Announcement of mid-term accounts for the period ending September 2002

On the afternoon of November 14, we announced results for the first half (ended September 30, 2002) of fiscal 2003 ending March 31, 2003 at the Tokyo and Osaka Stock Exchange Press Clubs.

Business Results

Domestic business conditions remained harsh throughout the period due to continued weak domestic demand, combined with low-price competition in a deflationary economy, and consumer suspicion of the food industry secondary to meat mislabeling scandals. Abroad, in general, business conditions remained sluggish throughout the period due to growing uncertainty over the future brought about by the continuing recession in many countries such as the U.S.
Despite these conditions, we achieved an increase in revenue as a result of aggressive promotion of new markets and products, but suffered a decrease in profit by failing to compensate for increased raw material costs by cost cutting in other areas.
Though the business conditions for the latter half of the period will remain harsh, the Fuji business group will continue to make every effort to achieve estimated results by increasing sales, mainly of high value-added specialty goods, and continuing to cut costs.

Mid-term Results for fiscal 2003 ending March 31, 2003
(April 1 to September 30, 2002)

(1) Consolidated Business Results

(2) Non-consolidated Business Results

Outlook for the business results for fiscal 2003 ending March 31, 2003

Summary of Operation by Division

Oils and Fats Division

Domestically, the closing of an "oil mill plant" at the end of September 2001 has led to a reduction in overall sales and net sales compared to the same period a year ago, mainly due to reduced sales and net sales for meal, fat, and oil cake. Functional oils suffered a decline in profit margin due to a rise in the raw ingredient price and a weak yen.
In our overseas market, the Belgian and Malaysian business groups increased their profit while the Singapore and Philippine business groups saw a reduction in profit due to a rise in raw ingredient costs. Our group in the United States made a great improvement on the profit side, reducing their deficit.

Confectionery and Baking Ingredients Division

A variety of chocolates, used in confectioneries and bread, showed steadily increasing sales, but experienced a difficult period due to a rise in raw ingredient prices.
Good performance was maintained for a variety of cream cheese margarines, thanks to a wide range of product lines to meet customer needs and our aggressive sales promotion activities. In particular, creamy spreads with a tangy fermented taste enjoyed excellent performance. However, profits were lower than expected owing to a rise in raw ingredient prices.
The confectionary ingredient wholesaler, one of our group companies, newly consolidated last year, showed improved profit performance.
Our Singapore business group enjoyed good performance in sales of frozen pie crusts and bechamel sauce, but suffered reduced sales for every ingredient related to confectionery manufacture, resulting in a fall in income and profits.

Soy Protein Division

Among soy protein processed foods, while the industrial use products equaled the sales performance of the same period last year, the retail products of the Soya Farm brand maintained good performance thanks to sales promotion activities using "Stay healthy by eating soybeans everyday" slogan, which appealed to health-minded customer.
Since last year, our domestic group companies producing and selling soybean protein foods suffered from sales competition targeting the mass merchandiser. Although production increased at the Tsukuba Protein Food Factory, a main facility based in the Kanto region, the group company managing the factory suffered a reduction in profit.
Soybean protein materials suffered somewhat from food mislabeling scandals, but remained successful in markets for ham, sausage, and seafood paste thanks to new product promotions. In particular, sales for health foods contributed to good performance in this division.
The functional uses of water-soluble soy polysaccharides extracted from "okara" showed good performance in the domestic market, with increased use in rice balls and noodles, and in the overseas market for use in drinks.
Against the background of a health oriented amino acid boom and consumer confidence regarding soy food, there was a fair increase in the sales volume of soybean peptide, which is used in sports drinks and health foods.
As for soymilk, Fuji Oil produces raw ingredient soymilk and domestic group companies produce and sell retail soymilk products such as "Chousei Tounyu" (processed soymilk) and "Tounyu de Tsukutta Yogurt" (yogurt made from soymilk). Given the prevailing health consciousness trend, our soymilk products, such as specially designated government approved health foods, have shown excellent performance.
Looking overseas, the China business group, which produces and sells soybean protein ingredients, saw strong performance as a result of its increasing reputation for quality and the growing sausage market

End of report