COMPANY RESEARCH AND ANALYSIS REPORTKENKO Mayonnaise Co., Ltd.
2915
Tokyo Stock Exchange First Section

29-Dec.-2017
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. FY3/18 1H results........................................................................................................................................

01

2. FY3/18 outlook...................................... ......................................................................................................

01

3. Progress made on the concept for the Group’s production bases. ..............................................................

01

4. Shareholder return policy....................... ......................................................................................................

02■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. Scope of business................................. ......................................................................................................

02

2. Company strengths. . .............................. ......................................................................................................

05

3. Production structures and consolidated subsidiaries...................................................................................

07■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. Overview of FY3/18 1H results. . ............. ......................................................................................................

08

2. Trends by business segment. . ......................................................................................................................

10

3. Financial position and management indicators. ...........................................................................................

13■Future outlook--------------------------------------------------------------------------------------------------------------------------------------------------------------- 14
1. Outlook for FY3/18.. .....................................................................................................................................

14

2. Sales outlook by segment. . .................... ......................................................................................................

17■Longer-term management strategy--------------------------------------------------------------------------------------------------------- 18
1. Concept for the Group’s production bases. .................................................................................................

18

2. Progress made on the Mid-term Management Plan.....................................................................................

20■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 21■Information security measures--------------------------------------------------------------------------------------------------------------------- 22

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

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir██SummaryPrices of raw materials have fallen further and the results outlook is
for higher profits from 2H
KENKO Mayonnaise Co., Ltd. <2915> (hereafter, “KENKO Mayo” or “the Company”) is a manufacturer of foods forcommercial use engaged in the production and sale of salads and delicatessen items, processed egg products, aswell as mayonnaise and dressings, and other products. It holds a leading position in the commercial-use market
and the leading market share in the long-life salads category at 42.3%. It has a 15.2% share of the mayonnaise
and dressings market, second behind the market leader, and 9.5% in the omelet products market, third behind themarket leader.
1. FY3/18 1H results
In the FY3/18 1H consolidated results, net sales increased but profits decreased, with net sales increasing 2.8%
YoY to ¥37,021mn and recurring profit decreasing 12.3% to ¥2,184mn. Factors decreasing profit were the risein vegetable prices, particularly of potatoes, due to typhoon damage in the previous year, and higher fixed costs,
including personnel costs and systems investment. The growth in net sales slowed, including for convenience
stores (CVS) due to continued unseasonable weather during the summer. But as a result of its meticulous proposal
activities tailored to industries and business formats, the Company once again achieved a record high on a fiscal
half-year basis. The results were slightly below the initial Company forecasts (net sales of ¥37,880mn and recurring
profit of ¥2,210mn).
2. FY3/18 outlook
Initial forecasts have been left unchanged for the FY3/18 consolidated results. The Company projects for net sales
to increase 5.9% YoY to ¥75,000mn and recurring profit to rise 2.1% to ¥4,100mn. The outlook for net sales is forthe increasing trend to continue, although there remains a risk that the result will be slightly below forecast becauseof the part that it was below forecast up to 1H. Conversely, in profits, the Hokkaido potato yield was about 10%
higher than in the previous year, so a reduction in raw material prices can be expected in 2H. Therefore, at FISCO,
we think that it is possible that the full fiscal year recurring profit will be around the same level as the Company’s
forecast. FY3/18 is the final year of the mid-term management plan, and it seems the Company will be able tomaintain a recurring profit margin at the 5% level.
3. Progress made on the concept for the Group’s production bases
For its domestic bases, the Company plans to expand facilities at two factories and build two new factories with afocus on growth from FY3/19 onwards. In addition to expanding production facilities at its Shizuoka Fujisan Factory,
which is the production base for processed egg products, and Nishi-Nihon Factory, which is the production basefor long-life salads and dressings, it will build two new factories for its consolidated subsidiaries that produce fresh
delicatessen items. The total investment amount is expected to be more than ¥15bn and production capacity will
increase by an equivalent of sales of more than ¥10bn in sales annually with a single operating team working in aday, compared to the previous structure. The subsidiaries’ new factories are scheduled to become operational in
FY3/19 Q1, and the Shizuoka Fujisan Factory and Nishi-Nihon Factory in Q4. Therefore, depreciation expenses
are forecast to increase from FY3/19 to FY3/20. But despite this, it is considered that the Company is aiming tomaintain or improve the recurring profit margin of 5% through the effects of higher sales and from strengthening thedevelopment of high-value-added products and improving production efficiency.

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

01 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Summary

4. Shareholder return policy
The Company’s shareholder return policy is based on stable dividends, with a payout ratio of 20% as thebench¬mark. It plans to pay ¥37 in FY3/18 as it did in FY3/17, which represents a dividend payout ratio of 21.2%.
Also, as a shareholder incentive, the Company awards shareholders registered at the end of March of each fiscal
year with its own products (worth ¥1,000 or ¥2,500) according to the number of shares held.
Key Points
Due to meticulous proposal activities tailored to industries and business formats, the outlook is for record highresults again in FY3/18• The sales capacity is scheduled to increase by around ¥10bn with two new factories and expanded facilities at
two existing factories becoming operational in FY3/19• Aiming for stable growth, while maintaining the recurring profit margin at a level above 5%•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻌㻔㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻕㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕㻝㻜㻜㻘㻜㻜㻜

㻡㻘㻜㻜㻜
㻠㻘㻜㻝㻣

㻤㻜㻘㻜㻜㻜

㻢㻜㻘㻜㻜㻜

㻠㻘㻝㻜㻜
㻠㻘㻜㻜㻜

㻟㻘㻠㻞㻢
㻞㻘㻣㻣㻢

㻞㻘㻡㻣㻠

㻟㻘㻜㻜㻜

㻞㻘㻞㻡㻤

㻠㻜㻘㻜㻜㻜
㻡㻠㻘㻡㻟㻟

㻡㻣㻘㻟㻜㻝

㻢㻜㻘㻟㻞㻣

㻢㻢㻘㻥㻟㻟

㻣㻜㻘㻤㻝㻞

㻣㻡㻘㻜㻜㻜

㻞㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻝㻘㻜㻜㻜

㻜

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

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Company overview
Has the top market share in the industry for long-life salads and isincreasing its share for processed egg products
1. Scope of business
KENKO Mayo is engaged in the production and sale of salads and delicatessen items, processed egg products,
including mayonnaise and dressings, and other products for commercial use. It also undertakes operations suchas the production and sale of delicatessen items that are delivered daily and retail store operations through its
consolidated subsidiaries.

