Itoham Yonekyu : Consolidated Financial Results for the Nine Months Ended December 31, 2021 (Japanese Accounting Standards)

Consolidated Financial Results for the Nine Months Ended December 31, 2021

(Japanese Accounting Standards)

February 8, 2022

Name of Listed Company: Itoham Yonekyu Holdings Inc.

Listing: Tokyo Stock Exchange

Stock Code:

2296

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

Representative: Isao Miyashita, President and Representative Director

Contact:

Kenji Uchiyama, Manager, Investor Relations Section

Tel: [phone]

Scheduled filing date of Quarterly Report:

February 14, 2022

Scheduled date of start of dividend payment:

-

Supplementary materials for the quarterly financial results:

Yes

Investor conference for the quarterly financial results:

No

(Amounts of less than one million yen are omitted)

1. Results of the nine months ended December 31, 2021 (From April 1, 2021 to December 31, 2021)

(1) Consolidated Results of Operations (cumulative)

(Figures in percentages denote the year-on-year change)

Profit (loss)

Net sales

Operating profit

Ordinary profit

attributable to

owners of parent

The nine months ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

December 31, 2021

655,708

-

23,135

-

26,796

-

18,582

-

December 31, 2020

646,827

-2.1

22,172

32.9

24,161

30.1

18,304

58.0

(Note) Comprehensive income:

The nine months ended December 31, 2021: 18,627 million yen (-%)

The nine months ended December 31, 2020: 19,596 million yen (82.5%)

Profit (loss)

Diluted net income

per share

per share

The nine months ended

Yen

Yen

December 31, 2021

63.46

63.43

December 31, 2020

62.12

62.08

(Note) As the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. has been applied from the beginning of the first quarter of the fiscal year ending March 31, 2022, the figures for the first nine months of the fiscal year ending March 31, 2022 are after the application of the said accounting standard, etc., and the percentage change from the same period of the previous year is not stated.

(2) Consolidated Financial Position

		Total assets		Total net assets	Shareholders'
			equity ratio
		Million yen		Million yen	%
As of December 31, 2021		416,921		259,388	62.1
As of March 31, 2021		394,086		247,648	62.7
(Reference) Shareholders' Equity:	As of December 31, 2021: 258,704 million yen	As of March 31, 2021: 246,931 million yen

(Note) As the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. has been applied from the beginning of the first quarter of the fiscal year

ending March 31, 2022, the figures for the first nine months of the fiscal year ending March 31, 2022 are after the application of the said accounting standard.

2. Dividend Payments

					Dividend per share
		First quarter		Second quarter		Third quarter		Year-end	Annual
		Yen		Yen		Yen		Yen	Yen
Year ended March 31, 2021		-		0.00		-		21.00	21.00
Year ending March 31, 2022		-		0.00		-
Year ending March 31, 2022 (Forecast)								22.00	22.00

(Note) Revision of dividend forecast published most recently: No

3. Consolidated Earnings Forecast (From April 1, 2021 to March 31, 2022)

(Figures in percentages denote the year-on-year change)

										Profit (loss)	Profit
	Net sales		Operating profit		Ordinary income		attributable to	(loss) per
										owners of parent	share
	Million yen		%	Million yen		%	Million yen		%	Million yen	%	Yen
Full year	820,000		-	24,000		-	26,000		-	16,500	-	56.35

(Note) Revision to forecast published most recently: No

(Note) As the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. has been applied from the beginning of the first quarter of the fiscal year ending March 31, 2022, the figures in the consolidated earnings forecast are after the application of the said accounting standard, etc., and the percentage change from the previous fiscal year is not stated.

Itoham Yonekyu Holdings Inc.(2296) Consolidated Financial Results for the Nine Months Ended December 31, 2021

* Notes

(1) Significant changes of subsidiaries during the term (changes in specific subsidiaries accompanied by a change in the

scope of consolidation):

None

1. Application of special accounting treatment in the preparation of the quarterly consolidated financial statements: None
2. Changes in accounting policies, changes of accounting estimates and restatement

(i)	Changes in accounting policies due to amendments to accounting standards:	Yes
(ii)	Other changes in accounting policies:	None
(iii)	Changes in accounting estimates:	None
(iv)	Restatements:	None

(Note) For details, please see "(3) Notes on quarterly consolidated financial statements, (Change in accounting policies)" under "2. Consolidated Financial Statements and Key Notes" on page 8.

