Itoham Yonekyu : Consolidated Financial Results (Japanese Accounting Standards) for the Six Months Ended September 30, 2021 (Q2 FY 2021)

November 05, 2021

Consolidated Financial Results (Japanese Accounting Standards) for the Six Months Ended September 30, 2021 (Q2 FY 2021)

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Scheduled date for filing of securities report: Scheduled date of commencement of dividend payment: Supplementary documents for financial results: Quarterly results briefing:

Itoham Yonekyu Holdings Inc. Tokyo Stock Exchange

2296

https://www.itoham-yonekyu-holdings.com/

Isao Miyashita, President and Representative Director Kenji Uchiyama, Manager, Investor Relations Section Tel. [phone]

November 12, 2021

-

Yes

Yes(for analysts and institutional investors)

(Amounts of less than one million yen are truncated)

1. Consolidated Financial Results for the Six Months Ended September 30, 2021 (April 1, 2021-September 30, 2021)

(1) Consolidated Results of Operations (Accumulated Total)		(% figures show year-on-year change)
	Net sales		Operating income	Ordinary income	Net income
		attributable
Six months ended	Million Yen	%	Million Yen	%	Million Yen	%	Million Yen	%
September 30, 2021	417,762	―	14,480	―	16,540	―	11,810	―
September 30, 2020	414,623	-4.1	12,625	34.7	13,544	31.5	10,946	58.0

(Note) Comprehensive income:	Six months ended September 30, 2021
	Six months ended September 30, 2020
	Net income per share	Fully diluted net
	income
Six months ended	Yen	Yen
September 30, 2021	40.33	40.31
September 30, 2020	37.15	37.13

12,271 million Yen (－%)

10,895 million Yen (92.7%)

(Note) The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29 ), etc. has been applied since the beginning of the six months of the consolidated fiscal year under review. As a result, the accounting treatment of revenue

differs from that of the six months of the previous fiscal year. Therefore, Consolidated Financial Results is provided without stating the amount of the year-on-year comparison (%) .

(2) Consolidated financial position

		Total assets	Net assets	Equity ratio
		Million Yen	Million Yen		%
As of September 30, 2021		405,147	253,682		62.4
As of March 31, 2021		394,086	247,648		62.7
(Reference) Shareholders' equity:	As of September 30, 2021	252,990	million Yen
		As of March 31, 2020	246,931	million Yen

(Note) The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29 ), etc. has been applied since the beginning of the six months of the consolidated fiscal year under review. As a result, the accounting treatment of revenue

differs from that of the six months of the previous fiscal year.

2. Dividends

	First		Second	Third	Fiscal	Total
For the fiscal year ended		Yen	Yen	Yen	Yen	Yen
March 31, 2021		－	0.00	－	21.00	21.00
March 31, 2022		－	0.00
For the fiscal year ending
March 31, 2022				－	22.00	22.00
(Forecast)

(Note) Changes to most recent dividend forecast: None

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2022

(April 1, 2021 to March 31, 2022)

(% figures show year-on-year change)

Net Sales

Operating income

Ordinary income

Profit attributable to

Net income per share

owners of parent

Million Yen

%

Million Yen

%

Million Yen

%

Million Yen

%

Yen

Full year

820,000

－

24,000

－

26,000

－

16,500

－

56.35

(Note) Changes to most recent financial results forecast: None

(Note) The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29 ), etc. has been applied since the beginning of the six months of the consolidated fiscal year under review. As a result, the accounting treatment of revenue

differs from that of the six months of the previous fiscal year. Therefore, the Forecast of Consolidated Financial Results is provided without stating the amount of the year-on-year comparison (%) .

