February 8, 2019

Consolidated Financial Results
for the Nine Months Ended December 31, 2018
(Japanese Accounting Standards)
Name of the Listed Company:
Listing:
Stock code:
URL:
Representative:
Contact Person:

Nitta Gelatin Inc.

First Section of Tokyo Stock Exchange4977
http://www.nitta-gelatin.co.jp
Koichi Ogata, Representative Director and President
Norifumi Nagaoka, Director and Executive Officer;
General Manager of General Management Division
Tel: +81-72-949-5381
Scheduled date to file Quarterly Securities Report: February 12, 2019
Scheduled date to commence dividend payments: Supplementary explanatory materials prepared:No
Explanatory meeting:
No(Millions of yen with fractional amounts discarded, unless otherwise noted.)

1. Consolidated financial results for the nine months ended December 31, 2018(from April 1, 2018 to December 31, 2018)(1) Consolidated operating results(Percentages indicate year-on-year changes.)
Net sales
Nine months ended
December 31, 2018
December 31, 2017

Millions of yen%

Operating income

Ordinary income

Net income
attributable toowners of the parent

Millions of yen

Millions of yen%

Millions of yen(49.9)(39.6)

956
528%

27,075(4.2)
547(35.5)
500
28,2664.3
848(36.9)
998
Note: Comprehensive income
For the nine months ended December 31, 2018:¥766 million, (32.9)%
For the nine months ended December 31, 2017: ¥1,141 million, 19.5%

Net income
per share
Nine months ended
December 31, 2018
December 31, 2017

Diluted net income
per share

Yen

Yen

52.08
28.77
Note: Diluted net income per share is not disclosed due to the absence of latent shares with dilution effect.

(2) Consolidated financial position
As ofDecember 31, 2018
March 31, 2018

Total assets

Net assets

Millions of yen

Millions of yen

38,09237,851

17,717
17,197

Reference: Equity
As of December 31, 2018:
As of March 31, 2018:¥15,737 million¥15,189 million

Equity ratio
%

41.3
40.1

%

81.1
(20.1)

2. Cash dividends
Cash dividends per shareFirst quarter

Second quarter

Third quarter

Fiscal year-end

Annual

Yen

Yen

Yen

Yen

Yen

Fiscal year ended March 31, 2018

-

6.00

-

6.00

12.00

Fiscal year ending March 31, 2019

-

6.00

10.00

16.00

Fiscal year ending March 31, 2019
(Forecasts)

Notes: Changes to most recent dividend forecasts: Yes
1. For revisions to dividend forecasts, please refer to the press release issued today (February 8, 2019) titled “NoticeConcerning Recording of Non-Operating Expenses (Equity in Losses of Affiliates) and Revision of Full-Year
Consolidated Financial Forecasts and Year-End Dividend Forecast (Commemorative Dividend for 100th
Anniversary of Foundation) for the Fiscal Year Ending March 31, 2019.”
2. Breakdown of fiscal year-end dividend for the fiscal year ending March 31, 2019 (forecasts): ¥6.00 in ordinary
dividend and ¥4.00 in commemorative dividend per share

3. Consolidated financial forecasts for the fiscal year ending March 31, 2019(from April 1, 2018 to March 31, 2019)(Percentages indicate year-on-year changes.)
Net sales

Fiscal year ending
March 31, 2019

Operating income

Ordinary income

Net income
attributable toowners of theparentMillionsof yen%Millionsof yen%Millionsof yen%Millionsof yen36,500(3.4)

700(36.1)

600(40.6)

1,000

Net income
per share
%

-

Yen

54.43

Note: Changes to most recent consolidated financial forecasts: Yes
For revisions to consolidated business forecasts, please refer to the press release issued today (February 8, 2019) titled“Notice Concerning Recording of Non-Operating Expenses (Equity in Losses of Affiliates) and Revision of Full-Year
Consolidated Financial Forecasts and Year-End Dividend Forecast (Commemorative Dividend for 100th Anniversary ofFoundation) for the Fiscal Year Ending March 31, 2019.”

Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in achange in the scope of consolidation): None
New:
None
Excluded:None(2) Adoption of special accounting methods for the preparation of quarterly consolidated financial
statements: No(3) Changes in accounting policies, changes in accounting estimates, and restatement of revisions
a. Changes in accounting policies due to revisions to accounting standards and other guidelines: No
b. Changes in accounting policies due to reasons other than a. above: No
c. Changes in accounting estimates: No
d. Restatement of revisions: No(4) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of December 31, 2018
18,373,974 shares
As of March 31, 2018
18,373,974 sharesb. Number of shares of treasury stock at the end of the period
As of December 31, 2018
163 shares
As of March 31, 2018
162 sharesc. Average number of shares
For the nine months ended December 31, 2018
For the nine months ended December 31, 201718,373,812 shares
18,373,812 shares* This financial report falls outside the scope of quarterly review procedures by Certified Public
Accountants or the independent auditor.
* Proper use of earnings forecasts, and other special matters
The forward-looking statements, including earnings forecasts, contained in these materials are based on information
currently available to the Company and on certain assumptions deemed to be reasonable. These statements do notguarantee that the Company will achieve its earnings forecasts. In addition, actual business and other results may
differ substantially due to various factors. For details on the conditions assumed and the cautionary notes and itemsin the financial forecasts, please refer to “(3) Description of Consolidated Business Forecasts and Other
Forward-looking Information” in “1. Qualitative Information Concerning Quarterly Financial Statements” on page
4 of the Attachment to this report.

Attachment Contents
1. Qualitative Information Concerning Quarterly Financial Statements ···································· 2(1) Description of Business Results ·················································································· 2(2) Description of Financial Position ················································································ 4(3) Description of Consolidated Business Forecasts and Other Forward-looking Information ·············· 4

2. Quarterly Consolidated Financial Statements and Key Notes ············································· 5(1) Consolidated Balance Sheets ····················································································· 5(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ········· 7
Consolidated Statements of Income(Nine months ended December 31) ·············································································· 7
Consolidated Statements of Comprehensive Income(Nine months ended December 31) ·············································································· 8(3) Notes to Quarterly Consolidated Financial Statements ······················································· 9(Note Concerning Going Concern Assumption) ······························································· 9(Note Concerning Significant Changes in Shareholders’ Equity) ··········································· 9(Additional Information) ·························································································· 9(Segment Information) ·························································································· 10-1-1. Qualitative Information Concerning Quarterly Financial Statements(1) Description of Business Results
In the first nine months of the fiscal year ending March 31, 2019, the global economy continued
to grow gradually, boosted by a sound U.S. economy and growth in emerging countries in Asia.
The Japanese economy also maintained its gradual expansion through firm corporate
performance and capital expenditures. Meanwhile, uncertainty is increasing due to the impact oftrade friction between the U.S. and China and concerns arising overseas such as downturns ineconomies in Europe and China.
In this environment, the Nitta Gelatin Group launched a new three-year Medium-Term
Management Plan in April 2018. The management policies of the Group as shown in thisMedium-Term Management Plan are as follows.
1. Our three core areas will be food solutions, health support, and biomedical.
2. We will globally optimize our production system in Japan, Asia, and North America in
response to an era of completely free trade.
3. We will promote selection and concentration and create high-value-added products andservices to recreate the Company as a higher-profit enterprise.
Guided by these management policies, the Group actively worked to conduct research,develop new products and cultivate new markets in its three core areas. The Group strove toenhance productivity and reduce costs at each of its manufacturing sites. In addition, theCompany has decided to absorb and merge its sales subsidiary Nitta Gelatin Foods Inc.
effective on April 1, 2019, for the purposes of focusing on core areas and expanding business.
As a result, for the first nine months of the fiscal year ending March 31, 2019, net sales
decreased 4.2% year on year to ¥27,075 million and operating income fell 35.5% to ¥547
million, mainly due to a decline in sales in Japan and a rise in the price of fish used as raw
materials. Ordinary income decreased 49.9% to ¥500 million, due to equity in losses ofaffiliates. Net income attributable to owners of the parent increased 81.1% to ¥956 million as aresult of the Company recording a transfer gain on business divestiture.
Company changed the reporting segment to a single business segment of “Collagen business”
effective as from the Second quarter ended September 30, 2018. For details, please refer to “2.
Quarterly Consolidated Financial Statements and Key Notes (3) Notes to Consolidated
Financial Statements (Segment Information).”
Products are categorized into the following sales categories.

