Home > Message from the Management

japanese

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Message from the Management

Hiroshi Sawada Chairman, President, C.E.O & C.O.O.

 During the fiscal year ended March 31, 2011, despites signs of an improvement in domestic production with the help of recovering exports, the Japanese economy continued to face uncertain prospects. In particular, capital spending and labor market conditions remained difficult, attributable partly to the effect of the Great East Japan Earthquake.

 The food industry also continued to face a challenging operating environment, given increasingly intense sales competition with consumer confidence experiencing a downturn in the uncertain economic environment.

 In these circumstances, the Group sought to achieve the objectives of the “10/11 SG130 Medium-Term Business Plan” in the first year of two years starting from April 2010, making every effort to expand the business and increase the earnings power.

 As part of these initiatives, the Group introduced an in-house company system in April to strengthen its readiness for the rapidly changing business environment. The Group also embarked on a broad array of investments in facilities for frozen foods, pet foods, buckwheat flour, and rice flour, including the expansion of the flour milling line at the Kobe Konan Plant and the construction of a new silo for raw materials in June (totaling approximately ¥12.5 billion), to accelerate the improvement of the business structure including those of Group companies in the future.

 In December, the Group acquired shares in OK Food Industry Co., Ltd., an equity-method affiliate, through a tender offer to make it a consolidated subsidiary. This move is not only key to advancing into new business fields and promoting the injection of management resources into areas with growth potential in a selective and focused manner; it is also beneficial to create synergies such as expanding the field for the ingredient business for deli foods and restaurant food, enhancing the cooking food business and making collaboration with the soybean-related business.

 As a result of these efforts, consolidated net sales for the year ended March 31, 2011 decreased 3.6% year on year, to ¥252,139 million, operating income declined 15.8%, to ¥10,567 million, ordinary income fell 15.4%, to ¥10,827 million, and net income decreased 23.6%, to ¥6,026 million.

 The outlook for the Japanese economy is difficult to foresee, given high downside risks such as the effect of the Great East Japan Earthquake, fluctuations in the financial capital market, and rising crude oil prices.

 In the food industry, competition among companies is set to intensify further, facing depressed consumer spending given the weaker labor and income environments. The domestic market continues to contract with the low birthrate and an aging population.

 The milling industry confronts a highly challenging environment, as the government selling price of foreign-grown wheat was raised 1% in October 2010 and then 18% in April 2011 on average for five brands, reflecting a recovery in international wheat prices and a more sustained upswing.

 The Group places top priority on accomplishing its mission of reliably supplying customers with products as a food manufacturer with a broad customer base for professional and household use, even in the difficult circumstances that prevail following the Great East Japan Earthquake.

 The Group will also proceed with initiatives to achieve the objectives of the “10/11 SG130 Medium-Term Business Plan” developed last year, with the aim of ensuring sustainable growth, viewing the current challenges as an opportunity and refusing to rest on past achievements.

 With these initiatives, the Group is committed to fulfilling its responsibilities to its stakeholders and achieving sustainable growth by continuing to strengthen its competitiveness and reducing costs in each business, enabling it to grow as a global diversified food company. We respectfully ask for your continued support as we pursue this commitment.

 June 2011