Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato伪伪Dominant in commercial-use, Industry leader in long-life
salads, egg salads etc.
KENKO Mayonnaise Co., Ltd. <2915> (hereafter “KENKO Mayo” or “the Company”) is engaged
in the production and sale of salads and delicatessen products, mayonnaise and dressings,
as well as processed egg and other products. It has a strong position in the commercial-use
market, and has the leading market share in the “long-life salads” category at 37.4%. In themayonnaise and dressings market, it is second behind Kewpie <2809> with a 14.7% share.
The FY3/15 consolidated results showed steady expansion in processed egg, salad anddelicatessen-related products for convenience stores (CVS) and bakeries, with sales up 5.3%
y-o-y to ¥60,327mn, marking four consecutive periods of increased sales, and setting a newrecord high. Also, recurring profit, enjoying the impact of factors such as higher sales, lower
raw material costs and revisions in selling prices, rose 22.9% y-o-y to ¥2,776mn, a shift backto earnings growth for the first time in two periods.
The outlook for the FY3/16 consolidated results is for continued revenue and earnings growth,with sales up 4.8% y-o-y to ¥63,200mn and recurring profit up 8.0% y-o-y to ¥3,000mn, setting a
new record high for recurring profit for the first time in six periods. The quality of the processed
egg products at the Shizuoka Fujisan Factory, which was fully operational from last period,has been highly rated. New customer acquisition is proceeding steadily, and in salads anddelicatessen-related items also growth is expected, with expansion in HMR demand providing
a tailwind. While rises in raw material costs and increases in fixed costs are anticipated, profit
margins are also expected to rise due to the impact of higher revenues and earnings, enhanced
productivity at the Shizuoka Fujisan Factory and improvements in the product mix.
At the same time as announcing results, the Company announced its new Mid-term Management
Plan “KENKO Five Code 2015-2017”. Its three strategies are: (1) establishing its position as
the Leading Company in Salads, (2) to further evolve “Salad Cuisine,” and (3) to further
strengthen the management platform to proactively promote expansion into global markets.
The Company aims to achieve consolidated sales of ¥75,000mn and a recurring profit marginof 5% in the Plan’s final year, FY3/18.
Further, while being conscious of (its commitment to) a 20% payout ratio in terms of shareholder
returns, the Company aims to raise the payout ratio while continuing a stable distribution of
profits, and in FY3/16 also plans a ¥2 increase in dividends to ¥25 (a payout ratio of 20.1%).
Additionally, every year the Company presents its own products to shareholders as at the endof March, as (another) shareholder reward.

伪伪Check Point
・ Focus on commercial-use mayonnaise and dressings produces many actual resultsfor orders
・ Significant sales growth in processed egg products, with new take-ups concentrated
around CVS・ Aiming for consolidated sales of ¥75bn under the new Mid-term Management Plan

We encourage readers to review our complete legal statement on “Disclaimer” page.
1

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KENKO Mayonnaise
Co., Ltd.

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2915 Tokyo Stock ExchangeFirst Section㻞㻘㻜㻜㻜㻟㻜㻘㻜㻜㻜

㻡㻜㻘㻢㻞㻥

21-Jul.-15

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

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

伪伪Company Overview
Focus on commercial-use mayonnaise and dressings produces
many actual results for orders
Scope of Business
KENKO Mayo is a manufacturer of foodstuffs, mainly engaged in the production and sale ofsalads and delicatessen items, mayonnaise and dressings, as well as processed egg products
and other products for commercial use, undertaking operations such as the production andsale of chilled grocery delicatessen products, and retail store operations through subsidiaries.
Looking at the (consolidated) composition of sales by product segment in FY3/15, salads
continue to have the highest share overall at 45.2%, with mayonnaise and dressings at 27.8%
and processed egg products 25.2%. Examining the trends in the last few years we see that thetrend has been for the weighting of mayonnaise and dressings to decline and that of processed
egg products to rise. This is due to expansion in the HMR market concentrated around CVSs,
against a backdrop of demand expanding for products including lunchboxes, bread snacks andsandwiches.

We encourage readers to review our complete legal statement on “Disclaimer” page.
2

■Company■
Overview㻿㼍㼘㼑㼟㻌㻯㼛㼚㼠㼞㼕㼎㼡㼠㼕㼛㼚㻌㼎㼥㻌㻼㼞㼛㼐㼡㼏㼠㻿㼍㼘㼍㼐㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻌㻒㻌㼐㼞㼑㼟㼟㼕㼚㼓㼟㻼㼞㼛㼏㼑㼟㼟㼑㼐㻌㼑㼓㼓㻌㼜㼞㼛㼐㼡㼏㼠㼟

㻻㼠㼔㼑㼞

㻡㻜㻚㻜㻑

KENKO Mayonnaise
Co., Ltd.

