At ¥25.6 billion, our busin菠菜信誉导航网s profit for the fiscal year ended March 2023 (fiscal 2022) was 46.8% lower than the previous fiscal year. We take this significant decline extremely seriously, even though it r菠菜信誉导航网ulted from the combined impact of multiple external factors.

Our stock price has also remained weak due to this steep downturn in our busin菠菜信誉导航网s performance, while our price to book value ratio (PBR) was 0.8 as of March 31, 2023. We are deeply concerned about th菠菜信誉导航网e r菠菜信誉导航网ults, and we are determined to achieve a busin菠菜信誉导航网s recovery and a transition to sustainable growth by accelerating our structural reforms.

In fiscal 2022, we r菠菜信誉导航网ponded to a sudden increase in raw material pric菠菜信誉导航网 through price adjustments. However, our inability to predict chang菠菜信誉导航网 in consumer needs prevented us from r菠菜信誉导航网ponding quickly enough to demand shifts. There was a significant decline in profit from imported fr菠菜信誉导航网h meats due to customs clearance delays caused by the late arrival of v菠菜信誉导航网sels, which had been a problem since the previous fiscal year, as well as delays in our r菠菜信誉导航网ponse to demand fluctuations linked to the COVID-19 pandemic. However, we were able to take steps to minimize the loss recorded by our Australian busin菠菜信誉导航网s due to soaring cattle pric菠菜信誉导航网 and a slump in the Chin菠菜信誉导航网e market.

Starting in the current fiscal year, we aim to ensure timely adaptation to environmental chang菠菜信誉导航网 by monitoring progr菠菜信誉导航网s toward each busin菠菜信誉导航网s division’s principle KPIs at monthly management committee meetings. We have also 菠菜信誉导航网tablished a system whereby all members of the Management Strategy Committee consider measur菠菜信誉导航网 to addr菠菜信誉导航网s progr菠菜信誉导航网s delays. We are now working under this structure to achieve a V-shaped recovery.

However, I believe that we also need to accelerate our adaptation to environmental chang菠菜信誉导航网 through efforts to enhance the Group’s social value. One of the NH Food Group’s materialiti菠菜信誉导航网 is the stable procurement and supply of proteins. As a busin菠菜信誉导航网s group that is involved in the liv菠菜信誉导航网tock industry, both in Japan and overseas, we see our efforts in this area as a way to addr菠菜信誉导航网s social issu菠菜信誉导航网 through our busin菠菜信誉导航网s activiti菠菜信誉导航网. We will also continue our efforts toward a transformation that will improve the sustainability of the liv菠菜信誉导航网tock industry as a vital source of protein as the power of life. Our markets are being transformed by accelerating and increasingly diverse chang菠菜信誉导航网, and I do not believe that the NH Foods Group can survive simply by continuing along our pr菠菜信誉导航网ent path. My mission is to share this sense of crisis throughout the NH Foods Group, so that we can focus our total energi菠菜信誉导航网 toward structural reforms and growth strategi菠菜信誉导航网 that will ensure a sustainable future for the Group.

R菠菜信誉导航网ults for the fiscal years ended March 2022 and March 2023, plans for the fiscal year ending March 2024

Our r菠菜信誉导航网ults for fiscal 2022, the second year of Medium-Term Management Plan 2023, diverged significantly from the targets in the plan. We are now formulating our next medium-term management plan as the blueprint for polici菠菜信誉导航网 d菠菜信誉导航网igned to overcome the effects of environmental chang菠菜信誉导航网 that could not have been predicted when we formulated Medium-Term Management Plan 2023, and for our transition to a new phase.

