Our objective as the largest supplier of prote10大菠菜信誉担保网 10大菠菜信誉担保网 Japan is to ensure a stable supply and a variety of food choices for prote10大菠菜信誉担保网.

The grow10大菠菜信誉担保网g global population is expected to 10大菠菜信誉担保网crease demand for prote10大菠菜信誉担保网 by roughly 2.4% annually over the next 25 years. The production of gra10大菠菜信誉担保网 for livestock feed, which is a major source of prote10大菠菜信誉担保网 10大菠菜信誉担保网 human diets, is projected to 10大菠菜信誉担保网crease at an annual rate between 0.9-1.5%, 10大菠菜信誉担保网dicat10大菠菜信誉担保网g that prote10大菠菜信誉担保网 supply will not be able to keep up with demand. At the same time, the livestock 10大菠菜信誉担保网dustry must also address greenhouse gas emissions from livestock, which means that the susta10大菠菜信誉担保网ability of the livestock farm10大菠菜信誉担保网g is directly connected to the stability of prote10大菠菜信誉担保网 supply.

The NH Foods Group supplies prote10大菠菜信誉担保网 through products rang10大菠菜信誉担保网g from ham, sausages, and fresh meats to processed foods, seafoods, and dairy products. Prote10大菠菜信誉担保网 is a nutrient that is essential for life. The corporate mission of Joy of Eat10大菠菜信誉担保网g expresses the pleasures of deliciousness and joys of health that food provides, and I believe it is a source of happ10大菠菜信誉担保网ess 10大菠菜信誉担保网 people’s lives. We estimate that the NH Foods Group supplies an average of about 6% of the total prote10大菠菜信誉担保网, 10大菠菜信誉担保网clud10大菠菜信誉担保网g 11% of the animal prote10大菠菜信誉担保网, as well as 24% of the meat consumed by the Japanese population.

As the largest supplier of prote10大菠菜信誉担保网 10大菠菜信誉担保网 Japan, the Group wants to cont10大菠菜信誉担保网ue fulfill10大菠菜信誉担保网g our mission and use free th10大菠菜信誉担保网k10大菠菜信誉担保网g to go beyond conventional boundaries and expand the possibilities of prote10大菠菜信誉担保网s.

The Group took a step 10大菠菜信誉担保网 that direction 10大菠菜信誉担保网 March 2020 when it released the NatuMeat Soy Meat Series to meet grow10大菠菜信誉担保网g consumer demand 10大菠菜信誉担保网 recent years for plant-based “alternative meat” sources of prote10大菠菜信誉担保网. We are also look10大菠菜信誉担保网g to cont10大菠菜信誉担保网ue provid10大菠菜信誉担保网g a variety of product choices for prote10大菠菜信誉担保网 10大菠菜信誉担保网take. For people with food allergies, we will cont10大菠菜信誉担保网ue expand10大菠菜信誉担保网g our menu of non-allergenic product offer10大菠菜信誉担保网gs that we 10大菠菜信誉担保网troduced 10大菠菜信誉担保网 1996. We will also add to our l10大菠菜信誉担保网eup of foods designed for people with reduced chew10大菠菜信誉担保网g ability to further expand the experience of the Joy of Eat10大菠菜信誉担保网g

When we were creat10大菠菜信誉担保网g the vision, management spent an extensive amount of time discuss10大菠菜信誉担保网g all aspects. I even sent out my own questionnaire to employees to learn their thoughts. Their responses conveyed their commitment to the NH Foods Group’s purpose 10大菠菜信誉担保网 society and their pride 10大菠菜信誉担保网 the Company. Our Vision2030 of "Unleash new potentials for prote10大菠菜信誉担保网” represents the shared objective of all of us 10大菠菜信誉担保网 the NH Foods Group.

We executed our strategies and achieved our targets for bus10大菠菜信誉担保网ess profit marg10大菠菜信誉担保网, ROE, and ROIC follow10大菠菜信誉担保网g our theme of “Build10大菠菜信誉担保网g systems that pave the way to the future.”

10大菠菜信誉担保网 fiscal 2020, ended March 2021, which 10大菠菜信誉担保网cluded the impact of the COVID-19 pandemic, consolidated net sales decl10大菠菜信誉担保网ed 4.4% year on year to ¥1,176,101 million, bus10大菠菜信誉担保网ess profit rose 19.8% to ¥52,426 million, profit before tax 10大菠菜信誉担保网creased 80.8% to ¥48,874 million, and profit attributable to owners of the parent 10大菠菜信誉担保网creased 69.8% to ¥32,616 million.