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2915 Tokyo Stock ExchangeFirst Section㻞㻜㻚㻜㻑

21-Jul.-15

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Further, looking at the (consolidated) sales composition by industry segment (client industrytype), we see that three industry segments represent almost 70% of the overall, with therestaurant industry being 26.7%, big box retailers 23.2% and CVS 18.9%. Looking at the trends
for the past few years we see that the weighting for the restaurant industry has been in aslight downtrend, while big box retailers and CVS are in an uptrend. The HMR market having
expanded is thought to be the cause, against a background where, amongst other things, there
are changes in consumer lifestyles and greater participation by women in society.
Looking at market share within industries, in recent years mayonnaise and dressings have
performed stably at around 15%, maintaining its number two position in the industry. Given
that it is virtually specialized in commercial-use, while its familiarity is limited with general
consumers, in commercial-use the Company plays sparring partner to the leading manufacturer
Kewpie, with a supply track record to most of the major restaurants and hotel chains.
Meanwhile, the Company, the pioneer of “long-life salads,” has established an industry-leading
market share of over 37% for long-life salads.

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Source: NIKKAN KEIZAI TSUSHINSHA, Inc. “The Beverage & Food Statistics Monthly”We encourage readers to review our complete legal statement on “Disclaimer” page.
3

■Company■
Overview㻸㼛㼚㼓㻙㻸㼕㼒㼑㻌㻿㼍㼘㼍㼐㻌㻹㼍㼞㼗㼑㼠㻌㻿㼔㼍㼞㼑㻌㻔㻞㻜㻝㻟㻕

㻟㻝㻚㻟㻑
㻟㻣㻚㻠㻑

KENKO Mayonnaise
Co., Ltd.

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2915 Tokyo Stock ExchangeFirst Section㼅㼍㼙㼍㼦㼍㼗㼕
㻻㼠㼔㼑㼞㼟
㻝㻝㻚㻢㻑

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻝㻥㻚㻣㻑
Source: FUJI Keizai “Foodstuff Marketing Handbook”Company Strengths
The Company’s strength lies in management integration of production, development and sales,
including, in addition to having established nationwide manufacturing structures that deliver
stable, high quality products, having a product development capability that meets customer
needs and a meticulous sales response capacity.
High quality means not only good taste; safety and security are also important elements.
Further, for the Company, which is focused on sales for commercial-use, the question of
how it can offer added value to customers holds an important key to expanding businessgrowth. The Company has taken steps to offer added value through its meticulous response
to customers, involving the segmentation of industry types and the integration of its productmarketing and development and menu development teams. The number of product items thatit develops annually exceeds 1,800, meaning it develops five new items every day. One of theCompany’s major strengths is not only offering new products, but offering them together withmenus that utilize them, which is a factor in obtaining customer satisfaction and trust. As thegraph (below) shows, since 2011, it has continued to grow at a rate exceeding the restaurantand HMR markets thanks to the fruits of these efforts.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4

■Company■
Overview

Broad Product Lineup

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
Source: Company briefing materials

FISCO Ltd. Analyst
Yuzuru Sato㻳㼞㼛㼣㼠㼔㻌㻾㼍㼠㼑㻌㼛㼒㻌㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㻛㻴㻹㻾㻌㻹㼍㼞㼗㼑㼠㻌㼍㼚㼐㻌㻯㼛㼙㼜㼍㼚㼥㻌㻿㼍㼘㼑㼟㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㻛㻴㻹㻾㻌㻔㼏㼍㼘㼑㼚㼐㼍㼞㻌㼥㼑㼍㼞㻕
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Currently, the Company’s nationwide production system comprises seven factories operated by
the parent company and 9 factories operated by seven consolidated subsidiaries. Subsidiaries
production bases are closely linked to their operating areas because they are the production
bases for delicatessen-related products for daily delivery to big box retailers, CVS, and other
outlets. Above all, just-in-time (JIT) response capability is essential for CVS that operate
24/7. Some of the factories therefore operate 365 days-a-year, with flexible production
systems that can quickly respond to changes in order volumes.
Also, the Company’s subsidiary Salad Cafe Co., Ltd. operates specialty salad restaurants. As of
end-March 2015 there were 16 shops, mainly opened in department stores and supermarkets.

We encourage readers to review our complete legal statement on “Disclaimer” page.
5

■Company■
Overview

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

In terms of overseas operations, the Company established a joint venture (49% equity stake) in
Indonesia with a local food producer in 2012 that began production (annual capacity of about
4,000 tons) and sales of mayonnaise, dressings, and sauces in Autumn 2013. This factoryhas obtained Halal certification, and apart from home and commercial-use sales locally, it
is engaged in the sale of liquid eggs. Locally demand, in particular from Japanese-affiliatedcompanies is so high that it has to proceed with expansion of its facilities. From February
2015 the Company has commenced exports to Japan of its “omayo” brand mayonnaise, which
has received Halal certification, while domestically it is in the process of expanding its sales
channels on a number of fronts.
Because its overseas businesses operate under equity-method affiliates, their sales are notreflected in the Company’s consolidated sales, but are recorded in non-operating income
and expenses as equity in net income (losses) of affiliates. They are included under Other
Businesses in the consolidated business segments.
Affiliates (% Capital Contribution & Scope of Operations)
Consolidated subsidiaries

