Announcement of the Settlement of Accounts

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

Announcement of the Settlement of Accounts for the Year Ending March 2005

Our settlement of consolidated and non-consolidated accounts for the year ending March 2005 was announced on the afternoon of Thursday, May 12 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the accounts is presented below.

Conditions Influencing the Results

During this term the domestic economy in Japan saw a trend of gradual recovery due to steady growth in business investment, production and exports. However, in the latter half of the fiscal year the economy entered a correction phase owing to an export slowdown and a leap in oil prices.
The food industry, to which we belong, continued to face severe conditions such as constantly high prices of raw materials in the international market, sluggish personal consumption and intensified competition between companies, along with various concerns for the safety of foods.
In such an environment, our group was engaged in the protection of "safety, product quality and environmental integrity" as the top priorities of management, and promoted "proactive sales" to properly respond to customer needs through the "three-pronged development strategy: development of new products, development of new production technologies and development of new markets".
Through these efforts, we achieved a sales volume of 172,978 million yen (an increase of 7.3% over the previous term), and the highest volume ever recorded in our history. The profits improved in all of the operating income (11,405 million yen or an increase of 3.6% over the previous term), ordinary income (10,946 million yen or an increase of 3.3% over the previous term) and net income for the term (7,023 million yen or an increase of 24.1% over the previous term).

Results for the Fiscal Year Ending March 2005
(April 1, 2004 to March 31, 2005)

Sales by Division (Consolidated)

Oils and Fats Processing Business

In the Japanese market, while the sales of hard butters for chocolate, a main product, remained stable in this term, the sales volume of processed oils and fats for foodstuffs and for frying increased as palm oil was perceived as good value due to the higher prices of soybean oil and canola oil in the domestic markets, which in turn were caused by an increase of prices in overseas markets. Overseas, the sales of hard butters for chocolate and other specialty products increased, but the combination of intensified competition among firms and an increase in costs associated with the launch of new plants resulted in poor performance.

Confectionery and Baking Ingredients Business

In the Japanese market, the sales of ingredient chocolate increased remarkably thanks to the development of new markets and the sales of new products. The sales volume of cream maintained the level of the previous term due to the development of products based on new technologies and other efforts. The sales of margarines declined from the level of the previous term due to a stagnant market, and we faced a difficult challenge in selling cheese ingredients and fillings as a result of a change in the market menu. Although the import and sales of confectionery and baking ingredients was unprofitable because of the higher prices of dairy products in overseas markets, the sales of behamel sauce, frozen pie crusts and other ingredients using butter grew steadily.
The cup dessert products produced and marketed by our group companies in Japan enjoyed satisfactory sales and recorded high market growth. In the sales companies, the success of the development of new markets through proactive sales and cost reductions led to an increase in both net sales and profits over the previous term. Overseas, our group company in Singapore dramatically improved the sales of high value-added products such as cream.

Soy Protein Business

In the Japanese market, soy protein ingredients maintained relatively steady sales by offsetting the sales decrease due to sluggish demand in the meat market with the expansion of sales in new markets, including the health-food market. Nevertheless, ensuring profits was a challenge because of the high prices of raw materials. In such a severe environment, soy protein food products for industrial use faced difficult conditions, including a decrease in the number of product orders received, although sales growth was recorded in the lunchbox and other markets. Regarding products for household use, our new snack products saw increased sales, but the sales of hamburgers, a main product, declined over the previous term. The sales of soy peptides increased as they were favorably accepted as healthy ingredients, not only in the field of health foods, but also in the beverage market based on the consumers' recognition of soybeans as safe and reliable food. Water-soluble soy polysaccharides, our original product, recorded steady sales as a food function-enhancing ingredient mainly in the Japanese markets of beverages, instant noodles and cooked noodles for convenience stores. Soy milk grew significantly and did even better than the previous term, thanks to the combination of a favorable market environment due to frequent coverage of information on soy milk by the mass media, and the enhanced recognition of our soy milk through the appreciation of good quality and the aggressive marketing of the SOYAFARM BRAND. In the mail order sales of soybean-related products, the sales of soy-isoflavone-content tablets and beverages using soy peptides grew significantly. In overseas markets, our group company in China that produces and markets soy protein ingredients enjoyed major growth thanks to the success of its efforts to improve its marketing strength based on proactive sales and organizational marketing. The group company in China that produces and markets soy protein products also dramatically increased the sales of products.

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

Yearly prediction: With the forecast of record high sales of 184 billion yen (an increase of 6.4% over the previous term), both the operating income and ordinary income are predicted to increase. On the other hand, net income for the term is estimated to decline by 1.1 billion yen due to the absence of any extraordinary factors such as the effect of tax and gains on returns from the employee pension fund, which were present in the previous term.

End of report