News Release

2007.5.10Announcement of the Settlement of Accounts for the Year Ending March 2007

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

Our settlement of accounts for the year ending March 2007 was announced on the afternoon of Thursday, May 10 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 experienced a gradual recovery, however, the food industry, to which we belong, continued to face a severe business environment due to skyrocketing raw material prices and intensified competition between companies.

In such an environment, our group was engaged in ensuring "safety, product quality and environmental integrity" as prerequisites of management, and actively promoted the "three-pronged development strategy: development of new products, development of new production technologies and development of new markets", as well as "cost reduction" and "proactive sales" to enhance our price competitiveness and promote the development and sales of high value-added products.

Through these efforts, the sales of hard butters for chocolate and ingredient chocolate steadily increased and we achieved a record high sales volume of 184,910 million yen (an increase of 5.6% over the previous term). On the other hand, ensuring profits was a challenge due to high raw material prices and an increase in depreciation costs as a result of strategic investment, with operating income of 7,095 million yen (a decrease of 23.5% over the previous term), ordinary income of 6,498 million yen (a decrease of 27.4% over the previous term) and net income for the term of 3,259 million yen (a decrease of 24.8% over the previous term).

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

[Consolidated operating results]

  Net sales
(millions of yen)
Operating income
(millions of yen)
Ordinary income
(millions of yen)
Net income for
the term
(millions of yen)
Net income for the
term per share
(yen)
Year ending
March 2007
184,910 7,095 6,498 3,259 37.57
Year ending
March 2006
175,172 9,277 8,952 4,334 49.14
Growth rate 5.6% (23.5)% (27.4)% (24.8)% (23.5)%

[Breakdown of Results by Division]

<Oils and Fats Processing Business>

In the Japanese market, while the sales of oils and fats for frying fell due to severe market conditions, hard butters for chocolate did well. However, profits declined over the previous term because of high raw material prices and the increase in initial costs resulting from the operation of the Chiba Plant, which started in October 2006.

Our overseas group companies continued to increase their sales considerably compared to the previous term, owing to growth in specialty products such as hard butters for chocolate in both the U.S.A./European markets and Asian markets. Profits also increased significantly over the previous year thanks to the improved productivity of our oils and fats processing company in the U.S.A., in addition to its sales growth.

Through these efforts, this business group achieved a sales volume of 66,987 million yen (an increase of 11.3% over the previous year). The operating income, 3,493 million yen (a decrease of 0.4% over the previous year), was comparable to the previous year as the decrease in domestic income was offset by profit growth in our overseas companies.

<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 as a result of the creation of new markets through the active development of proactive sales and the sales growth of new products. Cream products saw an increase in sales volume over the previous year thanks to new cream products that meet the needs of customers. Margarines, shortenings and fillings experienced a year-on-year decline in terms of both net sales and profits due to a stagnant market. Imported confectionery and baking ingredients enjoyed an increase in both net sales and profits through the sales growth of new products (e.g. butter preparation and bechamel sauce base). In May 2006, our margarine plant in Chiba started operation.

Our group companies in Japan aggressively introduced new products and saw a sales increase from the previous year but recorded a year-on-year decline in profits.

Overseas, our group companies in Singapore and Indonesia enjoyed good performance through the active development and sales of new products as well as their commitment to reducing costs and improving productivity.

Through these efforts, this business group achieved a sales volume of 79,753 million yen (an increase of 5.9% over the previous year). The operating income declined to 4,895 million yen (a decrease of 6.4% over the previous year) because the growth in sales was not enough to offset increases in the prices of raw material and the costs associated with the new plant.

<Soy Protein Business>

In the Japanese market, soy protein ingredients saw a decline in both sales quantity and net sales due to weak growth in new markets, including the health-food market, in comparison to the previous term in addition to sluggish demand in the meat and fish markets. Overseas, our group company in China in this division recorded a year-on-year decline in both net sales and profits due to intensified competition in the Chinese market and the increase in costs associated with the operation of the new factory.