Ownership
(%)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Main business

DIETCOOK SHIRAOI Co., Ltd.
Delicatessen-related production and sales
Lilac FOODS Co., Ltd.
Delicatessen-related production and sales
KANTOH DIETCOOK Co., Ltd.
Delicatessen-related production and sales
KANTOH DIET EGG Co., Ltd.
Delicatessen-related production and sales
KANSAI DIETCOOK Co., Ltd.
Delicatessen-related production and sales
DIETCOOK SUPPLY Co., Ltd.
Delicatessen-related production and sales
KYUSHU DIETCOOK Co., Ltd.
Delicatessen-related production and sales
Hello Delica Co., Ltd.
Delicatessen-related sales
Salad Cafe Co., Ltd.
Operation of shops specializing in salads
Equity-method affiliates
KENKO & TING (HONG KONG)
50.0 Mayonnaise, dressings, and salad sales
HOLDING CO., LIMITED
Hangzhou KENKO &50.0 Mayonnaise and dressings production and sales
Ting Foods CO., LTD.
PT. Intan Kenkomayo Indonesia
49.0 Mayonnaise, dressings and sauces production and sales*Shows group investment ratio including indirect investment from wholly-owned subsidiaries.

伪伪Results Trends
Sales set a new a record high with four consecutive periods ofgrowth(1) Consolidated FY3/15 Financial Highlights
The Company’s FY3/15 consolidated results, which were announced on May 11, show
increases in sales and earnings, with sales up 5.3% y-o-y to ¥60, 327mn, operating profit up
23.6% y-o-y to ¥3,001mn, recurring profit up 22.9% y-o-y to ¥2,776mn and net profit 29.7%
to ¥1,642mn. Sales rose for a fourth consecutive period, setting a new record high for a third
consecutive period, with recurring and net profit both posting growth for the first time in two
periods. Against the Company’s plan also both sales and earnings were slightly above target,
making it we feel a sound set of results.

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

■Results■
TrendsConsolidated FY3/15 Results(¥mn)

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Sales
Operating profit(Equity in net income(losses) of affiliates)
Recurring profit
Net profit

FY3/14
Actual% Sales
57,301
2,428
4.2%

Plan
60,0002,890

Actual
60,3273,001

FY3/15% Sales
5.0%

y-o-y
5.3%
23.6%

vs Plan
0.5%
3.8%

-229

-0.4%

-

-246

-0.4%

-

-

2,258
1,265

3.9%
2.2%

2,700
1,590

2,776
1,642

4.6%
2.7%

22.9%
29.8%

2.8%
3.3%

Examining the industry trends respectively, in Company’s main target markets including
restaurants, big box retailers and CVSs, we can see that in the restaurant industry, family
restaurants have seen increased health consciousness and also a rise in amounts paid per
customer with positive year-on-year growth, while in the Izakaya (Japanese-style restaurant-bar) and fast food restaurant industries customer traffic has stalled leading to negative
growth, in turn leading to slightly negative growth for the restaurant industry overall. On theother hand, in the supermarket and CVS industries, amidst expansion in HMR demand in bothindustries, the Company has succeeded in efforts to strengthen its lunchbox and delicatessen
menu product lineup, displaying positive year-on-year growth.
Looking at the Company’s sales by market, with respect to the restaurant industry, despitesales to the fast food industry being lackluster, due to the impact of strengthened marketing
activities, including meticulous menu proposals that business segment and industry segment
teams have engaged in to date, overall sales were on a par with those levels last year. Further,in respect of the big box retailer and CVS industries, both saw year-on-year sales increases
exceeding 8%. Apart from processed egg products being used in many products, with a tailwind
provided by expansion in the HMR market, the main factor was sound performance in bothsalads and delicatessen items.
Looking at the factors behind fluctuations in recurring profit, the main factors tending toboost earnings were the impact of higher revenues ¥204mn, mayonnaise and processed egg
product price revisions ¥540mn, and ¥282mn as both edible oil and egg market prices showed
composure with stable, high prices. On the other hand, factors tending to lower earnings
included ¥216mn in costs incurred due to the consolidation of production facilities, ¥179mn inincreases in fixed costs, and ¥113mn in increased distribution expenses. The costs incurred inconsolidation of production facilities mean costs incurred in closing the Niiza Factory held bysubsidiary KANTOH DIET EGG Co., Ltd., consolidation of operations in the Shizuoka Fujisan
Factory and related costs, associated with the Shizuoka Fujisan Factory, which commenced
operations from April 2014 as an integrated production facility for processed egg products,
becoming fully operational (all lines operating from October).

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

■Results■
Trends㻲㼍㼏㼠㼛㼞㼟㻌㼒㼛㼞㻌㻲㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㼕㼚㻌㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㻔㻲㼅㻟㻛㻝㻡㻕

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KENKO Mayonnaise
Co., Ltd.

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2915 Tokyo Stock ExchangeFirst Section

㻜
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㻙㻝㻝㻟

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21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.

