Announcement of the Mid-Term Accounts for the Period Ending September 2005

(Note) Figures shown have been rounded down to the nearest million yen

Our mid-term accounts for the period ending September 2005 were announced on the afternoon of Thursday, November 10 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the accounts is presented below.

Conditions Influencing the Results

The domestic economy in Japan during this mid-term saw a slight recovery. The economies in the U.S.A. and Asia also exhibited positive growth. On the other hand, the food industry, to which we belong, continued to face concerns over food safety, and suffered from a lack of strength due to reasons such as deflation.
In such an environment, our group has exerted aggressive efforts to increase its net sales and profits through the "three-pronged development strategy: development of new products, development of new production technologies and development of new markets", as well as through "cost reduction" and "proactive sales". However, we suffered from severe conditions including a deteriorating market for the soy protein business and the slow growth of earnings from new businesses, along with the stubbornly high prices of dairy products.

Results for the Mid-Term Ending September 2005
(April 1, 2005 to September 30, 2005)

Forecast Results for the Year Ending March 2006 (Whole year)
(April 1, 2005 to March 31, 2006)

Although the severe business environment is expected to continue in the future in light of the conditions both inside and outside Japan, we will strive to advance "creation and reform", which is our management policy of the mid-term business plan, and become the No. 1 Niche Special Provider.
Our oils and fats processing business will focus aggressively on the promotion of sales of our specialty products and on cost reduction.
Our confectionery and baking ingredients business will make efforts to actively develop new products and new markets based on new technologies, and endeavor to increase its sales quantity.
The soy protein business will continue its marketing activities under the "SOYAFARM" brand strategy while reviewing the marketing strategy and endeavoring to develop new markets and new users. The soy protein business will enhance efforts to develop new products and reduce production costs.
In consideration of these strategies, the yearly forecasts at present are for a sales volume of 174.5 billion yen (an increase of 0.9% over the previous term), an operating income of 10.0 billion yen (a decrease of 12.3% over the previous term), an ordinary income of 9.5 billion yen (a decrease of 13.2% over the previous term) and a net income for the term of 4.8 billion yen (a decrease of 31.7% over the previous term). These forecasts are based on the assumption of an exchange rate of 110 yen to the dollar.

Breakdown of Results by Division

<Oils and Fats Processing Business>

In the Japanese market, while the sales of the fats for frying declined, hard butters for chocolate did well. Thanks to enhanced productivity and stable material prices, profits increased over the previous year.
Each overseas group company recorded good performance in the sales of hard butters for chocolate and other specialty products, and in particular the group company in Europe enjoyed substantial growth. On the other hand, the group company in the U.S.A. faced severe conditions including increased costs due to the construction of a new plant and slow growth in productivity. The group company in China also struggled due to a fierce price war, despite promoting cost reduction. Through these efforts, this business group achieved a sales volume of 28,112 million yen (an increase of 4.0% over the previous year) and an operating income of 1,421 million yen (a decrease of 1.1% over the previous year).

<Confectionery and Baking Ingredients Business>

In the Japanese market, various types of ingredient chocolate continued to enjoy satisfactory sales compared to those of the previous term, mainly as a result of the development of new markets and the release of new products. The new cream product manufactured with a new technology did well and saw an increase in its sales quantity over the previous year. While we retained the same level of sales as the previous year for margarines and shortenings, the sales of ingredient cheese and fillings saw a decrease compared to the previous year. Imported products saw both an increased sales quantity and volume over the previous year as a result of growth in the market, but unfortunately were not profitable because of the stubbornly high prices of raw materials in overseas dairy markets.
Our group companies in Japan faced saw a decrease in both net sales and profits mainly because of the poor performance of dessert products. In the group company in Singapore, profits declined from the level of the previous year due to high material prices. The group company in Indonesia increased both its net sales and profits compared to the previous year for various reasons, including the development of new products. Through these efforts, this business group achieved a sales volume of 35,262 million yen (a decrease of 1.1% over the previous year) and an operating income of 2,119 million yen (a decrease of 24.1% over the previous year).

<Soy Protein Business>

In the Japanese market, soy protein ingredients saw sales growth thanks to the favorable condition of the health-food market and the development of new markets. However, soy protein food products faced difficult market conditions and sales declined over the previous year despite efforts to streamline operations. "Soy peptides" saw decreases in both net sales and profits over the previous year due to various factors including sluggish sales in the domestic beverage market. "Water-soluble soy polysaccharides" struggled because of a decrease in the exports of acid lactic beverages.
"Soy milk" experienced stagnant sales in the retail market because of fiercer competition and the end of the first round of the soy milk boom. Industrial use products performed well in the dessert market. Mail order sales of soybean-related products increased over the previous year thanks to the good performance of tablets and other products. In overseas markets, our group company in China did well in the sales of soy protein ingredients, but ensuring profits was a challenge because of the cost increase as a result of the construction of a new plant. Through these efforts, this business group achieved a sales volume of 19,386 million yen (a decrease of 3.8% over the previous year) and an operating income of 458 million yen (a decrease of 42.5% over the previous year).

End of report