Semi-Annual Report 2018
For the Six-Month Period Ended 30th September 2018

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 a third 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

unclear since the impact of a series of natural disasters is aconcern, in addition to uncertainties regarding overseas
economies due to the emergence of trade issues and otherfactors, and the effects of fluctuations in financial markets.
In the industry in which the Marudai Food Group operates,a challenging business environment is continuing, exemplified
by labour shortages and increases in logistics and energy costs
amid further intensifying price competition as consumers
become increasingly budget-minded. Regarding the meat
market, beef prices, which had been below the previous year’slevel, recently exceeded that level. On the other hand, pork
prices remained soft.
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 forthe continued support of our shareholders.
We hereby would like to announce the business results for the
first six-month period of the company’s 71th fiscal year.
During the first six-month period ended 30th September
2018, amid continuing improvement in the labour market andpersonal incomes, the Japanese economy achieved a moderate
recovery. However, prospects for the Japanese economy remain

As a result, consolidated net sales for the first six-month
period increased by 0.4% year on year to ¥121,229 million.
Operating income decreased by 44.5% to ¥1,026 million andprofit attributable to the owners of the parent decreased by
47.0% to ¥638 million.
Once again, we would like to express our gratitude to ourshareholders and to ask for your continued support of ourbusiness in the future.
December 2018.

Tokuo Kudara
President and Representative Director

1

MARUDAI FOOD CO., LTD.

PRODUCTS

Processed Food Products
The Ham & Sausage Products operations endeavoured to expand sales by introducing new products such as “Oryori Bacon,”“Arabiki Sausage MINION,” and “Fish Sausage MINION” in addition to vigorous sales promotion, such as “Wanpaku Challenge!
Campaign,” centring on mainstay items, such as the “Kunseiya-Ripened Pork Sausage.” For midsummer gift products, we
endeavoured to expand sales of the “Ouha” and “Kousai” series of gift packages, consisting of 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 6.4% year on year mainly because of further intensifying price competition against the
backdrop of consumers’ persisting budget-mindedness.
In the Precooked & Processed Foods operations, sales of the “Sundubu” series for which we have introduced a productconsisting of three microwavable one-person-portion packages as well as the “Bistro Club Beef Curry” series were robust. In
addition, the “Salad Chicken” series continued to contribute to sales. Desserts and beverages showed strong sales growth, towhich the popular “TAPIOCA TIME” series of beverages containing black tapioca contributed greatly. As a result, sales in thePrecooked & Processed Foods operations increased by 9.6% year on year.
As a result, sales in the Processed Food Products segment amounted to ¥84,804 million, an increase of 1.4% year on year.
Operating income, however, was far below the previous year’s level, having decreased by 72.5% year on year to ¥211 million,
owing to a decrease in sales of the mainstay Ham & Sausage Products operations and the impact of the initial cost associatedwith the start-up of a new plant for products for convenience stores.
Meat Products
With regard to beef, although both sales volume and sales of imported beef were lower than the previous year’s level, overall beef
sales slightly exceeded the previous year’s level, mainly because sales of Japanese beef grew as the sales volume expanded.
Regarding pork, while both sales volume and sales of Japanese pork were lower than the previous year’s level, we managed tosecure overall pork sales on a par with the previous year’s level mainly because sales of imported pork exceeded the previous
year’s level as the sales volume expanded. Sales volume and sales of chicken were far below the previous year’s level mainly
owing to the impact of declining prices.
As a result, sales in the Meat Products segment decreased by 1.9% year on year to ¥36,344 million. Operating income
decreased by 23.6% to ¥772 million mainly because of the decline in profitability of chicken.
Other
Sales in the Other business increased by 11.2% year on year to ¥81 million, but operating income decreased by 39.8% to ¥43
million.

2

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
30th September 2018 and 2017
(Unaudited)

Millions of yen
2018
2017

ASSETS
Current assets:
Cash and time deposits ........................................................................
Receivables:
Trade notes and accounts ................................................................
Other ...............................................................................................
Allowance for doubtful accounts ....................................................
Inventories ...........................................................................................
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)2018¥8,086¥13,031$71,192

31,811734(17)
17,662964
59,24030,824418(26)
16,010702
60,959280,0766,462(150)
155,503
8,488
521,571

15,299
328
3,783
(128)
19,282

13,342
270
4,071
(139)
17,544

134,698
2,888
33,307(1,127)
169,766

19,01053,33863,9158,854
641
145,758(88,044)
57,7142,424¥138,660

19,01850,39859,973
8,587
1,246
139,222(85,039)
54,183
1,338¥134,024

167,371469,607562,731
77,954
5,644
1,283,307(775,172)
508,135
21,342$1,220,814

Millions of yen
2018
2017

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note)2018

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

¥25,254
8,628
10,212
1,472
1,007
471
1,103
2,367
50,514¥26,567
8,659
5,222
1,575
1,089
641
1,111
2,543
47,407$222,345
75,964
89,91012,960
8,866
4,147
9,711
20,841
444,744

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 ................................................................

2,424
4,842
2,138
554
734
10,692

2,052
4,380
1,268
1,083
725
9,508

21,342
42,631
18,824
4,878
6,461
94,136

Shareholders’ equity:
Common stock
Authorised — 200,000,000 shares
Issued — 132,527,909 shares in 2018 (132,527,909 shares in 2017) ....
Capital surplus .....................................................................................
Retained earnings ................................................................................
Treasury stock, at cost .........................................................................
Total shareholders’ equity ...............................................................