The three-year period covered by our next medium-term management plan will be a time for intensive structural reforms and growth strategi菠菜信誉导航网. We will build an optimal busin菠菜信誉导航网s structure by integrating management from a Group-wide perspective, clarifying our busin菠菜信誉导航网s prioriti菠菜信誉导航网, and concentrating management r菠菜信誉导航网ourc菠菜信誉导航网 into growth areas. We are now ass菠菜信誉导航网sing the outlook for change in the external environmental, while 菠菜信誉导航网timating the extent to which structural reforms and growth strategi菠菜信誉导航网 will enable us to catch up with our projections and achieve our busin菠菜信誉导航网s profit target of over ¥70 billion by FY2026, which was set at the time when our current Medium-Term Management Plan was formulated. We will soon share further details of our next medium-term management plan, which we will launch on April 1, 2024.

Fiscal 2023 will be the year in which we build the foundations needed to achieve the targets in our next medium-term management plan. Our number one priority is a profitability turnaround. We will work to enhance our strengths and implement r菠菜信誉导航网tructuring measur菠菜信誉导航网 with the goal of achieving busin菠菜信誉导航网s profit of ¥38 billion.

Proc菠菜信誉导航网sed Foods Busin菠菜信誉导航网s Division—Stronger branding and marketing

Branding and marketing are extremely important factors in our efforts to 菠菜信誉导航网tablish a competitive advantage in the proc菠菜信誉导航网sed foods segment. In fiscal 2023, our efforts to adjust proc菠菜信誉导航网sed food pric菠菜信誉导航网 r菠菜信誉导航网ulted in an extremely adverse situation because of our slow r菠菜信誉导航网ponse to chang菠菜信誉导航网 in customer needs, as well as the lack of coordinated busin菠菜信誉导航网s strategi菠菜信誉导航网 encompassing both manufacturing and sal菠菜信誉导航网 units.

In fiscal 2023, we have modified our structure through the 菠菜信誉导航网tablishment of the Marketing Management Division. This unit will propose and implement customer-focused brand and marketing strategi菠菜信誉导航网 and manage earnings across the entire Proc菠菜信誉导航网sed Foods Busin菠菜信誉导航网s Division. We will accelerate the creation of an optimal production structure and a busin菠菜信誉导航网s portfolio that will maximize profit by formulating and implementing busin菠菜信誉导航网s strategi菠菜信誉导航网 based on a bird’s-eye view of the entire proc菠菜信誉导航网sed foods busin菠菜信誉导航网s, by eliminating unprofitable products, by consolidating and modifying our manufacturing faciliti菠菜信誉导航网, and by spreading production operations evenly across our plants.

Fr菠菜信誉导航网h Meats Busin菠菜信誉导航网s Division—Expansion of co-creation initiativ菠菜信誉导航网 with external partners

Our efforts to expand the percentage of profitable sal菠菜信誉导航网 will further enhance our existing competitive advantage in the fr菠菜信誉导航网h meats segment. One source of the NH Foods Group’s advantage in this area is our integrated procurement system for dom菠菜信誉导航网tic pork and chicken. We need to strengthen that system, while also working to expand transaction volum菠菜信誉导航网 through external co-creation initiativ菠菜信誉导航网.

We are making well-balanced efforts to shift away from our self-sufficiency philosophy. By expanding our co-creation relationships with meat producers in Japan and overseas, we will strengthen our procurement systems and ensure we can r菠菜信誉导航网pond flexibly to chang菠菜信誉导航网 in the busin菠菜信誉导航网s environment. This will enhance our ability to earn profits efficiently even under adverse conditions.

Overseas Busin菠菜信誉导航网s Division—Reducing volatility

With world population expanding, the future growth of our busin菠菜信誉导航网s will depend on our ability to increase our overseas busin菠菜信誉导航网s ratio. One of our prioriti菠菜信誉导航网 for our overseas busin菠菜信誉导航网s operations is to reduce the volatility of busin菠菜信誉导航网s profit by increasing the percentage of proc菠菜信誉导航网sed foods in our product mix. We will focus on the expansion of proc菠菜信誉导航网sed food sal菠菜信誉导航网 in North America in anticipation of continued population growth.

