Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

伪 Posted All-Time High Earnings in FY3/16, Achieved
Significant Growth in Small Packaged Long-Life
SaladsKENKO Mayonnaise Co., Ltd. <2915> (hereafter “KENKO Mayo” or “the Company”) is engaged in
the production and sale of salads and delicatessen products, mayonnaise and dressings, as well asprocessed egg and other products. It has a leading position in the commercial-use market, and theleading market share in the “long-life salads” category at 37.6%. In the mayonnaise and dressings
market, it is second behind the market leader Kewpie <2809> with a 14.7% share.
The Company posted all-time high results. In FY3/16 consolidated results, sales were up 11.0%
y-o-y to ¥66,933mn and recurring profit was up 23.4% y-o-y to ¥3,426mn. We think it is worth notingthat sales increased by over 10% for the first time since 2000. Key drivers of upbeat sales of salads,
processed egg products, and other products, primarily to convenience stores (herein CVS), aremore “solitary meals” with a rise in single-person households and “simplification” of cooking at homewith the shift to nuclear family structures. In particular, small packaged long-life salad sales climbed
sharply with a 2.5-fold gain. The Company also expanded sales to restaurants, mainly salads, thanks
to favorable response to meticulous menu proposals customized for individual industries. From a
profit perspective, rises in raw material and fixed costs were absorbed by the impact of higher sales
and the increased production efficiency, leading to double-digit growth.
The Company’s guidance for FY3/17 consolidated results calls for a 4.6% y-o-y rise in sales to¥70,000mn and a 2.1% increase in recurring profit to ¥3,500mn. However, we expect upside on
the prospect of FY3/16 sales momentum continuing in FY3/17 too. The Company plans to steadily
expand production capacity for products with robust demand, including processed egg products
and salads. In the “KENKO Five Code 2015-2017” three-year mid-term management plan currently
being implemented, sales of ¥75,000mn and a consolidated recurring profit margin of 5% are cited
as targets for the plan’s final year, FY3/18. If the current pace continues, the Company is on track to
comfortably achieve these targets.
The Company is reviewing measures to stimulate the overall dressings market this year in light of the
new designation of August 24 as “Dressings Day.”
The Company’s shareholder returns policy is based on stable dividends, with a payout ratio of 20%
as a benchmark. The Company raised dividends by ¥5 year-on-year to ¥28 in FY3/16 and plans anincrease of ¥2 per share to ¥30 in FY3/17 (representing a payout ratio of 20.0%). We expect a further
dividend hike if earnings exceed guidance. Also, as a further shareholder incentive, the Company
awards shareholders of record at the end of March each year with (¥1,000 or ¥2,500 worth of) its own
products in line with the number of shares held.

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We encourage readers to review our complete legal statement on “Disclaimer” page.
1

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㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻤㻜㻘㻜㻜㻜

㻟㻘㻠㻞㻢

㻟㻘㻡㻜㻜

㻣㻜㻘㻜㻜㻜

KENKO Mayonnaise
Co., Ltd.

㻢㻜㻘㻜㻜㻜

2915 Tokyo Stock ExchangeFirst Section㻠㻜㻘㻜㻜㻜

1-Aug.-16

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㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

伪 Company Overview
Steadily recruiting new customers in the restaurant industry
thanks to favorable assessment of quality at the Shizuoka
Fujisan Factory(1) Scope of Business
KENKO Mayo is a manufacturer of foodstuffs, mainly engaged in the production and sale of salads
and delicatessen items, mayonnaise and dressings, as well as processed egg products and otherproducts for commercial use, undertaking operations such as the production and sale of daily grocerydelicatessen products, and retail store operations through subsidiaries.
Looking at the consolidated sales contribution by product in FY3/16, salads and delicatessen items
were the highest with 45.5%, followed by processed egg products with 27.0% and mayonnaise anddressings with 25.5%. Looking at trends in recent years, salads and delicatessen products andprocessed egg products have been trending upward while mayonnaise and dressings have been flat.
Processed egg products overtook mayonnaise and dressings in FY3/16 for the first time. We may cite
as the reason for this that, due to expansion in the home meal replacement market (HMR), demandis expanding for processed egg products for lunch boxes, bakery products, and sandwiches aimed
at CVS. Also, from a production perspective, the commencement of operations from FY3/14 at the
Shizuoka Fujisan Factory, and promotion of increased production capacity and steady recruitment of
new customers, including conveyor-belt sushi chains, thanks to favorable assessment of quality at
this factory, were significant drivers of stronger sales.

We encourage readers to review our complete legal statement on “Disclaimer” page.
2

䕔 Company Overview

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㻠㻡㻚㻡㻑

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KENKO Mayonnaise
Co., Ltd.

㻞㻣㻚㻤㻑

㻟㻜㻚㻜㻑

2915 Tokyo Stock ExchangeFirst Section

㻞㻣㻚㻜㻑

㻞㻜㻚㻜㻑

㻞㻡㻚㻡㻑

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㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻞㻞㻚㻝㻑

㻝㻜㻚㻜㻑

1-Aug.-16

㻜㻚㻜㻑

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Looking at the consolidated sales composition by business category (customer industry type), we
see that three industry segments represent more than 70% of the total, with the Food services
industry being 26.0%, CVS 25.7% and mass-retailers 20.4%. Looking at the trends for the past few
years we see that contributions by CVS and mass-retailers are in an uptrend. Expansion in the HMR
is thought to be the cause, against a background of more “solitary meals” with a rise in single-personhouseholds and “simplification” of cooking at home due to changes such as a shift to nuclear family
structures and greater participation by women in society.

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㻞㻜㻚㻠㻑

㻞㻡㻚㻣㻑

Looking at market shares within these industries, in recent years mayonnaise and dressings
have performed stably at around 15%, maintaining the Company’s number two position in theindustry. Given that it is virtually specialized in commercial-use, while its familiarity is limited withgeneral consumers, in the commercial-use field the Company plays sparring partner to the leading
manufacturer, Kewpie, with a supply track record to most of the major restaurants and hotel chains.
Meanwhile, the Company, the pioneer of “long-life salads,” has established an industry-leading
market share of over 37% in long-life salads.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

䕔 Company Overview

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KENKO Mayonnaise
Co., Ltd.

㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻝㻠㻚㻟㻑㻭㼖㼕㼚㼛㼙㼛㼠㼛

2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.