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

02 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir

Company overview

Looking at the percentages of total net sales (consolidated) by product in the last five fiscal periods, sales ofsalads and delicatessen items, which provide more than 40%, have been steadily expanding, and major growth inprocessed egg products is noteworthy. Main supporting factors are the start of operations in FY3/14 of the Shizuoka
Fujisan Factory, which specializes in processed egg products, and the subsequent expansion of its production
capacity, in addition to the acquisition of a series of customers in the restaurant industry, including conveyer belt
sushi chains, and CVS, thanks to customers’ favorable assessments of the quality of the processed egg products
produced at this factory. In addition, egg salad for sandwiches and breads with fillings that are being newly adopted,
mainly by CVS, is supporting growth. The percentage of total net sales provided by processed egg products rosefrom 24.2% in FY/14 1H to 29.6% in FY3/18 1H. Conversely, sales of mayonnaise and dressings followed market
trends on the whole and have moved within a flat range in the last few years.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼜㼞㼛㼐㼡㼏㼠㻌㻔㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻕㻿㼍㼘㼍㼐㼟㻌㼍㼚㼐㻌㼐㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻌㼕㼠㼑㼙㼟㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻌㼍㼚㼐㻌㼐㼞㼑㼟㼟㼕㼚㼓㼟㻔¥㼙㼚㻕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㼟

㻝㻤㻘㻜㻜㻜
㻝㻠㻘㻤㻥㻣

㻝㻢㻘㻜㻜㻜
㻝㻠㻘㻜㻜㻜

㻝㻞㻘㻢㻥㻠

㻤㻘㻣㻡㻜

㻤㻘㻟㻡㻠

㻤㻘㻜㻜㻜
㻢㻘㻜㻜㻜

㻝㻢㻘㻟㻜㻥

㻝㻟㻘㻟㻤㻠

㻝㻞㻘㻜㻜㻜
㻝㻜㻘㻜㻜㻜

㻝㻡㻘㻢㻠㻞

㻝㻜㻘㻤㻜㻜

㻝㻜㻘㻥㻢㻣

㻤㻘㻤㻡㻤

㻤㻘㻥㻤㻥

㻥㻘㻝㻜㻜

㻣㻘㻤㻝㻢

㻤㻘㻢㻝㻠

㻡㻜㻠

㻡㻟㻡

㻢㻟㻞

㻣㻜㻤

㻣㻡㻡

㻲㼅㻟㻛㻝㻠㻌㻝㻴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㻲㼅㻟㻛㻝㻤㻌㻝㻴

㻣㻘㻜㻜㻟

㻠㻘㻜㻜㻜
㻞㻘㻜㻜㻜
㻜

Source: Prepared by FISCO from the Company’s results briefing materials

Looking at the composition of total net sales (consolidated) by industry in FY3/18 1H, the highest was to CVS at
28.9%, next was restaurants at 26.7%, and then mass retailers at 22.1%, so these three fields provided more than
70% of total net sales. In the last few years, the home meal replacement (HRM) market has been expanding in thecontext of the trend toward more “solitary meals” with the rise in single-person households and the “simplification”
of cooking at home due to changes such as the shift to nuclear families and the greater participation of womenin society, including more working women. Demand from CVS and mass retailers is growing for products such as
egg salad for sandwiches and atsuyaki (thick omelets) for lunch boxes, while demand for small packaged long-life
salads and dressings are also increasing.

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

03 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Company overview

㻿㼍㼘㼑㼟㻌㼏㼛㼚㼠㼞㼕㼎㼡㼠㼕㼛㼚㼟㻌㼎㼥㻌㼕㼚㼐㼡㼟㼠㼞㼥㻌㻔㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻘㻌㻲㼅㻟㻛㻝㻤㻌㻝㻴㻕
㻠㻚㻟㻑

㻠㻚㻣㻑

㻞㻤㻚㻥㻑

㻝㻟㻚㻟㻑

㻯㼂㻿
㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㼟㻹㼍㼟㼟㻌㼞㼑㼠㼍㼕㼘㼑㼞㼟㻮㼞㼑㼍㼐㻌㼙㼍㼗㼑㼞㼟㻲㼛㼛㼐㻌㼐㼕㼟㼜㼑㼚㼟㼕㼚㼓㻻㼠㼔㼑㼞㼟

㻞㻞㻚㻝㻑

㻞㻢㻚㻣㻑

Source: Prepared by FISCO from the Company’s results briefing materials

Looking at market share by industry, the Company’s share in the mayonnaise and dressings market has trended
stably at around 15% over the last few years and it has maintained its second-ranking position. As it virtuallyspecializes in commercial use, its products are not very familiar to general consumers, but in the commercial-use
field it competes for the top position with Kewpie Corporation <2809>, which is the leading manufacturer, and it has
a track record of supplying many major restaurants and hotel chains. Meanwhile, the Company, which is a pioneerof long-life salads, has established an industry-leading market share of over 40% for this product. Recently, salesof small packaged long-life salads to CVS have grown significantly, and it has also been expanding its market shareof this product. The Company ranks third in the industry for omelet products with a market share of around 9%.
Until the completion of the Shizuoka Fujisan Factory this was around 6%, but its share has expanded in the last few
years and it is expected to grow further in the future.

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㻢㻕㻝㻠㻚㻠㻑㻷㼑㼣㼜㼕㼑

㻝㻟㻚㻤㻑㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻡㻢㻚㻢㻑㻭㼖㼕㼚㼛㼙㼛㼠㼛㻻㼠㼔㼑㼞㼟

㻝㻡㻚㻞㻑

Source: Prepared by FISCO from NIKKAN KEIZAI TSUSHINSHA, Inc.’s “The Beverage & Food Statistics Monthly”

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

04 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Company overview

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㼑㼟㼠㼕㼙㼍㼠㼕㼛㼚㼟㻌㼒㼛㼞㻌㻞㻜㻝㻢㻕㻞㻢㻚㻠㻑㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻠㻞㻚㻟㻑㻷㼑㼣㼜㼕㼑
㼅㼍㼙㼍㼦㼍㼗㼕
㻝㻞㻚㻝㻑㻻㼠㼔㼑㼞㼟

㻝㻥㻚㻞㻑

Source: Prepared by FISCO from FUJI Keizai Management Co., Ltd.’s “Foodstuff Marketing Handbook”

㻻㼙㼑㼘㼑㼠㻌㼜㼞㼛㼐㼡㼏㼠㼟㻌㼙㼍㼞㼗㼑㼠㻌㼟㼔㼍㼞㼑㻌㻔㼑㼟㼠㼕㼙㼍㼠㼕㼛㼚㼟㻌㼒㼛㼞㻌㻞㻜㻝㻢㻕㻞㻢㻚㻣㻑㻷㼑㼣㼜㼕㼑
㻠㻠㻚㻠㻑㻭㻴㻶㻵㻷㻭㻺
㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻻㼠㼔㼑㼞㼟
㻝㻥㻚㻠㻑㻥㻚㻡㻑

Source: Prepared by FISCO from FUJI Keizai Management Co., Ltd.’s “Foodstuff Marketing Handbook”

2. Company strengths
The Company’s strength lies in its integration of the production, development and sales departments, namely, its
nationwide production system that stably supplies high-quality products, product development capabilities thatmeet customer needs, and its meticulous sales response capabilities.

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

05 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Company overview

High quality means not only good taste, as safety and security are also important elements. Further, for the Company,
which is focused on sales in the commercial-use field, 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 industries and business formats, with thesales, product development, production and menu development teams acting in concert. Seemingly as a result of
these efforts, the Company has continued to outpace the restaurants and HMR markets in terms of sales growthrate since 2011.
Broad product lineup* Figures for KENKO Mayonnaise are on a standalone basis
Source: The Company’s results briefing materials㻳㼞㼛㼣㼠㼔㻌㼞㼍㼠㼑㻌㼍㼚㼐㻌㼟㼍㼘㼑㼟㻌㼓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)
㻝㻝㻚㻜㻑

㻝㻞㻚㻜㻑
㻝㻜㻚㻜㻑
㻤㻚㻜㻑
㻢㻚㻜㻑

㻡㻚㻝㻑

㻡㻚㻝㻑

㻡㻚㻟㻑

㻞㻚㻤㻑

㻞㻚㻥㻑

㻡㻚㻤㻑

㻠㻚㻜㻑

㻞㻚㻡㻑
㻞㻚㻜㻑
㻜㻚㻜㻑
㻙㻞㻚㻜㻑

㻞㻚㻜㻑

㻙㻜㻚㻞㻑

㻟㻚㻣㻑

㻝㻚㻟㻑

㻙㻜㻚㻥㻑
㻙㻞㻚㻜㻑

㻙㻠㻚㻜㻑
㻞㻜㻝㻜

㻞㻜㻝㻝

㻞㻜㻝㻞

㻞㻜㻝㻟

㻞㻜㻝㻠

㻞㻜㻝㻡

㻞㻜㻝㻢

Source: Prepared by FISCO from the Company’s financial results and data from the Foodservice Industry Research InstituteWe encourage readers to review our complete legal statement on “Disclaimer” page.

