October 31, 2008 - Ajinomoto Co., Inc. announced today that it will record an extraordinary impairment loss for the interim period of the fiscal year ending March 31, 2009, as described below.
In light of this impairment loss and recent performance trends, Ajinomoto is issuing a performance forecast for the interim period (April 1 - September 30, 2008), which had not previously been disclosed, as presented below.
Recording and Details of the Extraordinary Impairment Loss
Ajinomoto will record an extraordinary loss of 13.4 billion yen on the impairment of goodwill of consolidated subsidiary Amoy Food Group in its consolidated results for the interim period of the fiscal year ending March 31, 2009. Rising raw material and fuel prices have increased costs for this subsidiary, which Ajinomoto acquired previously, and the earnings assumed at the time of the acquisition can no longer be expected. Ajinomoto will therefore write down the book value to the recoverable value.
In connection with the above, Ajinomoto will also record an extraordinary loss on stock of an affiliate of 8.6 billion yen on a non-consolidated basis on impairment of its shareholdings in the Amoy Food Group. Ajinomoto and a consolidated subsidiary together own all of the shares of the Amoy Food Group.
Consolidated Performance Forecast
Forecast for the Interim Period of the Fiscal Year Ending March 31, 2009 (April 1 - September 30, 2008)
(Millions of yen; %)
| |
Net Sales |
Operating Income |
Ordinary
Income |
Net Income (Loss) |
| Forecast (A) |
626,409 |
20,251 |
18,814 |
-4,855 |
Results for same period of
previous year (B) |
609,603 |
28,547 |
27,473 |
13,966 |
| Amount of change (A - B) |
16,805 |
-8,296 |
-8,658 |
-18,821 |
| Percentage change (%) |
2.8% |
-29.1% |
-31.5% |
- |
Reason for Disclosure of Performance Forecast
Ajinomoto compiles its budget based on the full fiscal year, and manages and evaluates the progress of results only for the full year. Consequently, Ajinomoto does not normally release interim performance forecasts. However, it is disclosing this forecast due to the significant changes in results compared with the same period of the previous fiscal year. The main reasons for the changes are as follows.
In the Domestic Food Products business, despite the impact of rising raw material prices, operating income is projected to exceed the level of the same period of previous year because Calpis Co., Ltd. became a wholly owned subsidiary on October 1, 2007. In the Overseas Food Products business, a decrease in operating income is projected due to the negative foreign currency translation effect of the stronger yen, higher raw material prices and other factors. In the Amino Acids business, operating income is projected to decline due to factors including deteriorating export profitability reflecting stronger currencies in countries where Ajinomoto has export bases, and higher raw material and fuel prices. As a result, Ajinomoto forecasts a substantial decrease in overall operating income for the interim period compared with the same period of previous year. In addition, Ajinomoto forecasts a net loss of 4.8 billion yen due to recording the above-noted impairment loss of approximately 13.4 billion yen as an extraordinary loss.
Other
Ajinomoto is currently reviewing its consolidated performance forecast for the fiscal year ending March 31, 2009 based on the outlook for the interim period and recent trends in foreign exchange rates and raw material prices, and will release its updated full-year forecast when it announces its interim results on November 7, 2008.
There is no change to the dividend forecast announced on May 9, 2008.