㻡㻡㻚㻥㻑㻻㼠㼔㼑㼞㼟

㻝㻠㻚㻣㻑㻿㼛㼡㼞㼏㼑㻦㻌㻺㻵㻷㻷㻭㻺㻌㻷㻱㻵㼆㻭㻵㻌㼀㻿㼁㻿㻴㻵㻺㻿㻴㻭㻘㻌㻵㼚㼏㻚㻌䇾㼀㼔㼑㻌㻮㼑㼢㼑㼞㼍㼓㼑㻌㻒㻌㻲㼛㼛㼐㻌㻿㼠㼍㼠㼕㼟㼠㼕㼏㼟㻌㻹㼛㼚㼠㼔㼘㼥䇿㻌㻸㼛㼚㼓㻙㻸㼕㼒㼑㻌㻿㼍㼘㼍㼐㻌㻹㼍㼞㼗㼑㼠㻌㻿㼔㼍㼞㼑㻌㻔㻞㻜㻝㻠㻕㻌FISCO Ltd. Analyst
Yuzuru Sato㻟㻝㻚㻟㻑㻷㻱㻺㻷㻻㻌㻹㼍㼥㼛㼚㼚㼍㼕㼟㼑㻟㻣㻚㻢㻑㻷㼑㼣㼜㼕㼑
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㻻㼠㼔㼑㼞㼟

㻝㻝㻚㻥㻑

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㻿㼛㼡㼞㼏㼑㻦㻌㻲㼁㻶㻵㻌㻷㼑㼕㼦㼍㼕㻌䇾㻲㼛㼛㼐㼟㼠㼡㼒㼒㻌㻹㼍㼞㼗㼑㼠㼕㼚㼓㻌㻴㼍㼚㼐㼎㼛㼛㼗䇿㻌

Built a nationwide production system for stable supply ofhigh-quality products(2) Company Strengths
The Company’s strength are: 1) its nationwide production system that supplies high-quality products
on a stable basis, and 2) its collective strength of integrated production, development and sales,
namely product development capabilities that meet customer needs as well as its meticulous sales
response capabilities.
High quality means not only good taste; safety and security are also important elements. Further,
for the Company, which is focused on commercial-use sales, the question of how it can offer added
value to customers holds an important key to expanding business growth. The Company has taken
steps to offer added value through its meticulous response to customers, involving the segmentationof industry fields by business format, with the sales, product development, production and menu
development teams acting in concert. The number of product items that the Company develops
annually exceeds 1,800, meaning it develops five new items every day. Since 2011, the Company’ssales growth rate has continued to outpace the restaurant and HMR markets thanks to the fruits ofthese continued efforts, including an increase of over 10% in FY3/16.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4䕔 Company Overview

Broad Product Line-Up

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
Source: Company briefing materials

FISCO Ltd. Analyst
Yuzuru Sato㻳㼞㼛㼣㼠㼔㻌㻾㼍㼠㼑㻌㼛㼒㻌㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㻛㻴㻹㻾㻌㻹㼍㼞㼗㼑㼠㻌㼍㼚㼐㻌㻯㼛㼙㼜㼍㼚㼥㻌㻯㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㻿㼍㼘㼑㼟㻌㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㻛㻴㻹㻾㻌㻔㼏㼍㼘㼑㼚㼐㼍㼞㻌㼥㼑㼍㼞㻕㻯㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼟㼍㼘㼑㼟㻌㻔㼒㼕㼟㼏㼍㼘㻌㼥㼑㼍㼞㻕

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Currently, the Company’s nationwide production system comprises 7 factories operated by the parent
company and 9 factories operated by 7 consolidated subsidiaries. Subsidiary production bases areclosely linked to their operating areas because they are the production bases for delicatessenrelated products for daily delivery to supermarkets. Above all, just-in-time (JIT) response capability
is essential for CVS that operate 24/7. Some of the factories therefore operate 365 days-a-year, withflexible production systems that can quickly respond to changes in order volumes.
Also, the Company’s subsidiary Salad Cafe Co., Ltd. operates specialty salad restaurants. As of
end-March 2016, there were 17 shops, mainly opened in department stores and shopping malls ingreater Tokyo and Kansai areas.

We encourage readers to review our complete legal statement on “Disclaimer” page.
5

䕔 Company Overview

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

In terms of overseas operations, the Company established a joint venture (49% equity stake) in
Indonesia with a local food producer in 2012 that began production (annual capacity of about 4,000tons) of mayonnaise and sauces in Autumn 2013. This factory has obtained Halal certification, andapart from home and commercial-use sales of these products locally, it is engaged in the sale of liquid
eggs. Demand, in particular from Japanese-affiliated companies is so high that it has to proceedwith expansion of its production capacity. From February 2015, the Company has commenced
exports to Japan of its “Omayo” brand mayonnaise, which has received Halal certification, while
domestically it is in the process of expanding its sales channels on a number of fronts, such as hotels
and restaurants.
Because its overseas businesses operate as equity-method affiliates, their sales are not reflected in
the Company’s consolidated sales, but are recorded in non-operating income and expenses as equity
in net income (losses) of affiliates. They are included under Other Businesses in the consolidated
business segments.
Affiliates (% Capital Contribution & Scope of Operations)
Consolidated subsidiaries
Ownership (%)
Main business
DIETCOOK SHIRAOI Co., Ltd.
100.0 Delicatessen-related production and sales
Lilac FOODS Co., Ltd.
100.0 Delicatessen-related production and sales
KANTOH DIETCOOK Co., Ltd.
100.0 Delicatessen-related production and sales
KANTOH DIET EGG Co., Ltd.
100.0 Delicatessen-related production and sales
KANSAI DIETCOOK Co., Ltd.
100.0 Delicatessen-related production and sales
DIETCOOK SUPPLY Co., Ltd.
100.0 Delicatessen-related production and sales
KYUSHU DIETCOOK Co., Ltd.
100.0 Delicatessen-related production and sales
Hello Delica Co., Ltd.
100.0 Delicatessen-related sales
Salad Café Co., Ltd.
100.0 Operation of shops specializing in salads(Equity-method affiliates)
PT. Intan Kenkomayo Indonesia
49.0 Mayonnaise, dressings and sauces production and sales*Shows group investment ratio including indirect investments from wholly-owned subsidiaries

