Ezaki Glico : >> Annual Report 2022

Annual Report 2022

(Fiscal year ended 31st December, 2022)

Contents

Five-Year Summary	1
Message from the President	2
Operating Results and Financial Position	3
Consolidated Financial Statements	9
Corporate Information	80

Five-Year Summary

Consolidated

			Millions				Thousands of
			of yen				U.S. dollars
	December December December December	March		December
	2022	2021	2020	2019	2019		2022
Net sales	303,921	338,571	344,048	288,187	350,270	2,290,286
Profit before income taxes	13,936	20,806	19,683	20,183	18,798	105,018
Profit attributable	8,099	13,519	11,836	12,047	11,844	61,032
to owners of the parent
			Yen
Per share of common stock:
Profit *	126.59	208.44	182.48	185.31	180.02	0.95
Cash dividends	80.00	70.00	65.00	60.00	60.00	0.60
			Millions
			of yen
Balance sheet data:
Shareholders' equity	221,046	223,470	213,682	204,169	201,098	1,665,757
Total assets	369,056	356,745	340,081	343,812	348,452	2,781,130

• Diluted profit per share has not been disclosed because no dilutive potential shares with dilutive effect existed.
• For the fiscal period ended 31st December, 2019, the period for consolidated accounting of the Company and its consolidated subsidiaries whose fiscal year end was on 31st March is the nine-month period from 1st April, 2019 until 31st December, 2019 following the change of the fiscal year end.
• 'Accounting Standard for Revenue Recognition' (Accounting Standards Board of Japan ('ASBJ') Statement No. 29, 31st March, 2020) and implementation guidance have been applied from the beginning of the year ended 31st December, 2022. Major management indicators for the year ended 31st December, 2022 represent figures after applying the accounting standard and implementation guidance.
• Fractional amounts of less than one million yen and one thousand U.S. dollars are rounded off.

1

Message from the President

The forward-looking statements herein are based on judgments made as of the end of the fiscal year under review.

In the fiscal year under review, the Japanese economy showed some signs of recovery partly due to the effects of various policies as economic and social activities started to return to normal thanks to COVID-19 countermeasures, etc. Meanwhile, rising raw material prices, fluctuations in financial and capital markets, and other factors require close attention, and the future outlook remains uncertain.

In light of this situation, our corporate group has worked to strengthen value creation in order to realize our Purpose, "Healthier days, Wellbeing for life." To this end, we have focused on the following initiatives: 1) providing the value of health and constructing a customer-oriented value chain, 2) concentrating research investment in priority areas, and 3) expanding overseas business.

As a result, our Dairy Division and other segments including the health business posted decreased sales from the previous fiscal year after reclassification. However, sales of our Confectioneries and Food Products, Ice Cream, Food Ingredients, and Overseas Divisions increased from the previous fiscal year after reclassification. Consequently, consolidated net sales amounted to ¥303,921 million, an increase of 3.9% from the ¥292,557 million total of the previous fiscal year after reclassification. Regarding earnings, our overall cost-to-sales ratio increased by 1.9 points from the previous fiscal year after reclassification due to the increase in the cost-to-sales ratio of all divisions excluding Food Ingredients Division. In addition, fixed costs increased due to lockdowns in Shanghai, China in the second quarter. Transportation and storage costs also increased due to soaring marine transportation costs.

As a result, operating income amounted to ¥12,845 million, a decrease of ¥6,461 million from the previous fiscal year after reclassification (¥19,307 million). Ordinary income was ¥13,646 million, a decrease of ¥8,062 million from the previous fiscal year after reclassification (¥21,708 million) due mainly to the decrease in operating income and foreign exchange losses. Profit attributable to owners of the parent was ¥8,099 million, a decrease of ¥5,419 million from the previous fiscal year after reclassification (¥13,519 million).

Although we expect increasing difficulties in our business environment, we will unite the efforts of all Group companies to improve performance and meet the expectations of our shareholders.

Your continuing support will be deeply appreciated.

May 2023

Katsuhisa Ezaki, Chairman

2

1. Operating Results and Financial Position

(1) Operating Results

The operating results of each segment are as follows.

Results by segment

(Unit: millions of yen, %)

Segment		Net Sales				Operating Income
Previous	Fiscal year		vs. Previous	YoY	Previous	Fiscal year	vs. Previous	YoY
	fiscal year	under review		fiscal year	(%)	fiscal year	under review	fiscal year	(%)
Confectioneries
and Food	65,634	66,717		1,082	1.6	5,098	5,004	(93)	(1.8)
Products
Ice Cream	77,246	80,097		2,850	3.7	3,799	2,717	(1,081)	(28.5)
Dairy	70,518	67,364		(3,154)	(4.5)	2,095	(257)	(2,352)	−
Food	10,500	11,158		657	6.3	919	1,238	319	34.8
Ingredients
Overseas	49,920	59,902		9,982	20.0	3,915	1,192	(2,723)	(69.6)
Others	18,735	18,682		(53)	(0.3)	1,525	505	(1,020)	(66.9)
Adjusted amount	−	−		−	−	1,954	2,445	491	25.1
Total	292,557	303,921		11,364	3.9	19,307	12,845	(6,461)	(33.5)

Note: The adjusted amount in the above table includes the eliminated amount of intersegment transactions and company-wide expenses not allocated to any reporting segment. The company-wide expenses mainly include the selling, general and administrative expenses not allocated to any reporting segment.

