Semi-Annual Report 2017
For the Six-Month Period Ended 30th September 2017

PROFILE
Since its establishment in 1958, MARUDAI FOOD CO., LTD. has been dedicated tooffering delicious, high-quality meat products. In order to understand the latest
consumer trends and to meet the needs of modern lifestyles, we have continuously
strengthened our research, sales and production operations. Intending to become
Japan’s leading food company, we successfully listed our stock on the First Section of
the Tokyo Stock Exchange in 1972.
Starting as a ham and sausage producer, Marudai Food has steadily expanded its
range of products to include heat-processed, vacuum-packed food, dessert and beverage
products and fresh meats. Ham and sausage, however, remain an integral part of our
product line and continue to account for almost half of our sales.
While pursuing a leading position in the ham and sausage market, Marudai Foodwas eager to explore new avenues by developing precooked and processed foods, which
went on sale in 1973. This long shelf-life food was developed to meet the specific needfor fast meal preparation. Containing absolutely no preservatives and requiring only
several minutes to prepare, Marudai precooked and processed foods have established astrong foothold in the market. Building on this success, we will make even greater
efforts to create new products that satisfy the increasingly discriminating tastes ofconsumers.

CONTENTSTO OUR SHAREHOLDERS .............................................................................. 1
PRODUCTS ......................................................................................................... 2
CONSOLIDATED BALANCE SHEETS............................................................ 3
CONSOLIDATED STATEMENTS OF INCOME ............................................. 5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME .......... 6
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ............ 7
CONSOLIDATED STATEMENTS OF CASH FLOWS .................................... 8
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS ........................... 9
DIRECTORS AND STATUTORY AUDITORS............................................... 10
OUTLINE OF THE COMPANY ...................................................................... 11b

MARUDAI FOOD CO., LTD.

TO OUR SHAREHOLDERS

personal consumption, the Japanese economy lacked vigour
mainly because of concerns about the outlook of overseas
economies, and prospects for the Japanese economy remain
unclear.
The Marudai Food Group’s Processed Food Products
business continues to operate in a challenging environment
owing to intensifying price competition while customers
remain budget-minded. Regarding the Meat Products business,whereas prices of Japanese beef started to stabilize, local
prices of U.S. beef increased. Prices of Japanese pork and U.S.
pork were higher than the previous year’s levels.
In these circumstances, the Marudai Food Group adhered toits basic policies—expanding the core business and fostering
the next pillar while strengthening product development
capabilities and technological capabilities—with the aim ofgaining recognition as an enterprise with a social mission,
namely, a comprehensive food products company offering
merchandise satisfying the highest standards of safety andreliability.

First of all, we would like to express our profound gratitude
for the continued support of our shareholders.
We hereby would like to announce the business results for the
first six-month period of the company’s 70th fiscal year.
During the first six-month period ended 30th September
2017, despite continuing improvement in the labour market andpersonal incomes as well as the start of a moderate recovery of

As a result, consolidated net sales for the first six-month
period increased by 4.3% year on year to 120,785 million yen.
Operating income decreased by 32.9% to 1,849 million yen
and profit attributable to the owners of the parent decreased by
35.7% to 1,204 million yen.
Once again, we would like to express our gratitude to ourshareholders and to ask for your continued support of ourbusiness in the future.
December 2017.

Tokuo Kudara
President and Representative Director

1

MARUDAI FOOD CO., LTD.