伪 Results Trends
Small packaged long-life salads taking hold as private-label
items(1) Review of FY3/16 Results
Consolidated FY3/16 results, which were announced on May 10, showed solid performance withsales up 11.0% y-o-y at ¥66,933mn, operating profit up 14.5% y-o-y at ¥3,436mn, recurring profit
up 23.4% y-o-y at ¥3,426mn and net profit attributable to parent shareholders up 27.0% y-o-y at¥2,085mn, exceeding guidance revised upward on February 8. The Company set record highs for a
fourth straight year in sales, a second consecutive year in operating profit, the first time in six years
in recurring profit, and the first time in nine years in net profit.
Consolidated FY3/16 Results(¥mn)
FY3/15
Actual% Sales

Sales
60,327
Cost of goods sold
44,608
73.9%
SG&A expenses
12,717
21.1%
Operating profit
3,001
5.0%
(Equity-method affiliate-246
investment income)Recurring profit
2,776
4.6%
Extraordinary profit
17
Net profit (attributable to
1,642
2.7%
parent shareholders)*Updated guidance from February 2016

FY3/16%
vs.
previous Periodyear
start plan
+11.0%+5.9%+11.4%+8.6%+14.5% +12.7%

Initialplan

Revisedplan

Actual% Sales

63,2003,050

66,0003,320

66,93349,68913,807
3,436

74.2%
20.6%
5.1%

-

-

-81

-

-

-

3,000
-

3,300
-

3,426
-660

5.1%
-

+23.4%-+14.2%
-

1,770

1,930

2,085

3.1%

+27.0%+17.8%

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

䕔 Results Trends

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

Looking at restaurant, CVS and supermarket industry trends, which form the Company’s major target
markets, while Izakaya (Japanese-Style restaurant-bar)’s continue to struggle, family restaurants
and other outlets performed well, due also to the impact of inbound demand. Fast-food outlets moved
to a recovery trend in sales from the second half of 2015 and these markets were generally upbeat
throughout the fiscal year. Further, in respect of sales of daily items for CVS also, on an existing
store basis, sales performed soundly up 2-4% year-on-year. This is due to the proliferation of “solitary
meals” with an increase in single-person households and greater participation by women in societythat is resulting in expanding demand for lunch-boxes, sandwiches, salads and other items. Given
that the statistics only announce existing store data, we feel on a total store basis the rise would
be 5% or more. For the same reasons, this suggests that the pace of delicatessen items sales atsupermarkets also continue to rise 5-8% year-on-year, and underlying expansion in the HMR market
continues along with the restaurant market.

㻹㼍㼖㼛㼞㻌㻹㼍㼞㼗㼑㼠㼟㻌㻹㼛㼚㼠㼔㼘㼥㻌㻿㼍㼘㼑㼟㻌㼀㼞㼑㼚㼐㼟㻌㻔㼥㻙㼛㻙㼥㻕

1-Aug.-16
㻝㻜㻚㻜㻑

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻤㻚㻟㻑㻯㼂㻿㻌㻔㼐㼍㼕㼘㼥㻌㼕㼠㼑㼙㻌㼟㼍㼘㼑㼟㻕
㻤㻚㻥㻑

㻤㻚㻜㻑

㻢㻚㻞㻑

㻟㻚㻞㻑
㻝㻚㻢㻑

㻞㻚㻟㻑

㻞㻚㻞㻑

㻢㻚㻟㻑

㻟㻚㻝㻑
㻟㻚㻞㻑

㻝㻚㻥㻑

㻡㻚㻥㻑
㻡㻚㻜㻑 㻠㻚㻝㻑
㻠㻚㻠㻑
㻞㻚㻢㻑

㻞㻚㻡㻑
㻞㻚㻣㻑

㻡㻚㻝㻑
㻡㻚㻟㻑

㻡㻚㻡㻑

㻞㻚㻡㻑

㻞㻚㻥㻑

㻡㻚㻜㻑

㻠㻚㻡㻑

㻟㻚㻜㻑
㻝㻚㻤㻑

㻝㻚㻢㻑

㻜㻚㻤㻑

㻜㻚㻜㻑
㻙㻞㻚㻜㻑

㻣㻚㻥㻑

㻠㻚㻞㻑

㻠㻚㻜㻑

㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠

㻣㻚㻝㻑

㻡㻚㻠㻑

㻢㻚㻜㻑

㻞㻚㻜㻑

㻢㻚㻣㻑

㻿㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㼟㻌㻔㼐㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻕

㻜㻚㻣㻑

㻝㻚㻠㻑

㻙㻜㻚㻡㻑
㻙㻞㻚㻣㻑

㻙㻞㻚㻟㻑

㻙㻠㻚㻜㻑
㻭㼜㼞㼕㼘㻌㻞㻜㻝㻡㻭㼡㼓㼡㼟㼠

㻭㼡㼓㼡㼟㼠

㻻㼏㼠㼛㼎㼑㼞

㻰㼑㼏㼑㼙㼎㼑㼞

㻲㼑㼎㼞㼡㼍㼞㼥 㻞㻜㻝㻢 㻭㼜㼞㼕㼘㻿㼛㼡㼞㼏㼑㻦㻌㻾㼑㼟㼠㼍㼡㼞㼍㼚㼠㼟㻌㻔㻶㼍㼜㼍㼚㻌㻲㼛㼛㼐㻌㻿㼑㼞㼢㼕㼏㼑㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㻕㻘㻌㼟㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㼟㻌㻔㻶㼍㼜㼍㼚㻌㻿㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㻕㻘㻌㻯㼂㻿㻌㻔㻶㼍㼚㼍㻌㻲㼞㼍㼚㼏㼔㼕㼟㼑㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㻕㻧㻌㻯㼂㻿㻌㼐㼍㼠㼍㻌㼟㼔㼛㼣㼟㻌㼕㼚㻌㼑㼤㼕㼟㼠㼕㼚㼓㻌㼟㼠㼛㼞㼑㻌㼎㼍㼟㼕㼟
While the fact that the industry environment itself is also sound forms a backdrop to the Company’ssolid results, we think the strength reflects continuous initiatives in proposing new products andmenus that meet customer needs too. In particular, demand exists for development of menus that canbe easily prepared and maintain good taste and healthiness amid labor shortages in the restaurant
industry. The Company’s sales growth rate exceeds that of the industry overall and we may cite, as
major reasons for this performance, new customer acquisition and the promotion of expansion in theshare of business it enjoys with existing customers as a result of engaging in new product proposals
that meet customer needs.
Looking at the Company’s sales by business category, apart from CVS, which at about 30% up yearon-year, grew the most, major business categories had higher revenues including restaurants andmass-retailers. In the CVS industry, positive factors contributing to robust sales were a steady paceof new adoptions of the Company’s processed egg products in lunch boxes, sandwiches, and otherproducts and hits with small packaged long-life salads that remain fresh for an extended period andare priced affordably in the ¥100-120 range. Moreover, in the restaurant industry, amidst a worsening
in staff shortages, the need for “wanting to provide delicious meals that are easy to prepare” is rising,with the ability to make product proposals that match this need leading to increased sales. In the
Izakaya industry also, that continues to struggle, the Company is expanding its share of business,
focusing on salads, and with increased sales year-on-year is arguably performing well. In the family
restaurant industry, sales of various salads for use in salad bars were vibrant.
Looking at factors behind fluctuations in recurring profit, ¥989mn from increased sales, ¥586mn fromefficiency enhancements, underpinned by higher utilization rates at the Shizuoka Fujisan Factory,and ¥70mn in logistic cost savings owing to lower crude oil prices were factors tending to increase
earnings, while on the other hand, ¥563mn in raw material cost fluctuations, mainly due to the impact
of soaring egg prices, and ¥432mn in higher fixed costs due to reductions in entrenched overheads
and other costs, including personnel costs and IT investment, were factors tending to lower earnings.

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

䕔 Results Trends

Equity-method investment income under non-operating income posted an ¥81mn loss (vs. a ¥246mn
loss in the previous year). The main source of the decline was removal of the equity-method investment
loss from China from 2Q owing to the sales of all shares in Chinese affiliates in 1Q. Equity-method
income from the Indonesian affiliate was a ¥19mn loss, which was down from the previous year’s¥69mn loss. Although results missed guidance because of the impact from temporary suspensionof mayonnaise sales during the period (it had restored sales now), the loss modestly narrowed fromthe year-ago level.

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

For extraordinary income, the Company recorded a ¥205mn gain from selling shares in affiliates in
China under profit, but also booked losses of ¥595mn for fixed-asset disposal costs and ¥283mn for
impairment costs related to a domestic factory.

㻲㼍㼏㼠㼛㼞㼟㻌㼒㼛㼞㻌㻲㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㼕㼚㻌㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㻔㻲㼅㻟㻛㻝㻢㻕㻌
1-Aug.-16

㻔㼰㼙㼚㻕㻌
㻡㻘㻜㻜㻜
㻣㻜

㻠㻘㻡㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻡㻤㻢

㻠㻘㻜㻜㻜

㻟㻘㻡㻜㻜
㻥㻤㻥

FISCO Ltd. Analyst
Yuzuru Sato

㻟㻘㻜㻜㻜
㻞㻘㻡㻜㻜

㻞㻘㻣㻣㻢

䕦㻡㻢㻟
㻸㼛㼣㼑㼞㻌㼘㼛㼓㼕㼟㼠㼕㼏㼟㻌㼏㼛㼟㼠㼟㻌

㻼㼞㼛㼐㼡㼏㼠㼕㼢㼕㼠㼥㻌㼑㼚㼔㼍㼚㼏㼑㼙㼑㼚㼠㻾㼍㼣㻌㼙㼍㼠㼑㼞㼕㼍㼘㻌㼏㼛㼟㼠㻌㼒㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌䕦㻠㻟㻞㻲㼕㼤㼑㼐㻌㼏㼛㼟㼠㻌㼕㼚㼏㼞㼑㼍㼟㼑㼟㻌 㻟㻘㻠㻞㻢㻵㼚㼏㼞㼑㼍㼟㼑㼐㻌㼟㼍㼘㼑㼟㻌㻞㻘㻜㻜㻜㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

Making progress in acquisition of major conveyor-belt sushi
chain customers for processed egg products(2) Trends by Business Segmenta) Seasoning/Processed Food Business
Sales in the seasoning and processed food business rose 10.7% y-o-y to ¥55,035mn and segment
profit increased 8.1% y-o-y to ¥2,862mn.
Looking at sales trends by item, salads and delicatessen items climbed 12.8% y-o-y to ¥18,903mn(sales volumes rose 9.4%), mayonnaise and dressings rose 1.7% y-o-y to ¥17,064mn (sales
volumes rose 4.2%), processed egg products increased 17.7% y-o-y to ¥17,792mn (sales volumesrose 15.5%). Looking at pricing per unit volume, only mayonnaise and dressings declined due to theimpact of increased weighting in bulk size commercial-use products sales.
In salads and delicatessen items, small packaged long-life salads grew significantly by approximately
2.5 times year-on-year, mainly driven by CVS business. Sales of potato salad, vermicelli salad, andburdock salad in 1kg packages rose sharply. Further, items utilizing ingredients in basic products
such as tuna salad, corn, and onions, have had new take-up for mainly restaurants, CVS and breadmakers, which is also a factor behind increased revenues.
In mayonnaise and dressings, while sales only rose slightly by 1.7%, this reflected the impact of alarge decline by mayonnaise and sauces to a major fast food chain, a key customer, in the first halfof the year. However, overall sales increased for the first time in two periods thanks to gains in salesof other products and to other customers, such as new adoptions of mayonnaise and tartar sauce
for use in delicatessen bakery products at CVS and growing sales of 1kg mayonnaise products tomass-retailers.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

䕔 Results Trends

In processed egg products, primary sources of upbeat sales were new adoptions of Atsuyaki (thickomelet) for lunchboxes and sushi rolls and thin omelets for doria and other dishes, increased sales of
egg salads for sandwiches and delicatessen bakery products and Kinshi-tamago, thin omelet cut into
string-like strips, for noodles mainly at CVS, and steep sales gains for Atsuyaki and Dashimaki (rolled
omelet with broth) tamago for conveyor-belt sushi chains driven by new customer acquisitions.