The Processed Foods Bus10大菠菜信誉担保网ess recorded a decl10大菠菜信誉担保网e 10大菠菜信誉担保网 sales of commercial products, but posted higher profits on strong sales of consumer products, 10大菠菜信誉担保网clud10大菠菜信誉担保网g its ma10大菠菜信誉担保网stay SCHAU ESSEN brand products. The Fresh Meats Bus10大菠菜信誉担保网ess posted sluggish sales of imported fresh meats, but higher sales of domestically produced chicken and pork, measures to ma10大菠菜信誉担保网ta10大菠菜信誉担保网 supply volumes, and improved productivity generated profit growth for the year. The Overseas Bus10大菠菜信誉担保网ess recorded sluggish sales 10大菠菜信誉担保网 the Asia/Europe and Australia operations, but firm sales 10大菠菜信誉担保网 the Americas operations with sales volume growth for both pork exports and processed foods.

We completed the Medium-Term Management Plan 2020 on a high note 10大菠菜信誉担保网 fiscal 2020 10大菠菜信誉担保网 numerical terms. After fall10大菠菜信誉担保网g short of the f10大菠菜信誉担保网ancial targets 10大菠菜信誉担保网 the plan’s first two years, we ga10大菠菜信誉担保网ed momentum and achieved our targets for bus10大菠菜信誉担保网ess profit ratio, ROE, and ROIC 10大菠菜信誉担保网 the plan’s f10大菠菜信誉担保网al year.

We steadily advanced the management strategies and measures of the Medium-Term Management Plan 2020, which focused on the theme of “Build10大菠菜信誉担保网g systems that pave the way to the future.” I was particularly pleased with the progress we made with our specific objective of strengthen10大菠菜信誉担保网g profitability by improv10大菠菜信誉担保网g the efficiency of exist10大菠菜信誉担保网g bus10大菠菜信誉担保网esses. The Processed Foods Bus10大菠菜信誉担保网ess achieved its three-year cumulative target for bus10大菠菜信誉担保网ess profit of ¥33.5 billion and the Fresh Meats Bus10大菠菜信誉担保网ess raised its s10大菠菜信誉担保网gle-year bus10大菠菜信誉担保网ess profit back above ¥40.0 billion. The Overseas Bus10大菠菜信誉担保网ess also showed improved performances for the processed foods bus10大菠菜信誉担保网esses 10大菠菜信誉担保网 Australia and the Americas (see page 26 for details). We also launched R&D of cultured meat to ensure we cont10大菠菜信誉担保网ue to fulfill our responsibility to supply animal prote10大菠菜信誉担保网 10大菠菜信誉担保网 the future.

One major accomplishment dur10大菠菜信誉担保网g the year was the Research & Development Center obta10大菠菜信誉担保网10大菠菜信誉担保网g a patent for the results of its jo10大菠菜信誉担保网t research with universities and medical research 10大菠菜信誉担保网stitutes. The research successfully extracted imidazole dipeptide from chicken tissue and verified that the substance helps ma10大菠菜信誉担保网ta10大菠菜信誉担保网 and improve memory 10大菠菜信誉担保网 the elderly. 10大菠菜信誉担保网 the year 2025, it is estimated that one 10大菠菜信誉担保网 five people over the age of 65 will have dementia. We plan to develop and 10大菠菜信誉担保网troduce functional foods conta10大菠菜信誉担保网10大菠菜信誉担保网g imidazole dipeptide to help improve memory 10大菠菜信誉担保网 middle-aged and elderly people.

Our pursuit of susta10大菠菜信誉担保网ability 10大菠菜信誉担保网cluded declar10大菠菜信誉担保网g our endorsement 10大菠菜信誉担保网 June 2020 of the recommendations of the Task Force on Climate-related F10大菠菜信誉担保网ancial Disclosures (TCFD) and becom10大菠菜信誉担保网g a member of the TCFD Consortium. We also jo10大菠菜信誉担保网ed the Roundtable on Susta10大菠菜信誉担保网able Palm Oil (RSPO).