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Sales Category

Products

Food solutions

Mainly gelatin for food use, food materials, collagen casings

Health support

Mainly gelatin for capsules, collagen peptide for health foods and beauty
applications, gelatin and collagen for advanced medical care

Specialties

Mainly adhesives, gelatin for industrial use, others

Sales were as follows:
Food solutions
In Japan, net sales increased year on year for delicatessen items in convenience stores andfrozen food as new business expansion made a contribution against a backdrop of robust
demand for ready-made meals, but net sales decreased for high sugar content confectionary
applications such as gummy and gelatin for use in confectionary and food preparation. Overseas,
net sales of collagen casing in snack sausages were lower than the previous fiscal year.
As a result, overall sales in the food solutions category decreased 2.6% year on year to¥11,541 million.
Health support
In Japan, net sales continued to increase amid robust demand for capsules for health foods anddue to rising health awareness and an increase in the number of drugstores. On the other hand,sales decreased in collagen peptide for beauty applications. Overseas, net sales increased due torobust sales of capsules in the U.S. market following market recovery and increased sales ofcollagen peptide manufactured at our North American plant. Net sales of capsules in the Asianmarket declined, affected in part by the outbreak of floods in southern India in August 2018.
As a result, overall sales in the health support category decreased 0.4% year on year to¥10,456 million.
Specialties
In adhesives, overall sales decreased 14.1% year on year to ¥5,077 million, influenced bydeclining sales in adhesives for hygiene products due to a change in demand by customers.

-3-(2) Description of Financial Position(Assets)
Total assets amounted to ¥38,092 million at December 31, 2018, ¥240 million higher than at
March 31, 2018. This was mainly attributable to increases in inventories and buildings andstructures.
(Liabilities)
Total liabilities stood at ¥20,374 million at December 31, 2018, ¥279 million lower than at
March 31, 2018. This was mainly attributable to decreases in long-term loans payable and net
defined benefit liability.
(Net assets)
Net assets amounted to ¥17,717 million at December 31, 2018, ¥520 million higher than at
March 31, 2018. This was mainly attributable to an increase in retained earnings and decreasein deferred losses on hedges.
As a result, the equity ratio stood at 41.3% as of December 31, 2018, compared to 40.1% asof March 31, 2018.

(3) Description of Consolidated Business Forecasts and Other Forward-looking
Information
The consolidated business forecasts for the fiscal year ending March 31, 2019 have beenrevised from those announced on November 8, 2018 in the “Consolidated Financial Results for
the Six Months Ended September 30, 2018.”
For details, please refer to the press release issued today (February 8, 2019) titled “NoticeConcerning Recording of Non-Operating Expenses (Equity in Losses of Affiliates) andRevision of Full-Year Consolidated Financial Forecasts and Year-End Dividend Forecast(Commemorative Dividend for 100th Anniversary of Foundation) for the Fiscal Year Ending
March 31, 2019.”
Actual business and other results may differ substantially from projections due to various
factors.

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2. Quarterly Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheets(Millions of yen)

Fiscal 2018
(As of March 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets-5-

3Q Fiscal 2019
(As of December 31, 2018)

1,626
8,966
5,152
1,240
2,944
338
(11)
20,256

1,676
9,069
5,889
1,114
3,162
582
(13)
21,482

3,621
4,809
3,819
12,251

3,939
4,627
3,264
11,831

384
395
780

365
371
737

3,451
1,174
(63)
4,563
17,59537,851

3,046
1,184
(188)
4,041
16,61038,092

(Millions of yen)

Fiscal 2018
(As of March 31, 2018)
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Net defined benefit liability
Other
Total noncurrent liabilities
Total liabilities
Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Valuation difference on other available-for-salesecurities
Deferred losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income(loss)
Non-controlling interests
Total net assets
Total liabilities and net assets-6-

3Q Fiscal 2019
(As of December 31, 2018)

4,159
2,504
2,497
95
249
2,550
12,056

4,549
2,536
2,528
199
145
2,316
12,274

4,684
2,709
1,203
8,597
20,654

4,509
2,495
1,094
8,099
20,374

3,144
2,966
9,206
(0)
15,317

3,144
2,966
9,942
(0)
16,053

1,331

1,133

(43)
142
(1,558)(11)
153(1,591)

(127)

(316)

2,008
17,19737,851

1,980
17,71738,092

(2) Consolidated Statements of Income and Consolidated Statements ofComprehensive Income
Consolidated Statements of Income(Nine months ended December 31)(Millions of yen)

Nine Months Ended
December 31, 2017
(From April 1, 2017
to December 31, 2017)28,26622,472