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㻒㻌㼛㼠㼔㼑㼞㻌㼏㼛㼟㼠㼟㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼕㼛㼚㻌㻒㼛㼠㼔㼑㼞㻌㼑㼤㼜㼑㼚㼟㼑㼟㻵㼚㼏㼞㼑㼍㼟㼑㼟㻌㼕㼚㼐㼕㼟㼠㼞㼕㼎㼡㼠㼕㼛㼚㼏㼛㼟㼠㼟㻯㼔㼕㼏㼍㼓㼛㻌㻿㼛㼥㼍㻌㻱㼤㼏㼔㼍㼚㼓㼑㻔㼁㻿㻰㻛㼎㼡㼟㼔㼑㼘㻕㻝㻤

FISCO Ltd. Analyst
Yuzuru Sato㻴㼕㼓㼔㼑㼟㼠㻌㼜㼞㼕㼏㼑㻝㻣㻹㼑㼍㼚㻌㼜㼞㼕㼏㼑㻸㼛㼣㼑㼟㼠㻌㼜㼞㼕㼏㼑

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

㻞㻜㻝㻞

㻞㻜㻝㻟



Significant sales growth in processed egg products, with new
take-ups concentrated around CVS(2) Trends by Business Segment○Seasoning/Processed Food Business
Sales in the seasoning and processed food business rose 4.6% y-o-y to ¥49,733mn, withsegment profit rising 25.8% y-o-y to ¥2,648mn.
Looking at sales trends by product type, we see that salads and delicatessen items performed
soundly, rising 5.6% y-o-y to ¥16,758mn (with volumes sold up 3.8%). Due to meticulous sales
activities by business segment and industry segment, long-life salads performed soundly
focused on the Company’s flagship potato salad. Further, the small-package “Salad Made by
a Salad Pro” salad series for big box retailers and CVS, which were introduced for home usefrom 2013, also performed well.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

■Results■
TrendsKENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.

Mayonnaise and dressings declined 1.9% y-o-y to ¥16,771mn (with volumes sold down 3.0%),
which was the only decline in sales by category. Apart from new uptake of mayonnaise forbaked bread and dressings for restaurants progressing, the World Sauces series also steadily
expanded sales through developing the number of items in the lineup, however, the impact of
the 11.0% y-o-y decline in sales to restaurants was felt. Within the restaurant industry sales
to the family restaurant, sushi and rice-bowl subsectors grew, however, they were unable tocover declines in the fast food and Izakaya subsectors.
Processed egg products performed well, rising 11.4% y-o-y to ¥15,115mn (with volumes soldup 9.7%). New uptake, concentrated around CVS, for a variety of processed products including
egg salads for sandwiches and delicatessen bakery products, thick omelettes for lunchboxes,
kinshi-tamago and boiled eggs, led to significant increases in sales. In particular, at the Shizuoka
Fujisan Factory, which commenced operations from April 2014, the Company has developed
a continuous and integrated production line from cracking the eggs to the final processes.
Since it became fully operational in H2, the new line has contributed to earnings, for example
by enhancing quality and taste markedly compared with that of the previous line, which has
helped to increase sales of high-value-added products, as well as leading to the acquisition ofcustomers such as large-scale sushi chains.

㻿㼑㼍㼟㼛㼚㼕㼚㼓㻌㻒㻌㻼㼞㼛㼏㼑㼟㼟㼑㼐㻌㻲㼛㼛㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻾㼑㼟㼡㼘㼠㼟FISCO Ltd. Analyst
Yuzuru Sato㻔¥㼙㼚㻕㻢㻜㻘㻜㻜㻜

㻡㻜㻘㻜㻜㻜
㻠㻜㻘㻜㻜㻜

㻝㻘㻜㻝㻡㻝㻟㻘㻡㻢㻣

㻿㼍㼘㼍㼐㻌㻒㻌㼐㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻌㻒㻌㼐㼞㼑㼟㼟㼕㼚㼓㼟㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻼㼞㼛㼏㼑㼟㼟㼑㼐㻌㼑㼓㼓㻌㼜㼞㼛㼐㼡㼏㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼠㼔㼑㼞㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻿㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕
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



○Delicatessen-Related BusinessIn delicatessen and related businesses, there was growth in sales but a decline in earnings,
with a rise of 9.7% y-o-y to ¥9,419mn in sales, while segment profit declined 5.6% y-o-y to¥348mn. Apart from cut vegetables, which are limited to the Hokkaido region and commenced
from December 2013, items including potato salad and macaroni salad for big box retailers
grew steadily, due to expansion in HMR demand. Given that the growth rate for sales ofdelicatessen products in the supermarket industry showed a rise of 6% y-o-y, we may notethat the Company growth exceeded the industry average.
On the other hand, rises in the market price of poultry eggs and the surges in Summer
market vegetable prices impacted from a profit perspective, resulting in a decline in earnings.
However, looking only at H2, sales performed well, rising 10.1% y-o-y, and segment profit
also expanded from ¥38mn in H2 FY3/14 to ¥199mn. Moreover, the Hokkaido cut vegetablebusiness performed above the Company’s plan and contributed to earnings.

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■Results■
TrendsKENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.

