Kyokuyo Group
Integrated Report

2023

Always nearby,
always delicious.
KYOKUYO

CONTENTS

1 Contents/Editorial Policy/Information Disclosure
Framework

Environment

Business Strategy

3 Corporate Philosophy/Corporate Action Charter

25 Marine Products Business

4 Message from the President

27 Freshfoods BusinessGovernance

29 Processed Food Business

Our Value Creation Story
11 History
13 Value Creation Process

31 Logistics Business

The Foundation of Our Value Creation

15 Business Development

32 Sustainability

17 Overview by Business

33 Approach to Stakeholders

19 Recognition of the Business Environment

35 Promotion of ESG-focused Management

21 Medium-term Business Plan
“Build Up Platform 2024”

37 Digital Transformation (DX)38 Environmental Policy

55 Corporate Governance

39 Conservation of Biodiversity

59 Board of Directors and Auditors

41 Reducing Greenhouse Gas Emissions

61 Message from Outside Director

43 Efforts to Reduce Plastic Waste

62 Risk Management

45 Achieving a Circular Society

63 Compliance

SocialCorporate Information
64 Financial Data Highlights
65 Corporate Data and Stock Information
66 List of Group Companies

46 Creating a Comfortable Working Environmentand Human Resource Development
About the Cover Design
Dandori-Nya, Kyokuyo’s official mascot character
Effective use of marine resources to create a low-carbon society.

2023 marks the 10th anniversary of the launch of ourDandori Jozu product line, which was based on theconcept of making food easy to prepare. In developing products that meet consumers’ needs throughhelping them to maximize the value of time, by reducing the amount of time needed to prepare foodand making the process simpler, we are aiming torealize our corporate philosophy of “Contributing toa healthy and happy lifestyle and food culture”.
Kyokuyo Group supports Fun to Share.

51 Providing Safe and Reliable Products

Kyokuyo Co., Ltd.

3-3-5, Akasaka, Minato-ku, Tokyo, 107-0052, Japan
Website53 Supply Chain Management
54 Contributing to the Community

Editorial Policy
As in the previous fiscal year, when compiling this year ’s Integrated
Repor t, we have made a concer ted effor t to ensure that the repor t
presents, accurately and in an easy-to-understand manner, the progressachieved in the implementation of our Build Up Platform 2024 Medium-term Business Plan, forecasts, and the long-term outlook for the
future, as well as information about ESG matters.
The repor t also introduces var ious initiatives that have beenlaunched in line with the basic policy for our Medium-term Business
Plan, which is “aiming to ‘change to a high-profit structure’ that will serve
as a foundation for new growth, achieving this goal by creating value
shared by both society and Kyokuyo through the implementation ofstrategies based on the core concepts of ‘continuous efforts to address
business issues’ and ‘a challenge for sustainable growth’, as we work tostrengthen our business foundations”.

••
••
•

 Governance system (adoption of an executive officer system, etc.)
Structural reorganization
Adoption of a new human resources system
Disclosure of information relating to climate change risk
DX (future strategy, etc.)
We hope that this report will give you a more in-depth understanding of ourcompany as it transforms itself to achieve new growth, and we look forward
to receiving your continued support in the future.

1

Kyokuyo Group Integrated Report 2023

PeriodFY2022 (from April 1, 2022 to March 31, 2023)* Some information from before and after the targeted period is included.

•

Publication Date
August 2023

Reference Guidelines▶ International Integrated Reporting Framework, International Integrated
Reporting Council (IIRC)▶Guidance for Collaborative Value Creation, Ministry of Economy, Tradeand Industry▶ Sustainability Reporting Standards, Global Reporting Initiative (GRI)
Forward-looking Statements
Forward-looking statements, including forecasts, goals, and plans included inthis report, are based on judgments made at the time this document was produced. Actual results may differ from these statements due to various factors
such as changes in the future business environment.

Kyokuyo Group
Integrated Report
Kyokuyo Group Integrated Report

2023

Always nearby,
always delicious.
KYOKUYO

Information Disclosure Framework

Scope
In principle, the report covers the Kyokuyo Group Companies in Japan.

