News Release

2007.2.8Financial and Performance Review for the Third 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 third quarter of the year ending March 2007 was announced on Thursday, February 8 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the announcement is presented below.

Performance Review for the Third Quarter of the Year Ending March 2007
(April 1 to December 31, 2006)

Operating results (consolidated progress)

(%) is in comparison to the previous year

  Sales Operating income Ordinary income Net income for
the quarter(term)
(millions of yen) (%) (millions of yen) (%) (millions of yen) (%) (millions of yen) (%)
Third quarter of the
year ending March 2007
138,722 106.1 5,958 79.3 5,485 76.8 2,887 78.6
Third quarter of the
year ending March 2006
130,798 100.5 7,511 87.0 7,144 85.1 3,673 72.2
(Reference)
Year ending March 2006
175,172   9,277   8,952   4,334  

The domestic economy in Japan during the third quarter of the year ending March 2007 (from April 1, 2006 to December 31, 2006) saw a recovery in corporate performance and an increase in capital investment. The food industry, to which we belong, however, continued to face harsh business conditions such as sluggish personal consumption, intensified competition between companies and stubbornly high raw material prices and energy costs. 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". Nevertheless, increased depreciation costs and higher raw material prices were not passed on in sales prices as expected, which resulted in a year-on-year decline in profits. Consequently, in the third quarter of the year ending March 2007, we achieved consolidated sales of 138,722 million yen (an increase of 6.1% over the previous year), a consolidated operating income of 5,958 million yen (a decrease of 20.7% over the previous year), a consolidated ordinary income of 5,485 million yen (a decrease of 23.2% over the previous year), and a net profit for the quarter of 2,887 million yen (a decrease of 21.4% 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. Profits decreased over the previous year owing to a rise in raw material prices and the initial cost of the new Chiba Plant. Overseas, significant growth in the sales of high value-added products such as hard butters for chocolate as well as an improvement in the profitability of our group company in the United States resulted in an increase in both net sales and profits over the previous year.
Through these efforts, this business group achieved a sales volume of 49,761 million yen (an increase of 12.3% over the previous year) and an operating income of 2,527 million yen (a decrease of 0.3% over the previous year).

<Confectionery and Baking Ingredients Business>

Various types of ingredient chocolate and creams enjoyed sales growth thanks to the development of new products and proactive sales, but margarines and fillings saw a decline in both sales volume and net sales from the previous year. Ensuring profits was a challenge despite the revision of prices of some products and cost reductions, which were not sufficient to offset cost increases due to persistently high raw material prices and other factors.
Through these efforts, this business group achieved a sales volume of 59,810 million yen (an increase of 5.7% over the previous year) and an operating income of 3,886 million yen (a decrease of 5.6% over the previous year).

<Soy Protein Business>

Soy protein ingredients recorded a year-on-year decline in profits owing to a downturn in the domestic meat and fish markets and fierce competition in China.
Soy protein food products enjoyed an increase in profitability despite the impact of a warm winter on some products, thanks to continuous steady sales growth in the boxed-lunch and meal preparation markets as well as the markets of products sold at convenience stores. The sales of food function-enhancing ingredients increased in the fermentation and culture markets, but ensuring profits was a challenge because the production of our group company in China did not reach the planned volume.
Although the soy milk business of a Japanese company in our group released new products, soy milk saw a decline in both net sales and profits over the previous year due to news reports of a health problem caused by the excessive intake of isoflavone, and a shrinking market.
Through these efforts, this business group achieved a sales volume of 29,150 million yen (a decrease of 2.6% over the previous year) and recorded an operating loss of 456 million yen (an operating income of 859 million yen was achieved in the previous year).

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

(millions of yen)

  Sales Operating income Ordinary income Net income for
the quarter(term)
Whole year 185,300 8,400 7,400 3,850

(Reference) Predicted net income per share for the term (whole year): 44.78 yen

* We have not corrected the predictions of the results for the year ending March 2007, released on November 9, 2006.
* We have made the above predictions based upon the information available at the date of the release of this report, and actual results may differ from the predictions due to various factors.

End of report

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