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

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

23-Jan.-17

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. analyst
Yuzuru Sato伪伪FY3/17 1H results were strong and exceeded theirinitial targets
KENKO Mayonnaise Co., Ltd. <2915> (hereafter, “KENKO Mayo” or “the Company”) is engaged in
the production and sale of salads and delicatessen items, mayonnaise and dressings, as well asprocessed egg and other products. It holds a leading position in the commercial-use market andthe leading market share in the “long-life salads” category at 37.6%. It has a 14.7% share of themayonnaise and dressings market, second behind the market leader Kewpie <2809>.
The FY3/17 1H (April to September 2016) consolidated results were strong, with net sales
increasing 8.3% year-on-year (y-o-y) to ¥36,009mn and recurring profit rising 38.8% to ¥2,490mn,
both exceeding their initial Company forecasts. Leveraging its strengths of providing detailed menu
proposals tailored to specific industries and formats and its product development capabilities, sales
grew steadily for a variety of products, including processed egg products, salads and delicatessen
items, and mayonnaise and dressings. Also, the consolidated recurring profit margin rose 1.5
percentage points, which was due to the favorable sales of high value-added products, including
small-package long-life salads, and in addition from the effects of reductions in the costs of raw
materials and logistics, and also improved productivity at consolidated subsidiaries.
The forecasts for the FY3/17 consolidated results are for net sales to increase 5.8% y-o-y to¥70,800mn and recurring profit to rise 22.6% to ¥4,200mn, which will once again be record highs.
The initial forecasts have been upwardly revised, by ¥800mn for net sales and ¥700mn for recurring
profit, but this is simply the addition of the amounts that the forecasts were exceeded in 1H, so theinitial forecasts for 2H have basically been left unchanged. The reason for this is that vegetableprices continue to soar due to the impact of the summer typhoons and unseasonable weather, so thecosts of procuring raw materials are expected to rise in 2H.
On November 7, 2016, the Company newly announced its concept for the Group’s production bases
toward growth from FY3/19 onwards. Specifically, it is to expand production facilities at its Shizuoka
Fujisan Factory, which is the production base for processed egg products, and at its Nishi-Nihon
Factory, which is the production base for long-life salads and dressings, and in addition, it will build
two new factories for its subsidiaries that produce delicatessen items. Operations are scheduled tostart by March 2019 and the total investment amount will be more than ¥15bn.
The Company’s shareholder returns policy is based on stable dividends, with a payout ratio of 20%
as the benchmark. It plans to raise dividends by ¥2 y-o-y to ¥30 in FY3/17, but as this represents a
dividend payout ratio of 15.9%, we can expect an additional dividend hike if earnings meet forecasts.
Also, as a further shareholder incentive, the Company awards shareholders registered at the end of
March of each fiscal year with (¥1,000 or ¥2,500 worth of) its own products according to the numberof shares held.

伪伪Check Point• Small-package long-life salads continue to maintain their strong results• The shareholders’ equity ratio rose to 47.2% and is drawing steadily closer to the mediumterm target of 50%• Outlook is for the sixth consecutive period of increased sales and continued record-highprofits

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

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㻣㻜㻘㻜㻜㻜

KENKO Mayonnaise
Co., Ltd.

㻢㻜㻘㻜㻜㻜

2915 Tokyo Stock ExchangeFirst Section㻠㻜㻘㻜㻜㻜

23-Jan.-17

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. analyst
Yuzuru Sato伪伪Company Overview
Sales of salads, delicatessen products, and egg products are
increasing(1) Scope of Business
KENKO Mayo is a manufacturer of foodstuffs and is mainly engaged in the production and sale ofsalads and delicatessen items, mayonnaise and dressings, as well as processed egg products andother products for commercial use. It also undertakes operations such as the production and sale ofdaily grocery delicatessen products and retail store operations through its subsidiaries.
Looking at the contributions to consolidated net sales by product in FY3/17 1H, salads were thehighest with 43.4%, followed by egg products with 30.0%, and mayonnaise and dressings with
24.6%. Looking at trends in recent years, salads and delicatessen items and egg products havebeen trending upward, while mayonnaise and dressings have been flat. The factors behind thehigher sales of egg products include that due to the expansion of the home meal replacement
market (HMR), demand is expanding for processed egg products for lunch boxes, bakery products,
and sandwiches, mainly for convenience stores (hereafter, CVS). In addition, the strong sales arebeing driven by the start of operations in FY3/14 at the Shizuoka Fujisan Factory and the resulting
expansion of production capacity, and also the steady acquisition of new customers from the foodservices industry and elsewhere thanks to the favorable assessment of quality at this factory.

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

■■Company Overview

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KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section㻝㻠㻘㻜㻜㻜

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23-Jan.-17㻝㻡㻘㻢㻠㻞

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

Source: the Company’s briefing materials

Looking at the contributions to consolidated sales by business category (customer industry type),
we see that three industry segments contribute more than 70% of the total, with CVS providing
28.8%, the food services industry 27.1%, and mass-retailers 20.5%. Looking at the trends for the
past few years, we find that contributions by CVS and mass-retailers have been trending upward,
and particularly in the FY3/17 1H results, CVS exceeded the food services industry. The expansion of
the HMR market is thought to be due to the trend toward more “solitary meals” with the rise in singleperson households and the “simplification” of cooking at home due to changes such as the shift tonuclear families and the greater participation of women in society, such as more working women.

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Source: the Company’s briefing materials
Looking at market shares within these industries, in recent years, mayonnaise and dressings have
performed stably at around 15%, maintaining the Company’s number two position in the industry.
Given that it virtually specializes in commercial-use products, while its familiarity with general
consumers is limited, in the commercial-use field the Company competes for top position with theleading manufacturer Kewpie, and has a track record of supplying many major restaurants and hotel
chains.
Meanwhile, the Company, which is the pioneer of long-life salads, has established an industryleading market share of over 37% for this product.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

■■Company Overview

㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻌㼍㼚㼐㻌㼐㼞㼑㼟㼟㼕㼚㼓㼟㻌㼙㼍㼞㼗㼑㼠㻌㼟㼔㼍㼞㼑㼟㻌㻔㻞㻜㻝㻠㻕㻝㻡㻚㻝㻑

KENKO Mayonnaise
Co., Ltd.

