House Foods : Consolidated Financial Results for the FY2022 (Ended March 31, 2023)

The original disclosure in Japanese was released on May 10, 2023 at 15:00

May 10, 2023

Consolidated Financial Results (Japanese Accounting Standards)

for the FY2022 (Ended March 31, 2023)

Company name:	House Foods Group Inc.
Stock exchange listing:	Tokyo Stock Exchange
Stock code:	2810
URL:	https://housefoods-group.com
Representative:	Hiroshi Urakami, President
Contact:	Nobuhide Nakagawa, General Manager, Public & Investors Relations Division
	Tel. [phone]

Scheduled date of ordinary shareholders' meeting:	June 27, 2023
Scheduled date of commencement of dividend payment:	June 28, 2023
Scheduled date for filing of annual securities report:	June 27, 2023
Supplementary documents for financial results:	Yes
Financial results briefing:	Yes (for analysts and institutional investors)

(Amounts of less than one million yen are rounded to the nearest million yen.)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 - March 31, 2023)

(1) Consolidated Results of Operations											(Percentages show year-on-year changes.)
		Net sales			Operating profit			Ordinary profit		Profit attributable to
								owners of parent
	Year ended	Million yen	%	Million yen		%		Million yen	%			Million yen	%
	275,060	8.6	16,631		(13.5)			18,253	(13.6)		13,703	(1.8)
	March 31, 2023
	Year ended	253,386	1.3	19,227		(1.0)			21,125	6.5		13,956	59.5
	March 31, 2022
	(Note) Comprehensive income:			15,973 million yen (-26.0%) for the fiscal year ended March 31, 2023
					21,581 million yen (75.7%) for the fiscal year ended March 31, 2022
		Profit per share		Profit per share		Return on equity			Ratio of		Ratio of
					ordinary profit		operating profit
		(basic)			(diluted)
										to total assets		to net sales
	Year ended	Yen		Yen						%				%		%
	139.95			-			5.1				4.7			6.0
	March 31, 2023
	Year ended	139.75			-			5.3				5.6			7.6
	March 31, 2022
	(Reference) Share of profit (loss) of entities accounted for using equity method:
					139 million yen for the fiscal year ended March 31, 2023
					(322) million yen for the fiscal year ended March 31, 2022
(2) Consolidated Financial Position
		Total assets			Net assets					Equity ratio		Net assets per share
	As of	Million yen		Million yen					%				Yen
	396,732			301,343					68.6			2,791.64
	March 31, 2023
	As of	382,021			298,567					70.4			2,700.99
	March 31, 2022
	(Reference) Shareholders' equity:			As of March 31, 2023:	272,293 million yen
					As of March 31, 2022:	268,966 million yen
(3) Consolidated Cash Flows
		Cash flows from	Cash flows from			Cash flows from		Cash and cash equivalents
		operating activities	investing activities			financing activities		at end of fiscal year
	Year ended	Million yen		Million yen					Million yen			Million yen
		19,483			(21,467)					(12,739)				62,682
	March 31, 2023
	Year ended		16,140			(10,398)					(10,068)				75,705
	March 31, 2022

2. Dividends

		Dividend per share			Total		Ratio of
						Payout ratio	dividends to
		End of				dividends
	End of	End of			(consolidated)	net assets
	second	Year-end	Annual	(annual)
	first quarter	third quarter		(consolidated)
	quarter
Year ended	Yen	Yen	Yen	Yen	Yen	Million yen	%	%
-	23.00	-	23.00	46.00	4,581	32.9	1.7
March 31,
2022
Year ended	-	23.00	-	23.00	46.00	4,487	32.9	1.6
March 31,
2023
Year ending
March 31,	-	23.00	-	23.00	46.00		25.5
2024
(forecasts)

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2024 (April 1, 2023 - March 31, 2024)

(Percentages show year-on-year changes.)

	Net sales		Operating profit		Ordinary profit	Profit attributable to	Profit per share
							owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Year ending March 31, 2024	304,800	10.8	20,000 20.3		20,900	14.5	17,500	27.7	180.07

* Notes

1. Changes of important subsidiaries during the period (changes of specific subsidiaries in accordance with changes in the scope of consolidation): Yes

New: 3 companies (Company Name) House Foods Group Asia Pacific Co., Ltd.