Publisher/Inquiries
Division of IR, CSR Section, Business Management Department,
Kyokuyo Co., Ltd.
Sumitomo Seimei Sanno Bldg., 3-3-5, Akasaka, Minato-Ku, Tokyo
107-0052, Japan
Tel: +81(3)5545-0715 Fax: +81(3)5545-0752

https://www.kyokuyo.co.jp/en

Kyokuyo Group Integrated Report 2023

49 Contributing to a Healthy and Happy Lifestyleand Food Culture

Financial Information
Summary of Financial Results
https://www.kyokuyo.co.jp/en/ir/library/library_reports01/index.html

Reports

•

•
•
•
•

Non-Financial Information
Corporate Profile
https://www.kyokuyo.co.jp/en/
files/2023kyokuyoprofile.pdf

Kyokuyo Group Integrated Report 2023•

 yokuyo GroupK
ESG Databook
https://www.kyokuyo.co.jp/en/ir/library/library_reports02/index.html

https://www.kyokuyo.co.jp/en/ir/library/library_reports02/index.html

Annual Securities ReportJapanese link: https://www.kyokuyo.co.jp/ir/library/library_reports02/index.html

Business Reporthttps://www.kyokuyo.co.jp/en/ir/library/businessreport/index.html

IRhttps://www.kyokuyo.co.jp/en/ir/index.html•

Sustainability
https://www.kyokuyo.co.jp/en/environment/index.html

WebsiteDialogue•

IR Presentations•

Shareholders’ Meetings

Kyokuyo Group Integrated Report 2023

2

Message from the President

Corporate Philosophy

Aiming to grow together with society,contributing to a healthy and happy lifestyle andfood culture based on management of human respect.

Kyokuyo Group Corporate Action Charter

Everyone at the Kyokuyo Group,from top management to each and every employee,
acts in accordance with our Corporate Action Charter,

Laying thefoundations
for further
development
Aiming to realize a major leap forward

based on our Corporate Philosophy.
1. As a comprehensive food manufacturing group that contributes to society, we provide products
and services with safety and security in order to earn the trust of our consumers and customers.
2. We comply with the law, engage in fair, transparent, and free competition, and maintain healthy
and normal relationships with government and administration.
3. In addition to our consumers, customers, and shareholders, we widely communicate with society
and actively disclose corporate information in a fair manner.
4. We recognize that tackling environmental problems is essential for the survival of our company
and its business, and voluntarily and actively act to do so.
5. We strive to maintain an environment where it is easy to work.
6. We act as a member of the international community, and strive to contribute to the developmentof related regions.

3

Kyokuyo Group Integrated Report 2023

Makoto Inoue
President and Representative Director
Kyokuyo Co., Ltd.

Message from the President

Theme

1

The Kyokuyo Group’s business environment▶ Falling marine products consumption in Japan▶ Rising demand for marine products globally▶ Securing supplies of marine products raw materials,
and developing overseas markets▶ Laying the foundations for further development
through innovative ideas
In September 2022, Kyokuyo celebrated the 85th anniversaryof its founding. Since its establishment, the company has
faced several difficulties and challenges, including the withdrawal from whaling, which was its original business, and theestablishment of exclusive economic zones (EEZs) extendingout to 200 nautical miles from the coast, but it has always
overcome these problems, taking on the challenge of developing new business areas in line with its corporate mission toprovide food for society.
Turning to the current situation, although the recovery
from the COVID-19 pandemic is continuing, and economic
and social activity is getting back to normal, the conflict in
Ukraine has triggered a rise in global resource and raw materials prices and a depreciation of the Japanese yen, which inturn have led to rising consumer prices, and the long period
of deflation that Japan experienced following the end of the

Theme

2

Looking back on the previous fiscal year

▶ In its consolidated financial results for the fiscal year
ended March 31, 2023, Kyokuyo posted its highest
ever net sales, operating profit, ordinary profit, andprofit attributable to owners of parent
In the fiscal year ended March 31, 2023, which was the second
year of implementation of the current Medium-term Business
Plan, Kyokuyo continued to undertake initiatives aimed at realizing the plan goal of “changing to a high-profit structure”.
On a consolidated basis, Kyokuyo posted record net sales, operating profit, ordinary profit, and profit attributable to ownersof parent.
In the marine products purchasing segment, revenue inthe first half of the year was the highest ever, buoyed by rising
prices in the marine products market. However, from the third
quarter onward, high prices led to a fall in demand, and themarket for the main fish categories in Japan deteriorated to agreater extent than had been anticipated, resulting in a pronounced fall in revenue.