㻷㼑㼣㼜㼕㼑
㻝㻠㻚㻟㻑㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑

2915 Tokyo Stock ExchangeFirst Section㻡㻡㻚㻥㻑㻭㼕㼖㼕㼚㼛㼙㼛㼠㼛㻻㼠㼔㼑㼞㼟

23-Jan.-17

Important disclosuresand disclaimers appear
at the end of this document.

㻝㻠㻚㻣㻑

Source: NIKKAN KEIZAI TSUSHINSHA, Inc. “The Beverage & Food Statistics Monthly”

㻸㼛㼚㼓㻙㼘㼕㼒㼑㻌㼟㼍㼘㼍㼐㼟㻌㼙㼍㼞㼗㼑㼠㻌㼟㼔㼍㼞㼑㼟㻌㻔㻞㻜㻝㻠㻕FISCO Ltd. analyst
Yuzuru Sato
㻟㻝㻚㻟㻑
㻟㻣㻚㻢㻑

㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻷㼑㼣㼜㼕㼑
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㻝㻝㻚㻥㻑㻝㻥㻚㻞㻑
Source: FUJI Keizai, “Foodstuff Marketing Handbook”

Built a nationwide production system for the stable supply ofhigh-quality products(2) The Company Strengths
The Company’s feature is its collective strength of integrated production, development and sales;
namely, its nationwide production system that supplies high-quality products on a stable basis, andproduct development capabilities that meet customer needs as well as its meticulous sales response
capabilities.
High quality means not only good taste, as safety and security are also important elements. Further,
for the Company, which is focused on commercial-use sales, the question of how it can offer added
value to customers is an important key in order for it to grow its business. Therefore, it is taking
steps to offer added value through its meticulous response to customers, involving the detailed
segmentation of industry fields by business format, with the sales, product development, production
and menu development teams acting in concert. The number of products that the Company develops
exceeds 1,800 a year, meaning it develops new items at a pace of 5 every day. Seemingly as a resultof these efforts, since 2011 the Company’s sales growth rate has continued to outpace the growthrate of the restaurants and HMR markets, including an increase of over 10% in FY3/16.

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

■■Company Overview

Broad Product Line-Up

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

23-Jan.-17

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

Source: Company briefing materials㻳㼞㼛㼣㼠㼔㻌㼞㼍㼠㼑㻌㼛㼒㻌㼠㼔㼑㻌㼞㼑㼟㼠㼍㼡㼞㼍㼚㼠㼟㻌㼍㼚㼐㻌㻴㻹㻾㻌㼙㼍㼞㼗㼑㼠㼟㻌㼍㼚㼐㻌㼠㼔㼑㻌㼟㼍㼘㼑㼟㻌㼓㼞㼛㼣㼠㼔㻌㼞㼍㼠㼑㻌㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㼟㻌㼍㼚㼐㻌㻴㻹㻾㻌㼙㼍㼞㼗㼑㼠㼟㻌㻔㼏㼍㼘㼑㼚㼐㼍㼞㻌㼥㼑㼍㼞㻕The Company’s consolidated net sales (fiscal year)

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Source: the Company’s financial results summary and restaurants / HMR market data from the㻲㼛㼛㼐㼟㼑㼞㼢㼕㼏㼑㻌㻵㼚㼐㼡㼟㼠㼞㼥㻌㻾㼑㼟㼑㼍㼞㼏㼔㻌㻵㼚㼟㼠㼕㼠㼡㼠㼑㻌(3) Production Structures, Group Subsidiaries
Currently, the Company’s nationwide production system comprises seven factories operated by
the parent company and nine factories operated by seven consolidated subsidiaries. Subsidiary
production bases are closely linked to their operating areas because they produce delicatessenrelated products for daily deliveries to supermarkets. Above all, a just-in-time (JIT) response capability
is essential for CVS, which operate 24 hours a day, 7 days a week. Some of the factories therefore
operate 365 days-a-year, with flexible production systems that can quickly respond to changes inorder volumes.
Also, the Company’s subsidiary Salad Cafe Co., Ltd. operates specialty salad shops (in the Salad
Cafe chain). As of the end of September 2016, there were 17 shops, mainly opened in department
stores and shopping malls in the metropolitan Tokyo and Kansai areas.

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

■■Company Overview

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

In terms of overseas operations, the Company established a joint venture (49% equity stake) in
Indonesia with a local food producer in 2012, which began production of mayonnaise and saucesin the fall of 2013. This factory has obtained Halal certification*, and apart from local home andcommercial-use sales of these products, it is engaged in the sale of liquid eggs. From February 2015,
the joint venture 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 numberof fronts, such as for hotels and restaurants.
As its overseas businesses operate as equity-method affiliates, their sales are not reflected in the
Company’s consolidated sales, but are recorded in non-operating profit and expenses as equity in
net profit (loss) of affiliates. They are included in Other Businesses in the consolidated businesssegments.
Affiliates (scope of operations, investment ratio)

23-Jan.-17*	
Halal certification:a system that
Importantdisclosuresconfirms that products and services
anddisclaimers
appearconform to Islamic religious
precepts,
suchthatdocument.
followers ofatthe endofas
thisIslam are forbidden to intake porkor alcohol.

FISCO Ltd. analyst
Yuzuru Sato

Consolidated subsidiaries

Investment ratio
Main business(%)
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related production and sales
100.0 Delicatessen-related sales
100.0 Operation of shops specializing in salads

DIETCOOK SHIRAOI Co., Ltd.
Lilac FOODS Co., Ltd.
KANTOH DIETCOOK Co., Ltd.
KANTOH DIET EGG Co., Ltd.
KANSAI DIETCOOK Co., Ltd.
DIETCOOK SUPPLY Co., Ltd.
KYUSHU DIETCOOK Co., Ltd.
Hello Delica Co., Ltd.
Salad Cafe Co., Ltd.
(equity-method affiliates)
PT. Intan Kenkomayo Indonesia
49.0 Mayonnaise, dressings, and sauces production and sales* Shows Group investment ratio, including indirect investments from wholly-owned subsidiaries
Source: the Company’s securities report伪伪Results Trends
Strong results that exceeded the initial forecasts and achieved
new record highs for 1H(1) Overview of the FY3/17 1H results
In the FY3/17 1H consolidated results announced on November 7, 2016, net sales increased 8.3%
y-o-y to ¥36,009mn, operating profit rose 35.6% to ¥2,476mn, recurring profit climbed 38.8% to¥2,490mn, and net profit attributable to parent shareholders grew 11.1% to ¥1,690mn, for strong
results that exceeded the initial forecasts and achieved new record highs for 1H.
FY3/17 1H consolidated results
FY3/16 1H% ofResultssales
33,244
8,596
25.9%
6,770
20.4%
1,826
5.5%
1,793
5.4%

