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Overview of Consolidated Financial Results of Ajinomoto Co., Inc.
for the Fiscal Year Ended March 31, 2018
Double-Digit Growth in Profit Attributable to Owners of Parent
Compared with the Previous Fiscal Year
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TOKYO, May 10, 2018 – An overview of the consolidated financial results of Ajinomoto Co., Inc. (“Ajinomoto Co.”) for the fiscal year ended March 31, 2018 is as follows.
1. Overview of Consolidated Financial Results for the Fiscal Year Ended March 31, 2018
(JPY billions unless otherwise noted; figures rounded down)
| |
Sales |
Business Profit |
Profit Attributable to
Owners of Parent |
| Fiscal Year Ended March 31, 2018 |
1,150.2 |
97.3 |
60.7 |
| Fiscal Year Ended March 31, 2017 |
1,091.1 |
96.8 |
53.0 |
| Year-on-Year Change |
+5.4% |
+0.5% |
+14.5% |
| Reference: |
Share of profit of associates and joint ventures
Fiscal Year Ended March 31, 2018: JPY 3,981 million
Fiscal Year Ended March 31, 2017: JPY 2,537 million
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| Note: |
Upon the adoption of International Financial Reporting Standards (“IFRS”), the Ajinomoto Group has introduced “Business profit” as a new profit level that will better enable investors, the Board of Directors, and the Management Committee to grasp the core business results and future outlook of each business while also facilitating continuous evaluation of the Group’s business portfolio by the Board of Directors and the Management Committee. “Business profit” is defined as “Sales” minus “Cost of sales,” “Selling expenses,” “Research and development expenses,” and “General and administrative expenses,” to which is then added “Share of profit of associates and joint ventures.” Business profit does not include “Other operating income” or “Other operating expenses.” |
Consolidated sales for the fiscal year ended March 31, 2018 increased JPY 59.0 billion compared with the previous fiscal year to JPY 1,150.2 billion due to an increase in sales of seasonings and processed foods (International) on a local currency basis, as well as factors including the positive effect of currency translation, although sales of coffee products decreased. Business profit was basically unchanged from the previous fiscal year at JPY 97.3 billion due to a steep rise in prices of fermentation raw materials as well as a decrease in profit from frozen foods (International) and coffee products, among other factors. Profit attributable to owners of parent increased JPY 7.6 billion to JPY 60.7 billion.
Dividends for the fiscal year ended March 31, 2018 are scheduled to be JPY 32 per share (including an interim dividend of JPY 15 per share), an increase of JPY 2 per share from the previous fiscal year. Dividends for the fiscal year ending March 31, 2019 are scheduled to be JPY 32 per share (including an interim dividend of JPY 16 per share).
An overview of consolidated results by business segment is as follows.
(JPY billions unless otherwise noted; figures rounded down)
| |
Sales |
Year-on-Year
Change |
Year-on-Year
Change (%) |
Business
Profit |
Year-on-Year
Change |
Year-on-Year
Change (%) |
Japan Food
Products |
384.1 |
-6.2 |
-1.6% |
39.1 |
-1.6 |
-4.1% |
International Food
Products |
464.7 |
+35.7 |
+8.3% |
41.6 |
-0.1 |
-0.3% |
| Life Support |
134.2 |
+10.1 |
+8.2% |
9.6 |
+3.7 |
+64.2% |
| Healthcare |
104.2 |
+14.7 |
+16.5% |
7.9 |
-0.1 |
-2.2% |
| Other Business |
62.7 |
+4.5 |
+7.9% |
-1.0 |
-1.3 |
— |
| Total |
1,150.2 |
+59.0 |
+5.4% |
97.3 |
+0.4 |
+0.5% |
| Note: |
Domestic and overseas sales of ACTIVA® products to food processing companies and savory seasonings are included in Japan Food Products. Domestic and overseas sales of AJI-NO-MOTO® for the food processing industry and nucleotides and sweeteners are included in International Food Products. |
Japan Food Products segment sales decreased because sales of coffee products declined due to the contraction of the home-use coffee market and the resulting intensification of competition, and because sales of seasonings and processed foods (Japan) were basically unchanged from the previous fiscal year due to the effect of the sale of a subsidiary, among other factors. Business profit decreased because of decreases in profit from frozen foods (Japan) and coffee products.
Main Factors in the Change in Sales
| ・ |
In seasonings and processed foods (Japan), although sales of soups increased, mainly for home use, overall sales were basically unchanged from the previous fiscal year due to factors including a decline in sales of restaurant and institutional-use bakery products and the effect of the sale of a subsidiary. |
| ・ |
Sales of frozen foods (Japan) increased overall. Home-use frozen food sales increased due to growth in sales of mainstay products such as Gyoza and The Chahan as well as the contribution of new products. Sales of restaurant and institutional-use products were basically unchanged from the previous fiscal year due to difficulties faced by processed chicken and other products, although sales of desserts, gyoza and other core categories grew. |
| ・ |
Overall sales of coffee products decreased due to declines in sales of gift products, products for convenience stores and home-use products, where the market contracted and competition intensified, although sales of stick coffee and restaurant and institutional-use products increased. |
Main Factors in the Change in Business Profit
| ・ |
Profit from seasonings and processed foods (Japan) decreased overall, despite an increase in profit from home-use products, due in part to a decrease in profit from restaurant and institutional-use bakery products as well as the effect of higher raw material prices. |
| ・ |
Although sales of frozen foods (Japan) increased, profit decreased due to factors including the depreciation of the yen and higher raw material prices. |
| ・ |
Despite the effect of the absence of royalty payments for trademark acquisition, profit from coffee products decreased overall as profit from home-use products declined substantially and profit from restaurant and institutional-use products was basically unchanged. |
International Food Products segment sales increased as a result of increases in sales of seasonings and processed foods (International) and frozen foods (International), in addition to factors including the positive effect of currency translation. Business profit was basically unchanged from the previous fiscal year despite substantial decreases in profit from frozen foods (International) and umami seasonings for processed food manufacturers.