PRODUCTS

Processed Food Products
The Ham & Sausage Products operations focused efforts on expanding sales through vigorous sales promotion of mainstay
items, such as the “Kunseiya-Ripened Pork Sausage,” as well as “Itsumo Shinsen-Always Fresh Loin Ham” and “Itsumo ShinsenAlways Fresh Half Bacon,” which are in single-serve packages.
For midsummer gift products, we endeavoured to expand sales of the “Ouha” and “Kousai” series of gift packages, consistingof products that won the Monde Selection Grand Gold Quality Award in the food products category. Despite these measures,
sales in the Ham & Sausage Products operations decreased by 0.9% year on year mainly because of intensifying pricecompetition while consumers remain budget-minded.
In the Precooked & Processed Foods operations, sales of the “Karaage Chicken with Algae Salt from Awaji Island,” featuring
specialty salt with the flavour of seaweed, were brisk. In addition, we vigorously introduced new products, including “Salad
Chicken Trimmings,” a dish aimed at health-conscious consumers. Furthermore, sales of retort curry products, such as the “Chef’s
Takumi” series, and of snack products, such as the “Rappers” series, continued to increase. Regarding desserts and beverages,
sales of “Three-layered Jelly Parfait” were favourable. As a result, sales in the Precooked & Processed Foods operations
increased by 4.5% year on year.
Overall, sales in the Processed Food Products segment amounted to 83,661 million yen, an increase of 1.7% year on year.
Operating income, however, decreased by 57.2% to 766 million yen owing to a lower gross margin reflecting an increase in thecost of energy as well as other costs and a decrease in sales of the mainstay Ham & Sausage Products operations.
Meat Products
With regard to beef, while prices of Japanese beef were lower than the previous year’s level, their sales were flat owing toefforts to expand sales volume. On the other hand, both sales volume and sales of imported beef were brisk mainly owing tovigorous sales expansion of U.S. chilled beef. Regarding pork, while prices exceeded the previous year’s level, sales were brisk.
For Japanese pork, we focused our sales efforts on branded pork, and regarding imported pork, sales volume surged centring on
U.S. pork. Sales of chicken increased as prices exceeded the previous year’s level.
Overall, sales in the Meat Products segment increased by 10.9% year on year to 37,051 million yen. Operating income
increased by 16.0% to 1,011 million yen mainly because of an increase in sales of highly profitable imported meat.
Other
Sales in the Other business decreased by 8.2% year on year to 73 million yen and operating income decreased by 24.3% to 72
million yen.

2

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
30th September 2017 and 2016
(Unaudited)

Millions of yen
2017
2016

ASSETS
Current assets:
Cash and time deposits ........................................................................
Receivables:
Trade notes and accounts ................................................................
Other ...............................................................................................
Allowance for doubtful accounts ....................................................
Inventories ...........................................................................................
Deferred tax assets ..............................................................................
Advances and other current assets .......................................................
Total current assets ..........................................................................
Investments and other assets:
Investment securities
Other ...............................................................................................
Deferred tax assets ..............................................................................
Other ....................................................................................................
Allowance for doubtful accounts .........................................................
Total investments and other assets ..................................................
Property, plant and equipment, at cost:
Land .....................................................................................................
Buildings and structures ......................................................................
Machinery and equipment ...................................................................
Lease assets .........................................................................................
Construction in progress ......................................................................
Less accumulated depreciation ............................................................
Net property, plant and equipment ..................................................
Intangible assets .....................................................................................
Total assets ..........................................................................................
See the accompanying note.

3

Thousands of
U.S. dollars (Note)2017¥13,031¥14,424$115,585

30,824418(26)
16,0101,039
702
61,99825,896464(38)
16,395
1,021
623
58,785

273,408
3,708(231)
142,008
9,216
6,226
549,920

13,342
157
4,071
(139)
17,431

11,725
135
4,998
(221)
16,637

118,343
1,393
36,109(1,233)
154,612

19,01850,39859,973
8,587
1,246
139,222(85,039)
54,183
1,338¥134,950

19,05649,19256,545
8,073
857
133,723(82,476)
51,247
1,116¥127,785

168,689
447,029
531,959
76,166
11,052
1,234,895(754,293)
480,602
11,868$1,197,002

Millions of yen
2017
2016

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note)2017

Current liabilities:
Payables:Trade notes and accounts payable ...................................................
Other ...............................................................................................
Short-term borrowings ........................................................................
Long-term debt due within one year ...................................................
Short-term lease obligations ................................................................
Accrued expenses ................................................................................
Accrued income taxes .........................................................................
Other current liabilities ........................................................................
Total current liabilities ....................................................................

¥26,567
8,659
5,222
1,575
1,089
2,407
641
1,247
47,407¥24,282
7,637
5,064
2,641
917
2,457
997
674
44,669$235,648
76,80546,31913,9709,659
21,3505,686
11,062
420,499

Long-term liabilities:
Long-term debt due after one year ......................................................
Long-term lease obligations ................................................................
Deferred tax liabilities .........................................................................
Liabilities for retirement benefits ........................................................
Other long-term liabilities ...................................................................
Total long-term liabilities ................................................................