5“Bubble Economy” in the early 1990s has come to an end,
with a transition to an inflationary environment. In addition,
Japan’s population continues to fall, with an ongoing trend
toward smaller families and an aging of the population, leading to concerns that the economy may begin to shrink. On
top of this, average per capita consumption of marine products is tending to fall.
On the other hand, at the global level, demand for marine
products is still rising, thanks to the increasing world populationand the enhanced living standards that have accompanied
rising incomes in many countries, particularly in emerging
economies in the Asia region. Given this business environment,
as a general food company focusing on fish products, not onlyis it vital for Kyokuyo to safeguard supplies of marine productraw materials for products to be sold in Japan, for the company
to achieve continued growth, there is also a need to develop
the steadily expanding overseas market. At the same time, witheconomic and social structures, and the food-related aspectsof lifestyles, all continuing to change, we need to implement
initiatives that are tailored to diversifying consumer needs.
To respond flexibly to this kind of social change and address
emerging issues, rather than merely carrying on with what wehave done in the past, we need new ideas about which direction the company should be heading in, and we need to proceed with laying the foundations for further development.

Kyokuyo Group Integrated Report 2023

Regarding the foods segment, although there was anincrease in sales and revenue for the major product categories—including sushi toppings for conveyor belt sushi restaurants, fried seafood products for the deli counters of massmerchandisers, and simmered fish and grilled fish products
for home delivery and sale through drugstores—rising prices
failed to keep pace with rising costs, and revenue fell overall.
In the tuna segment, market prices for tuna have remained
high, and with the recovery in the food services industry, sales
have been strong. There has also been significant growth insales of processed food products, particularly those manufactured in-house at Kyokuyo’s own plants. In addition, with therise in the wholesale price of skipjack due to shortages, net
sales and profits from skipjack also increased.
The logistics segment saw an increase in storage fee revenue thanks to consistently high space utilization rates,* and net
sales grew as a result. However, profits fell, despite price adjustments implemented in response to rising electricity costs.
* S pace utilization rate: the percentage of actual products
compared to the capacity of cold storage

Theme

3

Working to address issues identified while
implementing the Medium-term Business Plan

In the fiscal year ending March 31, 2024, which is the final yearof implementation of the current Medium-term Business Plan,besides working to address problems relating to our businessstrategy that have been identified over the previous two years,
we will also be putting in place the business foundations needed to support further growth.

1. Implementing and strengthening our business strategy▶ Strengthening the intra-Group system for integrated
procurement, processing, and sales▶ Realizing “produce overseas, sell overseas”▶ F urther strengthening of access to resources, by the
Resources Research & Development Department▶ Establishing new Divisions for Marine Products,
Freshfoods and Processed Food
Expanding our foods business
Regarding the expansion of our foods business, which is thebiggest challenge facing us, we are proceeding with the implementation of a sales strategy in which products manufactured at our own Kyokuyo Group plants have a key part to play.
With the Shiogama Plant of Kyokuyo Shokuhin Co., Ltd. taking
on a central role in Japan, and KYOKUYO GLOBAL SEAFOODS
Co., Ltd. (KGS) playing a similar role overseas, the Group is
implementing an integrated system that links procurement,
processing, and sales closely together. In this way, besides
making factory capacity utilization more efficient, we are also
striving to be a food manufacturer that ensures a stable supplyof products that can be consumed with safety and reliability.

