Announcement of the Mid-Term Accounts for the Period Ending September 2006

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

Our settlement of mid-term accounts for the period ending September 2006 was announced on the afternoon of Thursday, November 9 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the accounts is presented below.

Conditions Influencing the Results

The food industry, to which we belong, faced harsh business conditions such as sluggish consumption, intensified competition between companies and stubbornly high material and energy prices. In such an environment, our group has been aggressively involved in implementing the "three-pronged development strategy: development of new products, development of new production technologies and development of new markets", "cost reduction" and "proactive sales". However, stubbornly high material prices, as well as other causes that affect sale prices led to rising costs, which were not shifted in the sale prices, and thus resulted in poor performance.

Results for the Mid-Term Ending in September 2006
(April 1, 2006 to September 30, 2006)

<Oils and Fats Processing Business>

In the Japanese market, while the sales of oils and fats for frying declined due to a fierce price war, hard butters for chocolate and functional oils and fats did well. Profits declined over the previous term owing to cost inducing factors including high material prices and a declining yen along with the initial cost of the Chiba Plant, which began operation in October. Overseas, thanks to significant growth in high value-added products such as hard butters for chocolate, a large sales increase over the previous term was achieved. Profits also increased considerably over the previous year as a result of sales growth and drastically improved profitability in our group companies in the U.S.A. and China. Through these efforts, this business group achieved a sales volume of 31,860 million yen (an increase of 13.3% over the previous year) and an operating income of 1,579 million yen (an increase of 11.1% over the previous year).

<Confectionery and Baking Ingredients Business>

In the Japanese market, the sales of various types of ingredient chocolate increased remarkably as a result of the development of new products and proactive sales. The sales volume of cream grew from the previous year thanks to the sales increase of new products manufactured with new technology. However, the sales of margarines, shortenings, cheese ingredients and fillings struggled due to stagnant markets. The import and sales of confectionery and baking ingredients saw a sales increase from the previous year thanks to market growth. Profits declined from the level of the previous term due to stubbornly high material prices, a declining yen and the initial cost of the new plant. The cup dessert products produced and marketed by our group companies in Japan recorded a year-on-year decline in both net sales and profits because of the weak market. In our group company in Singapore, sales increased over the previous term but profits declined from the level of the previous year because of high material costs and the appreciation of the local currency. The group company in Indonesia enjoyed an increase in both net sales and profits thanks to the sales growth of high value-added products and cost reductions. Through these efforts, this business group achieved a sales volume of 37,344 million yen (an increase of 5.9% over the previous year) and an operating income of 1,859 million yen (a decrease of 12.3% over the previous year).

<Soy Protein Business>

Despite the development of new markets, the sales of soy protein ingredients in the Japanese market increased only slightly due to sluggish demand in meat and fish markets. Profits declined from the previous term owing to cost-inducingfactors including high material prices and a declining yen. Overseas, in our group company in China that produces and markets soy protein ingredients, ensuring profits was a challenge due to weak demand in the Japanese market and a fierce price war in China.
Soy protein food products saw an increase in both sales quantity and volume in the boxed-lunch and meal preparation markets as well as the markets of products sold at convenience stores, and profitability also improved.
The sales of soy peptides, our original food function-enhancing ingredients, enjoyed an increase over the previous term thanks to sales growth in the fermentation and culture markets despite sluggish sales in the domestic beverage and health-food markets. In our group company in China that produces and markets soy peptides, production did not reach the planned volume, which resulted in poor performance.
Water-soluble soy polysaccharides faced harsh conditions due to the decline of sales for use in acidic beverages.
Despite the aggressive release of new products, soy milk saw a decrease in both net sales and profits due to the impact of unusual weather in Japan, a shrinking market and news reports on a problem caused by excessive intake of isoflavone.
The news reports on isoflavone also resulted in the poor performance of mail order sales of soybean-related products.
Through its efforts, this business group achieved a sales volume of 19,118 million yen (a decrease of 1.4% over the previous year) and an operating loss of 355 million yen (an operating income of 458 million yen was achieved in the previous year).

Predictions for Consolidated Results for the Year Ending March 2007
(April 1, 2006 to March 31, 2007)

Regarding future prospects, the severe business environment is expected to continue for reasons including; stubbornly high material and energy prices and intensified competition between companies. In such an environment, our group will strive to advance our management policy of the mid-term business plan, "creativity and innovation", and to make the group a development-oriented global enterprise by focusing on the development of new products. In the second half, we will focus aggressively on the implementation of the three-pronged development strategy, revision of prices of some products and cost reduction through cost saving and improved operational efficiency.

<Oils and Fats Processing Business>

Our Oils and Fats Processing Business will endeavor to increase the sales of specialty fats, one of our group's strengths, and to enhance profitability through the promotion of cost reductions. In particular, we will strive to raise the operating capacity of the Chiba Plant, which started operation in October, and to further increase profitability through the improvement of productivity in our group company in the U.S.A.

<Confectionery and Baking Ingredients Business>

The sales of various types of ingredient chocolate, which are enjoying satisfactory sales, are expected to continue to grow in both the Japanese and overseas markets in the second half, thanks to the development of new products and proactive sales. For cream products, we will strive to expand the sales of new products with added functionality. The production of margarine began in May at the Chiba Plant, and we will endeavor to increase the sales of sheet margarine, a high value-added product.

<Soy Protein Business>

The profitability of soy protein products is expected to be enhanced through sales growth and a reduction in production costs. For the business of functionary additives including soy peptides and water-soluble soy polysaccharides, we will endeavor to increase sales through the development of new markets.
Although soy milk is expected to face severe conditions due to a shrinking market, we will make efforts to improve performance with the launch of new products and efficient marketing strategies.
For soy protein ingredients, we will endeavor to increase sales in new markets such as the health-food market and enhance the productivity.

End of report