Semi-Annual Report 2019
For the Six-Month Period Ended 30th September 2019

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 Food waseager 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

In the industry in which the Marudai Food Group operates,
a harsh business environment continued, exemplified by thenegative impact of the increase in the consumption tax rate on
consumer sentiment and the intensified competition among
companies, in addition to labour shortages and increases inlogistics costs. Regarding the meat market, domestic beef
prices stayed relatively soft, while imported beef prices werehigher than the previous year’s level. The pork market has
been volatile, mainly due to the impact of the classical swine
fever both in Japan and overseas. Domestic pork prices were
below the previous year’s level on average during the period,
while imported pork prices were above the previous year’slevel in general, and the outlook remains unclear.
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—and advanced its
corporate activities with the aim of gaining recognition as anenterprise with a social mission, namely, a comprehensive foodproducts company offering merchandise satisfying the highest
standards of safety and reliability.
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 72th fiscal year.
During the first six-month period ended 30th September
2019, the Japanese economy continued on a moderate recovery
track supported by improved employment and householdincome environments. However, the outlook remains uncertain
primarily due to heightened geopolitical risks including thetrade conflict between the United States and China.

As a result, consolidated net sales for the first six-month
period increased by 2.8% year on year to ¥124,667 million.
Operating income increased by 101.1% to ¥2,063 million andprofit attributable to the owners of the parent increased by
125.0% to ¥1,435 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 2019.

Toshiharu Inoue
President and Representative Director

1

MARUDAI FOOD CO., LTD.

PRODUCTS

Processed Food Products
The Ham & Sausage Products operations conducted sales promotion activities including “One Year to Go! Connect the Dreams!
Campaign,” and made efforts to boost sales centring on mainstay products such as the “Kunseiya-Ripened Pork Sausage” withthe package labeled with the emblem of an official supporter of the 2020 Olympic and Paralympic Games. We expanded sales of“Loin Ham” in a larger package, and worked to generate more sales through introduction of new products such as “Fish Sausage(Chiko-chan),” which features a character in a popular TV programme “Chico Will Scold You!” For our midsummer gift
products, we sought to increase sales of our “Ouha” and “Kousai” series, which include products that have won the Monde
Selection Grand Gold Quality Award in the food category. Despite these efforts, due to factors including intensified competition
among companies against a backdrop of reduced consumer spending, sales in the Ham & Sausage Products operations decreasedby 3.7% year on year.
In our Precooked & Processed Foods operations, our “Chicken Nugget,” which is furnished with a slightly chewy texture, andhealthy “Salad Chicken” series performed well. We also expanded sales of the “Chef no Takumi” series, including “Butter
Chicken Curry,” which contributed to an increase in sales of retort curry products. As for our desserts and beverages, beverages
containing black tapioca such as “TAPIOKA TIME” series continued to perform strongly. In addition, a full-scale operation of
the new plant for products for convenience stores that started operation in the previous fiscal year contributed towards increased
sales. As a result, sales in the Precooked & Processed Foods operations increased by 8.3% year on year.
As a result, sales in the Processed Food Products segment amounted to ¥86,984 million, an increase of 2.6% year on year.
Segment income grew 576.7% year on year to ¥1,426 million, owing mainly to the contribution of the increased sales in thePrecooked & Processed Foods operations and the improved profitability attributable to the full-scale operation of the new plantfor products for convenience stores, despite the decrease in sales of the mainstay Ham & Sausage Products operations.
Meat Products
With regard to beef, sales of Japanese beef were on a par with the previous year’s level. However, the overall sales of beef werehigher than the previous year’s level, primarily because sales volume of imported beef increased as we focused on sales ofbranded beef. Regarding pork, in the volatile market caused primarily by the impact of the classical swine fever both in Japanand overseas, the overall pork sales were higher than the previous year’s level, with domestic pork sales on a par with theprevious year’s level and with sales of pre-packaged imported pork increasing.
As a result, sales in the Meat Products segment increased by 3.5% year on year to ¥37,604 million. Segment income decreased
by 22.2% year on year to ¥601 million mainly because of the decline in profitability of domestic pork.
Other
Sales in the Other business decreased by 0.9% year on year to ¥79 million and Segment income decreased by 16.8% to ¥36
million.

