T. HASEGAWA CO., LTD.
Summary of Questions and Answers from Financial Results Briefing for
the Second Quarter of the Fiscal Year Ending September 2024
Question

What are T. HASEGAWA's initiatives toward creating sustainable flavors andfragrances? How much progress has been made in reducing CO2 emissions, forexample, by replacing existing flavors and fragrances based on naturalmaterials?

AnswerSince flavors and fragrances work to reduce the amount of natural raw materials
used, we believe that these products themselves contribute to combatting thedepletion of natural resources. In addition, as part of its circular economy
initiatives, we are using food residues from its manufacturing plants to produce
compost at an affiliate. This is then used to grow lemongrass, which in turn isused as a raw material for flavors and fragrances.
Although there is no data on whether natural or synthetic materials are more
effective in reducing CO2 emissions, natural materials such as vanilla beans andcitrus fruits are rising in price. We are responding to customer requests to replacethese natural materials with flavors and fragrances. In the USA, there are manycases where natural raw materials are specified due to the market's strong
preference for them, so we provide products in line with customer requests.

Question

The Chinese economy has been stagnant. Will this affect your businessperformance?

Answer

Flavors and fragrances are relatively unaffected because they are used in daily
essentials and food products.

QuestionIs there any impact of the ongoing weakening of the yen on your businessperformance? Also, I would like to know about your forex sensitivity.

AnswerForeign exchange rates have an impact on our business performance, withweaker yen a positive driver. A one yen fluctuation in the yen/dollar exchange
rate results in a change of approximately 100 million yen in consolidated netsales and approximately 4 million yen in consolidated operating profit. A one yen
fluctuation in the yen/yuan exchange rate results in a change of 500 million yen
in consolidated net sales and approximately 150 million yen in consolidated
operating profit.
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Question

You mentioned that the win-rate has risen due to the promotion of solution sales.
Is there a possibility that the win-rate will decrease going forward as competitors
copy your methods?

Answer

It is a method that has been well received by customers and could be copied.
That said, it would probably take other companies about four years to develop acompetitive marketing department, which is a feature of our Business Solutions
Division. While we are ahead of other companies, we believe the impact on thewin-rate will be negligible. In T. HASEGAWA's case, we have established amarketing department with specialists and are now having this department train
employees from the sales and research departments. Although there is concern
about copying, we would like to further develop new initiatives while we have alead.

Question

You mentioned that the product mix has improved in Japan, the USA, and China.
I would like to know which applications are experiencing growth.

AnswerIn our compounded flavors and fragrances, the profit margins of liquid flavors
and fragrances for beverages and other applications tends to be higher than thatof other products. Therefore the increase in sales volume of liquid flavors andfragrances has led to a better product mix. We will allocate resources towards
liquid flavors and fragrances, as they are a major source of earnings. Our new
plant in China is also primarily for the production of liquid flavors and is expected
to lead to further market share gains.

Question

Please describe the specific initiatives and their effectiveness related to"thorough profit management" in the China strategy.

AnswerWe changed our conventional operating method, in which raw material costs andproduction costs for each product were not precisely managed, and now conduct
profit management in detail by item. We have clarified pricing and ensured thatprofits can be managed in our sales activities through our sales offices andagents in China.
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