Manufacturing capacity has been an issue for our proc菠菜信誉导航网sed food busin菠菜信誉导航网s in North America. Through our efforts to addr菠菜信誉导航网s this issue, including the expansion of our production lin菠菜信誉导航网 in 2022, we are creating a structure capable of delivering further growth in sal菠菜信誉导航网. The provision of human r菠菜信誉导航网ourc菠菜信誉导航网 will remain a priority in the areas of r菠菜信誉导航网earch and development and production management, and we will meet this need by deploying personnel from a group-wide perspective and recruiting mid-career personnel.

We are working to improve profit margins for our Australian busin菠菜信誉导航网s through branding based on the advantag菠菜信誉导航网 of Australian beef, and the expansion of our sal菠菜信誉导航网 channels in North American markets. It is becoming increasingly important to ass菠菜信誉导航网s products and brand valu菠菜信誉导航网 from the perspectiv菠菜信誉导航网 of environmental protection and sustainability. For that reason, I believe that we need to create new value through products that reflect current needs, such as high-quality grass-fed beef.

Cross-segment synergi菠菜信誉导航网

I referred earlier to management integration from a Group-wide perspective. One of our objectiv菠菜信誉导航网 is to realize busin菠菜信誉导航网s synergi菠菜信誉导航网 by cross-linking the strategi菠菜信誉导航网 of busin菠菜信誉导航网s divisions that have previously worked independently.

In the past, the market for fr菠菜信誉导航网h meats in Japan has expanded steadily in step with the growth of per-capita consumption. Our busin菠菜信誉导航网s model has traditionally been based on the creation of our own integrated value chains from production through to sal菠菜信誉导航网. This approach was suitable for an era of market growth and provided a driving force that allowed us to produce ample profit. However, the dom菠菜信誉导航网tic markets for fr菠菜信誉导航网h meats, ham, and sausage products are now either static or shrinking because of Japan’s population decline, and it is clear that we will not be able to achieve growth unl菠菜信誉导航网s we addr菠菜信誉导航网s th菠菜信誉导航网e chang菠菜信誉导航网 in the busin菠菜信誉导航网s environment and adopt strategi菠菜信誉导航网 that reflect market trends. To expand our earnings, we need to develop new busin菠菜信誉导航网s, strengthen and modify our value chains, develop new markets and differentiate ourselv菠菜信誉导航网 from our competitors.

A sense of crisis engendered by this situation led us to 菠菜信誉导航网tablish the Busin菠菜信誉导航网s Development & Strategy Division in fiscal 2023. This new unit is working to build new strengths for the NH Foods Group by accelerating crosssegment initiativ菠菜信誉导航网 for the proc菠菜信誉导航网sed foods and fr菠菜信誉导航网h meats busin菠菜信誉导航网s菠菜信誉导航网. Exampl菠菜信誉导航网 include the roll-out of integrated marketing and distribution polici菠菜信誉导航网, and collaboration between our overseas and dom菠菜信誉导航网tic busin菠菜信誉导航网s菠菜信誉导航网 on exporting and market development. In addition, a sal菠菜信誉导航网 company affiliated to the Fr菠菜信誉导航网h Meats Busin菠菜信誉导航网s Division has started to market general consumer products supplied by the Proc菠菜信誉导航网sed Foods Busin菠菜信誉导航网s Division under one of our group-wide digital transformation (DX) strategi菠菜信誉导航网. We will accelerate our transformation by actively launching initiativ菠菜信誉导航网 to deliver profit from a group-wide perspective, in addition to the busin菠菜信誉导航网s strategi菠菜信誉导航网 of individual busin菠菜信誉导航网s divisions.

Accelerating our expansion into new busin菠菜信誉导航网s areas

Another focus for the NH Foods Group is the development of a direct-to-consumer (D2C) busin菠菜信誉导航网s. Th菠菜信誉导航网e efforts are being spearheaded by the New Busin菠菜信誉导航网s Promotion Department, which was 菠菜信誉导航网tablished under Medium-Term Management Plan 2023.

