日本水産（1332） – Supplemental documents for 3Q of FY2021

Supplemental Documentsfor the 3rd Quarter of FY2021(Note) “Accounting Standards for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. have been applied since the beginning of the first quarter of the current consolidated fiscal year. We are comparing and analyzing the consolidated cumulative period of the same quarter of the previous year and the previous consolidated fiscal year, which were applied retroactively to the relevant accounting standards.February 4, 2022Nippon Suisan Kaisha, LTD.Overview of the 3rd Quarter of FY2021Even though an impairment loss was incurred, the profit at each stage reached a record high.■In marine products, sales and profits increased due to strong fish prices in addition to rebound consumption.■Sales and profits of food products continued to increase due to strong sales, despite the impact of rising costs.■ Recorded an impairment loss of 5 billion yen as an extraordinary loss.(Unit: 100 million yen)3Q of FY20203Q of FY2021Y-on-Y(Amount)(%)FY2021Annual Plan(Announced on Nov. 5)ProgressRate(%)Net Sales4,6625,25258912.76,73078.1Operating ProfitOrdinary ProfitProfit attributable toowners of parent1501881312462931669563.7245100.610556.0280104.83425.917097.72Full-year Forecast for FY2021Revised annual plan upwards.■ Although there are concerns about re-expansion of COVID-19 and various cost increases, the annual plan was revised upward.FY2021Previous Plan(Announced onNov. 5)FY2021Revised PlanY-on-YY-on-YFY2020Actual Results(Amount)(%)(Amount)(%)Net Sales6,7306,9001702.56,15074912.224528017027033018025501010.217.95.91792261439050.010345.63625.13(Unit: 100 million yen)Operating ProfitOrdinary ProfitProfit attributable toowners of parentOverview of the 3rd Quarter of FY2021 by SegmentsSales increased significantly in both marine and food products businesses.(Unit: 100 million yen)Net SalesMarine ProductsFood ProductsFine ChemicalsGeneral DistributionOthersOperating ProfitMarine ProductsFood ProductsFine ChemicalsGeneral DistributionOthersCommon CostsOrdinary Profit3Q of3Q ofY-on-YFY2020FY2021(Amount)(%)4,6621,9302,2731891281401505210919185(54)1881315,2522,1792,50124312120624611213430178(57)29316658924922853(7)6595602410(0)2(2)1053412.712.910.028.3(5.7)46.963.7114.822.756.6(0.6)48.95.256.025.9Profit attributable to owners of parent4Main factors for increase/decrease in operating profit (Y-on-Y)■ Demand has recovered due to the relaxation of behavioral restrictions, and marine and food products were performing well.■ Strengthening of the domestic aquaculture and chilled business has also progressed.Marine ProductsProcessing/TradeFood Products(Except Chilled Business in Japan)Food ProductsChilled BusinessFineChemicalsConsolidated Adjustment(Unit: 100 million yen)Marine ProductsFishery and Aquaculture(Except South American Aquaculture)Marine ProductsSouth American Aquaculture (including adjustment of unrealized profit)Overseas 28Overseas 17Japan (10)Japan 20Sales volume increased, but profit was almost the same as the previous year 。including the adjustment of unrealized profit.Domestic aquaculture increased profits due to cost reductions in addition to improved aquaculture results. Domestic fishery was sluggish.Both domestic and overseas were performing well due to increased demand for salmon/trout and white fish and price increases. Alaska pollock processing in North America struggled.Profits increased due to cost reduction effects such as appropriate staffing and recovery of sales of rice balls.Profits increased in North America due to recovery in demand for foods for food service. In Europe, profits increased due to growth in alternative proteins and expansion of sales areas.In addition to strong sales of PCR test drugs, mail order sales were strong.Operating Profit3Q of FY2020Operating Profit3Q of FY20215Consolidated Balance Sheet (Y-on-Y)Working capital increased, including notes and accounts receivable.The Italic and bold figures mean increase/decrease, compared to the end of FY2020.