2

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
30th September 2019 and 2018
(Unaudited)

Millions of yen
2019
2018

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
Affiliates .........................................................................................
Other ...............................................................................................
Retirement benefit asset ......................................................................
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

¥

9,196

¥

8,086

Thousands of
U.S. dollars (Note)2019$

85,20328,282660(14)18,704924
57,752

31,811734(17)
17,662964
59,240262,040
6,115(130)
173,298
8,562
535,088106
11,491
312
305
3,897
(133)
15,978–15,299
–
328
3,783
(128)
19,282982
106,4672,891
2,826
36,106(1,232)148,040

18,42954,153
66,597
8,753
735
148,667(90,718)
57,9493,209¥ 134,888

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

170,749
501,742
617,039
81,0996,810
1,377,439(840,526)
536,913
29,732$ 1,249,773

Millions of yen
2019
2018

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note)2019

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

¥ 26,169
9,697
6,094
1,684
1,014
666
1,022
2,094
48,440¥25,254
8,628
10,212
1,472
1,007
471
1,103
2,367
50,514Long-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 ................................................................

3,248
4,563
1,083
779
685
10,358

2,424
4,842
2,138
554
734
10,69230,09442,277
10,034
7,218
6,347
95,970Shareholders’ equity:
Common stock
Authorised — 40,000,000 shares in 2019 (200,000,000 shares in 2018)
Issued — 26,505,581 shares in 2019 (132,527,909 shares in 2018) ....
Capital surplus .....................................................................................
Retained earnings ................................................................................
Treasury stock, at cost .........................................................................
Total shareholders’ equity ...............................................................

6,716
22,08645,458(2,657)71,603

6,716
22,08644,087(2,635)70,25462,226204,633
421,180(24,618)
663,421

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

4,687
3
38
(772)
3,956

7,254
10
38
(586)
6,716

43,42628352(7,153)36,653

Noncontrolling interests ........................................................................
Total net assets .....................................................................................
Total liabilities and net assets ..............................................................

531
76,090¥ 134,888

484
77,454¥ 138,660

4,920
704,994$ 1,249,773$

242,463
89,84556,463
15,603
9,395
6,171
9,469
19,400448,809

NET ASSETS

See the accompanying note.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Six months ended 30th September 2019 and 2018
(Unaudited)Thousands of
U.S. dollars (Note)2019

Millions of yen
2019
2018
Net sales ..................................................................................................
Cost of sales ............................................................................................

¥ 124,667
96,041¥ 121,229
94,491$ 1,155,073
889,846

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

28,626
26,563

26,73825,712

265,227
246,113

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

2,063

1,026

19,114

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

182
84
(110)
0
(12)
(33)
–
160

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

1,686
778
(1,019)
0
(111)
(306)
–
1,483

271

115

2,511

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

2,334

1,141

21,625

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

847
36

556
(64)

7,848
333

883

492

8,181

1,451
(16)

649
(11)

13,444(148)

Profit ........................................................................................................
Profit attributable to noncontrolling interests ......................................
Profit attributable to owners of parent .................................................

¥

1,435

¥

638

See the accompanying note.

5¥ 56.42

13,296

U.S. dollars (Note)

Yen
Profit attributable to owners of parent per share (Note) .....................

$¥ 25.01$ 0.52MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Six months ended 30th September 2019 and 2018
(Unaudited)Thousands of
U.S. dollars (Note)2019

Millions of yen
2019
2018
Profit ........................................................................................................
Other comprehensive income:Unrealised gains (losses) on securities ................................................
Deferred gains (losses) on hedges .......................................................
Adjustments for retirement benefits ....................................................
Share of other comprehensive income of associates accounted for using equity method ....
Total other comprehensive income .................................................
Comprehensive income ..........................................................................

¥ 1,451¥649$ 13,444

(587)
(5)
51
1
(540)
¥ 911

858
19
144
2
1,023
¥ 1,672(5,439)(46)473
9(5,003)$ 8,441

Comprehensive income attributable to:
Owners of the parent ...........................................................................
Noncontrolling interests ......................................................................

¥¥¥ 1,661¥ 11$ 8,293$ 148

See the accompanying note.

6

895
16

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 30th September 2019 and 2018
(Unaudited)Thousands of
U.S. dollars (Note)2019

Millions of yen
2019
2018
Common stock:
Balance at beginning and end of period .............................................