Initialforecast
35,250
1,820
1,800

4.6%

1,150

Net sales
Profit margin on sales
SG&A expenses
Operating profit
Recurring profit
Net profit attributable to parent
1,522
shareholders
Source: the Company’s briefing materials

FY3/17 1H% ofResultsy-o-ysales
36,009+8.3%
9,573
26.6% +11.4%
7,097
19.7%
+4.8%
2,476
6.9% +35.6%
2,490
6.9% +38.8%
1,690

4.7%

+11.1%(¥mn)
vs.
forecast+2.2%+36.1%+38.4%+47.0%

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

■■Results Trends

KENKO Mayonnaise
Co., Ltd.

Looking at restaurant, CVS, and supermarket industry trends, which form the Company’s major target
markets, while Izakaya (Japanese-style restaurant-bars) continue to struggle, family restaurants andother outlets performed well, due also to the impact of inbound demand. Fast-food outlets moved toa recovery trend from the second half of 2015 and overall maintained steady growth, of around 2%.
Further, in sales of daily items for CVS, on an existing store basis sales decreased slightly y-o-y, but
on an all stores basis, it is estimated they grew by around 5%. This was due to the proliferation of“solitary meals” and “simplification of cooking” following the increase in single-person households
and greater participation by women in society, such as working women, that is expanding demand forlunch-boxes, sandwiches, salads and other items, and the underlying expansion in the HMR market
is continuing alongside that in the restaurant market.

2915 Tokyo Stock ExchangeFirst Section

23-Jan.-17

Major markets’ monthly sales trends (y㻙㼛㻙㼥㻕㻯㼂㻿㻌㻔㼐㼍㼕㼘㼥㻌㼕㼠㼑㼙㻌㼟㼍㼘㼑㼟㻕㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㻌㼟㼍㼘㼑㼟
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㻝㻜㻚㻜㻑
㻤㻚㻜㻑 㻤㻚㻟㻑

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

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㻞㻚㻜㻑

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㻙㻞㻚㻜㻑

㻡㻚㻥㻑

㻢㻚㻟㻑

㻠㻚㻞㻑

㻞㻚㻟㻑 㻞㻚㻞㻑

㻣㻚㻥㻑

㻣㻚㻝㻑

㻢㻚㻣㻑

㻟㻚㻞㻑

㻠㻚㻜㻑

㻿㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㼟㻌㻔㼐㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻌㼕㼠㼑㼙㻌㼟㼍㼘㼑㼟㻕㻡㻚㻜㻑 㻠㻚㻝㻑
㻟㻚㻝㻑

㻟㻚㻞㻑
㻝㻚㻥㻑

㻝㻚㻢㻑

㻠㻚㻠㻑

㻡㻚㻟㻑 㻡㻚㻡㻑㻡㻚㻜㻑㻞㻚㻣㻑 㻡㻚㻝㻑

㻠㻚㻡㻑

㻞㻚㻤㻑
㻝㻚㻤㻑 㻟㻚㻜㻑㻞㻚㻢㻑 㻞㻚㻡㻑 㻞㻚㻡㻑 㻞㻚㻥㻑

㻜㻚㻤㻑

㻡㻚㻡㻑

㻟㻚㻤㻑 㻡㻚㻟㻑㻟㻚㻜㻑 㻡㻚㻟㻑

㻞㻚㻜㻑

㻜㻚㻢㻑
㻜㻚㻣㻑

㻝㻚㻜㻑

㻝㻚㻡㻑
㻜㻚㻞㻑

㻝㻚㻠㻑
㻜㻚㻜㻑

㻙㻜㻚㻡㻑

㻙㻞㻚㻟㻑

㻡㻚㻥㻑

㻝㻚㻡㻑

㻜㻚㻣㻑
㻙㻜㻚㻟㻑㻙㻜㻚㻡㻑
㻙㻝㻚㻣㻑

㻙㻞㻚㻣㻑

㻙㻠㻚㻜㻑
㻭㼜㼞㻙㻝㻡

㻶㼡㼚㼑㻭㼡㼓㼡㼟㼠 㻻㼏㼠㼛㼎㼑㼞 㻰㼑㼏㼑㼙㼎㼑㼞 㻲㼑㼎㻙㻝㻢

㻭㼜㼞㼕㼘

㻶㼡㼚㼑

㻭㼡㼓㼡㼟㼠 㻻㼏㼠㼛㼎㼑㼞㻿㼛㼡㼞㼏㼑㻦㻌㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㼟㻌㻔㻶㼍㼜㼍㼚㻌㻲㼛㼛㼐㻌㻿㼑㼞㼢㼕㼏㼑㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㻕㻘㻌㼟㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㼟㻌㻔㻶㼍㼜㼍㼚㻌㻿㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㻘㻌㻯㼂㻿㻌㻔㻶㼍㼜㼍㼚㻌㻲㼞㼍㼚㼏㼔㼕㼟㼑㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㻕㻚㻌㻯㼂㻿㻌㼟㼔㼛㼣㼟㻌㼑㼤㼕㼟㼠㼕㼚㼓㻌㼟㼠㼛㼞㼑㼟㻌㼛㼚㼘㼥The Company’s net sales increased 8.3% y-o-y and continue to grow at a pace above the growth
rates of the restaurants and HMR markets. As previously described, we consider this to be as a resultof the Company’s continuous initiatives to propose new products and menus that meet customer
needs. In particular, in the context of the continued chronic labor shortage in the restaurant industry,
there is strong demand for the development of menus that can be easily prepared while remaining
tasty and healthy. It is considered that by proposing menus that solve this sort of problem, theCompany is developing new customers and increasing its share of business with existing customers,
and thereby achieving sales growth above the industry averages.
Looking at sales by business category, in addition to CVS, which achieved significant double-digit
growth y-o-y, the major business categories had higher sales, including restaurants and massretailers. In the CVS industry, in addition to the increase in sales of processed eggs products, smallpackage long-life salads that have been adopted as private brands (PB) have become long-runninghits and the driving force behind the sustained high growth. Further, for the restaurants industry, therecovery of a major hamburger chain, whose results were sluggish in the same period in the previous
fiscal year, contributed, while the growth of sales to conveyor belt sushi chains was also mainly fromprocessed egg products. In addition, sales grew of fresh delicatessen daily items for mass-retailers,
while sales of cut vegetables sold exclusively in Hokkaido also trended strongly.
On looking at the factors behind the changes to recurring profit, we see it increased ¥504mn fromthe effects of higher sales, ¥134mn from improvements to production efficiency, ¥69mn from thereduction in logistics costs, and ¥121mn from fluctuations in raw materials prices, mainly from the fallin prices in the egg market, and these increases absorbed the higher fixed costs of ¥131mn, which
included personnel costs and IT investment.
The profit (loss) on investments from the equity method was a loss of ¥14mn (compared to a lossof ¥68mn in the same period in the previous fiscal year). The situation at the equity-method affiliate
in Indonesia was that sales of liquid eggs and commercial-use mayonnaise trended strongly, but
sales of retail-use mayonnaise were below target. Retail-use products struggled despite being soldthrough the sales channels of the local joint-venture partner, and going forward, the Company isconsidering improvement measures toward achieving profitability for the full fiscal year.