Soy protein food products enjoyed an increase in both sales quantity and net sales thanks to sales growth in the box lunch and meal preparation markets, as well as the markets of products sold through co-ops. Profitability was improved in comparison with the previous year through cost reductions, however, this was not enough to return the company to the black. On the other hand, our group company in China in this division did well in terms of both net sales and profits.

Despite sluggish sales in the domestic beverage market, the sales of soy peptides saw an increase over the previous term thanks to sales growth in the fermentation and culture markets. In our group company in China in this division, although the sales increased over the previous term, ensuring profits was a challenge.

Water-soluble soy polysaccharides recorded a year-on-year decline in both net sales and profits due to a decrease in the sales of acid lactic beverages.

Soy milk saw a year-on-year decline in both net sales and profits owing to a shrinking market, intensified competition, and news reports on a problem caused by the excessive intake of isoflavone, even though new products were released.

Mail order sales of soybean-related products struggled mainly because of the news reports on isoflavone.

Through these efforts, this business group achieved a sales volume of 38,169 million yen (a decrease of 3.8% over the previous year). An operating loss of 1,294 million yen (an operating income of 539 million yen was achieved in the previous year) was recorded due to a decrease in sales, higher material prices and a fierce price war.

Consolidated Results by Division

(million of yen)

  Sales Operating income
Sales Oils and Fats Processing Confectionery
and Baking Ingredients
Soy Protein Operating income Oils and Fats Processing Confectionery
and Baking Ingredients
Soy Protein
Result of the year
ending March 2007
184,910 66,987 79,753 38,169 7,095 3,493 4,895 (1,294)
Result of the year
ending March 2006
175,172 60,180 75,304 39,687 9,277 3,507 5,229 539
Amount of increase
(decrease)
9,738 6,807 4,449 (1,518) (2,182) (14) (334) (1,833)

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

Predictions for Consolidated Results for the Year Ending March 2008

Regarding future prospects, the recovery of the Japanese economy is expected to continue, led by private demand, however, the conditions are likely to remain uncertain in light of concerns about the impact of high oil and raw material prices.

The business environment for our company is also expected to remain harsh as the prices of our main materials including soybeans, palm oil and cacao are rising.

In such an environment, we will steadily revise our sales prices to offset increasing material costs and make further efforts to reduce costs and improve productivity.

The oils and fats processing business will focus on promoting the sales of hard butters for chocolate, which are in high demand especially overseas. In the Japanese market, we will introduce measures to enhance our palm oil business.

The confectionery and baking ingredients business will concentrate on increasing the sales of new products including the products with "scrumptiousness sustaining functions" and develop the ingredient chocolate business, which is doing well both in Japan and overseas.

The soy protein business will endeavor to improve its profitability through increasing productivity and removing unprofitable products. In addition, we will establish and develop new markets through the introduction of new products, proactive sales and marketing techniques that boost markets.

We forecast a sales volume of 200,000 million yen (an increase of 8.2% over the previous term), an operating income of 7,400 million yen (an increase of 4.3% over the previous term), an ordinary income of 6,500 million yen (an increase of 0.0% over the previous term) and a net income for the term of 3,300 million yen (an increase of 1.3% over the previous term).

Predictions for Consolidated Results for the Year Ending March 2008 (April 1, 2007 to March 31, 2008)

Predictions for Consolidated Results for the Year Ending March 2008 (April 1, 2007 to March 31, 2008)

(%) is the growth rate over the previous year on the results for the year, or the
growth rate over the previous mid-term on the results for the mid-term

  Net Sales Operating income Ordinary income Net income for
the term
Net income for
the term per share
(millions of yen) (%) (millions of yen) (%) (millions of yen) (%) (millions of yen) (%) (yen)
Mid-term 95,000 7.6 3,000 (2.7) 2,550 (5.9) 1,250 (7.5) 14.54
Year 200,000 8.2 7,400 4.3 6,500 0.0 3,300 1.3 38.38

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 best judgments based on the information available at the time of the forecast. Please be aware that the 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.

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