(Unit : 100 million yen)Current Assets2,768 450Cash and deposits 143 33Notes and accounts receivable 1,078 317Inventory1,388 97Current Liabilities 1,832 294Notes and accounts payable 503 86Short-term borrowings 888 202Accrued expenses 293 64Non-current Liabilities 1,319 (20)Long-term borrowings 1,072 (49)Non-current Assets 2,430 (6)Property, plant and equipment 1,434 (39)Net Assets2,047 169Intangible assets 113 15Investment and other assets 881 17Total Assets5,198444Shareholder’s equity 1,861 166Equity RatioAs of March 2021: 35.6% As of December 2021: 35.8% 6Consolidated Cash-Flow Statement (Y-on-Y)Demand for funds has expanded due to increased sales.(Unit: 100 million yen)Profit before income taxesDepreciation & amortizationWorking capitalIncome taxes paidOthersNet cash provided by operating activitiesInvestment in (purchase of) property, plant and equipmentOthersNet cash provided by investing activitiesIncrease (decrease) in short-term borrowingsIncrease (decrease) in long-term borrowingsOthersNet cash provided by financing activitiesCash and cash equivalent at end of term3Q of FY20203Q of FY2021Y-on-Y199148(11)(29)(82)224(185)65(119)(340)115(37)(262)158247147(219)(76)(6)91(133)0(132)156(31)(47)7818647(0)(208)(47)75(133)51(65)(13)497(146)(9)3417Marine Products BusinessNet Sales & Operating Profit (Y-on-Y)■ Significant increase in sales and profits due to recovery in demand and improvement in market conditions.(Unit: 100 million yen)3Q of FY20203Q of FY2021Y-on-Y(Amount)(%)Net Sales1,9302,17924912.9Operating Profit5211260 114.8Net Sales (Quarterly)Operating Profit (Quarterly)(Unit: 100 million yen)(Unit: 100 million yen)8Marine Products BusinessNet Sales & Operating Profit (Y-on-Y)■ In addition to the recovery of market conditions, improved aquaculture results and rebound consumption led to a significant increase in sales and profits.■ Fishery and North American processing were struggling.Operating Profit(Unit: 100 million yen)(Bar Chart)Net Sales(Line Chart)(Calculated based on Trade Statistics of Japan, Ministry of Finance)(Unit: yen/kg)JapanNorth AmericaSouth AmericaEuropeOthersOperating Profit Total(6)(6)34241 78(Unit: 100 million yen)9Salmon/Trout aquaculture business in South AmericaProfits of the South American aquaculture business including unrealized profits were almost the same as the previous year.(Unit: 100 million yen)(Note 1) Valuation profit/loss of fish in the pondEstimated profit of pre-shipment fish (fish in the pond) Valuation profit/loss offish in the pond(Evaluation by IFRS)(Note 1)Profit or losson business※1Adjustment of unrealized profit(Note 2)8716(2)2020022(2)(Note 2) Adjustment of unrealized profit in the inventoryFY2020FY2021GroupCompany AThe Nissui GroupNissui (Non-consolidated)If remaining withinthe Nissui Group as inventorywrite off as unrealized profitRealized as profit when selling to outside of the GroupCompany A books sales & profit at the time of deliveryCompany A’s①＋ProfitBookvalueProfitCompany A’s profit10Food Products BusinessNet Sales & Operating Profit (Y-on-Y)■ Commercial use improved due to relaxation of behavior restrictions, and profits for chilled business increased due to optimization of production system.■ The impact of cost increases began to appear from the third quarter.(Unit: 100 million yen)Net Sales3Q of FY20203Q of FY2021Y-on-Y(Amount)(%)2,2732,50122810.0Operating Profit1091342422.7Net Sales (Quarterly)Operating Profit (Quarterly)(Unit: 100 million yen)(Unit: 100 million yen)11Food Products BusinessNet Sales & Operating Profit (Y-on-Y)■ In Europe and the United States, sales and profits of both household and commercial use grew more than before Corona. ■ Domestic sales were strong, but profits declined due to rising raw material prices and the effects of foreign exchange.Operating Profit(Bar Chart)(Unit: 100 million yen)Net Sales(Line Chart)(Unit : yen/kg)JapanNorth AmericaEuropeOthersOperating Profit Total 100 1188 17(Calculated based on Trade Statistics of Japan, Ministry of Finance: Alaska Pollock)(Unit : 100 million yen)Impact of merger of subsidiaries12Fine Chemicals BusinessNet Sales & Operating Profit (Y-on-Y)■ Sales of PCR test drugs and media for overseas markets contributed to the strong performance.■ Mail-order sales of health foods also remained firm.(Unit: 100 million yen)Net SalesOperating Profit3Q of FY20203Q of FY2021Y-on-Y(Amount)(%)1891924330531028.356.6Net Sales (Quarterly)Operating Profit (Quarterly)(Unit: 100 million yen)(Unit: 100 million yen)13General DistributionNet Sales and Operating Profit (Y-on-Y)■ Sales decreased due to the partial business transfer.