○Other Businesses
In addition to revenue from its salad specialty shops, developed under subsidiary Salad Cafe,
results in the Other Business segment, included losses from equity in net income from affiliatesfrom overseas operations. Sales rose 0.1% y-o-y to ¥1,175mn, while segment losses were¥229mn (compared to a loss of ¥216mn in the last period). The Salad Cafe business had aslight increase in profits, however, equity in net losses from affiliates, which were also impacted
on by continued yen depreciation, rose from ¥229mn to ¥246mn.
In its Chinese business, despite losses declining by ¥39mn, due to consolidation of businesslocations, the pace of improvement in revenue lagged the Company’s plan, providing an issue
for further consideration in the future. On the other hand, while the amount of losses in its
Indonesian business, that commenced operations from Autumn 2013, increased to ¥56mn in
FY3/15, which was the first 12-month set of accounts, acquisition of customers such as Halal
specialty shops is proceeding steadily, and when viewed on a half-yearly basis losses declined
from ¥43mn in H1 to ¥13mn in H2, with December being profitable on a standalone monthly
basis, and profitability for full-year FY3/16 now within sight.

㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻾㼑㼟㼡㼘㼠㼟㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻰㼛㼙㼑㼟㼠㼕㼏㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻻㼢㼑㼞㼟㼑㼍㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻔¥㼙㼚㻕

FISCO Ltd. Analyst
Yuzuru Sato

㻝㻘㻠㻜㻜

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㻡㻜

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

Growth expected in FY3/16 also, with expansion in salad demand
due to increased health consciousness(3) Results Outlook for FY3/16
Consolidated results for FY3/16 anticipate sales up 4.8% y-o-y to ¥63,200mn, operating profit
up 1.6% y-o-y to ¥3,050mn, recurring profit up 8.0% y-o-y to ¥3,000mn and net profit up 7.8%
y-o-y to ¥1,770mn, with recurring profit setting a new record high for the first time in six
periods.
(¥mn)

Sales
Operating profit(equity in net income(losses) of affiliates)
Recurring profit
Net profit

FY3/15
Actual results% Sales
60,327
3,001
5.0%

vs Plan
63,2003,050

FY3/16% Sales
4.8%

y-o-y
4.8%
1.6%

-246

-0.4%

-

-

-

2,776
1,642

4.6%
2.7%

3,000
1,770

4.7%
2.8%

8.0%
7.8%

We encourage readers to review our complete legal statement on “Disclaimer” page.
10

■Results■
TrendsIn terms of the market environment, the Company is expected to continue to experience
tailwinds, with increased demand for salads expected due to heightened health consciousness
as well as growing HMR demand associated with lifestyle changes.

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

The outlook for sale by business anticipates a 4.2% y-o-y rise in seasonings and processed
foods. The breakdown includes expectations that salads and delicatessen items will rise
6.0% y-o-y, mayonnaise and dressings 1.9% y-o-y, and processed egg products will rise 4.5%
y-o-y. In respect of salads and delicatessen items, the Company is striving to increase sales
through continuing to strengthen product series including the World Salad series and Japanesedelicatessen dishes, as well as expanding small-package products for big box retailers and
CVS. Also, in respect of processed egg products, in addition to gains in products for CVS,
gains in sales to the restaurant industry, including conveyor-belt sushi chains, are expected.
In respect of delicatessen and related businesses, a further high year-on-year growth rate of
7.7% is expected. The Company expects increases in daily products for big box retailers due
to expansion in HMR demand. In respect of other businesses, sales growth of 4.3 y-o-y is
expected. Growth in sales is expected due to the opening of one new Salad Cafe shop in April(in Tachikawa City, Tokyo).
Looking at factors behind fluctuations in recurring profit, ¥397mn from the impact of higher
sales and ¥621mn from enhanced productivity centered mainly on the Shizuoka Fujisan Factory
are the major factors tending to boost profits. On the other hand, ¥270mn from raw material
cost fluctuations and ¥524mn from increased fixed and other costs, centering mainly aroundstaff costs, are the main factors tending to lower profits. In respect of raw material costs,
apart from high levels in poultry egg prices that have also continued since entering this period,
we feel that one factor behind cost increases will also be the impact of yen depreciation on
edible oil. Moreover, in respect of selling price revisions, which was a factor tending to boost
profits last period, the Company’s policy in relation to core products is to maintain them atcurrent levels, making it neutral from the perspective of this period’s results. Further, nonoperating income is expected to improve ¥170mn y-o-y, however, the main factor behind thisis a reduction in losses from equity in net income of affiliates.