06 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Company overview

3. Production structures and consolidated 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 totheir operating areas because they produce delicatessen items that are delivered daily 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. Someof the factories therefore operate 365 days a year, with flexible production systems that can quickly respond tochanges in order volumes.
Also, the Company’s subsidiary Salad Cafe Co., Ltd. operates specialty salad shops. As of the end of September
2017, there were 18 shops, mainly opened in department stores and shopping malls in the metropolitan Tokyo andKansai areas. The shops also play the role of disseminating information, such as on new proposals for salad menus.
In terms of overseas operations, the Company established a joint venture (49% equity stake) in Indonesia with alocal food producer in 2012, which began production of mayonnaise and sauces in the fall of 2013 (annual capacityof about 4,000 tons). This factory has obtained Halal certification, and apart from sales of these products for homeand commercial use, it is engaged in the sale of liquid eggs. Sales of Halal-certified mayonnaise to supermarkets
selling Japanese food products and other customers in Indonesia have begun. Going forward, the company will
actively implement sales activities to raise awareness and expand sales by developing local mayonnaise markets andculture and introducing products for commercial use by Japanese companies. 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 business segments.
Affiliates (scope of operations and investment ratio)
Consolidated subsidiaries

Investment ratio(%)

Main business

DIETCOOK SHIRAOI Co., Ltd.

100.0

Delicatessen-related production and sales

Lilac FOODS Co., Ltd.

100.0

Delicatessen-related production and sales

KANTOH DIETCOOK Co., Ltd.

100.0

Delicatessen-related production and sales

KANTOH DIET EGG Co., Ltd.

100.0

Delicatessen-related production and sales

KANSAI DIETCOOK Co., Ltd.

100.0

Delicatessen-related production and sales

DIETCOOK SUPPLY Co., Ltd.

100.0

Delicatessen-related production and sales

KYUSHU DIETCOOK Co., Ltd.

100.0

Delicatessen-related production and sales

Hello Delica Co., Ltd.

100.0

Delicatessen-related sales

Salad Cafe Co., Ltd.

100.0

Operation of shops specializing in salads

49.0

Mayonnaise, dressings, and sauces production and sales(equity-method affiliates)
PT. Intan Kenkomayo Indonesia* Shows Group investment ratio, including indirect investments from wholly-owned subsidiaries
Source: Prepared by FISCO from the Company’s securities report

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07 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir██Results trends
Profits declined due to higher raw material prices,
but once again achieved a record high for net sales
1. Overview of FY3/18 1H results
In the FY3/18 1H consolidated results announced on November 9, sales increased but profits decreased, with net
sales increasing 2.8% YoY to ¥37,021mn, operating profit decreasing 13.1% to ¥2,152mn, recurring profit falling
12.3% to ¥2,184mn, and net profit attributable to parent shareholders declining 11.9% to ¥1,489mn. The initial
Company forecasts were for higher sales and lower profits due to the impact of the rising prices of raw materials,
with the main factor being the soaring price of potatoes, although net sales and operating profit were both slightly
under these forecasts by 2.3% and 2.2%, respectively. This was due to significant impacts caused by continued
unseasonable weather during the summer and sluggish growth of sales to CVS.
FY3/18 1H consolidated results(¥mn)
FY3/17 1H
Results

FY3/18 1H
Initial forecast

Results

YoY

vs. forecast

Net sales

36,009% of sales-

37,88037,021% of sales
-

+2.8%

-2.3%

Gross profit

9,573

26.6%

-

9,576

25.9%

+0.0%

-

SG&A expenses

7,097

19.7%

-

7,423

20.1%

+4.6%

-

Operating profit

2,476

6.9%

2,200

2,152

5.8%

-13.1%-2.2%

Recurring profit

2,490

6.9%

2,210

2,184

5.9%

-12.3%-1.2%

Net profit attributable toparent shareholders

1,690

4.7%

1,550

1,489

4.0%

-11.9%-3.9%

Source: Prepared by FISCO from the Company’s financial results

Looking at the respective trends in the Company’s main target markets of restaurants, CVS, and mass retailers(supermarkets), net sales for the restaurant market as a whole trended steadily, up approximately 3% YoY. By
business format, they increased 5% for fast food restaurants, which had the highest growth among the main
business formats. It is considered that the reason for this was that sales promotion measures, including campaigns
and seasonal menus, were favorably received. Family restaurants also continued to perform strongly, up 2%, whilesales stopped falling and remained around the same level YoY despite the continued decrease in the number oflocations in the izakaya (Japanese taverns) and pub business format. This was due to the increase in customer
numbers within the ongoing economic recovery.
As for sales of daily items to CVS, it is estimated that sales at existing stores remained flat YoY, but sales grew
approximately 2% overall as a result of the increase in the number of stores. Alongside the rise in health consciousness and growth in demand in the HMR market, the Company is enhancing its product lineup of salads
and delicatessen items and strengthening sales floors. As previously mentioned, due to the impact of continued
unseasonable weather in the summer, growth has slightly slowed compared to the previous fiscal year, although it
remained steady. In addition, against the backdrop of growth in sales of delicatessen items for supermarkets anddemand in the HMR market, net sales were strong overall, up around 3% YoY.

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

08 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir

Results trends

Major markets’ monthly sales trends (YoY)㻯㼂㻿㻌㻔㼐㼍㼕㼘㼥㻌㼕㼠㼑㼙㻌㼟㼍㼘㼑㼟㻕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㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㻌㼟㼍㼘㼑㼟

㻣㻚㻜㻑

㻡㻚㻥㻑

㻡㻚㻠㻑

㻢㻚㻜㻑
㻡㻚㻜㻑

㻞㻚㻜㻑

㻠㻚㻡㻑

㻟㻚㻤㻑 㻡㻚㻟㻑

㻠㻚㻜㻑
㻟㻚㻜㻑

㻡㻚㻜㻑

㻠㻚㻠㻑
㻟㻚㻜㻑

㻟㻚㻜㻑 㻞㻚㻤㻑㻞㻚㻜㻑㻜㻚㻢㻑 㻜㻚㻣㻑㻝㻚㻜㻑㻟㻚㻟㻑 㻟㻚㻞㻑㻝㻚㻤㻑㻝㻚㻣㻑 㻟㻚㻜㻑㻝㻚㻡㻑 㻝㻚㻡㻑㻝㻚㻠㻑㻝㻚㻡㻑 㻜㻚㻜㻑

㻜㻚㻜㻑
㻜㻚㻜㻑

㻙㻞㻚㻜㻑

㻙㻜㻚㻟㻑

㻙㻜㻚㻝㻑

㻭㼡㼓㻚㻌㻝㻢

㻟㻚㻡㻑 㻟㻚㻟㻑

㻙㻜㻚㻞㻑
㻙㻜㻚㻣㻑

㻙㻝㻚㻟㻑

㻙㻝㻚㻣㻑
㻶㼡㼚㻚㻌㻝㻢

㻟㻚㻜㻑㻝㻚㻝㻑 㻞㻚㻞㻑 㻞㻚㻤㻑 㻞㻚㻣㻑 㻞㻚㻞㻑
㻜㻚㻢㻑
㻝㻚㻢㻑
㻝㻚㻡㻑
㻜㻚㻥㻑

㻙㻜㻚㻡㻑
㻙㻝㻚㻥㻑

㻙㻟㻚㻜㻑
㻭㼜㼞㻚㻌㻝㻢

㻠㻚㻣㻑㻞㻚㻡㻑 㻟㻚㻥㻑 㻞㻚㻞㻑

㻞㻚㻠㻑

㻝㻚㻜㻑
㻜㻚㻞㻑

㻙㻝㻚㻜㻑

㻠㻚㻣㻑

㻡㻚㻟㻑

㻻㼏㼠㻚㻌㻝㻢

㻰㼑㼏㻚㻌㻝㻢

㻲㼑㼎㻚㻌㻝㻣

㻭㼜㼞㻚㻌㻝㻣

㻶㼡㼚㻚㻌㻝㻣

㻭㼡㼓㻚㻌㻝㻣

Source: Prepared by FISCO from data from the Japan Food Service Association,
Japan Supermarket Association and Japan Franchise Association