	Itoham Yonekyu Holdings Inc.(2296)
Accompanying Materials - Contents
1. Qualitative Information on Consolidated Operating Results for the Six Months Ended September 30, 2021	........ 2
(1)	Description of operating results..........................................................................................................................	2
(2)	Description of financial position ........................................................................................................................	3
(3)	Description of future outlook, including consolidated operating results forecasts .............................................	3
2. Quarterly Consolidated Financial Statements and Major Notes ..............................................................................	4
(1)	Quarterly consolidated balance sheets ................................................................................................................	4
(2)	Quarterly consolidated statements of income and comprehensive income .........................................................	6
(3)	Quarterly consolidated statements of cash flows ................................................................................................	8
(4)	Notes on the quarterly consolidated financial statements ...................................................................................	9
	(Notes on going concern assumptions)...............................................................................................................	9
	(Notes in the case of significant changes in shareholders' equity) .....................................................................	9
	(Changes in accounting policies) .......................................................................................................................	9
	(Segment information) .....................................................................................................................................	10

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Itoham Yonekyu Holdings Inc.(2296)

1. Qualitative Information on Consolidated Operating Results for the Six Months Ended September 30, 2021

The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on March 31, 2020; hereinafter the "Revenue Recognition Accounting Standard"), etc. has been applied since the beginning of the first three months of the consolidated fiscal year under review. As a result, the accounting treatment of revenue differs from that of the first six months of the previous fiscal year. Therefore, the explanation is provided without stating the amount of change or the year-on-year comparison (%) in the following (1) Description of operating results. For the amount of change corrected to the same accounting standards and the comparison with the same quarter of the previous year, please refer to the supplementary materials for quarterly operating results.

(1) Description of operating results

During the first six months under review, the Japanese economy continued to face a challenging situation due to the impact of COVID-

19. However, the economy is expected to recover from this point on given the relaxation of restrictions on socioeconomic activities with the strict implementation of infection control measures and progress in vaccination.

In the industry where Itoham Yonekyu Holdings Inc. (the "Company") and its subsidiaries (collectively the "Group") operate, consumer needs and values are rapidly changing and diversifying with changes in their purchasing behavior and the acceleration of digitalization in society, reflecting the impact of COVID-19 as well as growing interest in ESG and SDGs. To fulfill its supply responsibilities as a group of food manufacturers, the Group provided workplace vaccination, in addition to continuing strict infection control measures. The Group prepared systems that permit employees to work safely and comfortably in diverse ways. At the same time, the Group approached its business by working to solidify a foundation that allows it to adjust itself to changes in the operating environment and display its strengths.

In this environment, the Group has developed the Medium-Term Management Plan 2023 for the period of three years starting from fiscal 2021. The Group's philosophy is to contribute to the realization of a sound and affluent society through business. The Company also has a vision of becoming a leading food company that continuously evolves with its employees by embracing a spirit of fairness and a commitment to progress. The Group will steadily pursue initiatives in its four priority fields of strengthening its management base, bolstering its earnings base, pursuing initiatives for new businesses and markets and taking steps for sustainability, aiming to achieve further growth and progress by defying stereotypes and reaffirming its strengths. Focusing on return on invested capital (ROIC) as a quantitative indicator, the Group aims to improve it to 6.8% during the applicable period. The Group has also decided to implement shareholder return policies in consideration of financial soundness and capital efficiency and has a dividend policy of increasing dividends steadily, with the payout ratio ranging from 30% to 50%, aiming for a payout ratio of around 40%.

As a result of appropriate and speedy responses to changes in consumer behavior based on the policies outlined above, the Group recorded net sales of 417,762 million yen and operating income of 14,480 million yen for the first six months under review. Ordinary income stood at 16,540 million yen, and profit attributable to owners of parent was 11,810 million yen.

The operating results by reportable segment are as outlined below.

With regard to hams and sausages, net sales declined mainly due to the effects of a review of unprofitable products to improve profitability, offsetting efforts to expand sales of key products for household consumption, such as The Grand Alt Bayern, Asano Fresh Series, Pork Bits and Gotenba Kogen Arabiki Pork, using TV commercials and consumer campaigns, as well as a sales recovery for products for business consumption centered on roast beef.

In cooked and processed food, net sales grew with strong results for Pizza products, including the staples La Pizza and Pizza Garden, and a sales increase for products for business consumption following a recovery in demand at convenience stores, in addition to sales expansion for products matching consumer preferences for convenience and healthy foods, such as Salad Chicken and Umazutsumi Volume Rich Hamburger.