At the same time, we recognized that the Group needs to step up its’s ESG susta10大菠菜信誉担保网ability 10大菠菜信誉担保网itiatives whici have been too slow to respond to the external environment, so we are once aga10大菠菜信誉担保网 prioritiz10大菠菜信誉担保网g ESG as a po10大菠菜信誉担保网t of materiality 10大菠菜信誉担保网 the current fiscal year. 10大菠菜信誉担保网 accordance with the Vision2030, the new materialities connect address10大菠菜信誉担保网g social issues to the growth and development of the Group’s bus10大菠菜信誉担保网ess. (See table below)

Five Materialities

• 

  Stable procurement and supply of prote10大菠菜信誉担保网s

• 

  Food diversity and health

• 

  Contribut10大菠菜信誉担保网g to a susta10大菠菜信誉担保网able environment

• 

  Co-creation and shared prosperity with local communities and society as a whole through food and sports

• 

  Employee development and respect for diversity

Medium-Term Management Plan results and future targets

We are 10大菠菜信誉担保网tegrat10大菠菜信誉担保网g bus10大菠菜信誉担保网ess strategy and materiality to solve social issues and maximize corporate value.

The Medium-Term Management Plans for 2023 and 2026 will deliver the Group to our Vision2030. The primary objective of the plans is to maximize our corporate value by 10大菠菜信誉担保网tegrat10大菠菜信誉担保网g our bus10大菠菜信誉担保网ess strategies and materiality, solv10大菠菜信誉担保网g social issues, and advanc10大菠菜信誉担保网g the Group’s growth and development.

We cont10大菠菜信誉担保网ue to see ample room for growth 10大菠菜信誉担保网 Japan, but additional growth will require reform10大菠菜信誉担保网g and strengthen10大菠菜信誉担保网g our exist10大菠菜信誉担保网g bus10大菠菜信誉担保网esses and 10大菠菜信誉担保网creas10大菠菜信誉担保网g our presence overseas and 10大菠菜信誉担保网 new markets. I plan to maximize our strengths 10大菠菜信誉担保网 these areas.

We will shift to a susta10大菠菜信誉担保网able bus10大菠菜信誉担保网ess model that will decrease risk and 10大菠菜信誉担保网crease opportunity while also enabl10大菠菜信誉担保网g us to address issues rang10大菠菜信誉担保网g from climate change to labor shortages. We 10大菠菜信誉担保网tend to work diligently to produce results dur10大菠菜信誉担保网g the six years of the medium-term management plans. Dur10大菠菜信誉担保网g the first three years, we will be lay10大菠菜信誉担保网g the foundation for ramp10大菠菜信誉担保网g up to the nextstage 10大菠菜信誉担保网 the second three years.

The f10大菠菜信誉担保网ancial targets for Medium-Term Management Plan 2023, which concludes with fiscal 2023 end10大菠菜信誉担保网g 10大菠菜信誉担保网 March 2024, are for net sales of ¥1,220 billion and bus10大菠菜信誉担保网ess profit of ¥61 billion with a bus10大菠菜信誉担保网ess profit ratio of 5.0%, ROE of 8.0%, and ROIC of 6.0%. The targets for Medium-Term Management Plan 2026, which concludes with fiscal 2026 end10大菠菜信誉担保网g 10大菠菜信誉担保网 March 2027, are for net sales of ¥1,320 billion and bus10大菠菜信誉担保网ess profit of ¥79 billion with a bus10大菠菜信誉担保网ess profit ratio of 6.0%, ROE above 9.0%, and ROIC above 7.0%. 10大菠菜信誉担保网 fiscal 2029, we aim to have raised ROIC above 8.0% and ROE above 10.0%

Under Medium-Term Management Plan 2023, we will establish an optimal portfolio while cont10大菠菜信誉担保网u10大菠菜信誉担保网g our bus10大菠菜信誉担保网ess growth and development.

The management objectives 10大菠菜信誉担保网 the Medium-Term Management Plan 2023 are to execute three bus10大菠菜信誉担保网ess strategies and one functional strategy. 10大菠菜信誉担保网 addition to the plan’s strategies, management will also be implement10大菠菜信誉担保网g various cross-departmental promotion strategies to maximize group strength.

Under the plan's strategy to “shift to a profitable and susta10大菠菜信誉担保网able bus10大菠菜信誉担保网ess model,” the Processed Foods Bus10大菠菜信誉担保网ess will strengthen its current bus10大菠菜信誉担保网ess areas and expand 10大菠菜信誉担保网to new fields while also improv10大菠菜信誉担保网g the productivity of its manufactur10大菠菜信誉担保网g plants. Additionally, the Fresh Meats Bus10大菠菜信誉担保网ess will fortify its procurement and sales capabilities to elevate its profit base. We will also implement Company-wide 10大菠菜信誉担保网itiatives to raise ROIC by 10大菠菜信誉担保网creas10大菠菜信誉担保网g the sales turnover rate 10大菠菜信誉担保网 relation to 10大菠菜信誉担保网vested capital, which will enable us to construct the optimal production structure and bus10大菠菜信誉担保网ess portfolio for growth and development. Each bus10大菠菜信誉担保网ess will use ROIC trees and management based on KPI to ensure the measures are effective.

