Management Information
Message from the President
I would like to express our sincere gratitude to our shareholders and investors for their exceptional support.
The business environment surrounding our group includes positive factors such as inbound demand and investment in DX (digital transformation) in Japan, but personal consumption is being held back by high prices, and there are concerns about the impact of US tariff policies. In the food industry, rising costs for raw ingredients such as cocoa continue to pose challenges, prompting ongoing measures such as price increases and raw ingredient changes. In response to this situation, our group is implementing strategies aligned with our mid-term business plan, including diversifying suppliers and sourcing countries, and investing in equipment to enhance quality.
As a result, consolidated net sales for the interim period of the 78th fiscal year ending October 2025 increased by 10.1% year on year to 65,764 million yen, driven by higher sales of dairy products and confectionery ingredients in Japan, as well as sales growth in both the United States and China. In terms of profits, while gross profit maintained an upward trend, selling and general administrative expenses increased due to higher labor costs and expenses related to DX (digital transformation), resulting in an operating profit of 2,913 million yen, a decrease of 5.7% year-on-year, an ordinary profit of 2,941 million yen, a decrease of 7.4% year-on-year, and an interim net profit attributable to parent company shareholders of 1,731 million yen, a decrease of 11.1% year-on-year.
For the second half of the fiscal year ending October 2025 (the 78th fiscal year), continued inflation centered on rice and other food products is expected, and concerns persist that real wage growth will remain negative as wage increases fail to keep pace. Due to continued thrift-minded spending and a shift toward lower-priced goods, personal consumption is expected to see limited growth. Additionally, the correction of the yen's depreciation in the foreign exchange market is beginning to show signs of weakening in consumption by inbound tourists (inbound tourism), which had been supporting the economy, such as a decline in average spending per visitor. While corporate performance is stable across most sectors, particularly in the non-manufacturing sector, the economic environment surrounding our group is expected to remain uncertain due to the continued implementation of U.S. tariff policies and the resulting fluctuations in financial markets.
Under these circumstances, our group will work to implement growth strategies in line with our newly established vision. By further integrating our strengths in ingredient procurement, ingredient processing, and market development, we will promote the expansion of our product lineup and the development of products tailored to customer needs, thereby pursuing the potential of ingredients and aiming to create new value.
We look forward to your further support and guidance.
Management Environment & Management Strategy
We see the following five management environments that need to be addressed from a medium- to long-term perspective in particular, and have established basic management strategies to address these environments.
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1. Growth strategy as a food trading company |
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| ･ Cultivating growing industries and users |
| ･ Pioneering new fields |
| ･ Expansion of product lineup（Promote changes in the profit structure to increase profits） |
| ･ Strengthening global expansion |
| ･ Strengthening the supply chain for main products |
| 2. Growth strategy as a food manufacturer |
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| ･ Product design tailored to customer needs and the accompanying capital investment |
| ･ Initiatives to improve factory utilization rates |
| ･ Efforts to provide safe and reliable food |
| 3. Promotion of Sustainability Management |
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| ･ Promoting environmental responsiveness and human resource diversity |
| ･ Maintaining a sustainable logistics network |
| ･ Collaborating with Stakeholders |
| ･ Promotion of DX |
| ･ Strengthening the Corporate Governance System |
Management Objectives & Shareholder Return Policy
◆As for net sales, changes in local prices reflecting changes in crop yields and demand, and fluctuations in foreign exchange rates cause changes in the unit purchase prices of imported food materials, which in turn cause changes in selling prices. Therefore, as a management indicator, our main goal is to increase gross profit and operating income rather than net sales.
◆In addition, our policy is to aim for an ROE (return on equity) of 8% over the medium to long term in order to sustainably increase corporate value. Although it is currently below 8% due to aggressive capital investment such as new plant construction and the recording of depreciation and amortization expenses, we aim to achieve 8% over the medium to long term.
◆In terms of profit distribution,we regard the return of profits to shareholders as an important management issue and makes it a basic policy to maintain stable dividends and to pay dividends from surplus twice a year, once as an interim dividend and once as a year-end dividend, based on a comprehensive assessment of business investments to achieve medium- to long-term growth and the level of retained earnings. Our basic policy is to pay dividends twice a year, an interim dividend and a year-end dividend.
Business Risks
Risks with the potential to negatively affect the Group’s financial status and management results are as follows, and we see them as factors that may significantly impact investor decisions. Though the items below include future items, they were interpreted as of January 30, 2024, the day we submitted our securities report.
