Executive Officer in Charge of Finance - Commitment

Working Together as a Group to Improve Expertise, Effectively Utilize Management Resources, and Leverage Corporate Functions

Looking Back on the Group’s Medium-term Management Plan 2022

In fiscal 2020, the food industry was affected in varied ways depending on their sales channels. Commercial products dropped significantly while demand for home-based meals increased due to the declaration of a state of emergency during the COVID-19 pandemic, requests to refrain from going out and shortened restaurant business hours. Amid these changes in the environment, consolidated net sales increased by 0.3% year on year to 615.1 billion yen, and consolidated operating profit increased by 9.9% year on year to 19.7 billion yen, exceeding fiscal 2019 figures, making for a good start to the first year of the Group’s Medium-term
Management Plan 2022.

The Medium-term Management Plan 2022, the second stage of the Group Long-term Vision 2026, is a stage for accelerating transformation, establishing Group earnings bases, and marking the beginning of renewal of the production structure. In order to achieve the targets of consolidated sales of 700 to 800 billion yen (before the application of the Accounting Standard for Revenue
Recognition) and consolidated operating profit of 30 to 40 billion yen for fiscal 2026 (ending March 2027) set in the Group Long-term Vision 2026, we will make necessary investments for growth and return to shareholders with an awareness of the cost of capital, while maintaining and improving financial soundness based on the foundation of stable financial management established in the first stage.

Financial Strategy in the Group’s Medium-term Management Plan 2022

The Medium-term Management Plan 2022 lays out financial targets with a good balance of capital efficiency, financial stability and shareholder returns, aiming for ROE of 8% or higher, consolidated equity ratio of 50% or higher, interest-bearing debt of 78 billion yen or less, and a dividend payout ratio of 20–30%. The Finance Division will continue to work hand-in-hand with the Group to achieve the targets of the Medium-term Management Plan 2022.

Capital Efficiency

Investment projects will be carefully examined, with capital costs always in mind. In fiscal 2020, ROE was above the target, at 8.1% (up 0.1 points over the previous fiscal year), and we will continue to improve capital profitability through transformation of our business portfolio and renewal of the production structure to support business growth, which are strategies in the Long-term Vision 2026. This Vision forecasts about 280 billion yen in capital investment over 10 years, and we will constantly monitor capital efficiency so that we can achieve ROE of 8% or higher, our financial target going forward.

Financial Stability


We believe that maintaining financial stability—in other words, observing financial discipline—is essential so that we can make the necessary investments for our growth and continue with stable management and dividend payments. The equity ratio has continued to increase each year, reaching 49.0% at the end of March 2021 (up 1.7 points over the previous year), and we will continue to work to maintain and improve financial stability. On the other hand, the balance of interest-bearing debt, another indicator, went over the target of 78 billion yen as a result of increasing liquidity on hand due to the uncertain impact of the COVID-19 pandemic. However, this overage is only temporary, and we will continue to flexibly procure capital as needed, while conducting financial management and capital administration that contributes to stable management.

In terms of investments, we do not expect to use equity financing,* which could dilute our stocks, and we plan to continue to procure capital through our internal reserves and taking on debt as needed.
A means of raising capital by issuing new shares or convertible bonds that results in an increase in equity (shareholders’ equity).

Shareholder Returns

During the period covered by the Group’s Medium-term Management Plan 2022, we will prioritize stable, ongoing dividends and will maintain a dividend payout ratio of 20-30%. In the Long-term Vision 2026, if the equity ratio trends stably at levels of 50% or higher while we make necessary business investments, we intend to raise the dividend payout ratio to 30% or higher.

Cash Flow Distribution Policy

The Long-term Vision 2026 lays out an approach that divides the cash flow the Group generates into three areas: internal reserves (financial discipline) to maintain financial stability; business investment for growth; and shareholder returns. For the Medium-term Management Plan 2022, the second stage of the Vision, we plan to use revenue from operating cash flow to build a new butter building at the Isobunnai Plant, a new building for camembert production at the Taiki Plant, and to expand the Sakeru Cheese production line, covering about 86 billion yen in capital investments.

The dividend forecast for the fiscal year ending March 31, 2022 has been increased by 10 yen per share to 50 yen per share, taking into account the sales and profit forecasts and the outlook for the financial situation. If the equity ratio remains stable at 50% or higher going forward, we will raise the dividend payout ratio to 30% or higher without waiting for the third stage, in order to enhance shareholder returns.

Delivering Sustainable Growth and Higher Corporate Value

With the management environment changing at a dizzying pace, we are determined to reform productivity without getting stuck in preconceived notions. This will ensure that we can achieve transformation of our business portfolio, renewal of the production structure to support business growth, and evolution of Group management, all of which are strategic concepts in the Long-term Vision 2026. Corporate functions will play a major role in achieving this. The Finance Division will work hand-in-hand with the Group to improve expertise, work to utilize management resources and leverage corporate functions with the aims of achieving sustainable growth, raising corporate value, and contributing to the SDGs.