[Confectioneries and Food Products Division]

Although sales of 'Kobe Roasted Chocolate' decreased from the previous fiscal year after reclassification, sales of 'Pocky' and 'Pretz' increased from the previous fiscal year after reclassification. As a result, divisional sales amounted to ¥66,717 million, a 1.6% increase from the previous fiscal year after reclassification (¥65,634 million).

As for divisional profits, cost-to-sales ratio increased. As a result, operating income was ¥5,004 million, a decrease of ¥93 million from the previous fiscal year after reclassification (¥5,098 million).

[Ice Cream Division]

Sales of 'Giant Cone' and 'Ice-no-Mi' decreased from the previous fiscal year after reclassification, while sales of 'Seventeen Ice' and sales in wholesale sales subsidiaries increased from the previous fiscal year after reclassification. As a result, divisional sales totaled ¥80,097 million, a 3.7% increase from the previous fiscal year after reclassification (¥77,246 million).

As for divisional profits, cost-to-sales ratio increased. As a result, operating income was ¥2,717 million, a decrease of ¥1,081 million compared to the previous fiscal year after reclassification (¥3,799 million).

[Dairy Division]

While sales of 'Putchin Pudding' increased from the previous fiscal year after reclassification, sales of 'BifiX Yogurt' and 'Choushoku Ringo (Breakfast Apple) Yogurt' decreased from the previous fiscal year after reclassification. As a result, divisional sales totaled ¥67,364 million, a decrease of 4.5% from the previous fiscal year after reclassification (¥70,518 million).

As for divisional profits, sales decreased and cost-to-sales ratio increased. As a result, operating loss was ¥257 million, a decrease of ¥2,352 million from the previous fiscal year after reclassification (operating income of ¥2,095 million).

3

[Food Ingredients Division]

Sales of 'GMIX' wheat protein increased from the previous fiscal year after reclassification. As a result, divisional sales were ¥11,158 million, a 6.3% increase from the previous fiscal year after reclassification (¥10,500 million).

As for divisional profits, gross profit increased due to the increase in sales. As a result, operating income was ¥1,238 million, an increase of ¥319 million from the previous fiscal year after reclassification (¥919 million).

[Overseas Division]

Sales by region in China, the ASEAN region and the U.S. increased from the previous fiscal year after reclassification. As a result, divisional sales were ¥59,902 million, a 20.0% increase from the previous fiscal year after reclassification (¥49,920 million).

As for divisional profits, fixed costs increased during periods of lockdowns in Shanghai, China and transportation and storage costs also increased. As a result, operating income was ¥1,192 million, a decrease of ¥2,723 million from the previous fiscal year after reclassification (¥3,915 million).

[Others (including health business)]

While sales of Office Glico and 'Almond Koka' increased from the previous fiscal year after reclassification, sales of 'SUNAO' decreased from the previous fiscal year after reclassification. As a result, sales in this segment totaled ¥18,682 million, a 0.3% decrease from the previous fiscal year after reclassification (¥18,735 million). Out of the above, for the health business, sales were ¥13,532 million, a 2.3% decrease from the previous fiscal year after reclassification (¥13,845 million).

As for profits, cost-to-sales ratio increased. As a result, operating income was ¥505 million, a decrease of ¥1,020 million from the previous fiscal year after reclassification (¥1,525 million).

(2) Financial Position

Assets

As of 31st December, 2022, current assets were ¥178,168 million, a decrease of ¥458 million from the end of the previous fiscal year. The main component of this decrease was a ¥10,320 million decrease in cash and deposits, despite a ¥2,474 million increase in notes and accounts receivable, trade and a ¥2,861 million increase in merchandise and finished goods. Non-current assets were ¥190,888 million, an increase of ¥12,769 million from the end of the previous fiscal year. The main components of this increase were a ¥4,163 million increase in machinery, equipment and vehicles, a ¥1,157 million increase in construction in progress, and a ¥5,725 million increase in software in progress. Consequently, total assets were ¥369,056 million, an increase of ¥12,311 million compared to the end of the previous fiscal year.

Liabilities

As of 31st December, 2022, current liabilities were ¥79,875 million, an increase of ¥7,724 million from the end of the previous fiscal year. The main component of this increase was a ¥4,056 million increase in notes and accounts payable, trade. Long-term liabilities were ¥44,421 million, an increase of ¥1,004 million from the end of the previous fiscal year. Consequently, total liabilities were ¥124,296 million, an increase of ¥8,729 million compared to the end of the previous fiscal year.

Net Assets

As of 31st December, 2022, net assets were ¥244,760 million, an increase of ¥3,582 million compared to the end of the previous fiscal year. Main contributors to this increase included a profit attributable to owners of the parent amounting to ¥8,099 million and an increase of ¥6,998 million in translation adjustments, which were offset by a decrease of ¥4,816 million due to cash dividends. Consequently, shareholders' equity ratio was 66.2%, down 1.3 percentage points from the end of the previous fiscal year.

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