News Release

2004.1.1New Year's Message

January 1, 2004

Kazuhito Asahara, President

Fuji Oil Co., Ltd.



I would like to wish all of our customers a Happy and Prosperous NewYear!

As we look toward the coming year, I would like to take this opportunity to announce our management policy for 2004.

First is the issue of food safety and reliability. Last year was characterized by another series of corporate misdeeds in the Japanese food industry, making consumers further question the safety and reliability of food. The Fuji Oil Group hereby declares that we will not put any product on the market unless we are fully certain of its safety and reliability. Recognizing that the issues of safety, quality and environmental protection are essential prerequisites for management, we will make every effort to achieve zero customer complaints and industrial accidents, while striving for eco-friendliness throughout our operations, in addition to full compliance with relevant laws and regulations.

Looking at the management environment of the global markets we operate in, including oils and fats, confectionery and baking ingredients, and soy protein, we are witnessing a consolidation of those markets in many parts of the world via M&A and corporate integration. There is major structural reform in progress almost comparable in scale to the Industrial Revolution, bringing with it intensifying competition with regard to market penetration and pricing. Moreover, the deflationary trend gripping the world economy is keeping selling prices low. In contrast, prices in raw material markets have risen significantly over the last three years, and are expected to remain high for some time to come, putting pressure on every player in this sector.

If Japanese manufacturers are to successfully compete in this severe environment, it is crucial for them to enhance their international competitiveness. Against this backdrop, the Fuji Oil Group is firmly committed to building an unshakable competitive advantage through a strategy of focus and selection. I'd like to discuss five programs we have set up to achieve this.

The first program is promotion of a three-pronged development strategy: development of new products, development of new production technology, and development of new markets. With the firm conviction that no growth will be possible outside this three-pronged development strategy, we will dedicate more resources to joint R&D with universities, propose promising new concepts under the lead of Fuji Sunny Plaza, and develop new production technology to create new markets. In contrast to the American style of management, where the focus is on lowering prices through mass production of commodities, we will remain committed to a management that attends to details, a strong suit of Japanese manufacturers, emphasizing small-lot production of a diverse range of products and finely-tuned responsiveness to market demand. We will also pursue opportunities in business domains fostered through proprietary technology, such as those related to special intermediate food ingredients in niche markets, including original functional oils and fats and confectionary and baking ingredients made possible by our oils and fats fractionation technology; soy ingredients with new functions based on separation of soy ingredients and enzyme technology; and processed soy protein food products that take advantage of soybean protein isolate, soybean protein concentrate and yuba (skimmed soy protein film). We will continue steadily pushing the frontiers of these emerging technological fields.

Our second program is expansion of overseas operations, where we see the future of the Fuji Oil Group. Sourcing materials from overseas, we started producing offshore some thirty years ago and were one of the first in the food processing business to do so. Under a basic policy of '"producing in the consuming markets," we will aggressively boost output at our 11 overseas production bases in 7 countries. In response to growing demand in the oils and fats and soybean businesses, we will have spent 17.5 billion yen in the year ending March 31, 2004 to expand capacity at 14 sites, double our usual pace of investment. These new facilities will go into operation one after another this year. I believe that fiscal 2004 (ending March 31, 2005), the first year following this substantial capital investment, will mark a new chapter in the history of the Fuji Oil Group.

Although our primary target will be China and other Asian markets, however we will also seek out opportunities in other regions, including North America, Europe and Russia.

Thirdly, we will continue to develop our brands and enhance our corporate image. Specifically, our Soya Farm brand will constitute the umbrella, under which we will market a complete line of soybean-based products, including soymilk and soymilk yogurt (Foods for Specified Health Uses), healthful and functional soy foods such as soy peptide and isoflavone, and soy protein foods, which are thought to lessen the danger of heart disease. In this manner, we plan to associate the Soya Farm brand with the images of health, nutrition, diet and beauty. In doing this, we expect the Soya Farm brand to further enhance the Fuji Oil Group's corporate image.

The fourth program is to further reduce costs throughout the entire supply chain, from material procurement to production and physical distribution, in a bid to increase our international competitiveness. This is a never-ending issue for us, one for which we must continuously seek new approaches.

The fifth program is strengthening the development of our human resources, for after all is said and done, a business' most important asset is its people.

With this I conclude my remarks on our five challenges for the coming year. We will do our very best in the year 2004, which presents us with both unprecedented tests and opportunities for further progress.

I am counting on your continued support and guidance for the new year.

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