㻲㼍㼏㼠㼛㼞㼟㻌㼒㼛㼞㻌㻲㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㼕㼚㻌㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㻔㻲㼅㻟㻛㻝㻢㻕
㻔¥㼙㼚㻕

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㻯㼔㼍㼚㼓㼑㻌㼕㼚㻌㼟㼍㼘㼑㼟㻼㼞㼛㼐㼡㼏㼠㼕㼢㼕㼠㼥㼑㼚㼔㼍㼚㼏㼑㼙㼑㼚㼠㻾㼍㼣㻌㼙㼍㼠㼑㼞㼕㼍㼘㼟㻌㼜㼞㼕㼏㼑㼟㻲㼕㼤㼑㼐㻌㼏㼛㼟㼠㼕㼚㼏㼞㼑㼍㼟㼑㼟

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

■Results■
Trends㻺㼍㼠㼕㼛㼚㼍㼘㻌㻲㼑㼐㼑㼞㼍㼠㼕㼛㼚㻌㼛㼒㻌㻭㼓㼞㼕㼏㼡㼘㼠㼡㼞㼍㼘㻌㻯㼛㼛㼜㼑㼞㼍㼠㼕㼢㼑㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㼟㻔㼆㻱㻺㻙㻺㻻㻴㻕㻌㻼㼞㼕㼏㼑㻌㻔㼀㼛㼗㼥㼛㻕㻌㼒㼛㼞㻌㻹㼑㼐㼕㼡㼙㻙㼟㼕㼦㼑㼐㻌㻱㼓㼓㼟㻔¥㻛㼗㼓㻕

㻲㼅㻞㻜㻝㻟

㻌㻲㼅㻞㻜㻝㻠

㻲㼅㻞㻜㻝㻡

㻟㻜㻜
㻞㻢㻜
㻞㻡㻜

KENKO Mayonnaise
Co., Ltd.

㻞㻞㻣

㻞㻟㻜
㻞㻟㻝

㻞㻞㻟
㻞㻜㻠

㻞㻜㻜

2915 Tokyo Stock ExchangeFirst Section

㻝㻡㻜

㻝㻥㻥

㻝㻥㻜

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21-Jul.-15

㻜

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato



㻭㼡㼓㻚

㻿㼑㼜㻚

㻻㼏㼠㻚

㻺㼛㼢㻚

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

伪伪Mid-Term Management Plan
Aiming for sales for consolidated ¥75bn under the new Mid-termManagement Plan
Outline of the New Mid-term Management Plan “KENKO Five Code 2015-2017”
The Company has announced a new Mid-term Management Plan, “KENKO Five Code 20152017”, which starts from fiscal 2015. In terms of specific management targets it aims forconsolidated sales of ¥75bn, a consolidated RP margin of 5%, an equity ratio of 50% and tomaintain an ROE of 8% or above in FY3/18. In order to achieve these targets it plans to put
five policies into effect.
KENKO Five Code 2015-2017 Business Strategies

Source: Company materials

We encourage readers to review our complete legal statement on “Disclaimer” page.
12

■Mid-Term■
Management Plan

KENKO Five Code 2015-2017
FY3/1560,327
2,776
4.6%
45.5%
9.6%

Sales
Recurring profit
RP margin
Equity ratio
ROE

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

FY3/1875,000
3,750
5.0%
50.0%
8% or above

5 Management Indices○Globalization
In addition to business activities from raw material procurement to sales, the Company isengaging in establishing business locations aimed at developing human resources in orderto undertake data collection activities (marketing) and global expansion. In particular, in thisPlan, the Company is giving thought to expansion into the European and North American
markets, and is planning to establish business locations in order to collect data locally. KENKO
Mayonnaise is aiming in the future to be a company that broadcasts “trends in food” to theworld.
○Innovation
Not constrained by prevailing wisdom and values, or existing structures, each staff member willcontinue to always maintain flexibility in their thinking, and in every circumstance be innovativeand progressive, and to make a significant contribution.
○Best practice
From investment plans and capital policy, at every stage of business activity, the Company will
respond with a sense of urgency, making on each occasion the most efficient and beneficial
determination.
○Knowledge management
To share within the Group the 50 years of know-how, including expertise, experience, production
technology and quality control skills, and promote the development of structures that allow
for knowledge management sharing, believing that this will also contribute to future growth bylinking to the next generation.
○Communication (Brand development)
We feel that brand value enhancement is achieved through trust obtained via communication
with customers, and that by additionally boosting communication within the Company and
the Group, we can refine a three-pronged management structure that combines our threebusiness entities: the manufacturing function we have promoted to date at KENKO Mayo, thedelicatessen functions in the subsidiaries, and the data collection and broadcasting functions
utilizing shops and the Internet at Salad Cafe.
Business Strategies○Establishing our position as the Leading Company in Salads
In order to establish its position as the Leading Company in Salads the Company’s policy is
to expand the scale of sales in its various businesses. For FY3/18, the Company is targeting
sales increases of 19% for the mayonnaise and dressings business, 14% for the salads anddelicatessen business, 19% for the potato business and 23% for the processed egg business(over FY3/15 actual results).

We encourage readers to review our complete legal statement on “Disclaimer” page.
13

■Mid-Term■
Management Plan

In its egg business, which it is expected will grow the most, the Company’s policy is to proceedwith a staged expansion in domestic factory facilities, focusing on the Shizuoka Fujisan Factory
where orders are firm. The Company’s policy is to strive to develop the product lineup andpromote new customer acquisition, by undertaking product development that anticipates thedevelopment of functional products and market needs.

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

In respect of its mayonnaise and dressings business, apart from strengthening its productlineup in, for example, its World Sauce series and functional products, the Company continues
to undertake innovation including in container formats to respond to small-package and otherproduct (demand).