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

■■Results Trends

The growth rate of net profit attributable to parent shareholders was lower than that for recurring
profit, but this was due to a gain on the sale of a Chinese affiliate of ¥190mn that was recorded in
extraordinary profit in the same period in the previous fiscal year.

㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼏㼔㼍㼚㼓㼑㻌㼒㼍㼏㼠㼛㼞㼟㻌㻔㻲㼅㻟㻛㻝㻣㻌㻝㻴㻕(¥mn)

KENKO Mayonnaise
Co., Ltd.

㻟㻘㻜㻜㻜

2915 Tokyo Stock ExchangeFirst Section

㻞㻘㻡㻜㻜

㻝㻟㻠

㻵㼙㼜㼞㼛㼢㼑㼐㻌㼜㼞㼛㼐㼡㼏㼠㼕㼛㼚㻌㼑㼒㼒㼕㼏㼕㼑㼚㼏㼥

23-Jan.-17
㻝㻘㻡㻜㻜Important disclosuresand disclaimers appear
at the end of this document.

㻝㻘㻣㻥㻟

㻝㻞㻝
▲㻝㻟㻝

㻡㻜㻠
㻞㻘㻜㻜㻜

㻢㻥

㻾㼑㼐㼡㼏㼑㼐㻌
㻱㼒㼒㼑㼏㼠㼟㻌㼛㼒㻌㻵㼚㼏㼞㼑㼍㼟㼑㻌㼕㼚㻌㼘㼛㼓㼕㼟㼠㼕㼏㼟㻌㼒㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㼕㼚㻌 㼒㼕㼤㼑㼐㻌㼏㼛㼟㼠㼟㻘㻌
㼏㼛㼟㼠㼟
㻞㻘㻠㻥㻜
㼞㼍㼣㻙㼙㼍㼠㼑㼞㼕㼍㼘㼟㻌㼑㼠㼏㻚㼜㼞㼕㼏㼑㼟

㻱㼒㼒㼑㼏㼠㼟㻌㼛㼒㻌㼔㼕㼓㼔㼑㼞㻌㼟㼍㼘㼑㼟㻝㻘㻜㻜㻜㻲㼅㻟㻛㻝㻢㻌㻝㻴㻲㼅㻟㻛㻝㻣㻌㻝㻴FISCO Ltd. analyst
Yuzuru Sato

Small-package long-life salads continue to maintain theirstrong results(2) Trends by Business Segmenta) Seasoning and Processed Food BusinessIn this business, net sales increased 9.2% y-o-y to ¥29,954mn and the segment profit rose 22.8%
to ¥1,875mn.
Looking at the sales trends by product, sales of salads and delicatessen items increased 6.7% to¥9,828mn (sales volume, up 3.8%), mayonnaise and dressings rose 2.8% to ¥8,858mn (up 3.5%),
and processed egg products grew 18.0% to ¥10,595mn (up 18.3%), meaning sales of every productincreased.
Salads and delicatessen items continued to trend strongly, mainly from the sales of small-package
long-life salads to the CVS market. In addition, potato salads and other products for the restaurantmarket, particularly the basic products of 1kg packages, achieved favorable results. In Japaneseside dishes also, in July the Company launched two new products in the WASAI BANSAI® series (fora total of eight products), and also continued to adopt products such as the salty-sweetened Maruburdock for lunch-box stores, restaurants, and mass-retailers, which also contributed to the higher
sales.
In mayonnaise and dressings, sales grew of 1kg mayonnaise packages for mass-retailers and forexport, while they also increased for 500ml dressing packages and other products for the fast foodmarket. In addition, in World Traveler Dressings®, which the Company launched as a new series
in the previous fiscal year, as the second stage of its launch it released two new items from theinformation collected and developed into products at the Vancouver Research Office in Canada,
which was opened in July 2015. The first product is a Sriracha sauce (a spicy chili sauce) that iscurrently very popular in the United States, and the second product is a red eye gravy sauce (a coffee
flavored sauce), which is a traditional sauce in the southern states of the United States, and eachsauce was arranged as a dressing and made into products (for a total of three products).
The growth in processed egg products was mainly for the CVS market, from egg salads forsandwiches and for delicatessen bakery products, Atsuyaki (thick omelet) for sushi rolls, and Kinshitamago, thin omelet cut into string-like strips, for noodles. In boiled egg products also, the Company
continued to adopt various products, including for restaurants and for bread with filling, and the
double-digit growth continued.

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

■■Results Trends

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

23-Jan.-17

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

Source: the Company’s briefing materialsb) Delicatessen-Related BusinessIn this business, net sales increased 4.5% y-o-y to ¥5,449mn and segment profit rose 84.2% to¥620mn. Sales grew for basic products for supermarkets, including potato salad and macaroni salad,spaghetti salad using seasoned cod roe, and vermicelli salad. Cut vegetables sold exclusively in
the Hokkaido area also trended strongly. The segment profit margin rose greatly y-o-y, from 6.5%
to 11.4%, but this was mainly due to the effects of measures to improve productivity, including to
improve the loss (to improve the yield) in the manufacturing process at consolidated subsidiaries anda review of production lines, and also due to the inexpensive prices of raw materials.