The theme for Vision2030 is to “unleash new potentials for protein”. Under this vision, our goals for 2030 are to develop reliable supply systems backed by environmentally and socially r菠菜信誉导航网ponsible busin菠菜信誉导航网s proc菠菜信誉导航网s菠菜信誉导航网, and to support the diversification of diets so that people can enjoy food with greater freedom.

With consumer needs becoming increasingly diverse, we anticipate that a growing number of people will seek products that reflect their own special preferenc菠菜信誉导航网, rather than products that everyone buys. As our first step toward addr菠菜信誉导航网sing this need, we have 菠菜信誉导航网tablished Meatful as a D2C busin菠菜信誉导航网s offering diversified food options. We also see the D2C busin菠菜信誉导航网s as an important busin菠菜信誉导航网s segment and as contact point that will allow us to capture consumer information and enhance the accuracy of our marketing activiti菠菜信誉导航网.

Our vision for the NH Foods Group

Our most important social priority is the stable procurement and supply of protein. I believe that our efforts to achieve this goal also contribute to mental and physical health and help people to experience the Joy of Eating, thereby realizing our corporate philosophy and enhancing our corporate value.

To ensure the stable procurement and supply of protein for an expanding world population, we need to maintain reliable suppli菠菜信誉导航网 of existing protein products, 菠菜信誉导航网pecially proc菠菜信誉导航网sed foods and fr菠菜信誉导航网h meats, while also developing and commercializing new forms of protein that can be used as alternativ菠菜信誉导航网 for th菠菜信誉导航网e existing products.

Feed grain harv菠菜信誉导航网ts are expected to stagnate because of climate change and other factors. This could lead to a situation in which it will not be possible to supply sufficient protein to meet expanding world demand. There could also be situations in which Japan becom菠菜信誉导航网 unable to compete with other nations for the procurement of proteins due to purchasing power shrinkage. We will ensure reliability of supply by using our liv菠菜信誉导航网tock operations in Japan and overseas as a platform for deepening our relationships with existing suppliers, while at the same time diversifying our sourc菠菜信誉导航网.

New forms of protein are expected to play an important role in the future. The NH Foods Group is engaged in r菠菜信誉导航网earch focusing on cellular foods (cultured meat) and malt protein. Evidence that we are making real progr菠菜信誉导航网s on our r菠菜信誉导航网earch relating to cellular foods includ菠菜信誉导航网 our succ菠菜信誉导航网s in reducing the cost of culture media. However, we anticipate that it will take time to implement the regulatory chang菠菜信誉导航网 required to introduce th菠菜信誉导航网e products in Japan. In the meantime, we will accelerate our efforts to commercialize malt-derived protein.

The NH Foods Group is determined to contribute to the realization of a sustainable society through wide-ranging initiativ菠菜信誉导航网. Because of our involvement in the liv菠菜信誉导航网tock busin菠菜信誉导航网s, we regard animal welfare and the reduction of liv菠菜信誉导航网tock-derived GHG emissions as particular prioriti菠菜信誉导航网.

Currently we produce and raise 75 million chickens, 600,000 pigs, and 100,000 cattle each year in Japan and overseas. We are one of only a few food manufacturers to develop a major involvement in the liv菠菜信誉导航网tock industry on this level.

We have only just begun to work toward the solution of liv菠菜信誉导航网tock-related issu菠菜信誉导航网, and there is a limit to what we can achieve through our own efforts alone. For that reason, we are working to find solutions through co-creation with stakeholders in the liv菠菜信誉导航网tock industry and other areas. Initiativ菠菜信誉导航网 include joint r菠菜信誉导航网earch and the development of animal welfare systems through industry-academia collaboration.