1. Numbers of issued shares (common stock)
2. 1. Numbers of issued shares at end of period (including treasury shares):

Nine months ended December 31, 2021:	297,355,059 shares
Year ended March 31, 2021:	297,355,059 shares

1. Numbers of treasury shares at end of period:

Nine months ended December 31, 2021:	5,458,378 shares
Year ended March 31, 2021:	4,616,157 shares

1. Average number of shares issued during period (quarterly cumulative period):

Nine months ended December 31, 2021:	292, 806,116 shares
Nine months ended December 31, 2020:	294,672,445 shares

• This quarterly financial summary is not subject to a quarterly review by certified public accountants or audit firms.
• Explanation about the proper use of financial forecasts and other special notes

(Notes concerning forward-looking statements, etc.)

The operating results forecasts and other forward-looking statements contained in this report are based on information currently available to the Company, as well as certain assumptions that the Company has judged to be reasonable. As such, they do not constitute an assurance that the Company promises to achieve these projected results. Therefore, readers are advised to note that the actual results may vary materially from the forecasts due to a variety of factors.

For assumptions used for earnings forecasts and notes on the use of earnings forecasts, please refer to "(3) Information on the consolidated earnings forecasts and other future forecasts" under "1. Qualitative Information on Financial Results " on page "3".

(Access to supplementary materials and explanatory materials for quarterly financial results)

Supplementary materials and explanatory materials for quarterly financial results will be posted on our website after the announcement of quarterly financial results.

Itoham Yonekyu Holdings Inc.(2296) Consolidated Financial Results for the Nine Months Ended December 31, 2021

Contents
1. Qualitative Information on Financial Results for the Nine Months Ended December 31, 2021.......................................	2
(1)	Details of operating results..........................................................................................................................................	2
(2)	Details of financial position ........................................................................................................................................	3
(3)	Information on the consolidated earnings forecasts and other future forecasts ...........................................................	3
2. Consolidated Financial Statements and Key Notes ..........................................................................................................	4
(1)	Consolidated balance sheets ........................................................................................................................................	4
(2)	Consolidated statements of income and comprehensive income.................................................................................	6
(3)	Notes on quarterly consolidated financial statements .................................................................................................	8
(Note on going concern assumption) ............................................................................................................................	8
(Note in the event of a significant change in the amount of shareholders' equity) .......................................................	8
(Change in accounting policies)....................................................................................................................................	8
(Segment Information)..................................................................................................................................................	9

1

Itoham Yonekyu Holdings Inc.(2296) Consolidated Financial Results for the Nine Months Ended December 31, 2021

1. Qualitative Information on Financial Results for the Nine Months Ended December 31, 2021

The Company has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29), March 31, 2020, hereinafter referred to as the "Revenue Recognition Accounting Standard"), etc. from the beginning of the first quarter of the current fiscal year. As a result, the accounting treatment of revenue differs from that of the first nine months of previous fiscal year. Consequently, the explanation is provided without stating the amount of increase or decrease and the year-on-year comparison (%) in the following (1) Details of operating results. Please refer to the supplementary materials for the quarterly financial results for the amount of increase/decrease adjusted to the same accounting standards and comparison with the same period of the previous year.

(1) Details of operating results

For the first nine months of the current fiscal year, the severe situation caused by COVID-19 was gradually easing, but currently a new variant strain spreading rapidly, and the future of the Japanese economy is uncertain.

In our industry, consumer needs and values are rapidly changing and diversifying due to changes in purchasing behavior caused by COVID-19, and the accelerated digitization of society, as well as the growing interest in sustainability. In terms of the business environment, in addition to soaring raw material and fuel prices, distribution and labor costs continue to remain high, forcing food manufacturers to revise product prices.