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Satob) Delicatessen-Related Business
Delicatessen-related business sales rose 13.2% y-o-y to ¥10,660mn, with segment profits up 85.4%
y-o-y to ¥645mn. Both sales and profits increased at double-digit growth rates. Sales increases
came from new take-up of basic products at supermarkets, such as potato salad, macaroni salad
and pasta products using seasoned cod roe and eggs, stronger seasonal product sales, and a steep
rise in cut vegetables, which are limited to the Hokkaido region. Considering that delicatessen sales
in the supermarket industry grew more than 6%, this suggests that the Company’s market shareis expanding steadily. It is perceived that having optimal potatoes for its potato salad, grown incooperation with, and supplied by, contracted farmers, allows it to differentiate itself in terms of flavorand quality, leading to expansion in market share. From a profit perspective, the positive effect ofhigher sales and promotion of productivity enhancement at the various subsidiaries resulted in asignificant profit gain.

㻰㼑㼘㼕㼏㼍㼠㼑㼟㼟㼑㼚㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻾㼑㼟㼡㼘㼠㼟㻌㻔㼰㼙㼚㻕㻌

㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻝㻞㻘㻜㻜㻜

㻿㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕
㻢㻠㻡

㻡㻜㻜
㻟㻢㻥

㻟㻠㻤

㻢㻘㻜㻜㻜
㻠㻘㻜㻜㻜

㻣㻜㻜
㻢㻜㻜

㻝㻜㻘㻜㻜㻜
㻤㻘㻜㻜㻜㻔㼰㼙㼚㻕㻌

㻥㻘㻠㻝㻥

㻤㻘㻡㻤㻢

㻠㻜㻜
㻝㻜㻘㻢㻢㻜

㻟㻜㻜
㻞㻜㻜

㻞㻘㻜㻜㻜

㻝㻜㻜

㻜

㻜
㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

䕔 Results Trendsc) Other Businesses
Other businesses, in addition to revenue from the Company’s specialty sales shops Salad Cafe,
operated by its consolidated subsidiary Salad Cafe Inc., include in profits equity in net income(losses) of affiliates from overseas operations. Sales rose 5.4% y-o-y to ¥1,238m, with a segment
loss of ¥77mn (compared to a segment loss of ¥229mn for the same period a year earlier).

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

Although at 17 Salad Cafe store numbers were the same as those a year earlier, sales performed
soundly with heightened health consciousness. From a profit perspective, it maintains a modest profit,
though the profit was slightly lower because of an increase in new store opening costs, including
Salad Cafe Lumine Tachikawa in April 2015 and WaSaRa Kintetsu Abeno Harukas in March 2016, a
new brand that delivers “Japanese-style salads” with emphasis on Japanese ingredients and tastes.
On the other hand, in respect of overseas business, as a result of the disposal of Chinese affiliates
in 1Q, equity in net losses in affiliates declined.

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻾㼑㼟㼡㼘㼠㼟㻌㻔㼰㼙㼚㻕㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼢㼑㼞㼟㼑㼍㼟㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻝㻘㻠㻜㻜

㻝㻟

㻰㼛㼙㼑㼟㼠㼕㼏㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻝㻣

㻠

㻝㻘㻞㻜㻜

㻔㼰㼙㼚㻕
㻡㻜
㻜

㻝㻘㻜㻜㻜

㻙㻤㻝

㻤㻜㻜

㻙㻡㻜

㻙㻝㻜㻜

㻢㻜㻜

㻝㻘㻝㻣㻟

㻠㻜㻜

㻙㻞㻞㻥

㻝㻘㻝㻣㻡

㻝㻘㻞㻟㻤

㻙㻝㻡㻜
㻙㻞㻜㻜

㻙㻞㻠㻢

㻙㻞㻡㻜

㻞㻜㻜

㻙㻟㻜㻜

㻜

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

Simultaneous improvements in financial standing andearnings(3) Financial Conditions
Looking at the financial condition at the end of March 2016, total assets rose ¥2,857mn since theend of the previous year to ¥42,306mn. Within current assets, cash and deposits grew by ¥2,634mn
and notes and accounts receivable increased ¥1,083mn, while unpaid income declined by ¥847mn.
Further, within fixed assets, investments and other assets declined ¥607mn primarily due to thedisposal of shares in affiliates.
Total liabilities declined ¥1,513mn from the end of the previous period to ¥22,994mn. While interest
bearing debt fell by ¥967mn, notes and accounts payables climbed by ¥1,151mn, equipment-related
payment promissory notes rose by ¥772mn, and other reserves increased by ¥580mn. Further, net
assets rose ¥1,343mn from the end of the previous period to ¥19,311mn as a result of increases inretained earnings.
Looking at management indicators, the shareholders’ equity ratio rose 0.1% from the end of theprevious period to 45.6%, steadily approaching the mid-term management plan target of 50%. Theinterest-bearing debt ratio is also in a downtrend accompanying stronger earnings after a temporary
expansion as capital investment funds for the Shizuoka Fujisan Factor in FY3/14, so arguably
the financial condition has further improved. Additionally, for profitability, operating margin, ROA,
and ROE improved for a second straight period, and these trends show progress in strengthening
earnings capabilities too.

We encourage readers to review our complete legal statement on “Disclaimer” page.
10

䕔 Results Trends

Consolidated Balance Sheet

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Current assets(cash and deposits)
Fixed assets
Total assets
Current liabilities
Fixed liabilities(interest-bearing debt)
Total Liabilities
Total net assets(Safety)
Current ratio
Equity ratio
Interest-bearing debt ratio(Profitability)
Return on assets (ROA)
Return on equity (ROE)
Operating margin

FY3/13
18,403
5,919
15,59533,99814,2494,948
5,526
19,197
14,801

FY3/1418,095
3,884
21,59039,686
14,8609,015
9,943
23,876
15,810FY3/1518,704
4,778
20,74439,44814,422
7,058
8,584
21,481
17,967

