Nippn : Consolidated Financial Results for the First Quarter of FY2024 223KB

* Notes

1. Significant changes in subsidiaries during the current quarter (changes in specified subsidiaries in accordance with changes in the scope of consolidation): None
2. Adoption of special accounting methods for preparation of quarterly consolidated financial information: None
3. Changes in accounting policies, accounting estimates and retrospective restatements

(4) Number of shares issued and outstanding (common stock)

• These consolidated financial results are outside the scope of quarterly review procedures by certified public accountants or an audit corporation.
• Explanation regarding the appropriate use of projected financial results and other special instructions
  Descriptions regarding the future, including the financial outlook contained in this material, are based on certain information currently available to the Company and particular assumptions, which are, at the discretion of the Company, deemed reasonable, and actual financial results may significantly vary due to various factors. Please refer to "1. Qualitative Information on Quarterly Consolidated Financial Results, (3) Information on forecast of the consolidated financial results" on page 5 for information on preconditions underlying the above outlook and other related information.

NIPPN CORPORATION (2001) Consolidated Financial Results for the First Quarter of FY2024

Contents

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NIPPN CORPORATION (2001) Consolidated Financial Results for the First Quarter of FY2024

1. Qualitative Information on Quarterly Consolidated Financial Results

(1) Overview of business results

During the first three months of the fiscal year ending March 31, 2024, the Japanese economy benefited from a recovery of both personal consumption and inbound consumption, reflecting the relaxation of restrictions on activities. On the other hand, manufacturing and logistics costs remained high, against a backdrop of soaring prices of raw materials and energy due to the Russo-Ukraine situation as well as instability elsewhere internationally. Thus, the outlook remained uncertain.

In these circumstances, in accordance with our management philosophy of "contributing to the realization of a sustainable society by pursuing the well-being (happiness, health, and smiles) of people," we promoted initiatives to create future-focused value, working with our customers, employees, shareholders, society, and other stakeholders. In addition to cost reductions through operational improvements, we strove to strengthen our business foundation by further bolstering sales of mainstay products through upfront investments to expand sales and by enhancing our competitive advantage through the provision of high-value-added products and services.

In May 2023, the Company invested in Utah Flour Milling, LLC, a flour milling company in the U.S., in order to achieve business expansion in North America and promote the inorganic growth strategy. Through direct engagement in the flour milling business in the U.S. we aim to enhance the Group's overall strength as a flour miller and accelerate business growth in the U.S. by leveraging synergy with the Group's two existing sites in the U.S., namely, NIPPN California Inc., a California-based premix sales company, and Pasta Montana, L.L.C., a Montana-based pasta production and sales company, with a view to further expanding the global business.

Consolidated net sales for the first three months of fiscal 2024 increased by 14.4% year on year to ¥98,631 million, reflecting an increase in demand due to recovery of personal consumption and inbound consumption and the implementation of sales price revisions in stages in response to rising raw material costs and various other costs. In terms of profit, despite these higher costs and an increase in strategic costs for sales expansion, operating income increased by 117.8% to ¥5,447 million, ordinary income increased by 74.7% to ¥6,687 million, and profit attributable to owners of parent increased by 64.3% to ¥4,479 million owing to growth of the sales volume of frozen foods and robust performance of the ready-made meal business.

The performance of individual business segments was as follows.

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NIPPN CORPORATION (2001) Consolidated Financial Results for the First Quarter of FY2024

1) Flour Milling

In the Flour Milling business, sales were higher than the level for the same period of the previous year, mainly because of the wheat flour price revision and a robust trend in sales prices of wheat bran, a by-product.

In line with the increase of government sales prices (tax inclusive) of imported wheat by 5.8% on average for the five key products in April 2023, we revised the prices of wheat flour products for professional use from June 2023.

As a result, net sales of the Flour Milling segment increased by 12.4% year on year to ¥31,466 million, and operating income increased by 45.4% to ¥2,199 million.

2) Food

In the professional-use category, demand increased mainly from restaurants owing to recovery of personal consumption and inbound consumption, and as a result, sales of products in this category were higher than the level for the same period of the previous year.

In the home-use product category, we continued price revisions from the previous year in line with cost increases, such as for raw materials, logistics, and energy, and as a result, sales of products in this category were higher than the level for the same period of the previous year.

In the frozen foods category, sales of home-use frozen foods, centering on the One Plate Meal series of complete meals consisting of a main dish and staples, were buoyant in response to increasing needs for "quick and easy" meals. Sales of products in this category were higher than the level for the same period of the previous year, also reflecting price revisions.

In the ready-made meals business, sales were higher than the level for the same period of the previous year because demand increased as more people were out and about, resuming their normal lifestyles.

As a result, net sales of the Food segment increased by 14.9% year on year to ¥55,540 million, and operating income increased by 222.0% to ¥2,765 million.

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