(Unit: 100 million yen)Net SalesOperating Profit3Q of FY20203Q of FY2021Y-on-Y(Amount)(%)1281812117(7)(0)(5.7)(0.6)Net Sales (Quarterly)Operating Profit (Quarterly)(Unit: 100 million yen)(Unit: 100 million yen)14Outlook15Full-year Forecast for FY2021Expect sales and profits to greatly exceed the previous year.Net SalesMarine ProductsFood ProductsFine ChemicalsGeneral DistributionOthersOperating ProfitMarine ProductsFood ProductsFine ChemicalsGeneral DistributionOthersCommon CostsOrdinary ProfitProfit attributable to owners of parentFY2020FY2021Y-on-YActual ResultsRevised Plan(Amount)(%)6,1502,4973,0112601662131795814023227(72)2261436,9002,8643,28231715827927012715638209(80)33018074936627056(8)6590681514(1)1(8)1033612.214.79.021.7(5.2)30.750.0115.611.359.1(6.9)20.211.145.625.116Revised Plan for the 4th quarter of FY2021 Operating Profit (Y-on-Y)There is strong cost push pressure due to soaring labor costs and raw materials and stagnation in the supply chain, and profit margins are declining, especially in food products, both in Japan and overseas.Marine ProductsSouth American Aquaculture (including adjustment of unrealized profit)Marine ProductsProcessing/TradeFood Products(Except Chilled Business in Japan)FineChemicalsConsolidated Adjustment(Except South American Aquaculture and others)(Unit: 100 million yen)Overseas 0Japan (3)Overseas (4)Japan (3)Food products are struggling due to rising costs in Japan and oversea.Profit declines for North American households due to chance loss caused by lack of raw materials.Expect an increase in overseas sales of pharmaceutical products, which started in September of the previous year.Expect losses on some products that are delayed in sales.The unit sales price is expected to 。rise significantly, and the survival rate is also expected to improve.Operating Profit4Q of FY2020ActualOperating Profit4Q of FY2021Revised Plan17Impairment of the North American fishery processing businessImpairment of fixed assets in the struggling North American processing business.About the North American fishery processing businessImpairment backgroundOperating loss for the second consecutive term due to a decrease in yield caused by downsizing of raw materials, an increase in labor costs due to an increase in the minimum wage, and an increase in COVID-19 countermeasure costs.In 2022, the business environment is expected to be severe due to the continued increase in the minimum wage, in addition to the decrease in catch quotas.Manufactures surimi, fillets, pollock roes, etc. by processing pollock in Alaska.● Reduction of the number of workers.● Improvement of yield rate by reviewing production composition.● Review of production capital investment plan.Recorded an impairment loss of 5 billion yenAn important base that supports the Group’s supply chain as a source of surimi and fillets, which are raw materials for frozen foods and surimi-based products.18Major actions / initiatives (Marine Products Business)Respond flexibly to fishery market conditions and secure stable profits● Focus on marine products with increased added value (convenient, healthy, etc.) and aim for a structure that is not easily affected by market conditions.A product that eats white fish with vegetables.The entire tray can be cooked in the microwave.● Efforts in anticipation of market fluctuationsContinue procurement and sales with an emphasis on inventory turnover in preparation for changes in the fishery market.● Strengthening resource accessExpansion of fishery resource procurement in collaboration with domestic and overseas group companies.Gapao using “MSC minced fish” that can be made into Gapao rice just by warming it in a bag and putting it on rice(Unit: yen)Source: Tokyo Central Wholesale Market Market Statistics Information “Fresh Fish (All Markets)”19Expansion of domestic coho salmon aquaculture business”Otsuchi salmon aquaculture business” will start in Iwate prefecture from April 1st→ It will be possible to expand the sales area and extend the sales period and expect to sell to a wide range of consumers nationwide.Aim to expand the salmon/trout aquaculture business.③Otsuchi, IwateBusiness started in 2015Business started in 2014②Sado, Niigata①Sakaiminato, TottoriFor that purpose, we will actively work on① Further expansion of production capacity,② Development and expansion of marine aquaculture and seedling production functions,③ Creation of new business opportunities20Major actions / initiatives (Food Products Business)The key points are price increase penetration and production capacity increase.