Semi-Annual Report 2016
For the Six-Month Period Ended 30th September 2016

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 ofboth the Tokyo and Osaka Stock Exchanges 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, cheese and freshmeats. Ham and sausage, however, remain an integral part of our product line andcontinue 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

unpredictable because of mounting uncertainty regarding
overseas economies and concern about both foreign exchange
rates and the stock market.
The Marudai Food Group’s Processed Food Products
business continues to operate in a challenging environment
characterized by intensifying sales competition whilecustomers are becoming increasingly budget-minded, althoughprices of raw materials have been stable. Regarding the Meat
Products business, while prices of U.S. beef have been stableowing to an increase in shipments, high prices of Japanese
beef persisted owing to a decrease in shipments. Prices of U.S.
pork have begun to weaken, reflecting the continuing increasein shipments, with prices of Japanese pork starting to stabilize
due to a recovery in shipments.
In these circumstances, the Marudai Food Group adhered toits basic pol icies — st reng t hen i ng t he core busi ness,
implementing a diversification strategy, and promoting lowcost operations—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
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 69th fiscal year.
During the first six-month period ended 30th September
2016, the Japanese economy remained on a moderate recovery
path owing to improvement in the labour market and personal
incomes despite the lack of vigour in personal consumption.
However, prosp e cts for t he Japa nese e conomy wereAs a result, consolidated net sales for the first six-month
period decreased by 0.2% year on year to 115,774 million yen.
Operating income increased by 28.9% to 2,755 million yen,and profit attributable to owners of the parent increased by
32.3% to 1,872 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 2016.

Tokuo Kudara
President and Representative Director

1

MARUDAI FOOD CO., LTD.

PRODUCTS

Processed Food Products
The Ham & Sausage Products operations made vigorous efforts to expand sales of mainstay items such as the “KunseiyaRipened Pork Sausage,” which was redesigned and launched in April 2016, through sales promotions, including the “Natsu no
Nippon! Zenryoku Ouen! (Go for it! Japan in the Summer! ) Campaign.” Sales of the smoked top-grade “Ibushi Tokkyu Bacon,”“Aburi Bara Yakibuta” Chinese-style barbecued pork, and rich-flavoured “Umami White Ham,” all of which are popular
products, were robust. In addition, we introduced new products, including the “Iwamizawa Cured Ham” series produced in
Iwamizawa, Hokkaido, and worked to increase sales.
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. Nevertheless, sales of the
Ham & Sausage Products operations decreased by 3.2% year on year partly because of intensifying sales competition while
consumers became increasingly budget-minded.
In the Precooked & Processed Foods operations, sales of retort curry products centering on the “Bistro Club Beef Curry” wererobust. We made efforts to increase sales of chicken dishes with the launch of new products, including the “Yuzukosho Chicken,”which is fried chicken flavoured with a seasoning made from yuzu citron zest and chili peppers produced in Kyushu. Brisk salesof desserts and beverages continued, underpinned by robust sales of the mainstay “SWEET CAFE” series of desserts andexecution of a campaign for the “TAPIOCA TIME” series of beverages with black tapioca. During the campaign period, we
raised the amount of black tapioca in each “TAPIOCA TIME” series beverages by 20%. Sales of the Precooked & Processed
Foods operations increased by 4.2% year on year.
Overall, sales in the Processed Food Products segment amounted to 82,292 million yen, up 0.2% year on year. Operating
income decreased by 12.3% to 1,790 million yen owing to a decrease in sales of the mainstay Ham & Sausage Products
operations despite decreases in the prices of raw materials and energy, and our cost reduction efforts through rationalization.
Meat Products
With regard to beef, sales of Japanese beef and imported frozen beef were lacklustre while prices of Japanese beef remained
high. In this situation, we strove to increase sales of U.S. chilled beef. Regarding pork, sales of Japanese pork, whose prices havestarted to stabilize, decreased year on year, despite an increase in sales volume. We made efforts to promote sales of imported
chilled pork to secure overall sales of pork. Sales of chicken were sluggish because of a decline in prices of imported chicken.
As a result, sales in the Meat Products segment decreased by 0.6% year on year to 33,403 million yen. Operating income
greatly increased from the same period of the previous year to 871 million yen because of higher profit on imported frozen beef
whose prices plummeted in the previous year and also owing to our vigorous efforts to expand sales of imported beef andimported pork, which offer relatively high profitability.
Other
Sales in the Other business decreased by 63.2% year on year to 79 million yen, but operating income increased by 15.6% to 94
million yen.

2

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
30th September 2016 and 2015
(Unaudited)

Millions of yen
2016
2015

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 ...........................................................................
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)2016¥14,424¥13,972$142,741

25,896464(38)
16,395
1,021
623
58,78525,714356(58)
14,4811,044
856
56,365

256,269
4,592(376)
162,246
10,104
6,166
581,742

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

13,134
105
5,671
(263)
18,647116,032
1,336
49,460(2,187)
164,641

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

17,92747,65356,378
6,063
906
128,927(81,374)
47,553893¥123,458

188,580
486,809559,574
79,8918,481
1,323,335(816,190)
507,145
11,044$1,264,572

Millions of yen
2016
2015

LIABILITIES AND NET ASSETS
Current liabilities:
Trade notes and accounts payable .......................................................
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 ....................................................................
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 ................................................................