2,052
4,380
2,194
1,083
725
10,434

2,043
3,859
1,041
2,322
433
9,698

18,201
38,85019,461
9,606
6,431
92,549

Shareholders’ equity:
Common stock
Authorised — 200,000,000 shares
Issued — 132,527,909 shares in 2017 (132,527,909 shares in 2016) ...
Capital surplus .....................................................................................
Retained earnings ................................................................................
Treasury stock, at cost .........................................................................
Total shareholders’ equity ...............................................................

6,716
22,086
43,832(783)
71,851

6,716
22,08642,266(512)
70,55659,571
195,902388,788(6,945)637,316

Accumulated other comprehensive income:Unrealised gains on securities .............................................................
Deferred gains (losses) on hedges .......................................................
Foreign currency translation adjustments ............................................
Adjustments for retirement benefits ....................................................
Total accumulated other comprehensive income ............................

5,737
11
38
(974)
4,812

4,292
(26)
46
(1,871)
2,441

50,88797
337(8,639)42,682

Non-controlling interests .......................................................................
Total net assets .....................................................................................
Total liabilities and net assets ..............................................................

446
77,109¥134,950

421
73,418¥127,785

3,956
683,954$1,197,002

NET ASSETS

See the accompanying note.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Six months ended 30th September 2017 and 2016
(Unaudited)Thousands of
U.S. dollars (Note)2017

Millions of yen
2017
2016
Net sales ..................................................................................................
Cost of sales ............................................................................................

¥120,785
93,762¥115,774
88,269$1,071,359
831,666

Gross profit .........................................................................................
Selling, general and administrative expenses ......................................

27,02325,17427,50524,750239,693
223,292

Operating income ................................................................................

1,849

2,755

16,401Other income (expenses):
Interest and dividend income ..............................................................
Interest expense ...................................................................................
Gain on sale of securities, net ..............................................................
Loss on disposal of property, plant and equipment, net ......................
Loss on impairment of assets ..............................................................
Other, net .............................................................................................

139
(92)
–
(29)
(16)
161

170
(104)
3
(133)
(24)
205

1,233
(816)
–
(257)
(142)
1,427

163

117

1,445

Income before income taxes ...................................................................

2,012

2,872

17,846

Income taxes:
Current .................................................................................................
Deferred ...............................................................................................

720
76

1,046
(75)

6,386
674

796

971

7,060

Profit ........................................................................................................
Profit attributable to non-controlling interests ....................................

1,216
(12)

1,901
(29)

10,786(107)

Profit attributable to owners of parent ................................................

¥1,204¥1,872

See the accompanying note.

5

¥9.17

10,679U.S. dollars (Note)

Yen
Profit attributable to owners of parent per share .................................

$¥14.24$0.08

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Six months ended 30th September 2017 and 2016
(Unaudited)

Millions of yen
2017
2016
Profit ........................................................................................................
Other comprehensive income:Unrealised gains on securities .............................................................
Deferred gains (losses) on hedges .......................................................
Foreign currency translation adjustments ............................................
Adjustments for retirement benefits ....................................................
Share of other comprehensive income of associates accounted for using equity method ....
Total other comprehensive income .................................................
Comprehensive income ..........................................................................
Comprehensive income attributable to:
Owners of the parent ...........................................................................
Non-controlling interests .....................................................................
See the accompanying note.

6

Thousands of
U.S. dollars (Note)2017¥1,216¥1,901$10,786

697
10
–
221
(1)
927
¥2,143

(131)
(5)
41
195
10
110
¥2,011

6,182
89
–
1,960
(9)
8,222
$19,008¥2,131¥12¥1,982¥29$18,901$107

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 30th September 2017 and 2016
(Unaudited)Thousands of
U.S. dollars (Note)2017

Millions of yen
2017
2016
Common stock:
Balance at beginning and end of period .............................................

¥6,716¥6,716$ 59,571

Capital surplus:
Balance at beginning and end of period .............................................