Keystone Natural Holdings, LLC

Nature Soy, LLC

1. Changes in accounting policies and changes or restatement of accounting estimates
2. 1. Changes in accounting policies caused by revision of accounting standards: Yes

(ii)	Changes in accounting policies other than (i):	None
(iii)	Changes in accounting estimates:	None
(iv)	Restatement:	None
(Note) Please refer to "4. Consolidated Financial Statements and Key	Notes (5) Notes to Consolidated Financial

Statements, Changes in Accounting Policies" on page 24 of the Accompanying Materials for details.

(3) Number of shares outstanding (common shares):

(i) Number of shares outstanding at end of period (including treasury shares)

As of March 31, 2023:	100,750,620 shares
As of March 31, 2022:	100,750,620 shares

(ii) Number of treasury shares at end of period

As of March 31, 2023:	3,212,078 shares
As of March 31, 2022:	1,169,959 shares

(iii) Average number of shares outstanding during the term

Year ended March 31,	2023	97,913,505 shares
Year ended March 31,	2022:	99,867,791 shares

(Reference) Summary of Non-Consolidated Financial Results

1. Non-Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 - March 31, 2023)

(1) Non-Consolidated Financial Results				(Percentages show year-on-year changes.)
		Net sales		Operating profit	Ordinary profit	Profit
	Year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
	16,271	(27.6)	3,909	(64.7)	4,588	(62.0)	6,787	(48.2)
	March 31, 2023
	Year ended	22,464	6.7	11,066	9.8	12,079	10.2	13,096	23.0
	March 31, 2022
		Profit per share (basic)	Profit per share (diluted)
	Year ended		Yen		Yen
	69.31		-
	March 31, 2023
	Year ended	131.13		-
	March 31, 2022
(2) Non-Consolidated Financial Position
		Total assets		Net assets		Equity ratio		Net assets per share
	As of	Million yen	Million yen		%		Yen
	225,485		189,581		84.1		1,943.65
	March 31, 2023
	As of	222,917		193,625		86.9		1,944.40
	March 31, 2022
	(Reference) Shareholders' equity:	As of March 31, 2023: 189,581 million yen
			As of March 31, 2022: 193,625 million yen

• These consolidated financial results are not included in the scope of audits by certified public accountants or the audit corporation.
• Explanations and other special notes concerning the appropriate use of business results forecasts

• The forward-looking statements such as result forecasts included in this document are based on the information available to the Company at the time of the announcement and on certain assumptions considered reasonable, and the Company makes no representations as to their achievability. Actual results may differ materially from the forecast depending on a range of factors.
  For other matters relating to the forecasts, please refer to "1. Analysis of Operating Results and Financial Position, (4) Future Outlook" on page 5 of the accompanying materials.

Accompanying Materials - Contents

1. Analysis of Operating Results and Financial Position	2
	(1)	Analysis of Operating Results	2
	(2)	Analysis of Financial Position	3
	(3)	Analysis of Cash Flows	4
	(4)	Future Outlook	5
	(5)	Basic Policy on the Payment of Dividends and Dividends for the Fiscal Year under Review and Next Fiscal Year	6
	(6)	Business and Other Risks	7
2. Basic Corporate Management Policy and Issues Facing the Group	12
	(1)	Basic Corporate Management Policy	12
	(2)	Business Environment	12
	(3)	The Company's Medium- to Long-term Management Strategy and the Issues that the Company Needs to Address	12
3. Basic Concept concerning the Selection of Accounting Standards	15
4. Consolidated Financial Statements and Key Notes	16
	(1)	Consolidated Balance Sheets	16
	(2)	Consolidated Statements of Income and Comprehensive Income	18
	(3)	Consolidated Statements of Changes in Equity	20
	(4)	Consolidated Statements of Cash Flows	22
	(5)	Notes to Consolidated Financial Statement	24
		Notes Relating to Assumptions for the Going Concern	24
		Changes in Accounting Policies	24
		Business Combination, etc	24
		Segment Information	26
		Per Share Information	31
		Important Subsequent Events	31
5.	Other Information	32
	(1)	Senior Management Changes	32
6.	Supplementary Information	33
	(1)	Business Results	33
	(2)	Number of Group Companies	33
	(3)	Consolidated Statements of Income	34
	(4)	Consolidated Balance Sheets	38
	(5)	Consolidated Statements of Cash Flows	38
	(6)	Capital Investment	39
	(7)	Depreciation	39
	(8)	Major Management Indicators, etc	39
	(9)	Reference Information	40