¥ 6,716¥ 6,716$ 62,226

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

¥ 22,086¥ 22,086$ 204,633

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

¥ 44,913
(890)
1,435
¥ 45,458¥ 44,470(1,021)638¥ 44,087$ 416,130(8,246)
13,296$ 421,180

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

¥ (2,635)(22)¥ (2,657)¥ (2,457)(178)¥ (2,635)$ (24,414)(204)$ (24,618)

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

¥ 5,274(587)¥ 4,687¥ 6,396858¥ 7,254$ 48,865(5,439)$ 43,426¥¥$

Deferred gains (losses) on hedges:
Balance at beginning of period ...........................................................
Increase (decrease) for period ............................................................
Balance at end of period .....................................................................
Foreign currency translation adjustments:
Balance at beginning of period ...........................................................
Increase for period ..............................................................................
Balance at end of period .....................................................................
Adjustments for retirement benefits:
Balance at beginning of period ...........................................................
Increase for period ..............................................................................
Balance at end of period .....................................................................
Noncontrolling interests:
Balance at beginning of period ...........................................................
Increase for period ..............................................................................
Balance at end of period .....................................................................
See the accompanying note.

7

¥

¥
¥

¥
¥

¥
¥

9
(6)
3

36
2
38

(823)
51
(772)

519
12
531

¥

¥
¥

¥
¥

¥
¥

(9)
19
10

35
3
38

$

$
$

83
(55)
28

334
18
352

(730)
144
(586)

$ (7,625)472$ (7,153)

477
7
484

$
$

4,809
111
4,920

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended 30th September 2019 and 2018
(Unaudited)

Millions of yen
2019
2018

Thousands of
U.S. dollars (Note)2019

Cash flows from operating activities:
Income before income taxes ................................................................
Depreciation and amortisation ............................................................
Loss on impairment of assets ..............................................................
Increase (decrease) in allowance for doubtful accounts ......................
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 ......................
Decrease (increase) in receivables .......................................................
Increase in inventories .........................................................................
Increase in trade notes and accounts payable ......................................
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 .......................................

¥ 2,334
3,114
33
4
(184)
(182)
110
(0)
–
12
2,413
(2,932)
3,089
(109)
(43)
7,659
175
(110)
(371)
(181)
7,172

¥ 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

$ 21,625
28,852306
37(1,705)(1,686)
1,019
(0)
–
111
22,357(27,166)
28,620(1,010)(397)
70,963
1,621(1,019)(3,438)(1,677)66,450Cash 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 ...............................................

(17)
0(3,597)333(179)(3,460)(16)
133(5,017)162(19)(4,757)(158)
0(33,327)
3,085(1,658)(32,058)

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 provided by (used in) financing activities ........................

(286)
(967)
(475)
(890)
(22)
(3)
(2,643)

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

(2,650)(8,960)(4,401)(8,246)(204)(27)(24,488)

Net increase (decrease) in cash and cash equivalents .........................
Cash and cash equivalents at beginning of period ..............................
Cash and cash equivalents at end of period .........................................

1,069
8,127
¥ 9,196

(624)
8,710
¥ 8,086

9,904
75,299$ 85,203

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 2019.
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 2019, which was ¥107.93 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.
Additional Information
The Company consolidated shares of its common stock at a ratio of 5-to-1 on 1st 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 2019)

Chairman and
Representative Director:

Tokuo Kudara

President andRepresentative Director:

Toshiharu Inoue

Senior Executive andManaging Directors:

Yoshio Kuramori

Managing Director:

Yasushi Sawada

Directors:

Shigeki Fukushima
Nobuyoshi Katoh
Kouji Mishima

Outside Directors:

Susumu Shimadzu
Keiko Kaneko

Statutory Auditor:

Yoshikazu Sawanaka

Outside Statutory Auditors:

Takuji OkudairaMotoaki Nishimura

10

OUTLINE OF THE COMPANY(As of 30th September 2019)

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: 2,023

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.

7 regional sales departments which

Marudai Meat Co., Ltd.

service 31 local outlets.

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

Plants:Hokkaido, Iwate,

Marudai Service Co., Ltd.

Niigata, Kanto,

8 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