¥22,086¥22,086$195,902

Retained earnings:
Balance at beginning of period ...........................................................
Cash dividends paid ...........................................................................
Profit attributable to owners of parent ................................................
Increase resulting from exclusion of equity method affiliates ...........
Balance at end of period .....................................................................

¥43,679(1,051)
1,204–¥43,832¥41,306
(920)
1,872
8
¥42,266$387,431(9,322)
10,679–$388,788

Treasury stock, at cost:
Balance at beginning of period ...........................................................
Purchase of treasury stock ..................................................................
Balance at end of period .....................................................................

¥(513)(270)¥ (783)¥(512)0¥ (512)$(4,550)(2,395)$ (6,945)

Unrealised gains on securities:
Balance at beginning of period ...........................................................
Increase (decrease) for period ............................................................
Balance at end of period .....................................................................

¥5,040697¥ 5,737¥4,423(131)¥ 4,292$44,705
6,182$ 50,887

Deferred gains (losses) on hedges:
Balance at beginning of period ...........................................................
Increase (decrease) for period ............................................................
Balance at end of period .....................................................................

¥1
10
¥
11

¥

$

Foreign currency translation adjustments:
Balance at beginning of period ...........................................................
Increase (decrease) for period ............................................................
Balance at end of period .....................................................................

¥38
(0)
¥
38

¥(4)
50
¥
46

$337
(0)
$
337

Adjustments for retirement benefits:
Balance at beginning of period ...........................................................
Increase for period ..............................................................................
Balance at end of period .....................................................................

¥(1,195)221¥ (974)¥(2,067)196¥(1,871)$(10,600)
1,961$ (8,639)

Non-controlling interests:
Balance at beginning of period ...........................................................
Increase for period ..............................................................................
Balance at end of period .....................................................................

¥439
7¥ 446¥396
25¥ 421$3,89462$ 3,956

See the accompanying note.

7

¥

(21)
(5)
(26)

$

9
88
97

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended 30th September 2017 and 2016
(Unaudited)

Millions of yen
2017
2016

Thousands of
U.S. dollars (Note)2017

Cash flows from operating activities:
Income before income taxes ................................................................
Depreciation and amortisation ............................................................
Loss on impairment of assets ..............................................................
Decrease in allowance for doubtful accounts ......................................
Increase in liabilities for retirement benefits .......................................
Interest and dividend income ..............................................................
Interest expense ...................................................................................
Gain on sale of securities, net ..............................................................
Loss on valuation of investment securities ..........................................
Loss on disposal of property, plant and equipment, net ......................
Increase in receivables .........................................................................
Increase in inventories .........................................................................
Increase in trade notes and accounts payable ......................................
Increase (decrease) in consumption tax payable .................................
Other, net .............................................................................................
Subtotal ...........................................................................................
Interest and dividends received ...........................................................
Interest paid .........................................................................................
Income taxes paid ................................................................................
Special retirement expenses ................................................................
Net cash provided by operating activities .......................................

¥2,012
2,703
16
(3)
94
(139)
92
–
1
29
(4,902)(1,165)
3,194
144
1,269
3,345
146
(92)
(651)
(843)
1,905

¥2,872
2,567
24
(26)
80
(170)
104
(3)
–
133
(1,243)(2,176)
2,422
(952)
705
4,337
178
(103)
(617)
–
3,795

$17,846
23,976142(27)
834(1,233)816–
9257(43,481)(10,334)
28,331
1,277
11,257
29,6701,295(816)(5,774)(7,477)
16,898Cash flows from investing activities:
Purchase of short-term investments and investment securities ...........
Proceeds from sale of short-term investments and investment securities .....
Purchase of property, plant and equipment .........................................
Proceeds from sale of property, plant and equipment .........................
Other, net .............................................................................................
Net cash used in investing activities ...............................................

(16)
1(3,624)604(63)(3,098)(16)
9(3,814)187(115)(3,749)(142)
9(32,145)
5,357
(558)
(27,479)

Cash flows from financing activities:
Net increase (decrease) in short-term borrowings ...............................
Repayment of long-term debt ..............................................................
Repayment of lease obligations ...........................................................
Cash dividends paid .............................................................................
Purchase of treasury shares .................................................................
Other, net .............................................................................................
Net cash used in financing activities ...............................................