■ Measures to increase costsJapan: Steadily implement price increases in February.■ Future initiativesJapan: Expansion of fast muscle protein productsUnder the catchphrase of “Toward an era of choosing proteins,” we will carry out PR activities in various media to raise awareness.Overseas (Europe and America): Prices have been raised in North America, and costs have been reduced in Europe by narrowing down raw material procurement. Price increases are planned for both Europe and the United States in 2022.Overseas (Europe): Consider expansion of production facilities to expand sales area and meet demand for alternative proteins.Spinach and cheese galetteFalafel(Chickpea croquette)21New products for Spring / Summer 2022 (Japan)Realize the wellness life of the environment-friendly mind and body.■ Lifestyle that has become established due to the corona disaster■ Environment-friendly, physically and mentally healthy life■Product creation based on “human origin, technology origin and marine resources”Health appealSimplified containerPlastic reductionExpand sales with various promotions to commemorate the 70th anniversaryReduced salt sausageMinced meat cutlet with 95% cholesterol cutCurrent productOne tray22Quick Dish (QD) categoryUtilizing our strengths to respond to the development of simple prepared foods that are in line with the timesQuick Dish (QD) is ・・・= Simple prepared foods that can be eaten in a microwave oven or boil with a temperature zone change (change the freezing to a chilled temperature zone) during the distribution process.Expand the product category of frozen chilled prepared foods by effectively utilizing the product development, manufacturing functions, and know-how of frozen and chilled products.● Respond to the growth in demand for home-cooked meals due to the corona disaster.● The reduction of additives improves the taste.● Since the expiration date can be set longer, it leads to reduction of food loss.An example of a product for CVS23Quality Assurance System for Fine Chemicals BusinessStrengthen the quality assurance capabilities of pharmaceutical raw materials.By separating and strengthening the functions of “manufacturing” and “quality” in pharmaceutical products, we will enhance our quality assurance capabilities.Strengthen quality assurance capabilities to expand overseas marketsOur strengths as a high-purity EPA bulk supply manufacturer (1) Cost competitiveness (2) Supply stability (= raw material access)In addition to that, we will improve our quality assurance capabilities and expand it all over the world.24Although the business environment is unpredictable due to the spread of Omicron variant and the rise in raw materials, we will respond firmly and flexibly.25Make people around the world healthy from sustainable marine resources26Appendix273Q of FY2020 3Q of FY2021 Y-on-YMain causes of fluctuationsConsolidated Income Statement (Y-on-Y)Sales and profits increased year-on-year.(Unit : 100 million yen)Net salesGross profitSGA expensesOperating profitNon-operating profitNon-operating expensesOrdinary profitExtraordinary profitExtraordinary lossesProfit before income taxesIncome taxes – currentIncome taxes – defferedProfitProfit attributable tonon-controlling interestsProfit attributable toowners of parent4,66273758615048111882211199491313641315,25286862224658112931561247621017371665891313595(0)1053349 Subsidy 12, Miscellaneous income (2)(7)Gain on sale of investment securities (15) ,Insurance money received 1049 Inpairment loss 504712(2)37* The revenue recognition standard has been applied from this fiscal year. The previous year’s figures are the figures after reclassification to which the revenue recognition standard is applied. 