2009.5.8Announcement of the Settlement of Accounts for the Year Ending March 2009
(Note) Figures shown have been rounded down to the nearest million yen.
Our settlement of accounts for the year ending March 2009 was announced on the afternoon of Friday, May 8 at the Tokyo Stock Exchange and Osaka Securities Exchange Press Clubs. An outline of the accounts is presented below.
Overview of FY2009
Japan's economy caused companies, namely those in the exporting industry, to suffer drastic declines in business performance from increased costs following the general rise in oil and other raw material prices in the first half of the year, and from the global economic downturn in the latter half of the fiscal year.
In addition to heightened concerns towards food safety following false labeling scandals of food products, the food industry in which we are placed was faced with cost pressures to respond to the increased demands from consumers for lower pricing triggered by the economic recession.
Amid such challenging business environment, our group has started endeavoring on the new medium-term business plan "Innovation and Action 2010" and steadily carried out measures to strengthen oversight of each division's business profitability through the adoption of the company system along with demonstrating speedy decision-making. We have continued to bring forward the mid-term business plan with "speed" and "innovation" as the key concepts while continuing to prioritize "safety, quality and environmental integrity" as the Group's prerequisites for management.
For the annual term ended March 2009, we achieved net sales of 239,369 million yen (11.8% y-o-y increase), operating income of 11,528 million yen (50.6% y-o-y increase), ordinary income of 10,306 million yen (48.7% y-o-y increase) and net income of 7,485 million yen (a net loss of 841 million yen was recorded the previous year).
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[Breakdown of Results by Division]
<Oils and Fats Processing Division>
Domestically, fats for frying struggled, but the Company's ongoing adjustment of unprofitable products, favorable growth seen in fats from southern regions within the general oils and fats for processing, and solid sales achieved from specialty products including hard butters for chocolate, led to significant growth in both sales and profit.
In overseas group businesses, the excellent results posted from hard butters for chocolate and enhanced profitability of the refining division contributed to improved sales and profits.
Through these efforts, this division achieved a sales volume of 106,428 million yen (23.1% y-o-y increase) and an operating income of 7,342 million yen (79.8% y-o-y increase).
<Confectionery and Baking Ingredients Division>
Domestically, chocolates for the mass retail market decreased in sales but frozen chocolates and chocolates for bread achieved steady growth and contributed to excellent results. Creams, margarines, shortenings and fillings met market demands through its superior functionality that substituted dairy products and increased sales in return, but struggled to gain profit after failing to thoroughly respond to the rise in raw material prices. Imported confectionary and baking ingredients recorded decline in sales volume after removal of importing balance accounts from overseas subsidiaries, among other factors, but nevertheless improved year-on-year profit following the growth in processed materials for cooking.
Dessert products from our domestic group company posted steady results in the gifts and souvenirs category, but nevertheless experienced decrease in both sales and profits due to struggling sales in the retail category.
Our subsidiary in Indonesia posted decline in profits as a result of high raw material prices. Our subsidiary in Singapore also experienced decrease in profits due to decline in exports for Japan following the rising dairy material prices overseas despite the steady increase in sales for creams and margarines targeted to Southeast Asia.
Through these efforts, this division achieved a sales volume of 94,581 million yen (5.6% y-o-y increase) and an operating income of 4,755 million yen (a decrease of 13.3% y-o-y).
<Soy Protein Division>
Domestically, soy protein ingredients continued to improve in sales thanks to steady growth seen in products for fermentation and culture medium, frozen foods, and prepared food markets, but did not offset negative factors, including price revisions that responded to increased raw material costs only insufficiently, and resulted in decrease in profits. Overseas, our group company in China improved in profit as a result of product revision and cost reduction through transfer and integration of its plants.
Soy protein products saw decline in sales as a result of the sharp decline in imported sales from our subsidiary in China, but achieved significant increase in profits following active cost reduction efforts through narrowing down the product mix.
Soy peptides saw improvements in both year-on-year net sales and profits as a result of steady growth posted by products for fermentation and culture medium in addition to increase in sales achieved by our Chinese subsidiary for sales in the overseas markets.
Water-soluble soy polysaccharides posted increase in both net sales and income as a result of solid sales seen in acid lactic beverages both domestically and overseas, in addition to steady demand from the prepared noodles and rice markets.
Soy milk experienced decline in sales due to the struggling home-delivery market despite the recovery seen in the mass retailing market, but nevertheless considerably improved in profit thanks to cost-cutting efforts.
For mail orders, although the "Isofla-Balance" product renewal launched in the fiscal year resulting in significant sales was not enough to offset the declining sales of other products, the category nevertheless posted improved profit as a result of cost reduction efforts.
Through these efforts, this division recorded a sales volume of 38,358 million yen (0.9% y-o-y increase) and recorded an operating loss of 569 million yen (an operating loss of 1,914 million yen was recorded in the previous year).
Predictions for the Next Business Term
As for the outlook for the next business term, there are concerns that Japan's economy will continue to worsen from the impact of the global economic depression and show symptoms such as stagnation in the exporting industry, declining employment, and dwindling consumption.
The business environment for our company is also expected to remain challenging as concerns for food safety heighten, costs for safety assurance increase, consumption diminishes following the economic downturn, and competition intensifies due to increased demands for lower prices.
Amid such challenging environment, the Group will steadily carry out the key issues posed in the medium-term business plan "Innovation and Action 2010" which will go into its 2nd year.
The oils and fats processing division will focus on expanding sales globally though launching new production equipments in Singapore to manufacture hard butters for chocolate. We aim to expand business while considering opting for alliances in the raw materials category to realize dominating global competitiveness for the palm oil business.
In the confectionary and baking ingredients division, we will continue to endeavor on market development for luxury chocolates following expectations that the market for white chocolates will grow. For creams, margarines and fillings, we will launch new products that appeal price merits and unique functions apart from other companies.
In addition to further promoting cost reduction through narrowing the product mix and cutting down production costs to improve performance, the soy protein division will improve performance through expansion of sales by launching new products that are healthy and convenient.
We forecast a sales volume of 223,400 million yen (6.7% y-o-y decrease), an operating income of 12,000 million yen (4.1% y-o-y increase), an ordinary income of 10,700 million yen (3.8% y-o-y increase) and a net income for the term of 6,600 million yen (11.8% y-o-y decrease).
|Net sales||Operating income||Ordinary income||Net income|
|(millions of yen)||(%)||(millions of yen)||(%)||(millions of yen)||(%)||(millions of yen)||(%)|
|First 2 Quarters||105,800||91.1||4,900||100.7||4,200||93.8||2,700||90.0|
End of report
*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.