685(1,004)(503)(1,050)(270)(5)(2,147)

(335)
(910)
(452)
(920)
(1)
(5)
(2,623)

6,076(8,905)(4,462)(9,313)(2,395)(45)(19,044)

Effect of exchange rate changes on cash and cash equivalents ..........
Net decrease in cash and cash equivalents ...........................................
Cash and cash equivalents at beginning of period ..............................
Cash and cash equivalents at end of period .........................................

–(3,340)16,371¥13,031–(2,577)
17,001¥14,424–(29,625)
145,210$115,585

See the accompanying note.

8

MARUDAI FOOD CO., LTD.

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Basis of financial statements
MARUDAI FOOD CO., LTD. (the “Company”) and its consolidated domestic subsidiaries maintain their official
accounting records in Japanese yen and in accordance with the provisions set forth in the Japanese Company Law andaccounting principles and practices generally accepted in Japan (“Japanese GAAP”). The accounts of overseas
affiliated companies are based on their accounting records maintained in conformity with generally accepted
accounting principles and practices prevailing in the respective countries of domicile. Certain accounting principles
and practices generally accepted in Japan are different from International Accounting Standards and standards inother countries in certain respects as to application and disclosure requirements. Accordingly, the accompanying
financial statements are intended for use by those who are informed about Japanese accounting principles andpractices. These financial statements should be read along with the Annual Report to Shareholders for the year ended
31st March 2017.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience ofreaders outside Japan, using the prevailing exchange rate at 30th September 2017, which was ¥112.74 to U.S. $1.00.
These translations should not be construed as representations that the Japanese yen amounts have been, could havebeen, or could in the future be converted into U.S. dollars at this or any other rate of exchange.

9

DIRECTORS AND STATUTORY AUDITORS(As of 30th September 2017)

President andRepresentative Director:

Tokuo Kudara

Senior Executive andManaging Director:

Yoshio Kuramori

Managing Director:

Yasushi Sawada

Directors:

Wataru Fukiage
Nobuyoshi Katoh
Shigeyoshi Chiba
Shigeki Fukushima

Outside Directors:

Susumu Shimadzu
Hideo Yano

Statutory Auditor:

Yoshikazu Sawanaka

Outside Statutory Auditors:

Takuji OkudairaMotoaki Nishimura

10

OUTLINE OF THE COMPANY(As of 30th September 2017)

Established:

Major Subsidiaries:

10th June 1958

Hokkaido Marudai Food Co., Ltd.
Stated Capital:

Tohoku Marudai Food Co., Ltd.

¥6,716 million

Shin-etsu Marudai Food Co., Ltd.
Chubu Marudai Food Co., Ltd.

Number of Employees: 2,087

Chu-Shikoku Marudai Food Co., Ltd.
Head Office:21-3 Midori-cho, Takatsuki-shi,

Kyushu Marudai Food Co., Ltd.

Osaka, Japan

Toda Foods Co., Ltd.
Azumino Food Co., Ltd.

Branch Office:4-7-5 Tsukiji, Chuou-ku,

Marushin Foods Co., Ltd.

Tokyo, Japan

Pioneer Foods Co., Ltd.
Umeya Co., Ltd.

Sales Offices:

The sales headquarters at the

Yahata Food Co., Ltd.

Company’s head office in Osaka

Hornmeier Co., Ltd.

controls 10 distribution centers andMarudaifood Co., Ltd.

3 regional sales departments which

Marudai Meat Co., Ltd.

service 37 local outlets.

Meat Supply Co., Ltd.
Marbest Trading Co., Ltd.

Plants:Hokkaido, Iwate,

Marudai Service Co., Ltd.

Niigata, Kanto,

10 Other subsidiaries

Ibaraki, Yokosuka, Shounan,
Associated Company:

Shizuoka, Matsusaka,

Betagro MF Deli Co., Ltd.

Takatsuki, Okayama,
Hiroshima, Karatsu

Overseas Office:

Chicago, U.S.A.

11

Head Office: 21-3 Midori-cho, Takatsuki-shi, Osaka, Japan
Telephone: 81-726-61-2518 Fax: 81-726-61-5006