It is now 10 years since we launched our Dandori Jozu
product line, which was created to provide enhanced simplicity and convenience in an environment characterized by labor
shortages. To further expand and strengthen this product line
going forward, we have set up a dedicated department that ismainly focused on managing the Dandori Jozu range. Making
effective use of the Dandori-Nya mascot character, we will beworking to further develop sales promotion for Dandori Jozu
product line, and expand the sales channels.
Expanding our overseas businessWith regard to another important area that we are focusingheavily on, our overseas business operations, whereas in thepast this has mainly involved the exportation of products
made in Japan and overseas sales through three-way trade inmarine product raw materials, we are now proceeding withan overseas business strategy that emphasizes the policy of“produce overseas, sell overseas”.
We are building up our network of overseas production
and sales locations, with a particularly important role being
played by KGS, our key overseas production facility, which
supplies products not only to Japan but also to markets inSoutheast Asia, Europe and North America, by Kyokuyo Vina
Foods Co., Ltd., which was established in Vietnam last year
to handle production and sale of products for the Southeast
Asian market (and to reduce the risks associated with having
too much of our production capacity located in the same
country), and by Ocean’s Kitchen Property Management LLC,
established in the US to undertake manufacturing of imitation
crab meat for the US market.

Kyokuyo Group Integrated Report 2023

6

Strengthening access to resources
Faced with the challenge of achieving sustainable utilizationof the world’s limited marine resources, safeguarding healthy
oceans is vital for the continuation of our business, and for
ensuring a stable supply of food. To help realize a sustainablemarine products industry, going forward, besides undertaking aquaculture of Pacific bluefin tuna and red sea bream ina manner that protects biodiversity and ecosystems, startingfrom 2025 we will also be selling salmon raised through inland aquaculture in Japan. Last year, in addition to working toachieve sustainable, stable procurement of skipjack throughthe bringing into service of the Wakaba-Maru No. 11, a large
vessel that is competitive in international terms, in our overseas purse seine fishing business, we also helped to invigorate
the skipjack processing industry in Japan, and we are contributing toward keeping alive aspects of Japanese traditional
cuisine, such as katsuobushi (dried skipjack shavings) and katsuo-no-takaki (seasoned seared skipjack).
Organization
Chart

Organizational restructuring
In April 2023, we adopted a new segment structure whichclarifies our core businesses. The former Marine Products
Purchasing Business, Foods Business, Tuna Business andLogistics Business have been replaced by the Marine Products
Business, Freshfoods Business, Processed Food Business andLogistics Business, and we are developing our business using this new structure. In addition, with the aim of realizing
flexible business operation and “changing to a high-profit
structure”, we have established new Divisions for each of the
Marine Products Business, Freshfoods Business and Processed
Food Business. Besides putting in place a system that will
clarify the strategy for each business and ensure that employees fully understand the strategy and act proactively to
implement it, by having centralized management througheach Business Division, we are aiming to become a high-profit
organization that strives for overall efficiency.

Tuna
Business
Department

Foodservice
Business
Division

Retail andConsumerBusiness Division

Foodservice Foodservice
Retail andRetail andBusiness
Business
Consumer Business Consumer Business
Department 1 Department 2
Department 1
Department 2
Following the restructuring
MarineProducts
Business Division (newly

established)

Marine Products Marine Products Marine Products
Business
Business
Business
Department 1
Department 2
Department 3

Freshfoods
Business
Division

Kyokuyo Group Integrated Report 2023

Processed FoodBusiness(newlyDivision(newlyestablished)established)

Tuna
Sushi and Resources Research Foodservice
Retail andRetail andBusiness
SashimiBusiness
Consumer Business Consumer Business& Development
Department Department
Department
Department 1
Department 2
Department(newly established) (newly established)

7

2. Strengthening our business foundations▶ Strengthening the governance framework throughthe adoption of an executive officer system(name changed)

enable employees to carry out their work with a higher levelof motivation.
The background to this change is the transformations thathave been taking place in the external environment, including
the shrinking labor force caused by the trend toward smallerfamilies and the aging of the population in Japan, changing
workstyles, increased awareness of diversity, etc. Besides supporting diversified workstyles and changing lifestyles, the newhuman resources system is also designed to provide greatertransparency in performance appraisals, making it possible
for younger employees to secure promotion more rapidly
through accurate assessments of their contribution to the organization, their capabilities, and their character, and to allow
the experience accumulated by senior employees to be handed down effectively to the new generation.
DX promotion
Responding to issues affecting the workplace, including labor
shortages, the need to transmit skills to a new generationof employees, and the problem of long working hours, weare aiming to enhance working efficiency by promoting improvements that make effective use of digital technology, forexample by utilizing artificial intelligence (AI) based sorting
technology in the Kyokuyo Group production facilities.