In this market environment, the Company’s net sales grew 2.8% YoY, which is roughly the same growth rate as in
the restaurant and HMR market. It is considered that this is due to positive effects from the Company’s meticulous
proposal and sales activities tailored to industries and business formats.
In terms of the factors causing recurring profit to increase and decrease,, higher sales was an increasing factorof ¥141mn, while decrease factors were ¥162mn from the impact of higher raw material prices, particularly for
potatoes, and ¥66mn from lower production efficiency, which was mainly due to a decline in the quality of vegetables.
Another decreasing factor was the rise in fixed costs and other costs of ¥219mn (including personnel costs, systems
investment, and exhibition costs). Within the raw materials, the prices of eggs and cooking oil trended at aroundthe same level YoY.

㻲㼍㼏㼠㼛㼞㼟㻌㼍㼒㼒㼑㼏㼠㼕㼚㼓㻌㼞㼑㼏㼡㼞㼞㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㻲㼅㻟㻛㻝㻤㻌㻝㻴㻕
㻔¥㼙㼚㻕
㻞㻘㻤㻜㻜

㻗㻝㻠㻝

㻞㻘㻢㻜㻜

㻙㻢㻢

㻞㻘㻠㻜㻜

㻙㻞㻝㻥

㻞㻘㻞㻜㻜

㻴㼕㼓㼔㼑㼞㻌
㼟㼍㼘㼑㼟

㻞㻘㻜㻜㻜

㻝㻘㻤㻜㻜

㻙㻝㻢㻞

㻞㻘㻠㻥㻜

㻸㼛㼣㼑㼞㻌
㼜㼞㼛㼐㼡㼏㼠㼕㼛㼚㻌㼑㼒㼒㼕㼏㼕㼑㼚㼏㼥

㻝㻘㻢㻜㻜
㻝㻘㻠㻜㻜

㻲㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㻵㼚㼏㼞㼑㼍㼟㼑㼟㻌㼕㼚㻌㼕㼚㻌㼞㼍㼣㻌
㼒㼕㼤㼑㼐㻌㼏㼛㼟㼠㼟㻘㻌㼙㼍㼠㼑㼞㼕㼍㼘㻌㼑㼠㼏㻚㼜㼞㼕㼏㼑㼟

㻞㻘㻝㻤㻠

㻝㻘㻞㻜㻜
㻲㼅㻟㻛㻝㻣㻌㻝㻴㻲㼅㻟㻛㻝㻤㻌㻝㻴

Source: Prepared by FISCO from the Company’s results briefing materials

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

09 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Results trends

Also, in non-operating profit, the equity in net loss in affiliates shrunk from ¥14mn in FY3/17 1H to ¥7mn. Although
it is taking slightly longer than initially planned, the profit-loss performance of the equity-method affiliate in Indonesia
is improving from the higher sales of liquid eggs and commercial-use mayonnaise, mainly for local Japaneserestaurants. The company is aiming to become profitable in FY3/18 2H and to achieve the profit-loss breakevenpoint for the full fiscal year.

Achieved higher sales for all products, particularly salads anddelicatessen items
2. Trends by business segment(1) Seasoning and processed food businessIn this business, net sales increased 3.1% YoY to ¥30,885mn and segment profit decreased 4.8% to ¥1,785mn.
Profits fell on a half fiscal year basis, but on looking only at Q2 (July-September 2017), net sales increased 3.3%
and segment profit grew 3.7%, marking the first increase in profits in four fiscal quarters. Also, the segment profit
margin was 6.5%, which was above its most recent peak in the previous Q2.

㻾㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㼟㼑㼍㼟㼛㼚㼕㼚㼓㻌㼍㼚㼐㻌㼜㼞㼛㼏㼑㼟㼟㼑㼐㻌㼒㼛㼛㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟㻿㼍㼘㼍㼐㼟㻌㼍㼚㼐㻌㼐㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻌㼕㼠㼑㼙㼟㻌㻔㼘㼑㼒㼠㻕㻼㼞㼛㼏㼑㼟㼟㼑㼐㻌㼑㼓㼓㻌㼜㼞㼛㼐㼡㼏㼠㼟㻌㻔㼘㼑㼒㼠㻕㻿㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕㻔¥㼙㼚㻕㻟㻡㻘㻜㻜㻜

㻝㻘㻤㻣㻡㻟㻜㻘㻜㻜㻜
㻞㻡㻘㻜㻜㻜

㻞㻜㻘㻜㻜㻜
㻝㻡㻘㻜㻜㻜

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㻔㼘㼑㼒㼠㻕㻻㼠㼔㼑㼞㼟㻌㻔㼘㼑㼒㼠㻕

㻝㻘㻡㻞㻣

㻤㻘㻥㻤㻞
㻤㻘㻢㻝㻠

㻣㻞㻝

㻝㻜㻘㻡㻥㻡

㻝㻜㻘㻣㻤㻠

㻝㻘㻤㻜㻜
㻝㻘㻡㻜㻜

㻝㻘㻞㻜㻜
㻤㻘㻤㻡㻤

㻤㻘㻥㻤㻥

㻝㻜㻘㻜㻜㻜
㻡㻘㻜㻜㻜

㻞㻘㻝㻜㻜

㻝㻘㻣㻤㻡
㻢㻣㻝

㻢㻝㻞

㻔¥㼙㼚㻕

㻥㻜㻜

㻢㻜㻜
㻥㻘㻞㻝㻝

㻥㻘㻤㻞㻤

㻝㻜㻘㻟㻥㻝

㻲㼅㻟㻛㻝㻢㻌㻝㻴㻲㼅㻟㻛㻝㻣㻌㻝㻴㻲㼅㻟㻛㻝㻤㻌㻝㻴

㻜

㻟㻜㻜

㻜

Source: Prepared by FISCO from the Company’s results briefing materials

Looking at sales trends by product, sales of salads and delicatessen items increased 5.7% to ¥10,391mn (sales
volume up 6.2%), processed egg products grew 1.8% to ¥10,784mn (up 4.0%), and mayonnaise and dressingsrose 1.5% to ¥8,989mn (up 1.0%), meaning sales of every product increased.