Net sales
Cost of sales

Nine Months Ended
December 31, 2018
(From April 1, 2018
to December 31, 2018)27,075
21,619Gross profit on sales

5,794

5,455

Selling, general and administrative expenses

4,946

4,908

Operating income

848

547

Non-operating income
Interest income
Dividend income
Foreign exchange gains
Equity in earnings of affiliates
Other

9
45
93
124
56

4
38
109
113

Total non-operating income

328

266

Non-operating expenses
Interest expenses
Equity in losses of affiliates
Other

156
21

149
146
17

177

312

998

500

-

79
655
416

-

1,151

1
10

122
0
141

12

265

Income before provision of income taxes

986

1,387

Income taxes

392

389

Net income

593

997

Net income attributable to non-controlling interests

65

40

Net income attributable to owners of the parent

528

956

Total non-operating expenses
Ordinary income
Extraordinary gains
Gain on sales of noncurrent assets
Transfer gain on business divestiture
Gain on change in equity
Total extraordinary gains
Extraordinary losses
Provision of allowance for doubtful accounts
Disposal costs for noncurrent assets
Loss on retirement of noncurrent assets
Total extraordinary losses-7-Consolidated Statements of Comprehensive Income(Nine months ended December 31)(Millions of yen)

Nine Months Ended
December 31, 2017
(From April 1, 2017
to December 31, 2017)
Net income

Nine Months Ended
December 31, 2018
(From April 1, 2018
to December 31, 2018)

593

997

357

(198)

(70)
184
64

40
0
(32)

11

(41)

547
1,141

(231)
766

1,082
58

768
(2)

Other comprehensive income (loss)
Valuation difference on other available-for-salesecurities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Pension liability adjustment
Share of other comprehensive income (loss) of
associates accounted for using equity method
Total other comprehensive income
Total comprehensive income
Comprehensive income (loss) attributable to:
Owners of the parent
Non-controlling interests-8-(3) Notes to Quarterly Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Note Concerning Significant Changes in Shareholders’ Equity)
None(Additional Information)
Adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.”
The Company has adopted “Partial Amendments to Accounting Standard for Tax EffectAccounting, etc.” (Accounting Standards Board of Japan (ASBJ) Statement No. 28,
February 16, 2018) from the beginning of the first quarter of the fiscal year ending March 31,
2019. Accordingly, deferred tax assets have been presented under investments and otherassets and deferred tax liabilities have been presented under noncurrent liabilities.

-9-

(Segment Information)
I. Nine months ended December 31, 2017 (From April 1, 2017 to December 31, 2017)
1. Information on net sales, income and loss by reporting segment(Millions of yen)

Reporting segment

Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income(Notes)Adjustments*1

Amounts in the
consolidated
income statement*2

Collagenmaterial
business

Formulasolutionbusiness

Total

20,722

7,544

28,266-28,266

1,515

5

1,521

(1,521)-

22,238
1,064

7,550
812

29,788
1,877(1,521)(1,029)28,266848

1. Adjustment for segment income of ¥(1,029) million comprises elimination ofintersegment transactions of ¥10 million and unallocated expenses of ¥(1,040) million.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.

2. Information on impairment loss on noncurrent assets and goodwill by reporting segments
None
II. Nine months ended December 31, 2018 (From April 1, 2018 to December 31, 2018)
1. Information on net sales, income and loss by reporting segment
Information is omitted as Nitta Gelatin Group was operating a single segment,“collagen business”.
2. Information on impairment loss on noncurrent assets and goodwill by reporting segments
None
3. Matters Concerning Changes in Reporting Segments
The Nitta Gelatin Group’s reporting segments until now have been categorized into twobusinesses: collagen material business and formula solution business. To make intensive
investments to pursue its strategy for core businesses and new businesses according to its
new corporate vision, the Company conducted a reorganization centered on transforming
the production and sales management system and reviewed the allocation of Groupmanagement resources and the management system.
On August 1, 2018, the Company conducted a company split of the adhesive business(excluding manufacturing), which is included in the Formula Solutions Business. As theCompany shifted to integrate the management of its business activities into the Collagen
Business, the Company made the Collagen Business its standalone reporting segment fromthe second quarter ended September 30, 2018.
As a result, disclosure of segment information for the nine months ended December 31,
2018 is omitted since there is only a single segment.

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