Under these circumstances, the Group is implementing product and sales strategies that accurately and promptly respond to changes in the world, and in order to fulfill its supply responsibilities as a food manufacturer, we are conducting our business activities by continuing to take thorough countermeasures against infectious diseases and creating an environment where each and every employee can practice safe, secure, and diverse work styles. In the "Medium-term Management Plan 2023," which covers the three-year period starting in FY2022, the Group has set four priority policies: "Strengthening management base," "Strengthening earnings base," "Initiatives for new business and markets," and "Initiatives for sustainability." These are based on the Group's philosophy "We will contribute to achieving a sound and affluent society through business" and the vision of "A leading food company that emphasizes the spirit of fairness, rises to the challenge of transformation and achieves sustainable growth with its employees." Specifically, the Group is implementing measures in accordance with the priority policies, including reorganization into business strategy segments to maximize the effects of the integration, promotion of operational efficiency through digital strategies using RPA, expense entry systems, etc., and changing to eco-friendly packaging for products in drawstring bag form, such as "The GRAND Alto Bayern."

As a quantitative target in the "Medium-term Management Plan 2023," the Group will focus on the return on invested capital (ROIC), aiming to increase it to 6.8% during the target period. In addition, the Group will take measures to return profits to shareholders by taking into account financial soundness and capital efficiency. In order to maximize shareholder value, the dividend payout ratio will be in the range of 30-50%, with the target of increasing dividends stably to 40%.

As a result of the efforts to respond to changes in the business environment as described above, the Group's performance for the first three quarters of the current fiscal year was net sales of 655,708 million yen, operating profit of 23,135 million yen, ordinary profit of 26,796 million yen, and profit attributable to owners of parent of 18,582 million yen.

A summary of the business results by reportable segment is as follows.

(Processed Foods Division)

As for ham and sausage, sales were almost the same as the previous year as efforts to expand sales of mainstay products for home use, such as "The GRAND Alto Bayern," "Asano Fresh Series," "Pork Bits," "Gotemba Kogen Arabiki Pork," and "Genkei Bacon Block Series", through the launch of TV commercials and consumer campaigns, and growth in sales of roast beef for professional use were offset by the impact of reviewing unprofitable products to improve profitability, etc.

As for processed foods, sales of pizzas, the mainstay of which are "La Pizza" and "Pizza Garden," were strong, and sales of merchandise that meet convenience and health-consciousness of consumers, such as "Salad Chicken" and "Umazutsumi Volume Rich Hamburg," also grew. In addition, sales of merchandise for commercial use increased in line with the recovery in demand at convenience stores. As a result, net sales increased

As for gifts, sales of gifts of cooked food products grew, as the Company launched TV commercials with a new concept and worked to expand sales, especially of the "Densho" series. However, due to the impact of the shrinking market as a whole, overall gift sales volume and net sales were both down from the previous year.

As a result, net sales in the Processed Food Division for the first nine months of the current fiscal year were 234,787 million yen, and operating profit was 10,890 million yen, affected by the sharp rise in raw material and fuel prices.

2

Itoham Yonekyu Holdings Inc.(2296) Consolidated Financial Results for the Nine Months Ended December 31, 2021

(Meat Division)

In the domestic business, sales increased due to factors such as growth in sales of imported chicken merchandise for commercial use, amid a recovery trend in sales to restaurants and to food services at convenience stores, while the rise in demand for home cooking has slowed down. Operating profit declined, mainly due to higher purchase prices for imported meat and domestic beef, and the effects of continued congestion in ocean container transport.

In the overseas business, both net sales and operating profit increased due to the efforts of ANZCO Foods Limited to focus on profitable sales, as well as strong demand for meat overseas.

As a result of the above, net sales in the Meat Division for the first nine months of the current fiscal year were 417,705 million yen, and operating profit was 13,022 million yen.

(2) Details of financial position

(Status of assets, liabilities and net assets)

Total assets at the end of the third quarter of the current fiscal year increased by 22,834 million yen compared to the end of the previous fiscal year to 416,921 million yen. This was mainly due to an increase in notes and accounts receivable - trade and inventories, and a decrease in cash and deposits.

Total liabilities increased by 11,094 million yen from the end of the previous fiscal year to 157,532 million yen. This was mainly due to an increase in notes and accounts payable - trade.

Net assets increased by 11,740 million yen compared to the end of the previous fiscal year to 259,388 million yen. This was mainly due to an increase in retained earnings.

The beginning balance of retained earnings decreased by 155 million yen due to the application of the Revenue Recognition Accounting Standard, etc.

(3) Information on the consolidated earnings forecasts and other future forecasts

There is no change to the consolidated earnings forecast for the fiscal year ending March 31, 2022, which was announced on September 24, 2021.

3