28Impact on net sales by foreign exchange and exchange rateExchange rateamong overseassubsidiaries3Q of FY20203Q of FY2021Y-on-YLocalCurrencyJPY(100 million)LocalCurrencyJPY(100 million)LocalCurrencyJPY(100 million)Breakdown(Unit: 100 million yen)Impact otherthan exchangerateImpact ofexchangerate9431,0341,128156185167USD (million)EUR (million)878236287268DKK (million)1,9533172,254Other Currencies－153－34939419431300－627740374830Total1,7012,0673652841824281081Note) The foreign exchange rate on the right table is the average rate during the 3rd Quarter.3Q of FY20203Q of FY2021VariationUSDEURDKK105.25 yen110.44 yen4.9%124.59 yen129.89 yen4.3%16.74 yen17.46 yen4.3%29Consolidated cumulative net sales by Segment Matrix (Y-on-Y)(Unit : 100 million yen)Marine ProductsFood ProductsFine ChemicalsGeneralDistributionOthersSub TotalConsolidatedAdjustmentGrand Total2622092172162431863,900(643)3,25752157JapanNorth AmericaSouth AmericaAsiaEuropeSub TotalGrand TotalConsolidatedAdjustment1,664901,5741,7131,74935413332539455808320175154812,741275(561)(26)2,1792492,465(535)1,93015812,734216(233)112,5012284423603933112004543523743112,518(245)2,27352157266213217216245187(8)08(22)(23)(96)(87)(38)(47)53(7)652431891211282061404,13823716420103188351636,205603(636)7(120)(8)(110)4(74)(14)(10)(2)856725,6023,501244156243160(59)2925(7)825664952788(112)831675175154(115)6439(952)(13)(939)* The upper columns indicate the cumulative result of FY2021 and the lower columns indicate that of FY2020. The Italic figures mean increase/decrease.* Consolidated adjustment includes elimination of sales through intergroup transactions.5,2525894,66230Consolidated cumulative operating profit by Segment Matrix (Y-on-Y)JapanNorthAmericaSouthAmericaAsiaEuropeSub TotalGrand TotalCommonCostsConsolidatedAdjustment(Unit : 100 million yen)4911651667 (1)69291817 (0)18642Marine ProductsFood ProductsFine ChemicalsGeneralDistributionOthersCommon Costs919107131353622991442617060115(0)00(0)00Ratio ofOperating Proftto Net Sales(%)2.50.62.30.70.15.22.75.44.812.510.214.814.03.93.9113 7637136 2710930 111917 (0)18651(0)(16) 112 6052(2) 134 2410930 101917 (0)1885(0) (57) (2)(54)200(19)(0)15(1)0(0)00(0)10(0)0(2)16(56) (1) (56) (1)(54)(54)246 951504.73.21.531Sub TotalConslidatedAdjustmentGrand Total187 60126(0)6(6)187 54133(0)49 21282351 20319(9)1910(1)817 (0)1881(0)172(1)75(0)13340 18 (56) (1) 248 11522(2)(1)38 18 (56) (1)20(54)0(0)(54)0* The upper columns indicate the cumulative result of FY2021 and the lower columns indicate that of FY2020. The Italic figures mean increase/decrease.* Consolidated adjustment includes amortization of goodwill and elimination of unrealized profit in inventory, etc.Marine Products BusinessNet Sales & Operating Profit (Y-on-Y)FisheryFisheryAquacultureAquaculture(Unit : 100 million yen)Processing/TradeProcessing/TradeNon-Non-consolidatedconsolidatedConsolidated Consolidated AdjustmentAdjustmentOperating Profit (Bar Chart)Net Sales (Line Chart)Including unrealized gains on inventories, amortization of goodwill, etc.(6)(6)34217 352342Operating Profit TotalFY2020 FY2021FY2020 FY2021FY2020 FY2021FY2020 FY2021FY2020 FY2021* The Italic figures in the lower part of this chart show the accumulation of the bar (Operating Profit)32Food Products BusinessNet Sales & Operating Profit (Y-on-Y)Operating Profit (Bar Chart)(Unit : 100 million yen)Net Sales (Line Chart)ProcessingProcessingChilledChilledNon-Non-consolidatedconsolidatedConsolidated Consolidated AdjustmentAdjustment436781757 51Operating Profit TotalFY2020 FY2021FY2020 FY2021FY2020 FY2021FY2020 FY2021* The Italic figures in the lower part of this chart show the accumulation of the bar (Operating Profit).33Disclaimer regarding forward-looking statementsThis presentation contains forward-looking statements regarding Nissui’s business projections for the current term and future terms. All forward-looking statements are based on rational judgment of management derived from the information currently available to it, and the Company provides no assurances that these projections will be achieved. Please be advised that the actual business performance may differ from these business projections due to changes of various factors. Significant factors which may affect the actual business performance includes but are not limited to the changes in the market economy and product demand, foreign exchange rate fluctuations, and amendments to various international and Japanese systems and laws. Accordingly, please use the information contained in this presentation at your own discretion. The Company assumes no liability for any losses that may arise as a result through use of this presentation.Nippon Suisan Kaisha, Ltd. February 4, 2022Code: 1332 Contact:Corporate Strategic Planning & IR DepartmentCorporate Strategic Planning Section+81-3-6206-7037https://www.nissui.co.jp/english/index.html34