Financial and Performance Review for the First Quarter of the Year Ending March 2007

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

Our financial and performance review for the first quarter of the year ending March 2007 was announced on Friday, July 28 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the announcement is presented below.

Performance Review for the First Quarter of the Year Ending March 2007
(April 1 to June 30, 2006)

[Qualitative information on the progress of operating results (consolidated)]

The domestic economy in Japan during the first quarter of the year ending March 2007 saw a continuously recovery, assisted by improvements in corporate profitability and increases in capital investment, however the food industry, to which we belong, continued to face harsh business conditions, such as the impact of unusual weather in Japan, a declining yen, higher energy costs, and stubbornly high material prices for confectionery products.
In such an environment, during the first quarter of the year ending March 2007, our group only slightly increased domestic sales over the previous year due to intensified competition between companies and a stagnant market, and profits declined over the previous year because rises in costs were not sufficiently offset by cost reductions. Overseas, sales grew steadily and profits also increased over the previous year.
Consequently, in the first quarter of the year ending March 2007, we achieved consolidated sales of 43,820 million yen (an increase of 6.9% over the previous year), a consolidated operating income of 1,555 million yen (a decrease of 25.5% over the previous year), a consolidated ordinary income of 1,356 million yen (a decrease of 30.6% over the previous year), and a net profit for the quarter of 610 million yen (a decrease of 35.9% over the previous year).

Breakdown of Results by Division

<Oils and Fats Processing Business>

Domestically, the sales of oils and fats for frying and other products declined due to a fierce price war, but overseas sales increased over the previous year as the expansion of the sales of hard butters for chocolate progressed mostly as planned. Although profits in Japan saw a decrease over the previous year due to a decline in sales and the initial cost of the Chiba Plant, which is scheduled to begin operation in October, profits in overseas markets steadily increased thanks to sales growth in Southeast Asia and China and an improvement in the profitability of our group company in the United States.
As a result, this business group achieved a sales volume of 16,120 million yen (an increase of 14.6% over the previous year) and an operating income of 661 million yen (a decrease of 4.1% over the previous year).

<Confectionery and Baking Ingredients Business>

Despite difficult conditions for cream products and fillings, such as a stagnant market, sales in this division increased over the previous year thanks to the sales growth of various types of ingredient chocolate and imported confectionery and baking ingredients. Profits fell below the level of the previous year due to higher costs as a result of the yen's decline, and stubbornly high material prices for confectionery products.
As a result, this business group achieved a sales volume of 18,178 million yen (an increase of 5.0% over the previous year) and an operating income of 1,009 million yen (a decrease of 15.9% over the previous year).

<Soy Protein Business>

The sales of soy protein ingredients and food function-enhancing ingredients saw an increase over the previous year as a result of the success of the development of new markets.
Growth in the sales of products for industrial use led to an increase in both net sales and profits of soy protein food products over the previous year.
The soy milk business introduced a new product, but faced severe business conditions, such as a stagnant market and intensified competition between companies, which resulted in a decrease in both net sales and profits over the previous year.
As a result, this business group achieved a sales volume of 9,522 million yen (a decrease of 1.1% over the previous year) and recorded an operating loss of 115 million yen (an operating income of 196 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)

At this point, we have not corrected the predictions of the results for the mid term and whole year, released on May 11, 2006.

(Note) The forecasts above have been made based on the information available at the time of this announcement, and the actual results may differ from these forecasts due to various factors.

End of report