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

10 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir

Results trends

In salads and delicatessen items, sales grew of the mainstay products of long-life salads and Japanese-styledelicatessen items to CVS and restaurants. In particular the WASAI BANSAI® series is meeting customer needs
for high value-added, simplicity, and waste reduction, and the Company has also expanded its product lineup
from 11 items at the end of the previous fiscal year to 13 items. As a result, it has been increasingly adopted byizakaya and hotels for buffet menus and it performed strongly. For potato salads also, against the backdrop of theshortage of workers in the restaurant industry, demand is increasing for products with preprocessed ingredientsthat can be cooked easily, so sales to CVS and mass retailers of the Salads made by Pros series grew steadily.
In processed egg products, egg salads for sandwiches and breads with fillings, atsuyaki for lunch boxes, andkinshi-tamago (thin omelets cut into strips) for noodles for the CVS market were newly adopted, which contributed
to higher sales. The unit price per weight fell slightly, but this was due to changes in the sales composition ratio.
Also, the Company is actively developing and selling products to respond to customers’ needs, such as for
simplification in restaurants and other places where meals are prepared by commercializing Range-Easy Eggs
and also by launching egg white sheets in response to the needs of health-conscious customers.
In mayonnaise and dressings, 10kg mayonnaise packages for bread makers were newly adopted, while otherproducts, including small-packaged dressings for CVS, and nugget sauces for fast food restaurants, and 500ml
packages of dressings, also performed well. The Company expanded the lineup of its mainstay World Traveler
Dressings® series by one item from the end of the previous fiscal year to five items. In addition, the Company
continued to diversify the Triple Balance® series, which includes low calorie, low sugar, and reduced salt non-oil
dressings sold in 20ml, 200ml, 500ml, and 1L packages, and added three items to the lineup for a total of six.
Higher sales of these products contributed to the results of this business.
(2) Delicatessen-related businessIn this business, net sales increased 1.0% YoY to ¥5,501mn and segment profit decreased 39.1% to ¥378mn.
The main reason for this decrease was the higher prices of vegetables, particularly potatoes. However, products
for mass retailers, including those using seasoned cod roe, shrimp, and burdock, were newly adopted, while rolled
omelet and soup-related products were also adopted, and net sales continued on an upward trend.

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㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻣㻘㻜㻜㻜㻿㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻣㻜㻜

㻢㻞㻜

㻢㻘㻜㻜㻜

㻡㻘㻞㻝㻟

㻡㻘㻠㻠㻥

㻔¥㼙㼚㻕

㻡㻘㻡㻜㻝

㻢㻜㻜

㻡㻘㻜㻜㻜

㻡㻜㻜

㻠㻘㻜㻜㻜

㻠㻜㻜

㻟㻘㻜㻜㻜

㻟㻣㻤
㻟㻟㻣

㻟㻜㻜

㻞㻘㻜㻜㻜

㻞㻜㻜

㻝㻘㻜㻜㻜

㻝㻜㻜

㻜

㻜
㻲㼅㻟㻛㻝㻢㻌㻝㻴㻲㼅㻟㻛㻝㻣㻌㻝㻴㻲㼅㻟㻛㻝㻤㻌㻝㻴

Source: Prepared by FISCO from the Company’s results briefing materials

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

11 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir

Results trends(3) Other businesses
Results for other businesses include equity in net profit (loss) of affiliates from overseas operations, in addition
to revenue from the Company’s specialty salad shops operated by its consolidated subsidiary Salad Cafe. Net
sales rose 4.9% YoY to ¥635mn and segment loss was ¥19mn (compared to a loss of ¥17mn in FY3/17 1H).

㻻㼠㼔㼑㼞㻌㼎㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌㼞㼑㼟㼡㼘㼠㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼢㼑㼞㼟㼑㼍㼟㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕㻔¥㼙㼚㻕㻰㼛㼙㼑㼟㼠㼕㼏㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻣㻜㻜

㻢㻜
㻢㻝㻝

㻢㻜㻜
㻡㻜㻜

㻞

㻢㻜㻡

㻟㻜㻜

㻢㻟㻡

㻠㻜
㻞㻜

㻙㻟

㻠㻜㻜
㻙㻝㻠

㻙㻣

㻜

㻙㻝㻞

㻙㻞㻜

㻞㻜㻜
㻝㻜㻜

㻔¥㼙㼚㻕

㻙㻠㻜
㻙㻢㻤

㻙㻢㻜

㻜

㻙㻤㻜
㻲㼅㻟㻛㻝㻢㻌㻝㻴㻲㼅㻟㻛㻝㻣㻌㻝㻴㻲㼅㻟㻛㻝㻤㻌㻝㻴

Source: Prepared by FISCO from the Company’s results briefing materials

The number of Salad Cafe stores increased by 1 from the end of the previous fiscal year to 18 stores, which
contributed to higher sales. The Japanese-style salad specialist store Wasara Sogo Yokohama Store opened in April
2017 as the second store following on from the opening of the Wacara Kintetsu Abeno Harukas Store in Osaka.
Against the backdrop of the boom in Japanese foods, the Company is strengthening its Japanese-style saladmenu proposals. Also, in March 2017, the Company opened Imotamaya Isetan Shinjuku Cafe, which specializes inJapanese side dishes using ingredients that are familiar to a wide range of age groups, mainly potatoes and eggs.
On the other hand, in the overseas business, as previously mentioned equity in net loss of affiliates in Indonesia
was reduced.

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

12 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Results trends

Due to the concept for the Group’s production bases, interestbearing debt increased, but it maintained its financial soundness
3. Financial position and management indicators
Looking at the financial position at the end of FY3/18 1H, total assets increased ¥6,006mn from the end of theprevious fiscal year to ¥57,448mn. The main increasing factors in current assets were increases in cash and depositsof ¥661mn and note and accounts receivable-trade of ¥2,979mn due to the last day of September falling on aholiday for financial institutions. In fixed assets, construction in progress grew ¥3,649mn due to the construction
carried out in line with the concept for the Group’s production bases.
Total liabilities rose ¥4,680mn from the end of the previous fiscal year to ¥27,666mn. To fund the construction of the
new factories, interest-bearing debt increased ¥1,398mn, while notes and accounts payable-trade rose ¥2,807mn.
Also, net assets increased ¥1,325mn from the end of the previous fiscal year to ¥29,781mn. This was mainly due
to increases of ¥1,111mn in retained earnings on the recording of net profit attributable to parent shareholders andof ¥193mn for the valuation difference on other available-for-sale securities.
Looking at management indicators, total assets grew mainly from the acquisition of fixed assets alongside the concept for the Group’s production bases, while interest-bearing debt increased to fund these acquisitions. Therefore,
the equity ratio fell 3.5 percentage points from the end of the previous fiscal year to 51.8%, while the interest-bearing
debt ratio rose 3.5 percentage points to 30.4%, so the financial structure worsened slightly.
In the concept for the Group’s production bases, the Company plans to invest a total of more than ¥15bn by
FY3/19. In the current Q2, it spent ¥4,133mn to acquire tangible fixed assets, and it seems that the majority of thisspending was related to the concept for the Group’s production bases and around ¥12bn is required to fund theremaining capital expenditure for this concept. The Company is planning to cover this amount from cash in handand borrowings, so interest-bearing debt may increase from now until FY3/19. However, the financial burden fromborrowing is low as ultra-low interest rates continue, and judging from its current profitability, we think that theCompany will maintain its financial soundness even if interest-bearing debt increases.
Consolidated balance sheet(¥mn)
FY3/15

FY3/16

FY3/17

FY3/18 1H

ChangeCurrent assets

18,704

21,83629,19632,164

2,967(Cash and deposits)

4,778

7,412

13,77914,440661(Inventories)

2,309

2,601

2,817

2,798

-19

Fixed assets

20,744

20,46922,24525,284

3,038

Total assets

39,44842,30651,44257,448

6,006

Total liabilities

21,481

22,99422,98527,6664,680(Interest-bearing debt)*

8,584

7,617

7,651

9,050

1,398

Total net assets

17,967

19,311

28,45629,781

1,325

Current ratio

129.7%

133.9%

177.1%

164.5%-12.6pt

Shareholders’ equity ratio

45.5%

45.6%

55.3%

51.8%

-3.5ptInterest-bearing debt ratio

47.8%

39.4%

26.9%

30.4%

+3.5pt(Stability)*Interest-bearing debt includes long-term accounts payable
Source: Prepared by FISCO from the Company’s financial results and results briefing materials