FY3/16
21,836
7,412
20,46942,306
16,313
6,680
7,617
22,994
19,311129.2%
43.5%
37.3%

121.8%
39.8%
62.9%

129.7%
45.5%
47.8%

133.9%
45.6%
39.4%

8.0%
10.0%
5.1%

6.1%
8.3%
4.2%

7.0%
9.6%
5.0%

8.4%
11.2%
5.1%

(¥mn)
Change+3,132+2,634-274+2,857
1,891
-378
-967
+1,513+1,343

伪 Future Outlook
Aiming to increase sales for a sixth straight year and set alltime high earnings consecutively in FY3/17(1) Outlook for FY3/17 Results
In FY3/17 consolidated guidance, the Company targets higher sales for a sixth straight year andconsecutive all-time high earnings, with sales up 4.6% y-o-y to ¥70,000mn, operating profit up 0.4%
y-o-y to ¥3,450mn, recurring profit up 2.1% y-o-y to ¥3,500mn, and net profit attributable to parent
shareholders up 2.1% y-o-y to ¥2,130mn. The factors behind fluctuations in recurring profit include¥455mn from the impact of greater revenues and ¥317mn from enhanced production efficiency as
factors boosting earnings, and ¥225mn in increased raw material costs and ¥473mn in increased
fixed costs as factors reducing earnings. However, we think this is a conservative plan in light ofcurrent upbeat sales that are continuing the trend from last year and modestly lower pricing in theegg market, compared to the previous year, during April and May for ingredients. We expect theCompany to beat guidance as long as market conditions do not significantly change.
FY3/16 Consolidated Results Outlook(¥mn)
FY3/16
Actual% previous
results
year
66,933+11.0%
3,436+14.5%
3,426+23.4%

Sales
Operating profit
Recurring profit
Net profit attributable toparent shareholders

2,085+27.0%

35,2501,820
1,800

FY3/17Full-year
y-o-y
plan
+6.0%
70,000
-0.3%
3,450
+0.4%
3,500

1,150

-24.5%

1H plan

2,130% previous
year
+4.6%
+0.4%
+2.1%
+2.1%

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

䕔 Future Outlook㻲㼍㼏㼠㼛㼞㼟㻌㼒㼛㼞㻌㻲㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㼕㼚㻌㻾㼑㼏㼡㼞㼞㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㻔㻲㼅㻟㻛㻝㻣㻕㻌
㻔㼰㼙㼚㻕
㻠㻘㻡㻜㻜

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

䕦㻞㻞㻡

㻟㻝㻣

㻠㻘㻜㻜㻜

㻠㻡㻡
㻟㻘㻡㻜㻜
㻟㻘㻠㻞㻢

1-Aug.-16

㻼㼞㼛㼐㼡㼏㼠㼕㼢㼕㼠㼥㻌㼑㼚㼔㼍㼚㼏㼑㼙㼑㼚㼠䕦㻠㻣㻟㻾㼍㼣㻌㼙㼍㼠㼑㼞㼕㼍㼘㻌㼏㼛㼟㼠㻌㼒㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟㻌㻲㼕㼤㼑㼐㻌㼏㼛㼟㼠㻌㼕㼚㼏㼞㼑㼍㼟㼑

㻵㼚㼏㼞㼑㼍㼟㼑㼐㻌㼟㼍㼘㼑㼟

㻟㻘㻡㻜㻜

㻟㻘㻜㻜㻜
㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻢

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻺㼍㼠㼕㼛㼚㼍㼘㻌㻲㼑㼐㼑㼞㼍㼠㼕㼛㼚㻌㼛㼒㻌㻭㼓㼞㼕㼏㼡㼘㼠㼡㼞㼍㼘㻌㻯㼛㼛㼜㼑㼞㼍㼠㼕㼢㼑㻌㻭㼟㼟㼛㼏㼕㼍㼠㼕㼛㼚㼟㻌㻔㼆㻱㻺㻙㻺㻻㻴㻕㻌㻼㼞㼕㼏㼑㻌㻔㼀㼛㼗㼥㼛㻕㻌㼒㼛㼞㻌㻹㼑㼐㼕㼡㼙㻙㼟㼕㼦㼑㼐㻌㻱㼓㼓㼟㻌㻔㼰㻛㼗㼓㻕㻌

㻲㼅㻞㻜㻝㻠

㻞㻤㻜㻲㼅㻞㻜㻝㻡

㻞㻢㻜
㻞㻠㻜

㻞㻠㻣
㻞㻟㻜

㻞㻞㻣

㻞㻝㻥
㻞㻟㻞

㻞㻜㻠

㻞㻝㻡
㻝㻤㻜

㻞㻝㻟

㻞㻞㻟

㻞㻞㻜
㻞㻜㻜

㻞㻞㻟

㻞㻜㻠

㻲㼅㻞㻜㻝㻢

㻞㻡㻜

㻞㻡㻞

㻞㻠㻜

㻞㻠㻞

㻞㻡㻡

㻞㻠㻤
㻞㻜㻥
㻝㻥㻞

㻝㻥㻥
㻝㻥㻜

㻝㻥㻞

㻞㻝㻥
㻞㻝㻡

㻞㻜㻥

㻝㻤㻞

㻝㻢㻜
㻝㻠㻜

㻿㼛㼡㼞㼏㼑㻦㻌㼖㼍㻚㼦㻙㼠㼍㼙㼍㼓㼛㻚㻯㼛㻚㻘㻸㼠㼐㻚(2) Segment Sales Outlook
The outlook for full-year sales by reported segment calls for 4.3% y-o-y growth in seasonings andprocessed foods to ¥57,379mn. Key sales strategies, just as in FY3/16, are pursuing strategic
measures tailored to specific industries and formats and expanding product formats to meet market
needs and enhancing the product lineup.
For salads and delicatessen products, the Company intends to expand sales of small packaged
long-life salads receiving strong inquiries from mass-retailers and CVS. It projects an 18% y-o-y risein FY3/17, but we see a possibility of an even larger gain because of campaign measures being
implemented at CVS. It also plans to strengthen the WASAI BANSAI ® series of Japanese-styledelicatessen products. While it added three items to bring the series to six items in FY3/16, theCompany is also promoting commercialization of small packages in the 500g size. It will continue todevelop new products too, such as the release in March 2016 of “Minced Meat” as a new productfor a new sales channel.
For mayonnaise and dressings, it plans to develop products with longer freshness periods andestablish a presence in overseas markets. The Company intends to broaden product scope in the
new World Traveler Dressings series launched in FY3/16 in the domestic market and develop new
products with healthy features and functionality.