3. Measures to address sustainability issues
To enable the sustainable use of the world’s limited marine
product resources into the future, there is a need for appropriate safeguarding and careful utilization of these resources,
underpinned by proper management based on scientific evidence, including concern for ecosystems and prevention ofover-fishing, etc.

Strengthening the governance framework
Starting from April 2023, we have adopted an executive officer
system, aiming not only to make management more flexible
and to strengthen corporate governance by separating themanagement decision-making and oversight function fromthe execution function, but also to cultivate next-generation
management talent.

Resource management
As an enterprise whose business activities involve the use of
the world’s limited marine product resources, the Kyokuyo
Group strives to safeguard the ocean environment. However,realizing a sustainable marine products industry and healthy
oceans is a challenge that the Group cannot tackle alone.
What is needed to address these problems is resource management based on scientific knowhow. Since 2017, Kyokuyo
has been a member of SeaBOS*, collaborating with some of
the world’s leading marine products, aquaculture and feed
companies to effectively utilize marine resources in a sustainable manner based on scientific evidence, and working toaddress various issues with the aim of realizing healthy oceans
and a healthy global environment.

Adopting a new human resources system
A new human resources system came into effect starting from
April 2023, with adjustments made to the previous system to* SeaBOS: Seafood Business for Ocean Stewardship (SeaBOS) is an organization
whose membership comprises nine of the world’s largest marine products companies, along with scientists. Utilizing an approach based on scientific evidence,
SeaBOS aims to address various issues in order to help achieve the sustainable useof marine resources and realize healthy oceans.

▶ Adopting a new human resources system toenhance employee motivation

Before the restructuring
Marine Products Marine Products Marine Products
Business
Business
Business
Department 1
Department 2
Department 3

With global competition to purchase marine products
becoming increasingly intense, the Marine Products Businessis working to strengthen its procurement capabilities andincrease the volumes handled. In addition, by strengthening
the comprehensive, integrated system within the Kyokuyo
Group that covers every stage from procurement throughprocessing to sales, the Marine Products Business is working
to enhance profitability.
By handling sushi toppings and sashimi items together
with skipjack and tuna, which are often supplied to be eatenraw, in the same segment, the Freshfoods Business is aiming
to make business management more efficient. Regarding
sushi and sashimi products, the Freshfoods Business is striving to enhance the quality of staple products and expand
sales of items produced at Kyokuyo’s own plants, aiming toensure stable profits. For the aquaculture business, we haveestablished a specialized department, the Resources Research& Development Department, and will strive to improve profitability by strengthening production management by experts.
The Processed Food Business handles frozen and chilled
foods, canned foods, seafood delicacies, etc. In the frozen andchilled foods segment, it is focusing on product items that
require a high degree of processing, including simmered andgrilled fish products, and is aiming to enhance the profitability
of Kyokuyo’s own production facilities. In the canned foodsegment, the Processed Food Business is striving to expand
market share by strengthening relationships with key business
partners, while in the seafood delicacies segment, it is aiming
to grow sales by developing new product items.

▶ Proceeding with digital transformation (DX) to help
address the problem of labor shortages, etc.

Kyokuyo Group Integrated Report 2023

8

Message from the President

Responding to climate change
Climate change is an important management issue for
Kyokuyo, as it is leading to changes in the marine environment (which underpins Kyokuyo’s business operations) andto abnormal weather events, and is having various impacts
on both society as a whole and the Kyokuyo Group’s business operations. In line with the TCFD Recommendations,for which Kyokuyo expressed its support in May 2022, we areundertaking analysis of the risks and opportunities presented
by climate change in relation to our business, and besides formulating response strategies, starting from this fiscal year wehave also begun to implement related disclosure.

