6 November 2009 - Ajinomoto has reported its consolidated interim results for the period ended September 30, 2009.
In the interim period under review (April 1, 2009 to September 30, 2009), the Japanese economy experienced a substantial deterioration in corporate profits, impacted by the global economic recession, with a slowdown also in consumer spending, influenced by declines in incomes and a deterioration of the employment situation.
Internationally, some countries and regions in Asia, such as China, started to recover, but the recession continued in the U.S. and Europe, with conditions remaining severe. In the food industry, the business environment remained difficult, as a result of factors including a cooling of consumer sentiment against the backdrop of the recession.
Within this environment, the Ajinomoto Group (“Ajinomoto” or “the Group”) focused its efforts on creating demand, developing new markets, reducing costs and strengthening the business structure, by pursuing reforms on all levels throughout the entire Group, aiming to be successful in the increasingly severe operating environment and to overcome competitive pressures.
As a result of these initiatives, although consolidated sales for the interim period decreased 6.6% (¥41.6 billion) to ¥584.7 billion, operating income increased 63.3% (¥12.8 billion) to ¥33.0 billion, ordinary income increased 92.3% (¥17.3 billion) to ¥36.1 billion, and net income was ¥21.6 billion.
Domestic food products
Domestic food product sales decreased 4.6% (¥15.4 billion) to ¥320.4 billion, and operating income increased 67.0% (¥5.0 billion) to ¥12.6 billion. The slight decrease in sales, which came despite growth in sales of edible oils and coffee, was attributable to lower revenue from domestic beverages, and ceasing to be involved in the chilled dairy products business at the end of January 2009. The substantial increase in operating income was partly due to lower costs of raw materials.
Seasonings and processed foods: In seasonings and processed foods for the retail market, sales of HON-DASHI® increased slightly, sales of consommé trended favorably, and sales of Chinese dashi products grew strongly. Sales of umami seasoning AJI-NO-MOTO® were at the same level as the previous interim period. Sales of soups and the Cook Do® line decreased slightly. Sales of mayonnaise and mayonnaise-type dressings increased strongly, partly due to higher sales of Pure Select® Low-Calorie Kokuuma Calorie 55% Cut. Sales of Kellogg’s products were at the same level as the previous interim period.
In seasonings and processed foods for the commercial market, sales were at the same level as the previous interim period, despite a cooling in spending at restaurants. Sales of ACTIVA®, an enzyme (transglutaminase) used to enhance food texture and quality, to food processing companies and sales of savory seasoning products decreased slightly.
Sweeteners and nutritional foods: Sales of low-calorie sweeteners for home use and restaurant use increased slightly compared to the previous interim period. Sales of amino acid supplement amino VITAL® decreased, with lower sales of granulated products and jelly drink type products.
Delicatessen and Bakery products: Sales of lunchboxes and prepared dish delicatessen products grew steadily, while sales of bakery products were at the same level as the previous interim period.
Frozen foods: Amid a market in the process of recovering from the downturn caused by a series of incidents that raised concerns about food safety and security, sales of Gyoza and Yawaraka Wakadori Kara-Age, key products for the retail market, grew favorably. However, sales of Ebi Shumai decreased slightly and sales of some products for lunchboxes and rice products declined, which led to an overall decrease in sales of products for the retail market. Sales of products for restaurant and institutional use increased slightly, reflecting strong sales initiatives targeting major customers, which offset the impact of a decline in eating out due to the recession and the new influenza virus.
Beverages: Despite sales of lactic acid beverages as CALPIS Water® being in line with the previous interim period in the domestic market, beverage sales decreased overall, influenced partly by the cancellation of partnerships in the evian® business, with the unseasonable summer weather also having a major impact. Edible oils and Coffee: Sales of edible oils increased substantially from the previous interim period. Sales of coffee were steady.
Overseas food products
Overseas food product sales increased 29.8% (¥23.8 billion) to ¥104.1 billion, and operating income increased 140.8% (¥9.4 billion) to ¥16.1 billion. The substantial increase in sales was due to the transfer of the umami seasonings for processed food manufacturers business from the amino acids segment, and strong growth in sales of umami seasonings for processed food manufacturers. The considerable increase in operating income partly reflected the decline in the cost of raw materials. The effect of the transfer of the umami seasonings for processed food manufacturers business was to increase sales by ¥24.8 billion and operating income by ¥6.4 billion.
Seasonings: In Asia, sales of AJI-NO-MOTO® grew strongly, while sales of flavor seasonings for home use increased substantially, but the impact of foreign exchange rates kept revenue from sales at the same level as the previous interim period. In America, sales of flavor seasonings for home use trended strongly in South America, but revenue from sales decreased compared to the previous interim period due to the impact of foreign exchange rates. In Europe and Africa, sales decreased due to the impact of foreign exchange rates, despite significant growth in sales of AJI-NO-MOTO® for home use in West African countries. Processed foods: In Asia, sales of Birdy® canned coffee and instant noodles were strong, but revenue from sales decreased slightly overall, due to the impact of foreign exchange rates.
Umami seasonings for processed food manufacturers: Following price increases in all regions, sales of AJI-NO-MOTO® to the food processing industry grew substantially in Japan, but decreased in each region overseas, impacted significantly by foreign exchange rates, and as a result of lower sales volumes due partly to the impact of inventory already in the market. Sales of nucleotides increased significantly, due to increased sales volumes and price increases, particularly with respect to major overseas customers, despite the impact of foreign exchange rates.
Amino acids
Sales in the amino acids business decreased 34.8% (¥48.6 billion) to ¥90.9 billion, and operating income decreased ¥6.5 billion to a negative figure of ¥0.1 billion. The considerable declines in sales and operating income were attributable to factors including the transfer of the umami seasonings for processed food manufacturers business to the overseas food products segment, as well as increasingly intense competition, the impact of foreign exchange rates, and demand being slow to recover. The effect of the transfer of the umami seasonings for processed food manufacturers business was to decrease sales by ¥24.8 billion and operating income by ¥6.5 billion.
Amino acids for pharmaceuticals and foods: Sales in Japan were at the same level as the previous interim period, but overseas, sales decreased in Europe and North America, due partly to the impact of exchange rates, resulting in a decrease in overall sales.
Pharmaceutical fine chemicals: Sales decreased considerably from the previous interim period, due to ceasing, in the previous fiscal year, to sell a key product, as well as the impact of foreign exchange rates. Sweeteners: Sales of sweeteners for the processed food industry increased substantially in Japan and Asia, but decreased significantly in Europe and Central and South America, resulting in a substantial fall in overall sales. Sales in South America of powdered juice Refresco MID®, which contains aspartame, were favorable, but the impact of exchange rates led to a substantial decline in revenue.
Specialty chemicals: Sales of cosmetic ingredients decreased slightly from the previous interim period in Japan, and fell overseas, resulting in a decline overall. Sales of amino acid-based cosmetic Jino® trended favorably, increasing compared to the previous interim period. Sales of insulation film for build-up printed wiring board decreased considerably.