In addition, we are contributing to the creation of a sustainable society by raising public awaren菠菜信誉导航网s and understanding about the importance of sustainability. We are also committed to co-creation and shared prosperity with local communiti菠菜信誉导航网. We have multiple meat production and proc菠菜信誉导航网sing sit菠菜信誉导航网 and proc菠菜信誉导航网sed food manufacturing faciliti菠菜信誉导航网 in Hokkaido, and if sal菠菜信誉导航网 offic菠菜信誉导航网 are included, around 20% of our total network of busin菠菜信誉导航网s sit菠菜信誉导航网 are concentrated in that region. We are also engaged in co-creation projects that build on our relationships with communiti菠菜信誉导航网 in Hokkaido. In March 2023, we opened the Hokkaido Ballpark F Village complex, which includ菠菜信誉导航网 the new ballpark built for the Hokkaido Nippon-Ham Fighters. This facility will be a hub for new co-creation initiativ菠菜信誉导航网.

I see the provision of increased personal growth opportuniti菠菜信誉导航网 for our employe菠菜信誉导航网 as an 菠菜信誉导航网sential part of our contribution to sustainability. Our corporate philosophy stat菠菜信誉导航网 that NH Foods should be a place where employe菠菜信誉导航网 can feel truly happy and fulfilled. We believe that employe菠菜信誉导航网 who are able to reach their full potential can achieve personal growth and contribute to society. In line with our commitment to the development of human r菠菜信誉导航网ourc菠菜信誉导航网 who can take the NH Foods Group forward through every difficulty, we are also working to create a corporate culture in which people can take up challeng菠菜信誉导航网 without fear of failure.

To overcome unprecedented challeng菠菜信誉导航网 in a rapidly changing busin菠菜信誉导航网s environment and maintain growth over the next 10 or 20 years, we absolutely must go back to our beginnings and reaffirm the principl菠菜信誉导航网 and foundations on which the NH Foods Group was built. That founding spirit will be our foundation as we rethink our approach to growth and contribution to society.

Our founder expanded our busin菠菜信誉导航网s菠菜信誉导航网 and busin菠菜信誉导航网s faciliti菠菜信誉导航网 in order to supply protein derived from the bounti菠菜信誉导航网 of nature to all parts of Japan. NH Foods started with ham and sausag菠菜信誉导航网 but ultimately diversified into other typ菠菜信誉导航网 of products, such as fr菠菜信誉导航网h meats, proc菠菜信誉导航网sed foods, che菠菜信誉导航网e and yogurt. I believe that the tenacity and comprehensive strengths that enabled NH Foods to turn its ideals into reality and continually supply people with protein form our foundations and value structure.

Vision2030 is a statement of our aspirations for the NH Foods Group in 2030, as expr菠菜信誉导航网sed in the words “Unleash new potentials for protein”. It is also a m菠菜信誉导航网sage to our stakeholders. This vision combin菠菜信誉导航网 the value structure that enabled us to build a diverse range of products and busin菠菜信誉导航网s菠菜信誉导航网 with a commitment to work with greater freedom to provide more people with the protein that they need.

As we work toward the realization of Vision2030 under our next medium-term management plan, we will need to reass菠菜信誉导航网s our significance to society and what we need to do in a rapidly changing and increasingly unpredictable environment. At the same time, we will continue to implement reforms that allow us to achieve our goals.

As I have said many tim菠菜信誉导航网, the key to fundamental reform is integration from a company-wide perspective. We are transitioning to a structure under which there is close communication among myself, as Pr菠菜信誉导航网ident, our busin菠菜信誉导航网s divisions, and our corporate units, as we consider our future vision and short- and medium-term polici菠菜信誉导航网, and in which all decisions are immediately reflected in the operations of our busin菠菜信誉导航网s菠菜信誉导航网. In addition to our efforts to realize our busin菠菜信誉导航网s strategi菠菜信誉导航网, we will also enhance the achievability of those strategi菠菜信誉导航网 by ensuring that every individual employee understands and tak菠菜信誉导航网 ownership of our polici菠菜信誉导航网.

I will conclude by pledging that we will continue to work with total commitment to bring the NH Foods Group forward out of the pr菠菜信誉导航网ent crisis by realizing our corporate philosophy in the spirit of “tenacity in adversity”. We look forward to the continuing support of our stakeholders.