㻾㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㼐㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻙㼞㼑㼘㼍㼠㼑㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟(¥mn)

㻺㼑㼠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

(¥mn)

㻡㻘㻠㻠㻥

㻣㻜㻜

㻢㻘㻜㻜㻜
㻡㻘㻞㻝㻟
㻡㻘㻜㻜㻜

㻢㻜㻜

㻠㻘㻡㻠㻜

㻢㻞㻜
㻡㻜㻜

㻠㻘㻜㻜㻜

㻠㻜㻜
㻟㻘㻜㻜㻜

㻝㻘㻜㻜㻜

㻟㻜㻜

㻟㻟㻣

㻞㻘㻜㻜㻜

㻞㻜㻜
㻝㻜㻜

㻝㻠㻥

㻜

㻜
㻲㼅㻟㻛㻝㻡㻌㻝㻴㻲㼅㻟㻛㻝㻢㻌㻝㻴㻲㼅㻟㻛㻝㻣㻌㻝㻴

Source: the Company’s briefing materials

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

■■Results Trendsc) Other Businesses
Other businesses includes in its results the equity in net profit (loss) of affiliates from overseas
operations, in addition to revenue from the Company’s specialty Salad Cafe shops operated by its
consolidated subsidiary Salad Cafe Inc. Sales decreased 1.0% y-o-y to ¥605mn and the segment
loss was ¥17mn (compared to a loss of ¥66mn in the same period in the previous fiscal year).

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

The number of shops in the Salad Cafe chain remained at 17, despite shop openings and closures,and net sales also remained at basically the same level as in the previous fiscal year. As a result,profits trended on the profit-loss breakeven line. A store was newly opened in March 2016 under
the new brand WaSaRa Kintetsu Abeno Harukas, which provides “Japanese-style salads” with anemphasis on Japanese ingredients and tastes. Its sales are growing on the back of the boom inJapanese food, and the Company is considering strengthening measures for the future. On the other
hand, in the overseas business, the loss in the equity in net profit (loss) in affiliates was reduced asa result of the sale of a Chinese affiliate in Q1 of the previous fiscal year.

23-Jan.-17

Important disclosuresand disclaimers appear
at the end of this document.

㻻㼠㼔㼑㼞㻌㼎㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌㼞㼑㼟㼡㼘㼠㼟㻌(¥mn)

㻰㼛㼙㼑㼟㼠㼕㼏㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻣㻜㻜

㻢㻜㻜
㻡㻜㻜

FISCO Ltd. analyst
Yuzuru Sato㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼢㼑㼞㼟㼑㼍㼟㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

(¥mn)
㻝㻜㻜

㻡㻢㻠

㻢㻝㻝

㻢㻜㻡

㻞

㻙㻟

㻡㻜

㻟

㻜

㻠㻜㻜

㻙㻝㻠

㻙㻡㻜

㻟㻜㻜
㻙㻢㻤

㻙㻝㻜㻜

㻞㻜㻜
㻝㻜㻜

㻙㻝㻡㻜

㻙㻝㻟㻤

㻜

㻙㻞㻜㻜
㻲㼅㻟㻛㻝㻡㻌㻝㻴㻲㼅㻟㻛㻝㻢㻌㻝㻴㻲㼅㻟㻛㻝㻣㻌㻝㻴

Source: the Company’s briefing materials

The shareholders’ equity ratio rose to 47.2% and is drawing
steadily closer to the medium-term target of 50%(3) Financial Condition
Looking at the financial condition at the end of September 2016, total assets were up ¥1,768mn on
the end of the previous fiscal year to ¥44,075mn. The main factors were, in current assets, increases
in cash and deposits of ¥940mn following the higher profits and ¥666mn in notes and accounts
receivable, and in fixed assets, an increase of ¥364mn in tangible fixed assets alongside the higher
capital investment.
Total liabilities were up ¥276mn on the end of the previous fiscal year to ¥23,270mn, mainly because
the increase in notes and accounts payable of ¥619mn exceeded the decrease in interest-bearing
debt of ¥447mn. Further, net assets rose ¥1,492mn to ¥20,804mn, as despite dividend payments of¥241mn, net profit attributable to parent shareholders of ¥1,690mn was recorded.
Looking at management indicators, the shareholders’ equity ratio rose 1.6 percentage point from theend of the previous period to 47.2%, drawing steadily closer to the mid-term management plan targetof 50%. The interest-bearing debt ratio is also trending downward alongside the stronger earnings
after temporarily increasing from the procurement of funds for the capital investment for the Shizuoka
Fujisan Factory in FY3/14. So arguably, the Company’s financial condition has further improved.

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

■■Results Trends

Consolidated Balance Sheet

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

FY3/1418,095
3,884
21,59039,686
9,015
9,943
23,876
15,810FY3/1518,704
4,778
20,74439,4487,058
8,584
21,481
17,967

Current assets(cash and deposits)
Fixed assets
Total assets
Fixed liabilities(interest-bearing debt)*
Total liabilities
Total net assets(stability)
Current ratio
121.8%
129.7%
Shareholders’ equity ratio
39.8%
45.5%
Interest-bearing debt ratio
62.9%
47.8%
* Interest-bearing debt includes long-term accounts payable
Source: the Company’s financial results summary

FY3/16
21,836
7,412
20,46942,306
6,680
7,617
22,994
19,311

FY3/17 Q2
23,262
8,353
20,81244,075
6,075
7,170
23,27020,804(¥mn)
Change+1,426+940+342+1,768
-605
-447
+276
+1,492133.9%
45.6%
39.4%

135.3%
47.2%
34.5%

-

23-Jan.-17

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. analyst
Yuzuru Sato伪伪Future Outlook
Outlook is for the sixth consecutive period of increased sales
and continued record-high profits(1) Outlook for the FY3/17 results
The outlook for the FY3/17 consolidated results is for net sales to increase 5.8% y-o-y to ¥70,800mn,
operating profit to climb 19.3% to ¥4,100mn, recurring profit to grow 22.6% to ¥4,200mn, and net
profit attributable to parent shareholders to rise 28.5% to ¥2,680mn, for the sixth consecutive fiscal
year of higher sales and continued record-high profits. The forecasts for both sales and profits havebeen upwardly revised compared to the initial Company forecasts, but the amounts that they havebeen increased is only the amounts that the 1H results exceeded their forecasts, so if looking only at
2H results, the initial forecasts have basically been left unchanged. This is because nationwide, thevolume of vegetables harvested fell due to Japan being hit by several typhoons in the summer andthe lack of sunshine in the fall, which means that raw material procurement costs are expected to risein 2H due to the soaring prices of vegetables.
Outlook for the FY3/17 consolidated results
FY3/16
Net sales
Operating profit
Recurring profit
Net profit attributable to parent shareholders
Source: the Company’s briefing materials