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

13 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir██Future outlook
Due to meticulous proposal activities tailored to industries andbusiness formats, the outlook is for record high results again
in FY3/18
1. Outlook for FY3/18
Initial forecasts have been left unchanged for the FY3/18 consolidated results. The Company projects net sales toincrease 5.9% to ¥75,000mn, operating profit to rise 2.3% to ¥4,080mn, recurring profit to climb 2.1% to ¥4,100mn,
and profit attributable to parent shareholders to rise 0.1% to ¥2,870mn. If the forecasts are achieved, the Company
will once again achieve record high results. The 1H results were slightly below the forecasts, but the market priceof potatoes has fallen more than anticipated, so at FISCO we think that the Company will be able to achieve theforecasts on a profits basis. On the other hand, although net sales have returned to the Company-forecast pacesince October, it is possible that it will not be able to recover the 1H shortfalls and that therefore, the full fiscal year
result will be slightly below the forecast.
FY3/18 consolidated outlook(¥mn)
FY3/17Full-year
resultFY3/18YoY

1H result

YoY

Full-year
forecast

YoY

1H progressrate

Net sales

70,812+5.8%

37,021+2.8%

75,000

+5.9%

49.4%

Operating profit

3,987+16.0%

2,152-13.1%

4,080

+2.3%

52.7%

Recurring profit

4,017+17.2%

2,184-12.3%

4,100

+2.1%

53.3%

Net profit attributable to parent
shareholders

2,867+37.5%

1,489-11.9%

2,870

+0.1%

51.9%

Earnings per share (¥)

194.8890.43

174.20Source: Prepared by FISCO from the Company’s financial results

In terms of the factors causing recurring profit to increase and decrease, the increase factors will be the effectsof the higher sales of ¥375mn, the improvement in production efficiency of ¥90mn, and the reduction in logistics
costs of ¥58mn, while the decrease factors will be the fluctuation in raw-materials prices of ¥80mn and the increasein fixed costs of ¥360mn.These forecasts assume that the price of eggs, which are a main raw material, will stayat around the same level of the previous fiscal year of ¥205/kg, and that the price of potatoes will not be a factor
in rising coasts as the harvest yield has recovered. However, the reasons why despite this, profits are forecast to
decline ¥80mn are the expected rise in the market price of cooking oil and the increase in costs for tuna and otherimport materials. The impact from cooking oil will be kept down as the Company concludes forward contracts formore than half of its annual amount, so it is not considered that there will be a major fluctuation.

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

14 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Future outlook

Therefore, the market conditions for eggs and potatoes may be the factors causing profits to change in the future,but eggs were trending basically unchanged YoY up to November, and it seems their market conditions are moreor less as expected. Conversely, for potatoes, the 2017 harvest in Hokkaido, which is the main supplier region, hasbeen upwardly revised from the initial forecast of an increase of 2.6% YoY to an increase of 9.6%, which exceeds
the average harvest yield over the past five years. Therefore, the market prices are also clearly falling, for example in
October, the wholesale price on the Tokyo Central Wholesale Market fell 37% compared to October 2016. Supposingthat the wholesale price after November trends at around the same pace as in FY2015, the average annual pricewill fall by around 20% YoY. However, in the case of the Company, it purchases directly from the production areasin Hokkaido, and also, depending on the product, it uses potatoes harvested up until October in the previous year.
Therefore, a slight time lag is expected between the decline in the market prices and the positive effect of thison profits. In addition, in order to reduce procurement risk, since FY3/18 the Company has been increasing its
procurement from regions other than Hokkaido.
With regards to logistics costs, in recent years logistics companies have been raising prices, but the Company has
been working to reduce these costs, including by reviewing its delivery routes (for example, direct from the factory
to the customer, not via a warehouse), and by increasing delivery efficiency, such as by reducing the number ofdeliveries (bulk deliveries).

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㼛㼞㼑㼏㼍㼟㼠㻌㻔㻲㼅㻟㻛㻝㻤㻕
㻔¥㼙㼚㻕
㻡㻘㻜㻜㻜

㻗㻟㻣㻡
㻠㻘㻜㻜㻜
㻟㻘㻡㻜㻜
㻟㻘㻜㻜㻜

㻗㻡㻤

㻗㻥㻜

㻠㻘㻡㻜㻜

㻠㻘㻜㻝㻣

㻞㻘㻡㻜㻜

㻱㼒㼒㼑㼏㼠㼟㻌㼛㼒㻌㼔㼕㼓㼔㼑㼞㻌
㼟㼍㼘㼑㼟

㻙㻤㻜
㻙㻟㻢㻜

㻾㼑㼐㼡㼏㼑㼐㻌
㼘㼛㼓㼕㼟㼠㼕㼏㼟㻌㼏㼛㼟㼠㼟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㼜㼞㼕㼏㼑㼟

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 㻠㻘㻝㻜㻜
㼑㼠㼏㻚

㻞㻘㻜㻜㻜
㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻔㻱㻕

Source: Prepared by FISCO from the Company’s results briefing materials

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

15 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir

Future outlook㻔¥㻛㼗㼓㻕

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼜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㼙㼑㼐㼕㼡㼙㻙㼟㼕㼦㼑㼐㻌㼑㼓㼓㼟㻲㼅㻞㻜㻝㻡

㻲㼅㻞㻜㻝㻢

㻲㼅㻞㻜㻝㻣

㻞㻤㻜
㻞㻢㻜

㻞㻠㻜

㻞㻞㻣

㻞㻟㻝

㻞㻞㻟

㻞㻝㻢

㻞㻞㻜
㻞㻜㻜

㻞㻟㻜

㻞㻝㻟

㻞㻝㻝

㻝㻤㻠

㻞㻝㻣
㻞㻝㻡

㻞㻜㻠

㻝㻤㻞

㻝㻤㻞

㻝㻤㻜

㻞㻜㻥

㻞㻞㻤

㻝㻥㻠

㻝㻥㻝

㻞㻜㻠

㻞㻠㻡

㻞㻝㻥

㻝㻥㻣

㻞㻝㻡

㻞㻡㻡

㻞㻡㻞

㻞㻡㻜

㻞㻠㻣

㻝㻥㻞

㻝㻤㻜

㻝㻣㻥

㻝㻢㻜
㻝㻠㻜
㻭㼜㼞㼕㼘

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

㻲㼑㼎㼞㼡㼍㼞㼥

Source: Prepared by FISCO from data from ja-z-tamago. Co., Ltd.