21-Jul.-15

In its salad and delicatessen business, in addition to expanding its World Salad series, apartfrom strengthening product series such as its Japanese Manna Salad series of Japanesedishes, the Company will promote product development, engaging in unearthing new ingredientsthat broaden the range of salads and expand small-package commercial-use products.

Important disclosuresand disclaimers appear
at the end of this document.

In its potato business, apart from strengthening products that meet market needs (e.g. preprocessed potatoes for commercial usage), the Company will promote revitalization of thepotato salad market, proposing menus where potato salads are the principal dishes.

FISCO Ltd. Analyst
Yuzuru Sato

○Further evolving “Salad Cuisine”
Toward further evolution of Salad Cuisine the Company is strengthening KENKO Mayonnaise
Group structures. The Group will continue to broadcast Salad Cuisine utilizing the media at
KENKO Mayonnaise parent. In addition, at subsidiaries that manufacture and sell daily items,
the Group will expand its sales market share to local big box retailers, strengthening productdevelopment and its menu proposal capabilities. Furthermore, the Group will increase thenumber of its Salad Cafe shops to 23 by FY3/18 (from 16 at the end of the previous period),
and will undertake expansion of salad cuisine tutorials.
○Strengthening the management platform to proactively promote expansion into global markets
In terms of the Company’s overseas strategy, it is promoting the strengthening of egg andHalal products at its Indonesian production site, and expanding exports from Indonesia. Further,in the European and North American markets it will establish a business location in order tocollect data and broadcast trends on food to the world.
In respect of export sales from Japan, from ¥350mn in FY3/15 the Company is aiming for¥1,000mn in FY3/18. In addition to mayonnaise and dressings, going forward the plan is toexpand exports such as salads and thick omelettes, positioning this period as one in which theCompany seeks to strengthen its management platform to develop foreign markets in earnest.

伪伪Financial Condition & Policy on Shareholder Returns
Capital demand from the new factory construction complete,improvement in safety indices(1) Financial Condition
In respect of the financial condition as of end-March 2015, total assets declined ¥237mn yearon-year to ¥39,448mn. The main factors behind fluctuations were increases of ¥894mn in cash
and deposits and ¥1,150mn in accounts receivable on the one hand, and declines of ¥1,469mn
and ¥908mn in other accounts receivable and tangible fixed assets respectively on the other.

We encourage readers to review our complete legal statement on “Disclaimer” page.
14

■Financial■
Condition & Policy on Shareholder Returns

At the same time, liabilities declined ¥2,395mn year-on-year to ¥21,481mn. Apart from a declineof ¥1,358mn in interest bearing liabilities, accrued amounts payable and equipment-related bills
payable declined by ¥1,098mn and ¥1,102mn respectively. Net assets rose ¥2,157mn year-onyear as a result of retained earnings to ¥17,967mn.

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

21-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.

Looking at management indices, interest-bearing debt increased in FY3/14 in the form ofcapital required for the construction of the new factory, however, in addition to that capitaldemand now being over, interest-bearing debt has fallen due to expansion in earnings, andall management safety indices have improved, including the equity ratio and interest-bearing
debt ratio. For the time being the likelihood of large scale demand for capital arising is slight,
with improvement in financial condition forecast to proceed along with earnings expansion.
Moreover, in respect of its equity ratio, the Company is aiming for a level of 50% under the new
Mid-term Management Plan.
On the other hand, profitability indices have shown steady performance over the last few years.
Under the new Mid-term Management Plan the Company is aiming to have an RP margin of
5% and ROE of 8% or above in 3 years time, however, this is almost the same level as current
profitability, with it considered that this is readily achievable if sales expand in accordance withthe plan.
Consolidated Balance SheetFISCO Ltd. Analyst
Yuzuru Sato
Current assets(cash and deposits)
Fixed assets
Total assets
Current liabilities
Fixed liabilities(interest-bearing debt)
Total Liabilities
Total Net Assets(Safety)
Current ratio
Equity ratio
Interest-bearing debt ratio(Profitability)
Return on assets (ROA)
Return on equity (ROE)
OP margin

FY3/12
16,107
4,017
14,29730,404
13,207
3,705
4,254
16,912
13,492

FY3/13
18,403
5,919
15,59533,99814,2494,948
5,526
19,197
14,801

FY3/1418,095
3,884
21,59039,686
14,8609,015
9,943
23,876
15,810FY3/1518,704
4,778
20,74439,44814,422
7,058
8,584
21,481
17,967122.0%
44.4%
20.3%

129.2%
43.5%
29.0%

121.8%
39.8%
32.7%

129.7%
45.5%
23.4%

6.8%
7.9%
4.1%

8.0%
10.0%
5.1%

6.1%
8.3%
4.2%

7.0%
9.6%
5.0%

(¥mn)
Change
608
894
-846
-237
-438
-1,956-836-2,395
2,157

Policy to raise the level of dividends stably in line with corporate
earnings expansion(2) Shareholder Return Policy
The Company’s shareholder returns are cash dividend payments and special gift exclusives
for shareholders. On the basis of a dividend payout ratio of 20% on a consolidated basis, while
taking into consideration the sustainability of dividends, its policy is to stably raise dividends
in line with increased earnings. The dividend per share in FY3/15 was ¥23 (¥10.00 interim and¥13.00 year-end, for a payout ratio of 19.9%), being a ¥2 rise over the previous period. Given
that revenues and earnings are expected to grow in FY3/16, it is planned that the dividend pershare will be raised by ¥2 year-on-year to ¥25.00 (interim ¥11.00 and year-end ¥14.00, for apayout ratio of 20.1%). As such, if it appears that earnings growth will continue from FY3/17
also, it is highly likely that cash dividends will also increase.