Theme

4

Looking ahead to the future▶ Aiming to achieve business growth in our overseas
business and food business▶ Changing to a high-profit structure through our processing strategy and the expansion of our overseas
business▶ Creating a working environment where employees
can work cheerfully, happily, and industriously▶ Taking on the challenge of developing new ideas,
without being afraid of failure
The Kyokuyo Group has always aimed to contribute toward
the realization of healthy and happy lifestyle and food culture,
while growing together with society. Going forward, we willbe leveraging our core expertise as a company that excels infish and seafood to achieve further growth by focusing on expanding our food business and overseas business.
The main aspect of our Medium-term Business Plan is to“change to a high-profit structure”, and we are proceeding
toward realizing this goal by implementing a processing strategy that is less vulnerable to fluctuations in the marine products market, and a sales strategy focused on product items
manufactured in our own Kyokuyo Group plants. We will
also be expanding our overseas business, and to realize our
medium- to long-term management strategy of becoming aprocessed food manufacturer that is globally competitive, weare considering more aggressive M&A activity and working
to strengthen our network of overseas production and sales
locations.
Regarding the new human resources system that we

9

Responding to the issue of marine plastic waste
To address the issue of plastic waste entering the oceans,
which is a global problem, we have identified the goal of
reducing the volume of plastic used in packaging by 30% (reference year: 2019) by 2030, and our whole Group is working
together to achieve this goal.

Kyokuyo Group Integrated Report 2023

have adopted this fiscal year, we realized that, rather thanmerely raising wages, there was a need to overhaul the human resources system itself, and so starting in 2020 we spend
considerable time developing the new system. Taking theview that it was vitally important to respond to the changes
in the external environment—including the shirking of theworking-age population caused by the trend toward smallerfamilies and the aging of the population—and to cultivate
human talent able to operate effectively on the global stage
in order to develop overseas markets, we thought very carefully about what content the new human resources systemneeded to have. Of course, raising salary levels can be expected to enhance the motivation of existing employees, and leadto improved productivity, and it is my hope that by enabling
employees to experience the joy and reassurance of working
as part of a close-knit team within the Kyokuyo Group, we canenable our organization to function with maximum effectiveness; this kind of workplace can be a wellspring of growth forour enterprise. We will be working to build an environment
in which employees are able to set high goals for themselves
and then work enthusiastically, cheerfully, and assiduously toachieve them.
Being keenly aware that “maintaining the status quo
amounts to going backwards”, in the future we will be working to expand the scope of our business activities, and rather
than proceeding along the same old path, we will continue to challenge ourselves, without fear of failure, to create“something from nothing” and develop new ideas, aiming toachieve a major leap forward.
I would like to ask all shareholders, investors and otherstakeholders for your continued understanding and support.

Our Value Creation Story

Transitioning
to a high-profit
structure

In line with our corporate philosophy of “Aiming to grow together with society, contributing to a healthy and happy lifestyle and food culture based on management of human respect”, the Kyokuyo Group works to address social problems
through its business activities, aiming both to make a positive contribution toward realizing a sustainable society and toenhance corporate value.

1970s – 1990s

2000s

2010 onwards

Establishment as afisheries company

Developing as a generalfood company

Making Kyokuyo into
a global company

Aiming for sustainable growth

Ensured a stable supply of foodby securing valuable sources ofprotein and entering the foodprocessing business

Beginning the manufacturing and saleof frozen foods, and making the marine
products purchasing business andprocessed foods business the central
focus of the company’s development

Working to expand Kyokuyo’s
network of overseas businesslocations

Strengthening measures to develop overseas businesses, the processed food business,and the aquaculture business, and to address ESG issues,
and aiming to both contribute toward the realization of a sustainable society and enhance corporate value

Salmon and ocean trout fisherymothership leaving port

Headquarters building

Exhibiting at the Seafood Expo Global
trade show in Brussels

Wakaba Maru No. 11 overseas purse
seine fishing vessel

1937

1970

2002

2012

2017

2021

Established Kyokuyo Hogei Co., Ltd. toengage in whaling using a fleet of one
large and many smaller vessels, and invarious other types of fishing, as wellas the processing and sale of marine
products