Resulty-o-y66,933
3,436
3,426
2,085

+11.0%+14.5%+23.4%+27.0%

Initialforecast
70,000
3,450
3,500
2,130

FY3/17
Revisedy-o-yforecast
70,800+5.8%
4,100 +19.3%
4,200 +22.6%
2,680 +28.5%(¥mn)
Amountrevised
+800
+650
+700
+550

For the full fiscal year recurring profit, the change factors are on the one hand increases of ¥644mn
from the effects of higher sales, ¥317mn from improvements in production efficiency, ¥110mn fromthe reduction in logistics costs, and ¥20mn from the effects of fluctuations in the prices of raw
materials, but on the other hand, a decrease of ¥317mn from higher fixed costs. The price of eggs,
which is the main raw material, trended slightly lower than expected in the April to October period
compared to the annual average price.

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

■■Future Outlook

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

However, the harvest volume of potatoes in the main production area of Hokkaido is expected tofall significantly y-o-y due to the impact of typhoon damage and some food producers have alreadybeen affected, such as having to postpone the launches of new products. The Company is working toincrease its suppliers to secure the volume that it needs, but it is being affected by higher procurement
costs and quality management costs and has incorporated these higher costs into the forecasts forthe current period. As potatoes are a single-harvest crop, the impact of the decline in harvest volume
may continue until around July 2017.

㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼏㼔㼍㼚㼓㼑㻌㼒㼍㼏㼠㼛㼞㼟㻌㻔㻲㼅㻟㻛㻝㻣㻕
(¥mn)

㻠㻘㻡㻜㻜

㻠㻘㻜㻜㻜
㻵㼙㼜㼞㼛㼢㼑㼐㻌㼜㼞㼛㼐㼡㼏㼠㼕㼛㼚㻌㼑㼒㼒㼕㼏㼕㼑㼚㼏㼥

㻢㻠㻠
㻟㻘㻡㻜㻜
㻟㻘㻠㻞㻢

FISCO Ltd. analyst
Yuzuru Sato

▲㻟㻝㻣

㻟㻝㻣

23-Jan.-17

Important disclosuresand disclaimers appear
at the end of this document.

㻞㻜

㻝㻝㻜

㻾㼑㼐㼡㼏㼑㼐㻌
㼘㼛㼓㼕㼟㼠㼕㼏㼟㻌㼏㼛㼟㼠㼟㻱㼒㼒㼑㼏㼠㼟㻌㼛㼒㻌㼒㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㼕㼚㻌㼞㼍㼣㻙㼙㼍㼠㼑㼞㼕㼍㼘㼟㻌 㻵㼚㼏㼞㼑㼍㼟㼑㻌㼕㼚㻌㼒㼕㼤㼑㼐㻌㼏㼛㼟㼠㼟㻘㻌㼜㼞㼕㼏㼑㼟㼑㼠㼏㻚㻠㻘㻞㻜㻜㻱㼒㼒㼑㼏㼠㼟㻌㼛㼒㻌㼔㼕㼓㼔㼑㼞㻌㼟㼍㼘㼑㼟㻟㻘㻜㻜㻜㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Source: the Company’s briefing materials㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㻼㼞㼕㼏㼑㻌㻔㼀㼛㼗㼥㼛㻕㻌㼛㼒㻌㼠㼔㼑㻌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㻌㻔㼆㻱㻺㻙㻺㻻㻴㻕㻌㻹㼑㼐㼕㼡㼙㻙㼟㼕㼦㼑㼐㻌㻱㼓㼓㼟(¥/kg)

㻲㼅㻞㻜㻝㻠

㻲㼅㻞㻜㻝㻡

㻲㼅㻞㻜㻝㻢

㻞㻤㻜
㻞㻢㻜
㻞㻠㻜
㻞㻞㻜
㻞㻜㻜
㻝㻤㻜

㻞㻠㻣
㻞㻟㻜

㻞㻞㻣

㻞㻞㻟
㻞㻝㻟

㻞㻞㻟
㻞㻝㻡

㻞㻜㻠
㻞㻜㻠

㻝㻥㻥

㻝㻥㻣

㻞㻝㻥

㻝㻥㻜

㻝㻥㻞

㻝㻤㻠

㻝㻤㻜

㻞㻟㻝

㻞㻡㻜

㻞㻡㻞

㻞㻠㻜

㻞㻠㻞

㻞㻡㻡
㻞㻠㻤

㻞㻝㻥
㻞㻜㻥

㻞㻝㻝

㻝㻥㻞

㻞㻝㻡

㻞㻜㻥

㻝㻥㻞

㻝㻤㻞

㻝㻢㻜
㻝㻠㻜

㻿㼛㼡㼞㼏㼑㻦㻌㼖㼍㻙㼦㻙㼠㼍㼙㼍㼓㼛㻚㻌㻯㼛㻚㻘㻌㻸㼠㼐㻚We encourage readers to review our complete legal statement on “Disclaimer” page.
12

■■Future Outlook(2) Sales outlook by segment

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

23-Jan.-17

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

By segment, sales are forecast to increase 5.3% y-o-y to ¥57,969mn in the seasoning and processed
foods business, to rise 8.5% to ¥11,565mn in the delicatessen-related business, and to grow 2.2% to¥1,265mn in other businesses. Continuing on from the previous period, the Company is pursuing astrategy of tailoring sales to specific industries and business formats, and it is also aiming to expand
product formats and strengthen its product lineup to meet market needs.
Net sales by segment

Seasonings & Processed foods
Salads & Delicatessen
Mayonnaise & Dressings
Processed Egg products
Others
Delicatessen-related Business
Other Business
Total
Source: the Company’s briefing materials

