Announcement of the Settlement of Accounts for the Year Ending March 2006
(Note) Figures shown have been rounded down to the nearest million yen
Our settlement of accounts for the year ending March 2006 was announced on the afternoon of Thursday, May 11 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the announcement accounts is presented below.
Conditions Influencing the Results
During this term the domestic economy in Japan saw a slight recovery due to steady growth in business investment based on the enhanced corporate earnings as well as a gradual increase in personal consumption, despite some instability factors, including higher oil prices.
The food industry, to which we belong, continuously failed to realize strong growth because competition among companies intensified under an increase in imported goods and declining prices. The industry is also placing more emphasis than ever before on a commitment to addressing concerns about the safety of food.
In such an environment, our group engaged in maintaining "safety, product quality and environmental integrity" as prerequisites of management, and promoted the "three-pronged development strategy: development of new products, development of new production technologies and development of new markets", while also focusing on "cost reduction" and "proactive sales". Nevertheless, ensuring profits was a challenge owing to an increase in depreciation costs along with stubbornly high prices for dairy products.
As a result, we achieved a sales volume of 175,172 million yen (an increase of 1.3% over the previous term), operating income of 9,277 million yen (a decrease of 18.7% over the previous term), ordinary income of 8,952 million yen (a decrease of 18.2% over the previous term) and net income for the term of 4,334 million yen (a decrease of 38.3% over the previous term).
|Net Sales |
(millions of yen)
|Operating income |
(millions of yen)
|Ordinary income |
(millions of yen)
|Net income |
(millions of yen)
|Net income |
|Year ending March 2006||175,172||9,277||8,952||4,334||49.14|
|Year ending March 2006||172,978||11,405||10,946||7,023||79.68|
|Year ending March 2006||1.3%||(18.7)%||(18.2)%||(38.3)%||(38.3)%|
[Breakdown of Results by Division]
<Oils and Fats Processing Business>
In the Japanese market, while the sales of oils and fats for frying declined due to severe market conditions, hard butters for chocolate and high value-added products such as functional oils and fats did well. Thanks to growth in high value-added products and enhanced productivity, profits increased over the previous term.
Our overseas group companies significantly increased sales due to growth in specialty products such as hard butters for chocolate in both U.S.A./European markets and Asian markets. Profits increased over the previous term, except in the group company in the U.S.A. which suffered due to its slow growth in productivity.
Through its efforts, this business group achieved a sales volume of 60,180 million yen (an increase of 5.1% over the previous term) and an operating income of 3,507 million yen (an increase of 5.7% over the previous term).
<Confectionery and Baking Ingredients Business>
In the Japanese market, various types of ingredient chocolate continued to enjoy satisfactory sales compared to the previous term; mainly as a result of the development of new markets and the release of new products. Cream products saw an increase in both sales quantity and volume over the previous term thanks to the good performance of new cream products manufactured with new technology. While we retained the same level of sales as the previous term for margarines and shortenings, the sales of fillings saw a decrease compared to the previous term due to a stagnant market. Imported confectionery and baking ingredients enjoyed record high sales in both terms of quantity and volume, but ensuring profits was a challenge because of the stubbornly high prices of raw materials in overseas dairy markets.
Although our group companies in Japan aggressively introduced new products, dessert products failed to maintain the growth level achieved in the previous term and recorded a decline in both net sales and profits over the previous term.
Overseas, in our group company in Singapore, net sales increased over the previous term, but profits declined from the level of the previous term due to high material prices. The group company in Indonesia increased both net sales and profits compared to the previous term for various reasons including the development of new products and enhanced productivity.
As a result, this business group achieved a sales volume of 75,304 million yen (an increase of 0.2% over the previous term) and an operating income of 5,229 million yen (a decrease of 21.6% over the previous term).
<Soy Protein Business>
In the Japanese market, soy protein ingredients saw an increase in both sales quantity and volume by offsetting a sales decrease due to sluggish demand in meat and fish markets with an expansion of sales in the health-food market.
