Message to Investors

Toru Arai, President
Toru Arai, President

Reflecting on the 168th financial period

In the 168th financial period, in order to achieve our goal of becoming a company with sustainably high profits, as laid out in the Medium-Term Business Plan for 2015, we have been executing several different strategies: reinforcing the structure of product development, thorough management of profit earnings, improving manufacturing efficiency and company-wide cost reduction. As a result, sales of our main food manufacturing segment showed a favorable transition, and the whole group achieved 181.8 billion yen, a 2.2% increase over the last financial period. Thanks to revenue growth, a decrease in our cost-to-sales ratio, and cost reductions, our operating income increased 93% to 11.4 billion yen and ordinary income increased 85% to 12 billion yen. This period’s net income increase, which is returned to the stockholders of the parent company, was the highest in our company’s history: a 113% increase to 8 billion yen, truly a significant achievement for the Morinaga Group.

In our food manufacturing segment, sales increased by 2.5% over the previous period to 172 billion yen. In the Confectionery Division, “HI-CHEW” performed well, and “Carré-de-Chocolat” also showed large growth thanks to people’s attention to the health benefits of cacao.

In the Frozen Division, “Choco Monaka Jumbo” has achieved its 15th year of consecutive sales growth. In the Healthcare Division, “Wieder in Jelly” has performed well throughout the year and drastically exceeded its performance over the last period, thanks to an effective advertisement campaign that focused on product function, as well as seasonal and targeted sales promotions.

The Overseas business division is one of our fast-growing sectors; we started selling U.S. manufactured HI-CHEW by Morinaga America Foods, Inc. in August 2015, and began manufacturing halal certified HI-CHEW by PT. Morinaga Kino Indonesia in March 2016. Establishing two new strategic manufacturing bases has put us in a position to speed up our overseas market development.

In the Healthcare Segment, we have newly established our “Health Business Division” starting from the 169th financial period. To meet the needs of our customers who want to select better products for their health, we aim to develop products that can support customers’ healthy decisions by making the most of our existing resources (technology, quality, raw material and sales), across all of our business segments.

Although both the global and domestic economies are still facing an uncertain future, the Morinaga Group will make the most of the great result of the 168th financial period, and continuously make efforts to maintain steady profit growth. We will also work to strengthen our management foundation, and expand our growing businesses, such as the overseas and health segments.

We appreciate your continual support.

Toru Arai, President
June 2016
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