FY3/1447,541
15,866
17,093
13,567
1,015
8,586
1,173
57,301

FY3/1549,733
16,758
16,772
15,116
1,087
9,419
1,175
60,327

FY3/1655,035
18,903
17,064
17,792
1,276
10,6601,238
66,933

FY3/17 E
57,96919,021
17,142
20,505
1,300
11,5651,265
70,800(¥mn)
Growth rate
5.3%
0.6%
0.5%
15.2%
1.9%
8.5%
2.2%
5.8%

Within the seasoning and processed foods business, for salads and delicatessen items, sales ofsmall-package long-life salads for mass-retailers and CVS are expected to increase to the nextlevel, based on the strong level of inquiries. Also, in October, the Company launched Magokoro
Shokusai™ as a new brand. Based on the concept of “Delicious salads and prepared meals thateveryone can eat,” the products are targeted at seniors, being smoother and easier to prepare thanits previous “soft food” releases.
In mayonnaise and dressings, the Company continues to develop its overseas markets. Overseas,various countries’ import restrictions are becoming increasingly strict, so its strategy is to improve
its name awareness by presenting products at exhibitions in these countries that meet their needs,
such as mayonnaise with longer expiration dates or that is gluten-free. As of the end of September
2016, it was exporting to 35 countries and regions. Conversely, domestically, as a new release
following on from World Traveler Dressings®, responding to the increasing awareness of healthamong consumers, it announced the Triple Balance™ series of non-oil dressings and launched two
products in October, Kingoma and Caesar Salad. With the keywords of low calorie, low sugar, andreduced salt, these products are being sold to restaurants and CVS, mass-retailers, food dispensers,
and bakers. Further, at the same time it released smaller 200ml packages of three of its currently
most popular dressings.
In processed egg products, the Company plans to strengthen the lineup of its Sozaitei® series toward
opening-up new markets. Since the production of this series was started at the Shizuoka Fujisan
Factory, it has acquired a strong reputation for taste and quality. In the restaurant industry, this brandbecame established in a short period of time and its products became hits, while in the fall of 2016,
the Company renewed the brand and is further strengthening its product capabilities. Specifically, it
extended the expiration dates of refrigerated-type products from 21 days to 30 days, and in addition,
it is focusing on the Dashi (soup stock) from certain production areas (dried-bonito Dashi from Yaizu
in Shizuoka Prefecture and Makombu (Japanese kelp) Dashi from Hokkaido), and is introducing
various marketing techniques, such as creating logos and including QR codes on the package
designs that guide consumers to recommended recipes on its website. As yet, Sozaitei® products
do not provide a high percentage of the total sales of processed egg products, but their sales are
expected to grow in the future.
Sales are expected to steadily increase in the delicatessen-related business, supported by the
expansion of the HMR market. There are concerns about profitability in 2H due to the soaring pricesof vegetables, but it is thought that the effects of the higher sales will be able to cover for this. In otherbusinesses, Salad Cafe sales are forecast to trend basically the same as in the previous fiscal year.
The aim for the Indonesian affiliate is to recover sales of mayonnaise for retailers and to achieve
profitability on a single-month basis.

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

■■Future Outlook

A large-scale investment totaling more than ¥15bn over 2
years is expected(3) The concept for the Group’s production bases

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

23-Jan.-17

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

On November 7, 2016, the Company announced its concept for the Group’s production basesin the future. Within the context of the steady expansion of results, this is its basic concept for
expanding production capacity in the future and it is finalizing the details. Specifically, it plans toincrease production facilities at the Shizuoka Fujisan Factory (main products: omelet products) andthe Nishi-Nihon Factory (long-life salads and dressings) and build new factories at its consolidated
subsidiaries of KANTOH DIETCOOK Co., Ltd. (fresh delicatessen items) and DIETCOOK SHIRAOI
Co., Ltd. (fresh delicatessen items and long-life salads). It is currently securing the land to build the
new KANTOH DIETCOOK factory.
The Company intends for all of the increased production facilities and new factories to have been
constructed and be operational by March 2019, and it is expected to be a large-scale investment
totaling more than ¥15bn over 2 years. The largest amount the Company spent on capital investment
recently was for the construction of the Shizuoka Fujisan Factory. However, this investment will takeplace over two years and involve increasing production facilities and constructing new factories atfour separate bases. The Company is considering which method among various options to use
to fund this capital investment, including effectively utilizing cash on hand. The Company will doso while remaining aware of the shareholders’ equity ratio and the ROE level. Details such as the
production capacity are as yet undetermined, but if the expanded facilities and new factories become
operational as planned, the Company’s net sales can be expected to further increase.

㻯㼔㼍㼚㼓㼑㻌㼕㼚㻌㼏㼍㼜㼕㼠㼍㼘㻌㼑㼤㼜㼑㼚㼐㼕㼠㼡㼞㼑㻌㼍㼚㼐㻌㼐㼑㼜㼞㼑㼏㼕㼍㼠㼕㼛㼚㻯㼍㼜㼕㼠㼍㼘㻌㼕㼚㼢㼑㼟㼠㼙㼑㼚㼠

(¥mn)
㻣㻘㻜㻜㻜

㻰㼑㼜㼞㼑㼏㼕㼍㼠㼕㼛㼚

㻢㻘㻠㻞㻠

㻢㻘㻜㻜㻜
㻡㻘㻜㻜㻜
㻠㻘㻜㻜㻜
㻟㻘㻜㻜㻜
㻞㻘㻜㻜㻜
㻝㻘㻜㻜㻜

㻢㻢㻠

㻝㻘㻣㻢㻥

㻝㻘㻠㻞㻝

㻝㻘㻜㻜㻠

㻥㻢㻜

㻝㻘㻡㻜㻤

㻣㻢㻢

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

(4) The progress made in the three-year Mid-term Management Plan
The Company started a new three-year Mid-term Management Plan, “KENKO Five Code 20152017” from FY15, with the current fiscal year being the Plan’s second year. In terms of the Plan’s
specific management targets, it aims for consolidated sales of ¥75bn, a consolidated recurring profit
margin of 5%, a shareholders’ equity ratio of 50%, and to maintain ROE at 8% or above in FY3/18. At
the present stage the progress made has been extremely smooth, with the recurring profit target insight of being achieved 1 year ahead of schedule, and ROE also expected to be kept at above 12%,
meeting the target of 8% or above.
KENKO Five Code 2015-2017
Consolidated net sales
Consolidated recurring
profit margin
Shareholders’ equity ratio
ROE