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1. Analysis of Operating Results and Financial Position

(1) Analysis of Operating Results

House Foods Group currently conducts business management based on five business segments; however, in terms of strategies for realizing its aspirations, the Group formulates and implements strategies for each of its four value chains (hereinafter referred to as "VC"): Spice VC, Functional Ingredients VC, Soybean VC and Value Added Vegetable VC, based on the theme of striving to become a high quality company that provides "Healthy Life Through Foods" Striving for Four Value Chains set out in the Seventh Medium-term Business Plan.

During the fiscal year under review, the business environment was quite volatile, with the resumption of economic activity after COVID-19 giving rise to a supply-demand gap and various international factors stoking global inflation, divergence in monetary policies, and the depreciation of the yen, and the outlook remained clouded with uncertainty.

To summarize the Group's performance based on its five business segments under such conditions, the Health Food Business, International Food Business and Restaurant Business posted gains in sales and profits as a result of price revisions and improvement of efficiency by Group companies in Japan and overseas to respond to cost increases in raw materials, energy, and personal expenses; however the Spice/Seasoning/Processed Food Business could not fully absorb higher costs through price revisions and reported lower profit. This heavily impacted the overall performance and, totally, sales were up but profits were down.

In addition, the Company made US-based Keystone Natural Holdings into a subsidiary on September 30, 2022, and the consolidated business results of Keystone Natural Holdings are included in the International Food Business from the fourth quarter of the fiscal year under review.

As a result, the Group's operating results were as shown below.

	FY2022
	Amount (million yen)		Year-on-year change (%)
Net sales	275,060		108.6
Operating profit	16,631		86.5
Ordinary profit	18,253		86.4
Profit attributable to owners of parent	13,703		98.2

As a result, the management indicators regarded as important by the Company are as follows.

	FY2021		FY2022
ATO (Asset Turnover)		0.67 times	0.71 times
ROS (Ratio of operating profit to net sales)		7.6%	6.0%
ROA (Ratio of operating profit to total assets)		5.1%	4.3%
ROE (Ratio of profit to equity)		5.3%	5.1%

The following is an overview of results by segment (before the elimination of inter-segment transactions).

	Consolidated net sales	Consolidated operating profit
Segment	(Segment profit (loss))
Amount	Year-on-year	Amount	Year-on-year
	(million yen)	change (%)	(million yen)	change (%)
Spice / Seasoning / Processed Food Business	119,802	102.0	7,915	62.7
Health Food Business	16,520	114.5	1,908	-
International Food Business	48,875	125.0	5,368	102.3
Restaurant Business	48,371	106.5	2,268	151.0
Other Food Related Business	50,699	111.3	1,234	83.4
Subtotal	284,266	108.5	18,693	90.2
Adjustment (elimination)	(9,206)	-	(2,062)	-
Total	275,060	108.6	16,631	86.5

(Note) 1. Adjustment (elimination) comprises profit or loss not distributed to segments and the elimination of inter-segment transactions.

Spice / Seasoning / Processed Food Business

This business segment has always functioned as a core business, underpinning the Group's earnings; however, in the fiscal year under review, the segment was severely impacted by rising prices for raw materials and rising energy costs. Despite revisions to the prices of some products, including core curry roux products, in August 2022, surging costs could not be fully absorbed, leading to lower profits.

As a result of the above, sales in the Spice/Seasoning/Processed Food Business stood at 119,802 million yen, up 2.0% year on year, and operating profit was 7,915 million yen, down 37.3% year on year. As a consequence, the ratio of operating profit to net sales was 6.6%, falling 4.1 percentage point from a year earlier.

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