News Release

News

FUJI OIL HOLDINGS

New Year's Thoughts

2014.1.6

First of all, I would like to express my sincere gratitude for your heartfelt sympathy, support, and cooperation regarding the damages that one of Fuji Oil Group's subsidiaries suffered due to Typhoon Haiyan, which struck the Philippines last November. The subsidiary is New Leyte Edible Oil which has its factory on Leyte Island in the central Philippines. Its production equipment was severely damaged by the winds and tidal waves that were the most devastating in recorded history. It took a long time to confirm the safety of all employees working at the plant, due to the chaos that the typhoon left behind, with no local infrastructure working. However, we are happy to report that miraculously, we ultimately could confirm the safety of every single employee. Please excuse us for our causing much concern regarding our supply capability, but I would like to hereby declare that we are taking all possible measures with confidence to deliver our products through full use of our supply chain.

Japan's economy in 2013 seemed to be somewhat recovering, with indications such as rising stock prices, improved corporate earnings and increase in plant investment, which appear to be led by government's economic policy of breaking away from deflation and a strong yen. This trend appears to continue this year, for the time being. Meanwhile, we food manufacturers are heavily affected by the exchange rate. As a company manufacturing processed oil and soy products, we feel that our performance last year suffered large impact by the cost of raw materials; specifically, by declining retail prices due to the lowered cost of oils, and the downward pressure on profit due to the high cost of soybeans. The media report that some consumers recognize economic recovery, and consumption is set to rise. Yet for the food industry, which is said to experience the impact of the economic climate at a slower pace than other industries, I feel that we are still in the deflation. In such an economic climate, we have carried out measures based upon our middle term business plan“Global & Quality 2013.” We have engaged in new product development and cost reduction to pursue the “promotion of global management", "promotion of technological management”, and “promotion of sustainable management,” which are set forth in the middle term business plan. While our performance for the first half resulted in sales slightly lower than expected, we made an increase in the profits. And now the figures are back on track.

In addition to this middle term business plan, since assuming the role of President last April, I have been advocating the following policies: "customer-oriented thinking” which means that we must thoroughly think about the true needs of our customers and act accordingly; and “changes” which means that every one of us must keep changing with the times. Technological management, in other words monozukuri (creating products), is at the core of our business model, and, through that, we have generated product value. While Japan's technologies of safety, security and health are undeniably outstanding, it is increasingly difficult to create value out of just these traits, especially in our rapidly changing economic and social climate. To bring out the full potential of monozukuri(creating products), we must first focus on kotozukuri (creating movement). It is only when these two acts are combined that customers can put a value on a product. At the basis of this is my strong belief that we should be a company that contributes to society. It is these thoughts that will generate the next set of measures that will allow Fuji Oil to grow even further.

The “Soy Renaissance" project that we announced last year is a mid-to-long term strategy for our soy business, based on the following concept: creating new values for soybeans, and contributing to people and the earth by providing delicious soybean ingredients and foods. Fuji Oil's world's first USS (Ultra Soy Separation) manufacturing method has allowed us to separate soybeans into soy-milk cream and low-fat soy-milk, resulting in the successful creation of entirely new soy-milk ingredients. The deliciousness and richness of the new soybean ingredients can be utilized for various foodstuffs, and we are gradually raising the public's awareness towards these products by introducing various ways in which they can be used in both savory and sweet dishes. People's attitudes toward the taste of soybeans have changed in recent years as the market embraced the health trend, with items like soy lattes and processed soybean products becoming increasingly popular. This year, we hope to enhance the recognition of our products even more for greater sales.

In addition, last year, we began getting involved in product development for the elderly market, focusing on items that combine oils and soy protein. In November, we hosted a seminar to introduce our products. Japan is aging at a rapid pace, and the elderly market is expected to grow significantly in future. With this, meals that help delay aging and extend elderly consumer's healthspan are going to be in high demand, and it is said that high quality protein and oils are integral for such meals. Fuji Oil proposed five keywords to promote nutrition intake among seniors: "safety/security”, “health”, “deliciousness", "fun", and "convenience", and have been producing a range of products and recipes that embody the keywords. The development of new technologies and ingredients, as well as strengthening our marketing activities based on foresight, will both be important challenges for our company from hereon.

This year, we will also expand our activities outside Japan even further. In 2013, we were able to establish a stable and competitive production base by investing in a plant that produces oils and fats for chocolate in the Republic of Ghana. Further, in order to expand our business in the growing Asian market, we set up an R&D center- equivalent to the ones we currently have in Japan – at our Asian base, Fuji Oil Asia in Singapore. Through the center, we will respond to the growing demands of the Southeast Asian market. By developing products that meet the tastes and trends of the various countries and regions, we will pursue our kotozukuri (creating movement) on a global scale.

In 2014, Fuji Oil will continue to provide products and services that bring our customers joy, while contributing to food culture around the world, based on our corporate philosophy "Contributing to healthier and happier living through the creation of contemporary eating habits as well as fine foods."

January 1, 2014
Hiroshi Shimizu, President and CEO