We encourage readers to review our complete legal statement on “Disclaimer” page.
12

䕔 Future Outlook

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

The Company submitted an application to the Japan Anniversary Association to designate August 24
of each year as “Dressings Day” and announced that it received official approval as an anniversary.
It selected August 24 through wordplay. Yasai, the Japanese word for vegetables, is written withthree characters that also correspond to the numbers 8, 3 and 1, respectively. Eight also represents
August, the eighth month of the year. Multiplying the three numbers denoting vegetables, that is eightmultiplied by three, multiplied by one, is equal to 24, explaining the August 24 date. Furthermore,
there is more wordplay, taken from kakeru, which is the Japanese word for multiply, but also topour over something, such as pouring dressing over vegetables. Connected to this, August 31 is
Vegetable Day. Viewed on a calendar, August 24 is immediately above August 31, evoking the imageof pouring dressing over Vegetable Day, giving greater weight to the August 24 date. The Company
plans to hold its own event and a joint event for the industry on August 24 of this year with a goal of
stimulating the dressings market, and we will be monitoring this activities as an initiative that seeks
to boost dressing sales.
For processed egg products, the Company plans to expand sales channels to not only CVS andrestaurants but also mass-retailers. Its Sozaitei® series, which includes Atsuyaki and Dashimaki
eggs, has a strong reputation for taste and quality, and the Company intends to develop productsthat meet needs.
The Company expects to continue increasing sales in the delicatessen-related business with a gainof 6.5% y-o-y to ¥11,356mn, receiving a tailwind from expansion of delicatessen product demand.
It also projects sales on par with last fiscal year in other businesses at a 2.2% gain to ¥1,265mn.
Further, it expects a profit at the Indonesia affiliate in FY3/17 thanks to higher sales of mayonnaise
and liquid eggs.
Sales by Segment

Seasonings & Processed foods
Salads & Delicatessen
Mayonnaise & Dressings
Processed Egg products
OthersSide-Dish-Related Business
Other Business
Total

FY3/1447,541
15,867
17,093
13,567
1,015
8,586
1,173
57,301

FY3/1549,733
16,758
16,772
15,116
1,087
9,419
1,175
60,327

FY3/1655,035
18,903
17,064
17,792
1,276
10,6601,238
66,933

FY3/17E
57,37919,577
17,974
18,541
1,287
11,356
1,265
70,000(¥mn)
Growth rate
4.3%
3.6%
5.3%
4.2%
0.9%
6.5%
2.2%
4.6%

Budgeting capital investments of up to ¥2,000mn in FY3/17(3) Capital Investments Plan
The Company is steadily bolstering production capacity in order to meet vibrant demand. For
dressings, it added a new line at the Nishi-Nihon Factory with the aim of bringing some outsourced
processes in-house and also improving taste and quality, lengthening the Shelf Life, and loweringcosts. It is designing the line to flexibly deal with container changes too. Operations started in the
new line in June 2016.
The Company also reinforced the production line for long-life salads that handles multi-format output
at the Gotenba Factory in April 2016. It strengthened the production line for small-sized potato salads
in the 100g range at the Yamanashi Salad Factory in January 2016. For processed egg products,
it added to freezer equipment at the Shizuoka Fujisan Factory in February 2016 and reinforced thescrambled egg line in February 2016. These measures seek to accommodate growing demand at
hotels for the rising number of foreign tourists visiting Japan. The Company expects these capital
investments to boost annual sales by about ¥3,000mn per year.

We encourage readers to review our complete legal statement on “Disclaimer” page.
13

䕔 Future Outlook

Production Site Reinforcement Plan Through FY3/18

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.

<Mayonnaise & Dressings Business>
'UHVVLQJVOLQHUHLQIRUFHPHQW
Nishi-Nihon Factory No.2 line (started operating in
June 2016)
Improve taste and quality, extend the freshness
period, and change containers
Flexible support for various formats (multi-filling)<Salads & Delicatessen Business>
/RQJOLIHVDODGOLQHUHLQIRUFHPHQW
Gotenba Factory new line (started operating in April
2016)
Solidify infrastructure and respond to multi-productand multi-format production<Potato Business>
6PDOOSRWDWRVDODGOLQHUHLQIRUFHPHQW
Yamanashi Salad Factory (started operating inJanuary 2016)
Strengthen output of 100g potato salads
Source: Company materials from the earnings briefing<Egg Business>
3URFHVVHGHJJSURGXFWHTXLSPHQWUHLQIRUFHPHQW
Shizuoka Fujisan Factory (started operating in
February 2016)
Added to freezer and scrambled egg facilities

The Company plans to spend modestly increase capital investments from FY3/16’s ¥1,700mn to¥1,800-2,000mn in FY3/17. However, it intends to continue increasing output of salads, processed
egg products, and other items as needed by demand trends and plans to expand output capacity
at the delicatessen products plant operated by the Saitama-based consolidated subsidiary too in
FY3/18. The Company is preparing to implement a large-scale capital investment plan from FY3/19.
It spent roughly ¥4,500mn on the Shizuoka Fujisan Factory completed in FY3/14 that has been
driving advances by the processed egg business since FY3/15, but still has space at the plant site
and room to expand facilities.
(4) Progress with the Three-Year Mid-Term Management Plan

FISCO Ltd. Analyst
Yuzuru Sato

The Company has started a new three-year Mid-term Management Plan, “KENKO Five Code 20152017” from fiscal 2015. In terms of specific management indicators, it aims for consolidated sales of¥75bn, a consolidated RP margin of 5%, and a shareholders’ equity ratio of 50% and to maintain an
ROE of 8% or above in FY3/18. We think the Company had an upbeat start in FY3/16 with results
exceeding the period-start plan.
KENKO Five Code 2015-2017
Consolidated sales
Consolidated recurring margin
Shareholders’ equity ratio
ROE

FY3/1560,327
4.6%
45.5%
9.6%

FY3/16
66,933
5.1%
45.6%
11.2%

FY3/17E
70,0005.0%-

FY3/18 goals
75,0005.0%
50.0%
At least 8%

The market environment, amidst a shift in the style of meals at home in the direction of individuality
and simplicity, due to the rise of single member households, evolution in the nuclear family andgreater participation by women in society, is likely to continue providing a tailwind for the Company.
Also, personnel shortages in the restaurant industry and delicatessen product sales operations at
mass-retailers are spurring interest in product and menu proposals that help simplify cooking. We
expect the Company’s meticulous sales activities by industry and format to expand transaction
shares at existing customers and contribute to acquisitions of new customers.
Under the mid-term management plan, initially an increased sales contribution from M&A was
expected, however, judging by the current momentum, even in the absence of M&A, the Company
is on track to be able to achieve ¥75bn in net sales. That said, the Company continues to consider
M&A, with target companies being those which may be expected to offer synergies with existing
operations domestically.
Further, within business strategies aimed at achieving the mid-term management plan, the Company
is tackling the following three major initiatives – “establishing our position as the Leading Company
in Salads,” “further evolving of Salad Cuisine,” and “strengthening the management platform toproactively promote expansion into global markets.” In order to establish its position as the Leading
Company in Salads, the Company’s policy is to expand the scope of sales in its various existing
businesses. To further evolve Salad Cuisine, it intends to strengthen information provision throughthe media and branding and promote Salad Cuisine cooking school and shops. As a new initiativein FY3/16, it opened the Jiyuan-Tashinamidokoro eat-in space that provides dishes with a specificingredient theme as a collaboration with Mitsukoshi <3099> and Kagawa Nutrition University on the
foodstuffs floor of Mitsukoshi Nihonbashi Store. The Company hopes to revitalize salad preparation
through these efforts.