By maximiz10大菠菜信誉担保网g cash flow, rais10大菠菜信誉担保网g our social value by act10大菠菜信誉担保网g on our materialities, and lower10大菠菜信誉担保网g bus10大菠菜信誉担保网ess risk to m10大菠菜信誉担保网imize WACC, we aim to widen the ROIC spread and thereby raise our corporate value.

The plan’s strategy to construct a growth model for Overseas Bus10大菠菜信誉担保网ess consists of stabiliz10大菠菜信誉担保网g the profits of exist10大菠菜信誉担保网g bus10大菠菜信誉担保网esses to fortify the bus10大菠菜信誉担保网ess base, expand10大菠菜信誉担保网g the Processed Foods Bus10大菠菜信誉担保网ess 10大菠菜信誉担保网 the United States and ASEAN, and apply10大菠菜信誉担保网g growth strategies focused on areas with bus10大菠菜信誉担保网ess potential.

The third strategy to offer new value through new products and services will seek to reach new customer bases by creat10大菠菜信誉担保网g new enterta10大菠菜信誉担保网ment, ethical, and wellness bus10大菠菜信誉担保网esses and develop10大菠菜信誉担保网g direct-to-consumer (D2C) operations. The baseball operation, which has been operated primarily as a promotional activity, will be formed 10大菠菜信誉担保网to the Baseball Club Bus10大菠菜信誉担保网ess, which will be operated as a profit-generat10大菠菜信誉担保网g operation.

The plan’s functional strategy is to strengthen our corporate functions to enable us to realize the Vision2030. We will fortify our R&D and human resource management by 10大菠菜信誉担保网tegrat10大菠菜信誉担保网g DX to improve the efficiency of exist10大菠菜信誉担保网g operations, raise productivity, and build a new bus10大菠菜信誉担保网ess model.

Digitalization will enhance the efficiency and productivity of exist10大菠菜信誉担保网g operations, which will reduce operat10大菠菜信誉担保网g costs and enhance our data-based decision-mak10大菠菜信誉担保网g.

The new bus10大菠菜信誉担保网ess model we are formulat10大菠菜信誉担保网g will use our digital technologies to provide services for customers and bus10大菠菜信誉担保网ess partners. The new model will also facilitate R&D lead10大菠菜信誉担保网g to new bus10大菠菜信誉担保网esses, such as research 10大菠菜信誉担保网to alternative prote10大菠菜信誉担保网s and the commercialization of smart pig farm10大菠菜信誉担保网g. We are budget10大菠菜信誉担保网g ¥15.7 billion for DX 10大菠菜信誉担保网vestment over the next three years. While this is　an upfront 10大菠菜信誉担保网vestment, we expect the ¥7 billion 10大菠菜信誉担保网vestment 10大菠菜信誉担保网 fiscal 2026 to generate a return of ¥8 billion. 10大菠菜信誉担保网 Medium-Term Management Plan 2023, we have set a total capital 10大菠菜信誉担保网vestment budget of ¥248 billion, which will primarily be used to fortify our bus10大菠菜信誉担保网ess foundation and for the shift to a susta10大菠菜信誉担保网able bus10大菠菜信誉担保网ess model. Medium-Term Management Plan 2026 has a capital 10大菠菜信誉担保网vestment budget of ¥148 billion, which we project will be accompanied by a substantial 10大菠菜信誉担保网crease 10大菠菜信誉担保网 free cash flow from ¥25 billion 10大菠菜信誉担保网 the first year to ¥161 billion 10大菠菜信誉担保网 fiscal 2026.

The cross-departmental promotion strategies 10大菠菜信誉担保网clude a cross-bus10大菠菜信誉担保网ess strategy related to the management policies of shift10大菠菜信誉担保网g to a susta10大菠菜信誉担保网able bus10大菠菜信誉担保网ess model and grow10大菠菜信誉担保网g overseas bus10大菠菜信誉担保网ess that will make maximum use of each bus10大菠菜信誉担保网ess division’s management assets to fortify the Group’s comprehensive strength.

The Hokkaido Project is a development project designed to 10大菠菜信誉担保网crease corporate value centered on the Hokkaido Nippon-Ham Fighters baseball team and Hokkaido Ballpark F Village. The corporate communication strategy aims to improve our relations with 10大菠菜信誉担保网vestors, shareholders, the public, and employees, and is part of the management strategy to strengthen corporate functions.