We encourage readers to review our complete legal statement on “Disclaimer” page.
15

■Financial■
Condition & Policy on Shareholder Returns

At the same time, as a special gift to shareholders, KENKO Mayo presents the company’s
products as gifts to shareholders of register as of March 31. A present with a value of ¥1,000
is given to shareholders with 100 to 999 shares, while a present with a value of ¥2,500 is given
to shareholders of 1,000 or more shares. The investment return per unit of shares including
the shareholder special gift was at the 2% mark based on conversion at a share price of ¥1,651
as of May 28.

KENKO Mayonnaise
Co., Ltd.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼑㼞㻌㻿㼔㼍㼞㼑㻌㼍㼚㼐㻌㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼍㼥㼛㼡㼠㻌㻾㼍㼠㼕㼛

2915 Tokyo Stock ExchangeFirst Section㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕

㻞㻣㻚㻜㻜

㻞㻟㻚㻢㻌

㻞㻡㻚㻜

㻞㻝㻚㻞㻌

㻝㻥㻚㻥㻌

㻝㻥㻚㻟㻌

㻞㻜㻚㻝㻌

㻞㻟㻚㻜㻜

㻞㻜㻚㻜

㻞㻝㻚㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

（％）
㻟㻜㻚㻜

㻞㻣㻚㻢㻌

㻞㻡㻚㻜㻜

21-Jul.-15

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻝㻡㻚㻜㻞㻡㻚㻜㻜㻌

㻝㻥㻚㻜㻜

㻝㻣㻚㻜㻜

FISCO Ltd. Analyst
Yuzuru Sato㻝㻜㻚㻜㻞㻟㻚㻜㻜㻌
㻞㻜㻚㻜㻜㻌

㻞㻜㻚㻜㻜㻌

㻲㼅㻟㻛㻝㻝

㻲㼅㻟㻛㻝㻞

㻞㻝㻚㻜㻜㻌

㻞㻝㻚㻜㻜㻌

㻡㻚㻜

㻝㻡㻚㻜㻜

㻜㻚㻜
㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢㻱

Consolidated Income Statement
Accounting periodSales(y-o-y)Cost of goods sold(% Sales)
SG&A expenses(% Sales)Operating profit(y-o-y)(% Sales)Non-operating profit
Non-operating expenses(Equity in income (losses) of affiliates)
Recurring profit(y-o-y)(% Sales)Extraordinary profit
Extraordinary losses
Income before income taxes(y-o-y)(% Sales)Corporate income tax(effective tax rate)
Net profit(y-o-y)(% Sales)[Key indicators]
Number of shares outstanding (thousands)
Net profit per share (¥)
Dividend per share (¥)
Net assets per share (¥)
Dividend payout ratio (%)

FY3/12
51,8782.5
38,253
73.7
11,480
22.1
2,144
-22.7
4.1
80
151
-20
2,073
-22.7
4.0
0
83
1,990
-18.5
3.8
960
48.2
1,029
-22.0
2.0

FY3/1354,533
5.1
39,62872.7
12,126
22.2
2,778
29.6
5.1
100
303
-216
2,574
24.2
4.7
2
188
2,388
20.0
4.4
979
41.0
1,409
36.9
2.6

FY3/1457,301
5.1
42,53074.2
12,342
21.5
2,428
-12.6
4.2
148
318
-229
2,258
-12.3
3.9
1
45
2,215
-7.2
3.9
949
42.8
1,265
-10.2
2.2

FY3/1560,327
5.3
44,60873.9
12,717
21.1
3,001
23.6
5.0
154
378
-246
2,776
22.9
4.6
97
80
2,793
26.1
4.6
1,151
41.2
1,642
29.8
2.7

14,211
72.5
20.0
949.4
27.6

14,21199.2
21.0
1041.521.2

14,21189.1
21.0
1112.623.6

14,211115.6
23.0
1264.419.9(¥mn; %)
FY3/16E
63,200
4.8

3,050
1.6
4.8

3,000
8.1
4.8

1,230
41.0
1,770
7.8
2.8

14,211
124.6
25.0
20.1

We encourage readers to review our complete legal statement on “Disclaimer” page.
16

Disclaimer
FISCO Ltd. (the terms "FISCO", "we", mean FISCO Ltd.) has legal agreements with the Tokyo
Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock price and index
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This report is based on information that we believe to be reliable, but we do not confirm or
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We provide this report solely for the purpose of information, not to induce investment or any
other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on information thatwas current at the time the report was produced, but this information and the content of thisreport are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
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The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.