㻼㼛㼠㼍㼠㼛㻌㼣㼔㼛㼘㼑㼟㼍㼘㼑㻌㼜㼞㼕㼏㼑㻌㻔㼛㼚㻌㼠㼔㼑㻌㼀㼛㼗㼥㼛㻌㻯㼑㼚㼠㼞㼍㼘㻌㼃㼔㼛㼘㼑㼟㼍㼘㼑㻌㻹㼍㼞㼗㼑㼠㻘㻌㻴㼛㼗㼗㼍㼕㼐㼛㻌㼜㼞㼛㼐㼡㼏㼑㻕㻔¥㻕㻲㼅㻞㻜㻝㻡

㻲㼅㻞㻜㻝㻢

㻲㼅㻞㻜㻝㻣

㻞㻡㻜

㻞㻜㻥

㻝㻥㻣

㻞㻜㻝

㻝㻥㻡

㻝㻤㻣

㻝㻤㻡

㻝㻥㻟

㻞㻜㻜
㻞㻜㻟
㻝㻤㻠
㻝㻢㻞

㻝㻡㻜

㻝㻤㻠

㻝㻠㻞

㻝㻢㻠

㻝㻣㻝

㻝㻜㻜

㻝㻞㻜

㻞㻝㻡

㻞㻝㻠

㻝㻢㻞

㻝㻥㻟

㻝㻣㻜

㻝㻡㻠

㻝㻠㻣
㻝㻟㻞
㻝㻟㻟

㻞㻜㻟

㻝㻜㻥

㻝㻝㻞

㻝㻝㻥
㻥㻣

㻥㻣

㻥㻣
㻡㻜
㻜
㻭㼜㼞㼕㼘

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

㻲㼑㼎㼞㼡㼍㼞㼥

Source: prepared by FISCO from the Tokyo Central Wholesale Market materials

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

16 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Future outlook

2. Sales outlook by segment
Looking at the sales outlook by segment also, the initial forecasts have been left unchanged and no particularrevisions have been made. In the seasoning and processed food business, the forecast is for sales to increase 5.1%
YoY to ¥61,477mn; in the delicatessen-related business, to rise 10.4% to ¥12,210mn; and in other businesses, togrow 6.1% to ¥1,313mn. Based on the progress rates up to 1H, it is highly possible that the result will be slightly
below forecast in the delicatessen-related business.
Net sales by segment(¥mn)
FY3/15

FY3/16

FY3/17

FY3/18 (E)Growth rate

49,73355,03558,511

61,477

5.1%

Salads and delicatessen items

16,75818,903

19,685

20,7295.3%

Mayonnaise and dressings

16,772

17,064

17,576

18,2984.1%

Processed egg products

15,116

17,792

19,86021,075

6.1%

Others

1,087

1,276

1,390

1,375

-1.1%

Delicatessen-related business

9,419

10,66011,062

12,210

10.4%

Other business

1,175

1,238

1,238

1,313

6.1%

Total

60,327

66,93370,81275,000

5.9%

Seasoning and processed foodSource: Prepared by FISCO from the Company’s results briefing materials

In the seasoning and processed food business, the Company is continuing to focus on measures tailored toindustries and business formats and strengthening product lineups. Among the products, sales of salads anddelicatessen items are forecast to increase 5.3% YoY. Sales of commercial-use, small packaged long-life salads are
growing, while the Company is also strengthening its lineup of pre-processed potato products and Japanese-styledelicatessen items, for which demand is increasing.
Sales of processed egg products are forecast to increase 6.1% YoY. The growth in sales to CVS has been slightly
less than anticipated, but the Company is strengthening sales proposals for the Sozaitei® series for mass retailers,and also continuing the development and sales of new products that meet diverse needs.
Sales of mayonnaise and dressings are forecast to increase 4.1% YoY. The Company is focusing on strengthening
the lineup of the Triple Balance® series that address increased health consciousness and developing functional
foods, and it is aiming to increase sales not only for the restaurants market, but also for the food dispensing, CVS,and mass retailers markets.
The delicatessen-related business is collaborating with the head office to strengthen menu proposals in order tomeet diversifying needs, while also enhancing sales activities toward the start of operations at the new and expandedfactories. In the other businesses also, the Company is working to strengthen proposals for Japanese-style salads in
Salad Cafe, and for the overseas business, it is aiming to achieve the profit-loss breakeven level for the full fiscal year.

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17 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir██Longer-term management strategy
The sales capacity is scheduled to increase by around ¥10bn
with two new factories and expanded facilities
at two existing factories becoming operational in FY3/19
1. Concept for the Group’s production bases
For its domestic bases, the Company plans to invest more than ¥15bn in expanding facilities at two factories andbuilding two new factories with a focus on growth from FY3/19 onwards. Specifically, it plans to increase production
facilities at the Shizuoka Fujisan Factory (main products: omelet products) and the 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). Once these
construction projects are completed, it will add production capacity equivalent to sales of more than ¥10,000mn
a year (with a single operating team working in a day). The plan is to increase the production lines at the Shizuoka
Fujisan Factory and Nishi-Nihon Factory while watching demand, but since construction costs are rising, it is possiblethat the capital expenditure amount will be slightly higher than initially planned.
The concept for the Group’s production bases
Factory / subsidiary

Main productConstruction
start date

Scheduledcompletion
date

Capitalinvestment(unit: ¥mn)

Increase in capacity on completion(forecast)

Shizuoka Fujisan Factory(Fuji City, Shizuoka Prefecture)

Omelet products

January2018

February
2019

4,167

Processed egg products will increase byapproximately 3,020t a year

Nishi-Nihon Factory(Maizuru City, Kyoto Prefecture)

Long-life salads anddressings

September
2017

March
2019

5,636

Salads and delicatessen products will
increase by approximately 4,300t a year

KANTOH DIETCOOKFresh delicatessen(Odawara City, Kanagawa Prefecture) items

June
2017

June
2018

3,550

Sales of salads and delicatessen
products will increase by approximately¥6,000mn a year

Fresh delicatessen
items and long-life
salads

July
2017

April
2018

2,547

Salads and delicatessen products will
increase by approximately 3,000t a year

DIETCOOK SHIRAOI(Shiraoi-gun, Hokkaido)

Source: Prepared by FISCO from the Company’s results briefing materials

Shizuoka Fujisan Factory is factory dedicated to the production of processed egg products that was newly opened
in March 2014, and in the last few years it has been one of the driving forces behind the Company’s growth. It had
an annual production capacity of about 6,000 tons, but since the space in the existing factory has been almost
entirely filled, the Company decided to expand the factory facilities within the same site. The capital investment will
be more than ¥4,000mn and the construction is scheduled for completion in February 2019, after which the annual
production capacity will increase by around 3,020 tons. It is considered that the Company is aiming to further expand
its share of the omelet market, in which it is currently ranked third.
The Nishi-Nihon Factory produces long-life salads and dressings, and it is the Company’s main base in the WestJapan area. The current construction work will increase its annual production capacity by around 4,300 tons. It isscheduled for completion in March 2019 and this expansion in production capacity is expected to increase salesof long-life salads.

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18 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.

29-Dec.-2017

2915 Tokyo Stock Exchange First Section

http://www.kenkomayo.co.jp/en/ir

Longer-term management strategy

Since KANTOH DIETCOOK’s existing factory in Tokorozawa had become too constricted, the Company newly
purchased land in Odawara City, Kanagawa Prefecture, as the site to build a new factory to produce fresh delicatessen items. Its construction is scheduled for completion in June 2018 and it is expected to increase sales byapproximately ¥6,000mn. Space at the Tokorozawa Factory became too constricted due to rising demand overthe last few years, and because of this the picking process had to be moved to another location which resulted in
an increase in costs. But after the current expansion in production capacity, there will be excess capacity from theoperations at the Odawara Factory, so the picking process can be returned to within the factory, which will be afactor improving profitability.
DIETCOOK SHIRAOI’s existing factory has become obsolete, so the Company decided to construct a new factory
within Ishiyama Industrial Park in Shiraoi Town, which is scheduled for completion in April 2018. In addition to fresh
delicatessen items, the plan is to increase the production capacity for pre-processed potato products, which demandis increasing, and the annual production capacity will increase by around 3,000 tons.
The completion of the construction at these four factories will further expand the Group’s production capacity. As
they will become operational from FY3/19 onwards, deprecation expenses are forecast to increase. But if the startof operations at the factories goes smoothly, in addition to the effects of higher sales, the effect of a reduction in
the personnel costs rate can also be expected at the existing factories. So at FISCO, we think that the Company
will be able to maintain the recurring profit margin at a level of above 5%. Previously, in order to respond to demandduring the busy season, nighttime overtime work was increased so that the factory was fully operational, whichcaused the personnel costs rate to rise. But when the new and expanded factories become operational, there
will be room in terms of production capacity, so personnel costs are expected to decline in line with reduction innighttime overtime work.
The capital investment amount in FY3/18 will be ¥600mn-¥700mn and no particularly large investments are planned.
Depreciation expenses are forecast to be ¥1,800mn, a slight increase YoY.