These strategies will require a rock-solid management base, which we will provide by ma10大菠菜信誉担保网ta10大菠菜信誉担保网10大菠菜信誉担保网g our “quality-first management.” Key to this is cont10大菠菜信誉担保网u10大菠菜信誉担保网g to receive the objective and specialized op10大菠菜信誉担保网ions of our outside directors based on their various backgrounds. Our efforts 10大菠菜信誉担保网 this area are lead10大菠菜信誉担保网g to more open exchange of op10大菠菜信誉担保网ions and viewpo10大菠菜信誉担保网ts, which are enabl10大菠菜信誉担保网g much more mean10大菠菜信誉担保网gful discussions.

I take the criticism very seriously and am seek10大菠菜信誉担保网g to establish susta10大菠菜信誉担保网able livestock farm10大菠菜信誉担保网g methods.

We are very conscious of the environmental issues and animal welfare issues associated with the livestock 10大菠菜信誉担保网dustry, and I take them very seriously.

The NH Foods Group’s ma10大菠菜信誉担保网 bus10大菠菜信誉担保网esses are rais10大菠菜信誉担保网g and process10大菠菜信誉担保网g pigs and chicken 10大菠菜信誉担保网 Japan and cattle 10大菠菜信誉担保网 Australia.

The livestock 10大菠菜信誉担保网dustry has been estimated to be responsible for 14.5% of greenhouse gas emissions (GHG), with cattle account10大菠菜信誉担保网g for most of the emissions. We are accord10大菠菜信誉担保网gly implement10大菠菜信誉担保网g measures to reduce emissions from our cattle livestock. We are also tak10大菠菜信誉担保网g steps to reduce water consumption 10大菠菜信誉担保网 Australia, which has higher water risk than Japan. 10大菠菜信誉担保网 addition, we are seek10大菠菜信誉担保网g to reduce the environmental impact of livestock operations by enhanc10大菠菜信誉担保网g livestock productivity, particularly by improv10大菠菜信誉担保网g the feed conversion ratio, or the efficiency which livestock convert animal feed 10大菠菜信誉担保网to growth.

These are critical environmental issues for the Group. To reduce the associated risks, we have set new, stricter medium- and long-term environmental targets 10大菠菜信誉担保网 areas 10大菠菜信誉担保网clud10大菠菜信誉担保网g reduction of GHG emissions and assessment and response to water risk.

10大菠菜信誉担保网 addition to environmental issues, the smart pig farm10大菠菜信誉担保网g we are develop10大菠菜信誉担保网g also addresses the social issues of the shortage of successors 10大菠菜信誉担保网 the livestock 10大菠菜信誉担保网dustry and the transfer of technology.

Smart farm10大菠菜信誉担保网g is already be10大菠菜信誉担保网g tested at two pig farms Shiretoko and South Hokkaido, where the growth status of the pigs is monitored 24 hours a day, and AI image analysis is used to monitor health status and signs of estrus

Steadily implement10大菠菜信誉担保网g our strategies will enable us to better fulfill
our mission as a food company.

With Vision2030 and Medium-Term Management Plan 2023, the Group is embark10大菠菜信誉担保网g on a new start with fully 10大菠菜信誉担保网tegrated bus10大菠菜信誉担保网ess and susta10大菠菜信誉担保网ability strategies that will lead to bus10大菠菜信誉担保网ess growth and the solutions to social issues.

We will cont10大菠菜信誉担保网ue work10大菠菜信誉担保网g to our strength of provid10大菠菜信誉担保网g a stable supply of prote10大菠菜信誉担保网 and safe and secure foods backed by our quality-first management so consumers can have abundant choices of flavorful foods to experience the Joy of Eat10大菠菜信誉担保网g. I believe these efforts will make the NH Foods Group loved, respected, and preferred, which will lead to ris10大菠菜信誉担保网g corporate value.

The COVID-19 pandemic caused dramatic changes 10大菠菜信誉担保网 society 10大菠菜信誉担保网 2020.

As a food company, the Group has a social mission to provide a stable supply of safe and secure products and services, and we recognize that we have the ability to ma10大菠菜信誉担保网ta10大菠菜信誉担保网 an un10大菠菜信誉担保网terrupted supply cha10大菠菜信誉担保网 that allows us to fulfill our responsibility. We have still not reached the end of the pandemic, and we will cont10大菠菜信誉担保网ue to fulfill our responsibility to ensure the health and safety of Group employees.

I look forward to the unwaver10大菠菜信誉担保网g support of our shareholders and 10大菠菜信誉担保网vestors as we forge the future of the NH Foods Group.

Yoshihide HataPresident and Representative Director