Thousands of
U.S. dollars (Note)2016¥24,282
5,064
2,641
917
2,457
997
8,311
44,669¥22,722
4,296
1,884
737
2,385
1,055
7,942
41,021$240,297
50,114
26,136
9,075
24,315
9,866
82,246442,049

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

4,375
1,979
1,814
1,546
603
10,317

20,21838,18910,302
22,9794,284
95,972

Shareholders’ equity:
Common stock
Authorised — 200,000,000 shares
Issued — 132,527,909 shares in 2016 (132,527,909 shares in 2015) ...
Capital surplus .....................................................................................
Retained earnings ................................................................................
Treasury stock at cost ..........................................................................
Total shareholders’ equity ...............................................................

6,716
22,08642,266(512)
70,556

6,716
22,061
40,104(511)
68,37066,462
218,565
418,268(5,066)698,229

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

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

5,020
(1)
(151)
(1,538)3,330

42,474(257)
455(18,516)
24,156

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

421
73,418¥127,785

420
72,120¥123,458

4,166
726,551$1,264,572

NET ASSETS

See the accompanying note.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Six months ended 30th September 2016 and 2015
(Unaudited)Thousands of
U.S. dollars (Note)
2016

Millions of yen
2016
2015
Net sales ..................................................................................................
Cost of sales ............................................................................................

¥115,774
88,269¥115,971
89,639$1,145,710
873,518

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

27,50524,75026,332
24,194272,192
244,928

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

2,755

2,138

27,264

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

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

156
(111)
–
73
(27)
172

1,682
(1,029)30(1,316)
(238)
2,029

117

263

1,158

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

2,872

2,401

28,422

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

1,046
(75)

1,032
(66)

10,352
(742)

971

966

9,610

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

1,901
(29)

1,435
(20)

18,812(287)

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

¥1,872¥1,415$18,525

U.S. dollars (Note)

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

5¥14.24¥10.70$0.14

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Six months ended 30th September 2016 and 2015
(Unaudited)

Millions of yen
2016
2015
Profit ........................................................................................................
Other comprehensive income:Unrealised gains on securities .............................................................
Deferred 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)2016¥1,901¥1,435$18,812

(131)
(5)
41
195
10
110
¥2,011

244
(9)
1
182
1
419
¥1,854(1,296)
(50)
406
1,930
99
1,089
$19,901¥1,982¥29¥1,835¥19$19,614$287

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 30th September 2016 and 2015
(Unaudited)

Millions of yen
2016
2015

Thousands of
U.S. dollars (Note)2016

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

¥6,716¥6,716$66,462

Capital surplus:
Balance at beginning of period ...........................................................
Purchase of shares of consolidated subsidiaries .................................
Balance at end of period .....................................................................

¥22,086–¥22,086¥22,073(12)¥22,061$218,565–$218,565

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

¥41,306
(920)
1,872
8
¥42,266¥39,616
(927)
1,415
–
¥40,104$408,768(9,104)
18,52579$418,268

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

¥(512)0¥(512)¥(10)(501)¥(511)$(5,066)0$(5,066)

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

¥4,423(131)¥4,292¥4,776244¥5,020$43,770(1,296)$42,474

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

¥(21)(5)¥(26)

¥8
(9)
¥(1)

$(208)(49)$(257)

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

¥(4)
50
¥46

¥(153)2¥(151)$(40)
495$455

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

¥(2,067)196¥(1,871)¥(1,720)
182¥(1,538)$(20,455)
1,939$(18,516)

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

¥396
25
¥421

¥402
18
¥420

$3,919247$4,166

See the accompanying note.

7

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended 30th September 2016 and 2015
(Unaudited)

Millions of yen
2016
2015

Thousands of
U.S. dollars (Note)2016

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 (gain) on disposal of property, plant and equipment, net ............
Increase in receivables .........................................................................
Decrease (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 ................................................................................
Net cash provided by operating activities .......................................

¥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

¥2,401
2,512
27
(43)
76
(156)
111
–
(73)
(1,750)
2,553
1,650
(105)
423
7,626
160
(111)
(681)
6,994

$28,422
25,403
238
(257)
792
(1,682)
1,029
(30)
1,316
(12,301)(21,534)
23,968(9,421)
6,976
42,9191,762(1,019)(6,106)37,556

Cash 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)
9(3,814)187(115)(3,749)(15)–(1,255)278(49)(1,041)(158)
89(37,744)
1,851(1,139)(37,101)

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

(335)
(910)
(452)
(920)
(1)
(5)
(2,623)(3,011)(1,060)
(390)
(927)
(500)
(16)
(5,904)(3,315)(9,005)(4,473)(9,104)(10)(50)(25,957)

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

–(2,577)
17,001¥14,424

0
49
13,923¥13,972–(25,502)168,243$142,741

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 2016.
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 2016, which was ¥101.05 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 2016)

President andRepresentative Director:

Tokuo Kudara

Senior Executive andManaging Director:

Keiichi Katoh

Managing Directors:

Yoshio Kuramori
Yasushi Sawada

Directors:

Wataru Fukiage
Nobuyoshi Katoh
Shigeyoshi Chiba

Outside Directors:

Susumu Shimadzu
Hideo Yano

Statutory Auditors:

Yoshikazu Sawanaka

Outside Statutory Auditors:

Takuji OkudairaMotoaki Nishimura

10

OUTLINE OF THE COMPANY(As of 30th September 2016)

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: 2,074

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,

11 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