Soy protein food products enjoyed substantial growth in the boxed-lunch and meal preparation markets, as well as the markets of products sold at convenience stores, thus experiencing a rise in sales quantity over the previous term. Although net sales declined over the previous term, profits increased compared to the previous term as a result of cost reductions.
Soy peptides saw a decrease in both net sales and profits over the previous term due to various factors including sluggish sales in the domestic beverage market and a sales decrease in the health-food market.
Water-soluble soy polysaccharides recorded a steady increase in sales volume in the markets of cooked rice and noodles mainly sold at convenience stores.
Soy milk was marketed as the key product of the "SOYAFARM BRAND" through the aggressive release of new products, but it 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, while development in the beverage market was slow.
Mail order sales of soybean-related products saw sales growth over the previous term thanks to the good performance of "It's Time for Vegetables!" and other products.
In overseas markets, our group company in China that produces and markets soy protein ingredients increased its imports and sales, but its profit declined over the previous term owing to an increase in costs associated with the operation of a new plant. The group company in China that produces and markets soy protein food products enjoyed an increase in both net sales and profit over the previous term thanks to significant growth in imports to Japan.
As a result, this business group achieved a sales volume of 39,687 million yen (a decrease of 2.3% over the previous term) and an operating income of 539 million yen (a decrease of 62.0% over the previous term).
Forecasts for the Next Term (Year ending March 2007)
Although the severe business environment is expected to continue in the future, due to conditions both inside and outside Japan, we will strive to advance our management policy of the mid-term business plan, "creativity and innovation", and to enhance profitability.
Our oils and fats processing business will further enhance oils and fats fractionation technology, one of our group's strengths, and endeavor to increase the sales of specialty products such as high value-added functional oils and fats and hard butters for chocolate. In particular, we will strive to enhance the productivity of the group company in the U.S.A. to achieve an increase in sales and enhance profitability. The oils and fats processing business in the Chiba Plant, which is currently under construction, is scheduled to start operation in October, and we will employ a vertical startup method and strive to enrich our customer services in the Kanto region.
Our confectionery and baking ingredients business will make efforts to increase the sales of high value-added products through the use of new technologies such as cream with a function to maintain flavor and a fresh taste. Based on the production technology of the ingredient colored chocolate plant, which began operation last year, we will also target an increase in the market share of products. Regarding production, the start of operation of the margarine business in our Chiba Plant in May will complete the establishment of a structure for manufacturing the main products of our confectionery and baking ingredients business based in both Kanto and Kansai.
The soy protein business will implement the development of new products, reform of the business structure and thorough cost reduction to enhance the profitability of the soy protein foods business. The soy protein ingredients business will endeavor to increase its sales in the growing health-food market and diversify the possible uses through the development of new products. In the soy milk business, the sales growth of our new product "soymilk" is our top priority, and we will develop aggressive promotional activities. For water-soluble soy polysaccharides, we will seek to establish overseas markets. Targets for soy peptide include a sales increase in the fermentation and culture markets and the growth of sales volume in overseas markets.
In consideration of these strategies, we forecast a sales volume of 184.3 billion yen (an increase of 5.2% over the previous term), an operating income of 10.2 billion yen (an increase of 9.9% over the previous term), an ordinary income of 9.5 billion yen (an increase of 6.1% over the previous term) and a net income for the term of 5.1 billion yen (an increase of 17.7% over the previous term).
These forecasts are based on the assumption of an exchange rate of 117 yen to the dollar.
End of report
(Note) In this report, except for historical and current facts, the forecasts for the next term including the plans and strategies may involve potential risks and uncertain factors, and we do not provide any assurance or warrant with respect to the information. These forecasts represent our judgments based on information available at the time of the forecast. Please be aware that actual results may substantially differ from these forecasts due to various factors including future business trends, competition within the industry, demands in the market, the trends of raw material markets and currency exchange rates.