We encourage readers to review our complete legal statement on “Disclaimer” page.
14

䕔 Future Outlook

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

As part of strengthening the management platform to proactively promote expansion into global
markets, the Company has newly established a research office in Vancouver, Canada in July 2015.
The Company aims to provide new food culture information and undertake product development
as a market player, based on information collected at this office location. Further, the Company
will also promote strengthening of Halal certified products in the importing business. It commenced
imports of frozen foods from November 2015 and is developing sales channels in Japan. For export
business, the Company is selling mainly mayonnaise and dressings in 35 countries and regions
as of March 2016. It is striving to raise awareness by actively participating in local exhibitions,and sales are primarily growing for household use. We expect growing demand from restaurant
operators, including support from the rising number of Japanese restaurant firms opening stores inoverseas markets. The Company plans to expand business scale by extending the freshness life andincreasing the number of export items. It targets ¥1,000mn in sales in FY3/18, the final fiscal year of
the mid-term business plan.

1-Aug.-16

伪 Shareholder Returns Policy
Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Plans to raise dividends for a third straight year in FY3/17
The Company’s shareholder returns are cash dividend payments and special gifts exclusive toshareholders. On the basis of a dividend payout ratio of 20% on a consolidated basis, and taking into
consideration the continuity of dividends, its policy is to raise dividends in line with corporate growth
and advances and increased earnings. In FY3/17, the Company plans to pay a dividend of ¥30, a ¥2
increase year-on-year (representing a dividend payout ratio of 20.0%), a third straight hike. However,if the dividend payout ratio falls below 20% as a result of net profit attributable to parent shareholders
exceeding forecasts, we may expect a further increase in dividends.
At the same time, as a special gift to shareholders, KENKO Mayo presents the Company’s products
as gifts to shareholders of register as of March 31. A present with a value of ¥1,000 is given to
shareholders with 100 to 999 shares, while a present with a value of ¥2,500 is given to shareholders
of 1,000 or more shares.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼑㼞㻌㻿㼔㼍㼞㼑㻌㼍㼚㼐㻌㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼍㼥㼛㼡㼠㻌㻾㼍㼠㼕㼛㻰㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕

㻔㼰㻕
㻟㻡㻚㻜

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻞㻣㻚㻢㻌

䠄㻑䠅
㻟㻜㻚㻜

㻞㻟㻚㻢㻌

㻟㻜㻚㻜
㻞㻝㻚㻞㻌

㻞㻡㻚㻜
㻝㻥㻚㻥㻌

㻞㻡㻚㻜

㻝㻥㻚㻝㻌

㻞㻜㻚㻜㻌
㻞㻜㻚㻜

㻞㻜㻚㻜
㻝㻡㻚㻜

㻝㻡㻚㻜
㻝㻜㻚㻜

㻞㻤㻚㻜㻌
㻞㻜㻚㻜㻌

㻞㻝㻚㻜㻌

㻞㻝㻚㻜㻌

㻟㻜㻚㻜㻌
㻝㻜㻚㻜

㻞㻟㻚㻜㻌

㻡㻚㻜

㻡㻚㻜
㻜㻚㻜

㻜㻚㻜

㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

We encourage readers to review our complete legal statement on “Disclaimer” page.
15

䕔 Shareholder Returns Policy

Consolidated Income Statement

KENKO Mayonnaise
Co., Ltd.
2915 Tokyo Stock ExchangeFirst Section

1-Aug.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru SatoSales(y-o-y)Cost of goods sold(% sales)
SG&A expenses(% sales)Operating profit(y-o-y)(% sales)Non-operating profit
Non-operating expenses(Equity in net income (losses) of affiliate)
Recurring profit(y-o-y)(% sales)Extraordinary profit
Extraordinary losses
Income before income tax(y-o-y)(% sales)Corporate income tax, etc.
Net profit(y-o-y)(% sales)

FY3/1354,533
5.1
39,62872.7
12,126
22.2
2,778
29.6
5.1
100
303
-216
2,574
24.1
4.7
2
188
2,388
20.0
4.4
979
1,409
36.8
2.6

FY3/1457,301
5.1
42,53074.2
12,342
21.5
2,428
-12.6
4.2
148
318
-229
2,258
-12.3
3.9
1
45
2,215
-7.2
3.9
949
1,265
-10.2
2.2

FY3/1560,327
5.3
44,60873.9
12,717
21.1
3,001
23.6
5.0
154
378
-246
2,776
22.9
4.6
97
80
2,793
26.1
4.6
1,151
1,642
29.8
2.7

FY3/16
66,93311.0
49,68974.2
13,807
20.6
3,436
14.5
5.1
158
168
-81
3,426
23.4
5.1
225
885
2,767
-0.9
4.1
681
2,085
27.0
3.1

Number of shares outstanding (thousands)
Net profit per share (¥)
Dividend per share (¥)
Net assets per share (¥)

14,211
99.16
21.00
1041.54

14,211
89.08
21.00
1112.55

14,211115.5723.00
1264.38

14,211146.7628.00
1358.94(¥mn, %)
FY3/17E
70,000
4.6

3,450
0.4
4.9

3,500
2.1
5.0

2,130
2.1
3.0
14,211149.8930.00-

We encourage readers to review our complete legal statement on “Disclaimer” page.
16

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock
price and index information. The trademark and value of the “JASDAQ INDEX” are theintellectual properties of the Tokyo Stock Exchange, and therefore all rights to them belong
to the Tokyo Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment
or any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content
of this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplicationsof the report, without the express written consent of FISCO, is strictly prohibited. Anytransmission, reproduction, distribution or transfer of the report or its duplications is also
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The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.