Message from the Management

Hiroshi Sawada

 During the first half of the fiscal year ending March 31, 2017, the Japanese economy remained on a moderate recovery track, supported by the fiscal policy of the Japanese government and monetary easing by the Bank of Japan. However, a full-blown recovery of the Japanese economy has yet to materialize because of persisting yen appreciation and a bearish stock market in addition to international risks, such as the slowing of the Chinese economy and other emerging economies in Asia and the Brexit issue. In the food industry, and particularly in the restaurant and delicatessen market, consumers are becoming more frugal in view of the trend of the Japanese economy.

 In order to respond flexibly and swiftly to the rapidly changing business environment, the Group is strengthening the business foundation based on the fundamental measures implemented so far that are focused on cost reduction and sales expansion. We aim to achieve sustainable growth by steadily implementing initiatives to reinforce competitiveness based on a low-cost operation strategy, business expansion in growth fields, enrichment of overseas business, and enhancement of CSR activities.

 In April 2016, NIPPN Donuts Holdings Co., Ltd., a subsidiary of the Company, acquired all the shares in Yamato Foods Co., Ltd., which operates donut shops. As a result, Yamato Foods Co., Ltd. has become a consolidated subsidiary of the Company.

 In September, the Company acquired 1,223,000 shares of its own stock for ¥922 million. On October 1, the Company conducted a 1-for-2 share consolidation and changed the number of shares constituting one tradable unit from 1,000 shares to 100 shares. Moreover, on November 1, Tofuku Flour Mills Co., Ltd., previously a consolidated subsidiary, became a wholly owned subsidiary of the Company through a share exchange. This was done in order to continuously increase the corporate value of both companies while achieving further synergy through enhanced collaboration.

 The Company relocated its head office in August to the newly built head office building in Kojimachi, Chiyoda-ku, Tokyo.

 As a result, consolidated net sales for the first half under review increased by 0.8% year on year to ¥156,404 million, operating income increased by 7.2% year on year to ¥5,401 million, ordinary income increased by 1.9% year on year to ¥6,069 million, and profit attributable to owners of parent increased by 3.4% to 4,151 million.

 We will aim for sustainable growth and improving our corporate value through overcoming the waves of change and continuing to improve our company and evolve.Your further support would be highly appreciated.

December. 2016