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
㻔¥㼙㼚㻕
㻣㻘㻜㻜㻜

㻯㼍㼜㼕㼠㼍㼘㻌㼕㼚㼢㼑㼟㼠㼙㼑㼚㼠㻰㼑㼜㼞㼑㼏㼕㼍㼠㼕㼛㼚

㻢㻘㻠㻞㻠

㻢㻘㻜㻜㻜

㻿㼔㼕㼦㼡㼛㼗㼍㻌㻲㼡㼖㼕㼟㼍㼚㻌
Factory ¥4,530mn

㻡㻘㻜㻜㻜
㻠㻘㻜㻜㻜
㻟㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻝㻘㻠㻞㻝
㻝㻘㻜㻜㻠

㻝㻘㻜㻜㻜

㻝㻘㻣㻢㻥

㻝㻘㻡㻜㻤

㻝㻘㻡㻜㻜

㻝㻘㻣㻡㻠

㻣㻢㻢

㻝㻘㻤㻜㻜
㻢㻡㻜

㻜
㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

Source: Prepared by FISCO from the Company’s financial results

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

19 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Longer-term management strategy

Aiming for stable growth, while maintaining the recurring profit
margin at a level above 5%
2. Progress made on the Mid-term Management Plan
FY3/18 is the final year of the mid-term management plan KENKO Five Code 2015-2017. Its numerical managementtargets are consolidated net sales of ¥75,000mn, a consolidated recurring profit margin of 5%, an equity ratio of
50%, and ROE of above 8%. Other than for net sales, it can be said that achieving these targets is in sight.
KENKO Five Code 2015-2017(¥mn)
FY3/18
FY3/15 result

FY3/16 result

FY3/17 result

Mid-term Plan
targets

Current
forecasts

Net sales

60,327

66,93370,81275,00075,000Recurring profit

2,776

3,426

4,017

3,750

4,100

Recurring profit margin

4.6%

5.1%

5.6%

5.0%

5.5%

Shareholders’ equity ratio

45.5%

45.6%

55.3%

50.0%

-

ROE

9.6%

11.2%

12.0%

At least 8%

9.7%

Source: Prepared by FISCO from the Company’s results briefing materials

There are three main reasons why results are trending favorably. The first reason is the steady expansion of therestaurants and HMR markets, which are the Company’s main markets, due to factors such as the increase insingle-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 and business formats in order to respond to issues in the restaurant industry, such as demand in
product and menu that contribute to “simplification” of cooking due to its chronic shortage of labor, and developmentof menus that reflect the rising awareness of health among consumers. This has enabled 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 the strong sales of small packaged long-life salads as PB products
and increased adoption of the processed egg products to CVS.
Further, within business strategies aimed at achieving the mid-term management plan, the Company is tackling thefollowing three major initiatives – “Establishing our position as the ’Leading Company in Salads,’” “Further evolving
Salad Cuisine,” and “Strengthening the management platform to proactively 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 ofsales in its various existing businesses. To further evolve Salad Cuisine, it intends to strengthen information provision
through the media and its own website, strengthen branding, and promote its Salad Cuisine cooking schools andSalad Cafe shops. On its own website, the Company has posted more than 1,200 recipes, including by businessformat and by season, and it disseminates information on trends on its “salads information specialty site” that is
visited by people interested in salads. Although there are inquiries for openings of the “Salad Cafe” salad specialty
stores, the Company’s policy is to judges whether or not to open a store while watching conditions.

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

20 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Longer-term management strategy

Also, in order to “Strengthen the management platform to proactively promote expansion into global markets,” theCompany is developing products that meet the needs in various countries, and it is also strengthening measures toexpand exports, including actively participating in exhibitions (a total of 6 times between April and September 2017,
including in the United States and Hong Kong). As of the end of September 2017, the Company was exporting to
36 countries and regions and steadily introducing its products into local Japanese companies (including CVS andrestaurant companies). The forecast for export sales in FY3/18 is around ¥600mn, and while this does not achieve
the medium-term management target, the Company intends to grow the scale of sales by increasing the number ofexport products and expanding the sales areas going forward. The Indonesian equity-method affiliate has started
sales of Halal-certified mayonnaise to local Japanese-food supermarkets and it is steadily expanding its businessscale through launching exports to neighboring countries, and the aim is for it to become profitable in FY3/19.
Going forward, the Company plans to formulate the next mid-term management plan, which will start from FY3/19,
but there is no doubt that the driving force behind growth will be the start of operations at the two new factories
and the two factories with expanded facilities. Going forward, it is expected to maintaining a recurring profit marginof above 5% as the top priority and continue to aim for stable profit growth.

██Shareholder return policy
Benchmark is a dividend payout ratio of 20% and it also provides
gifts to shareholders
As its policy to return profits to shareholders, the Company pays dividends and provides gifts to shareholders. Its
dividend policy is to raise dividends to a high level in line with earnings growth based on a benchmark consolidated
dividend payout ratio of 20%, while also taking into consideration the continuity of dividends. In FY3/18, it plans toleave the dividend per share unchanged YoY at ¥37.0 (payout ratio, 21.2%), while we can expect dividend growthin the future if earnings continue to increase.
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 valueof ¥2,500 is given to shareholders with 1,000 or more shares.

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

21 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise Co., Ltd.
2915 Tokyo Stock Exchange First Section

29-Dec.-2017
http://www.kenkomayo.co.jp/en/ir

Shareholder return 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㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕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㻕

㻠㻜㻚㻜

㻟㻜㻚㻜

㻟㻡㻚㻜
㻟㻜㻚㻜

㻞㻟㻚㻢㻌
㻞㻝㻚㻞㻌

㻞㻝㻚㻞㻌

㻝㻥㻚㻥㻌

㻝㻥㻚㻝㻌

㻝㻥㻚㻜㻌

㻞㻜㻚㻜

㻟㻣㻚㻜㻌

㻝㻡㻚㻜

㻟㻣㻚㻜㻌

㻞㻤㻚㻜㻌
㻞㻝㻚㻜㻌

㻞㻝㻚㻜㻌

㻞㻡㻚㻜
㻞㻜㻚㻜

㻞㻡㻚㻜

㻝㻜㻚㻜

（㻑）

㻝㻡㻚㻜
㻝㻜㻚㻜

㻞㻟㻚㻜㻌

㻡㻚㻜

㻡㻚㻜
㻜㻚㻜

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

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Information security measures
As its information security measures, the Company transferred the management information that is being managed
on a mission-critical system to an external data center that implements disaster countermeasures. In addition, inorder to prevent the loss of or tampering with information and other such problems, it has established a thoroughinformation management system and is implementing various security measures, including maintenance and preservation measures for systems failures. To defend against cyber-attacks, it has introduced a proxy server to restrict
external access and is implementing a range of other measures, such as strengthening the certification system.
Also, as the measures to prevent the leakage of information from inside to outside of the Company, it has formulated
information management rules and conducts employee education. Data can only be taken from inside to outsideof the Company on a USB memory device with an encryption key.

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

22 22

Disclaimer
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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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This report was prepared at the request of its subject company using information provided
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this report are subject to change without prior notice.
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FISCO Ltd.