FY3/1560,327

FY3/16
66,933

FY3/17 E
70,800FY3/18 targets
75,000

4.6%

5.1%

5.9%

5.0%

45.5%
9.6%

45.6%
11.2%

-

50.0%
At least 8%

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

■■Future Outlook

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

23-Jan.-17

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

There are three main reasons why results are trending above the targets. The first reason is thesteady expansion of the restaurants and HMR markets, which are the Company’s main markets,
due to factors such as the increase in single-person households and the greater participation by
women in society, for example more working women. The second reason is that the Company
continues to propose detailed menus and conduct sales activities tailored to specific industries andformats in order to respond to the issues in the restaurant industry, that it requires products andmenus that contribute to the “simplification” of cooking due to its chronic shortage of labor, and also
the development of menus that reflect the rising awareness of health among consumers. This isenabling the Company to expand its share of business with existing customers and also develop new
customers. The third reason is that results have improved at a pace faster than expected due to thestrong sales of processed egg products for CVS and of long-life salads as PB products.
Further, within business strategies aimed at achieving the mid-term management plan, the Company
is tackling the following three major initiatives – “Establishing our position as the ‘Leading Company
in Salads,’” “Further evolving Salad Cuisine,” and “Strengthening the management platform toproactively promote expansion into global markets.” In order to establish its position as the ‘Leading
Company in Salads,’ the Company’s policy is to expand the scope of sales in its various existing
businesses. To further evolve Salad Cuisine, it intends to strengthen information provision throughthe media and its own website, strengthen branding, and promote its Salad Cuisine cooking schools
and Salad Cafe shops. On its own website, the Company has posted a total of 1,330 recipes (as ofthe end of September 2016), including by business format and by season, and it uses its website
to disseminate information on trends. For the shop opening strategy for Salad Cafe, its policy is toconsider openings while giving the greatest priority to profitability.
As part of its strengthening of the management platform to proactively promote expansion into
global markets, the Company newly established a research office in Vancouver, Canada, in July
2015. Specific results have already started to appear from the information collected by this base,including the early launch of new products in the World Traveler Dressings® series. It is difficult for
the Company to expand its export business quickly due to the various hurdles that must be cleared,
such as meeting each country’s import restrictions, but it intends to expand profits centered onexports of mayonnaise and dressings.

伪伪Shareholder Returns Policy
For FY3/17, plans to increase the dividend per share by ¥2 to¥30
The Company returns profits to shareholders through paying dividends and providing special gifts
to shareholders. On the basis of a benchmark dividend payout ratio of 20% on a consolidated
basis, and taking into consideration the continuity of dividends, its policy is to raise dividends inline with corporate growth and development and with increased earnings. In FY3/17, the Company
plans to increase the dividend by ¥2 y-o-y to ¥30, which will be the third consecutive fiscal year of
higher dividends. However, if the results achieve the Company targets, the dividend payout ratio will
become 15.9%, meaning we can expect a further hike in dividends.
At the same time, the Company gives its products as gifts to shareholders registered on March 31
of each fiscal year. 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 with 1,000 or more shares.

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

■■Shareholder Returns Policy㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛
(¥)
㻟㻡㻚㻜

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻞㻣㻚㻢㻌

2915 Tokyo Stock ExchangeFirst Section

㻞㻟㻚㻢㻌

㻞㻡㻚㻜

㻞㻝㻚㻞㻌

㻝㻥㻚㻥㻌

㻞㻡㻚㻜

㻝㻥㻚㻝㻌
㻝㻡㻚㻥㻌

㻞㻜㻚㻜
㻞㻤㻚㻜㻌
㻞㻜㻚㻜㻌

㻞㻝㻚㻜㻌

㻟㻜㻚㻜㻌
㻝㻜㻚㻜

㻞㻟㻚㻜㻌

㻞㻝㻚㻜㻌

㻡㻚㻜

㻡㻚㻜
㻜㻚㻜

㻜㻚㻜
㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

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

㻞㻜㻚㻜
㻝㻡㻚㻜

㻝㻡㻚㻜
㻝㻜㻚㻜

23-Jan.-17

（㻑）
㻟㻜㻚㻜

㻟㻜㻚㻜

KENKO Mayonnaise
Co., Ltd.

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㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Consolidated income statement

Net sales(y-o-y)Cost of goods sold(% of sales)
SG&A expenses(% of sales)
Operating profit(y-o-y)(% of sales)
Non-operating profit
Non-operating expenses(equity in net profit (loss) of affiliate)
Recurring profit(y-o-y)(% of sales)
Extraordinary profit
Extraordinary loss
Income before income tax(y-o-y)(% of sales)
Corporate income tax, etc.
(effective tax rate)
Net profit attributable to parent shareholders(y-o-y)(% of sales)
Number of shares outstanding (1,000)
EPS ( ¥)
Dividend per share ( ¥)BPS ( ¥)
Dividend payout ratio (%)
Number of employees(including temporary employees)
Source: the Company’s financial results summary

FY3/1354,533
5.1
39,62872.7
12,126
22.2
2,778
29.6
5.1
100
303
-216
2,574
24.1
4.7
2
188
2,388
20.0
4.4
979
41.0
1,409
36.8
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
42.9
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

FY3/16
66,93311.0
49,68974.2
13,807
20.6
3,436
14.5
5.1
158
168
-81
3,426
23.4
5.1
225
885
2,767
-0.9
4.1
681
24.6
2,085
27.0
3.1

(¥mn, %)
FY3/17 E
70,800
5.8
4,100
19.3
5.8
4,200
22.6
5.9
2,680
28.5
3.8

14,211
99.16
21.00
1041.5421.2

14,211
89.08
21.00
1112.55
23.6

14,211115.5723.00
1264.38
19.9

14,211146.7628.00
1358.9419.1

14,211
188.59
30.00
15.9

2,936

2,944

2,841

2,957

-

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 theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock
price and index information. The trademark and value of the “JASDAQ INDEX” are theintellectual properties of the Tokyo Stock Exchange, and therefore all rights to them belong
to the Tokyo Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. 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 informationthat was current at the time the report was produced, but this information and the content
of this report 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 duplicationsof the report, without the express written consent of FISCO, is strictly prohibited. Anytransmission, reproduction, distribution or transfer of the report or its duplications is also
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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.