(1)Food safety
The Group sources products and ingredients from Japanese and overseas manufacturers and producers, and has production subsidiaries in Japan, the US, and China. We endeavor to enhance quality management and secure food safety by measures such as holding regular meetings with participants from the Quality Assurance Department and plants both in Japan and overseas. However, unpredictable issues and accidents in the manufacturing or processing lines could cause large-scale product recalls or large product-liability costs that would affect the Group’s financial status and management results.
(2)Inventory
The Group handles a wide variety of food ingredients and products. In particular, we maintain a certain amount of inventory centering on imported ingredients and products. We focus on inventory management to ensure we carry no excess inventory or expired product, by carefully taking into account harvest timing for agricultural products, production schedules at each plant, shipping schedules to our clients, and food expiry dates, as well as by assigning a person-in-charge for each product, who conducts frequent information exchanges with sales representatives. However, stock disposal due to disparity between sales forecasts and actual results, as well as substantial price fluctuations, could affect the Group’s financial status and management results.
(3)Stable procurement of food ingredients and their rising prices
As the Group sources food ingredients and products in and outside Japan, we face risks such as poor harvests due to natural disasters and climate change, which makes it difficult to secure consistent quality and quantity. We also face the possibility of our purchase and production costs being greatly affected by fluctuations in the overseas market prices of agricultural products due to changes in demand, or by exchange rate fluctuations. To counteract the above, we assign a procurement person-in-charge for each product, and strive to secure a consistent supply by conducting frequent information exchanges with each supplier and verifying the conditions of crops. However, if fluctuations occur on an unpredictable scale, the quality of ingredients and products may be compromised, or shortages may occur, which could impact the Group’s financial status and management results.
(4)Epidemics of communicable diseases or natural disasters
On top of sales offices, the Group also promotes its business through production plants and such. While the Group strives to control risks by such efforts as regularly reviewing the business continuity plan (BCP) and utilizing insurance, unpredictable natural disasters such as large earthquakes and extensive fires could cause loss or damage to the Group’s facilities and plants. In addition, large-scale epidemics of communicable diseases could damage our product supply which rely on ordering and shipping activities, and our production activities which rely on plants, thus affecting the Group’s financial status and management results.
(5)Impact of business globalization
The Group sources a portion of food ingredients and products from overseas, and operates production bases and sales businesses overseas. While the Group aims to manage related risks by designating departments dedicated to overseas procurements and a department to the management of overseas Group companies, wars, terrorism, political or social unrest, disadvantageous taxation and regulations, their amendments and abolition, and other unpredictable circumstances, or a defect in the governance of an overseas Group company, may affect the Group’s financial status and management results.
(6)Trade credit risks
The Group has experienced credit risks owing to accounts receivable of trade partners. We work to prevent credit risks by setting credit limits for each partner based on credit analyses and reviewing the partner based on the approval authority reflecting the credit limit. However, uncollected debts arising from unpredictable circumstances such as bankruptcy of our trade partners could affect the Group’s financial status and management results.
(7)Compliance with legal regulations, etc.
Our business activities are regulated in Japan by laws such as the Food Safety Basic Act and Food Sanitation Act, and in other countries where we conduct businesses by similar legal regulations. Although we have laid out appropriate measures to comply with these regulations, changes in these regulations or receiving a violation warning could limit the Group’s business activities and adversely affect our financial status and management results.
(8)Information and systems
On the back of the advancement of digitalization, besides order, purchase and accounting processing being conducted via information communications and data processing, communication with business partners, information exchanges within the Company, etc. also utilize electronic exchange methods. Therefore, the Group strives to reduce related risks by designating a department dedicated to information systems. However, if an information leakage, data loss, or virus attack occurs, the Group’s corporate activities may be hindered, which may affect the Group’s financial status and management results.
(9)Risks Related to Domestic and International Transportation
In response to labor shortages in the logistics industry, the Group is promoting a modal shift from trucking to rail freight and other modes of transportation, as well as unloading imported cargo at ports close to consumption centers. However, if problems arise, such as delays in product delivery due to a shortage of delivery drivers or a significant increase in logistics costs due to soaring labor and fuel costs, our group's business results may be affected. In addition, the increasing instability in global marine transportation may cause delays in the procurement of products and increases in logistics costs, which may affect the financial position and business performance of the Group.
Corporate Governance
Our Corporate Governance
Our basic approach to corporate governance The Group’s corporate philosophy is to "create a new food culture and contribute to society by consistently providing our customers with safe and reliable food products carefully sourced from domestic and overseas suppliers." To achieve this philosophy, it is important that we continue to exist as a company trusted by our shareholders and all stakeholders of the society, by ensuring healthy management with high transparency. Aiming for sustainable growth and improving our mid- to long-term corporate value, we will work to improve our corporate governance and build and operate a system to monitor and control our business activities.
Organization Chart of Corporate Governance