Main Factors in the Change in Sales
| ・ |
Sales of seasonings and processed foods (International) increased due to factors including the positive effect of currency translation, the effect of newly adding a subsidiary to the scope of consolidation and strong sales of AJI-NO-MOTO®, flavor seasonings and other products. |
| ・ |
Sales of frozen foods (International) increased due to the effect of newly adding a subsidiary in Europe to the scope of consolidation, the positive effect of currency translation and the expansion of Asian products in North America. |
| ・ |
Sales of umami seasonings for processed food manufacturers were basically unchanged from the previous fiscal year, mainly resulting from the effect of a drop in selling prices outside Japan and a decrease in sales due to the negative effect of the exchange rate for trade, despite increased sales due to the positive effect of currency translation. Sales of sweeteners increased, mainly due to growth in domestic sales and the positive effect of currency translation. |
Main Factors in the Change in Business Profit
| ・ |
Profit from seasonings and processed foods (International) increased due to factors including a substantial increase in profit from flavor seasonings and other products and the positive effect of currency translation, despite a substantial decrease from the canned coffee business in Thailand, where competition is intensifying. |
| ・ |
Profit from frozen foods (International) decreased substantially due to higher raw material and fuel prices and the effects of shipping regulations and increased production costs associated with the construction of a new production system in the United States, among other factors. |
| ・ |
Profit from umami seasonings for processed food manufacturers decreased substantially due in part to the negative effect of the exchange rate for trade and the drop in selling prices. Profit from sweeteners increased due to cost reductions resulting from stable production and more effective deployment of selling expenses, as well as the positive effect of the exchange rate for trade. |
Life Support segment sales increased as sales of both animal nutrition and specialty chemicals grew. Business profit increased due to significant growth in profit from animal nutrition as well as growth in profit from specialty chemicals.
Main Factors in the Change in Sales
| ・ |
Animal nutrition sales increased overall, with substantial increases in sales of Tryptophan and AjiPro®-L in addition to the positive effect of currency translation. |
| ・ |
Sales of specialty chemicals increased overall, with increases in sales of both personal care ingredients and chemicals. |
Main Factors in the Change in Business Profit
| ・ |
Profit from animal nutrition increased substantially, mainly due to the effect of increased sales of Tryptophan. |
| ・ |
Profit from specialty chemicals increased due to higher selling prices for chemicals and the positive effect of the exchange rate for trade. |
Healthcare segment sales increased due to factors including growth in sales of amino acids for pharmaceuticals and foods and sales of the supplement business, which includes foods with functional claims, as well as substantial growth in sales of pharmaceutical custom manufacturing. Business profit was basically unchanged from the previous fiscal year, despite a substantial decrease in profit from amino acids for pharmaceuticals and foods.
Main Factors in the Change in Sales
| ・ |
Sales of amino acids increased overall, with the positive effect of currency translation on both amino acids for pharmaceuticals and foods and pharmaceutical custom manufacturing, and the substantial effect of a newly consolidated subsidiary. |
| ・ |
Other business sales increased substantially due to growth in sales of foods with functional claims. |
Main Factors in the Change in Business Profit
| ・ |
Profit from amino acids for pharmaceuticals and foods decreased substantially due to the impact of inventory adjustments by major customers, as well as expenses incurred for M&A. Profit from pharmaceutical custom manufacturing increased as a result of the effect of increased sales and the positive effect of currency translation, despite upfront investments. |
| ・ |
Profit from other business increased due to the increase in sales. |
2. Consolidated Performance Forecast for the Fiscal Year Ending March 31, 2019
(JPY billions unless otherwise noted; figures rounded down)
| |
Sales |
Business Profit |
Profit Attributable to
Owners of Parent |
| Fiscal Year Ending March 31, 2019 |
1,184.0 |
103.0 |
61.0 |
In the fiscal year ending March 31, 2019 (fiscal 2018), the second year of the FY2017-2019 (for FY2020) Medium-Term Management Plan, Ajinomoto Co. will incorporate measures for issues that became apparent during fiscal 2017 and implement additional measures for profit growth.
As a result of these initiatives, for the fiscal year ending March 31, 2019, Ajinomoto Co. forecasts consolidated sales of JPY 1,184.0 billion, business profit of JPY 103.0 billion and profit attributable to owners of parent of JPY 61.0 billion.
The assumed exchange rate for the fiscal year is JPY 110.0 to USD 1.
| Note: |
The performance forecast above is based on information available to Ajinomoto Co. as of the date of this news release. Various factors could cause actual results to differ materially from the above forecast. |
About Ajinomoto Co.
Ajinomoto Co. is a global manufacturer of high-quality seasonings, processed foods, beverages, amino acids, pharmaceuticals and specialty chemicals. For many decades Ajinomoto Co. has contributed to food culture and human health through wide-ranging application of amino acid technologies. Today, the company is becoming increasingly involved with solutions for improved food resources, human health and global sustainability. Founded in 1909 and now operating in 35 countries and regions, Ajinomoto Co. had net sales of JPY 1,150.2 billion (USD 10.36 billion) in fiscal 2017. For more about Ajinomoto Co. (TYO: 2802), visit www.ajinomoto.com.
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