6,716
22,08644,087(2,635)70,254

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

59,130
194,453
388,158(23,199)
618,542

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

7,254
10
38
(586)
6,716

5,737
11
38
(974)
4,812

63,86788334(5,159)59,130Non-controlling interests .......................................................................
Total net assets .....................................................................................
Total liabilities and net assets ..............................................................

484
77,454¥138,660

446
77,109¥134,024

4,262
681,934$1,220,814

NET ASSETS

See the accompanying note.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Six months ended 30th September 2018 and 2017
(Unaudited)Thousands of
U.S. dollars (Note)2018

Millions of yen
2018
2017
Net sales ..................................................................................................
Cost of sales ............................................................................................

¥121,229
94,491¥120,785
93,762$1,067,345
831,934

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

26,73825,712

27,02325,174

235,411226,378

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

1,026

1,849

9,033

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

164
95
(106)
79
(85)
(27)
(56)
51

139
96
(92)
–
(29)
(16)
–
65

1,444
836
(933)
696
(748)
(238)
(493)
449

115

163

1,013

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

1,141

2,012

10,046

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

556
(64)

720
76

4,895
(563)

492

796

4,332

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

649
(11)

1,216
(12)

5,714
(97)

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

¥638¥1,204$5,617

U.S. dollars (Note)

Yen
Profit attributable to owners of parent per share (Note) .....................
See the accompanying note.

5¥25.01¥45.83$0.22

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Six months ended 30th September 2018 and 2017
(Unaudited)

Millions of yen
2018
2017

Thousands of
U.S. dollars (Note)2018

Profit ........................................................................................................
Other comprehensive income:Unrealised gains on securities .............................................................
Deferred gains on hedges ....................................................................
Adjustments for retirement benefits ....................................................
Share of other comprehensive income of associates accounted for using equity method ....
Total other comprehensive income .................................................
Comprehensive income ..........................................................................

¥649¥1,216$5,714

858
19
144
2
1,023
¥1,672

697
10
221
(1)
927
¥2,143

7,554
167
1,268
18
9,007
$14,721

Comprehensive income attributable to:
Owners of the parent ...........................................................................
Non-controlling interests .....................................................................

¥1,661¥11¥2,131¥12$14,624$97

See the accompanying note.

6

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 30th September 2018 and 2017
(Unaudited)

Millions of yen
2018
2017

Thousands of
U.S. dollars (Note)2018

Common stock:
Balance at beginning and end of period .............................................

¥6,716¥6,716$59,130

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

¥22,086¥22,086$194,453

Retained earnings:
Balance at beginning of period ...........................................................
Cash dividends paid ...........................................................................
Profit attributable to owners of parent ................................................
Balance at end of period .....................................................................

¥44,470(1,021)
638¥44,087¥43,679(1,051)
1,204¥43,832$391,530(8,989)5,617$388,158

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

¥(2,457)(178)¥(2,635)¥ (513)(270)¥(783)$(21,632)(1,567)$(23,199)

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

¥ 6,396
858¥7,254¥ 5,040
697¥5,737$ 56,313
7,554$63,867

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

¥(9)
19
¥10

¥1
10
¥11

$
$

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

¥35
3
¥38

¥38
(0)
¥38

$308
26
$
334

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

¥(730)144¥(586)¥(1,195)
221¥(974)$(6,427)
1,268$ (5,159)

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

¥477
7
¥484

¥439
7
¥446

$4,20062$ 4,262

See the accompanying note.

7

(79)
167
88

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended 30th September 2018 and 2017
(Unaudited)

Millions of yen
2018
2017

Thousands of
U.S. dollars (Note)2018

Cash flows from operating activities:
Income before income taxes ................................................................
Depreciation and amortisation ............................................................
Loss on impairment of assets ..............................................................
Decrease in allowance for doubtful accounts ......................................
Increase (decrease) 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 ................................................................................
Payments for special retirement expenses ...........................................
Net cash provided by operating activities .......................................

¥1,141
3,085
27
(6)
(48)
(164)
106
(79)
2
85
(2,768)(1,619)
1,960
(87)
335
1,970
164
(105)
(439)
(26)
1,564

¥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

$10,046
27,161
238
(53)
(423)
(1,444)
933
(696)
18
748
(24,370)(14,254)
17,257(766)
2,950
17,345
1,444(925)(3,865)(229)
13,770Cash 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)
133
(5,017)162(19)(4,757)(16)
1(3,624)604(63)(3,098)

(141)
1,171
(44,172)
1,426
(166)
(41,882)

Cash flows from financing activities:
Net increase 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 ...............................................

5,082
(831)
(480)
(1,019)
(178)
(5)
2,569

685
(1,004)(503)(1,050)(270)(5)(2,147)44,744(7,316)(4,226)(8,972)(1,567)(45)
22,618Net decrease in cash and cash equivalents ...........................................
Cash and cash equivalents at beginning of period ..............................
Cash and cash equivalents at end of period .........................................

(624)
8,710
¥8,086(3,340)16,371¥13,031(5,494)
76,686$71,192

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 2018.
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 2018, which was ¥113.58 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.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year’s presentation.
Additional Information
The Company consolidated shares of its common stock at a ratio of 5-to-1 on 1 st October 2018, the effective date.
Profit attributable to owners of parent per share is computed based on the assumption that the said consolidation ofshares was conducted at the beginning of the previous fiscal year.

9

DIRECTORS AND STATUTORY AUDITORS(As of 30th September 2018)

President andRepresentative Director:

Tokuo Kudara

Senior Executive andManaging Directors:

Toshiharu Inoue

Managing Director:

Yasushi Sawada

Directors:

Shigeki Fukushima

Yoshio Kuramori

Nobuyoshi Katoh
Wataru Fukiage

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 2018)

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: 2,091

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.

4 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