As a result, the processed food business segment achieved net sales of 148,257 million yen in the first six months under review. Operating income for the segment amounted to 6,510 million yen, reflecting factors such as efforts to raise production efficiency and cut costs, in addition to the net sales stated above.

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Itoham Yonekyu Holdings Inc.(2296)

In the domestic meat business, net sales expanded, chiefly reflecting growth in sales of imported chicken products for business consumption amid a recovery in sales of products for the food service industry and home meal replacements sold at convenience stores, while demand for eating at home slowed. Profit for the domestic meat business decreased, mainly because of rises in the purchasing prices of imported meat and home-grown beef as well as an increase in the cost of marine transport.

In the overseas meat business, delays in shipments due to global congestion in marine container transport affected ANZCO Foods Ltd. However, both net sales and profits for the overseas meat business increased with purchasing and sales efforts prioritizing profitability, in addition to rises in production volumes.

As a result, the meat business recorded net sales of 267,409 million yen and operating income of 8,601 million yen.

(2) Description of financial position

(Assets, liabilities and net assets)

Total assets at the end of the first six months under review increased 11,060 million yen from the end of the previous fiscal year, to 405,147 million yen. This result mainly reflected an increase in inventories and a decrease in cash and deposits.

Liabilities totaled 151,464 million yen, an increase of 5,026 million yen from the end of the previous fiscal year. This result was mainly due to an increase in notes and accounts payable - trade.

Net assets increased 6,034 million yen from the end of the previous fiscal year, to 253,682 million yen. This result was primarily attributable to an increase in retained earnings.

Due to the application of the Accounting Standard for Revenue Recognition, etc., the beginning balance of retained earnings decreased 155 million yen.

(Cash flows)

Cash and cash equivalents ("cash") at the end of the first six months under review decreased 21,599 million yen from the end of the previous fiscal year, to 29,051 million yen (compared with a decrease of 2,712 million yen posted in the same period of the previous fiscal year).

Cash flows from operating activities

Net cash used in operating activities was 9,705 million yen (compared with net cash of 14,217 million yen such activities provided in the same period of the previous fiscal year). An increase in inventories and income taxes paid were main factors for the cash decrease, offsetting profit before income taxes posted and an increase in notes and accounts payable - trade.

Cash flows from investing activities

Net cash used in investing activities was 5,433 million yen (compared with net cash of 6,220 million yen used in such activities in the same period of the previous fiscal year). The purchase of property, plant and equipment for facility renewal and other purposes was a main factor for the cash decrease.

Cash flows from financing activities

Net cash used in financing activities was 6,778 million yen (compared with net cash of 10,454 million yen used in such activities in the same period of the previous fiscal year). Cash dividends paid were the main factor for the cash decrease.

(3) Description of future outlook, including consolidated operating results forecasts

The Company made no change to consolidated results forecasts for the fiscal year ending March 31, 2022 it had announced on September 24, 2021.

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Consolidated Financial Statements	ItohamYonekyu Holdings Inc. (2296)
(1) Consolidated Balance Sheets
		(Million Yen)
	As of March 31, 2021	As of September 30, 2021
ASSETS
Current assets
Cash and deposits	50,952	29,352
Notes and account receivable - trade	86,591	89,506
Merchandise and finished goods	63,313	80,123
Work in process	1,745	1,862
Raw materials and supplies	17,174	24,283
Other	6,617	11,848
Allowance for doubtful accounts	(10)	(10)
Total current assets	226,384	236,967
Non-current assets
Property, plant and equipment
Buildings and structures, net	36,433	36,655
Machinery, equipment and vehicles, net	28,919	29,469
Tools, furniture & fixtures, net	1,468	1,492
Land	25,745	25,921
Leased assets, net	2,758	2,610
Others, net	2,269	1,416
Total property, plant and equipment	97,595	97,566
Intangible assets
Goodwill	19,573	18,868
Other	2,150	3,020
Total intangible assets	21,724	21,888
Investments and other assets
Investment securities	29,331	29,255
Net defined benefit assets	12,162	12,798
Other	6,993	6,771
Allowance for doubtful receivables	(105)	(100)
Total investments and other assets	48,382	48,724
Total non-current assets	167,702	168,179
Total Assets	394,086	405,147

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