Began production of frozen foods at the
Hiratsuka Plant in Kanagawa Prefecture

Secured ISO 14001 international certification, relating to reducing the negative
impact of business activity on the environment

Established Kyokuyo Nippai Marine Co.,
Ltd. (current Kyokuyo Feed One Marine
Co., Ltd.) in Ehime Prefecture with theaim of commercializing the full-life-cycle
aquaculture of Pacific bluefin tuna

Made first shipment of “Hon Maguro no
Kiwami TUNAGU”, our brand of Pacificbluefin tuna raised with full-life-cycle
aquaculture

Formulated the Kyokuyo Group Basic
Sustainability Policy to realize sustainablegrowth for both the Kyokuyo Group andsociety as a whole

Joined the SeaBOS initiative, the aimof which is to solve problems to help
achieve sustainable utilization of marine
resources through a scientifically based
approach, and to realize healthy oceans
and a healthy global environment

2022

Began fishing for salmon and ocean trout
in the North Pacific using a fleet of one
large and many smaller vessels

1960
Established a new marine products canning factory in Hokkaido

1962
Began pelagic trawling operations off thewest coast of Africa

1964
Established a representative office in Las
Palmas in the Canary Islands, Spain (theKyokuyo Group’s first overseas businesslocation)

Established Kyokuyo Shoji Co., Ltd. in Tokyo
to undertake the procurement and sale offood products, Kyokuyo Akitsu Reizo Co., Ltd.
in Osaka to undertake cold storage warehouse operation, and Kyokuyo U.S.A. Inc.
(current Kyokuyo America Corporation) in the
US to undertake the procurement and saleof marine products and their exportation to
Japan

1973
Began overseas purse seine fishing business using a purse seine fishing vessel

1980

Established QINGDAO KYOKUYO INTER­
NATIONAL CO., LTD. to undertake productsales in China, and exportation

2013

Established K&U Enterprise Co., Ltd. in
Thailand to undertake the manufacturing
and sale of sushi products

Began the sales of the “Dandori Jozu”
series of frozen food products

2006Entered the frozen foods retail market

Established KYOKUYO EUROPE B.V. in the
Netherlands to undertake the sale of marine products and frozen foods

Compiled the Food Defense Guidelines
as a food safety initiative

2007

Established Kyokuyo Shokuhin Co., Ltd. in
Miyagi Prefecture to undertake manufacturing of frozen foods

Established Kyokuyo Marine Farm Co.,
Ltd. in Kochi Prefecture to undertake thefarming, processing, and sale of Pacificbluefin tuna

1984

2008

Established Kyokuyo Foods, Co., Ltd. in
Ehime Prefecture to manufacture imitation crab meat

1997
Established Kyokuyo Suisan Co., Ltd. in
Shizuoka Prefecture to undertake overseas
purse seine fisheries operations and theprocessing and sale of skipjack and tuna

Kyokuyo Group Integrated Report 2023

2005

Made Jokki Co., Ltd. (a manufacturer of
seafood delicacies) into a consolidated
subsidiary

2009
Made first shipment of “Hon Maguro
no Kiwami”, our brand of farmed Pacificbluefin tuna

Announced Sea Marché as a new brandfor consumer products

2014

2015
Completed construction of the newfactory of Kyokuyo Shokuhin Co., Ltd. in
Miyagi Prefecture

2019
Established KYOKUYO GLOBAL SEAFOODS
Co., Ltd. in Thailand to undertake productionof sushi, grilled fish, and boiled fish products
Invested in an aquaculture company in
Kochi Prefecture, farming red sea breamand other species, expanding the variety
of farmed fish species we offer
Joined CLOMA, an organization whichworks across all industries to resolve theissue of plastic waste in the oceans

KYOKUYO GLOBAL SEAFOODS Co., Ltd.

Completed the building of Wakaba Maru
No. 11, an overseas purse seine fishingvesselEstablished Kyokuyo Vina Foods Co., Ltd.
in Vietnam to undertake food products
manufacturing, sale, and exportation

2023
Kyokuyo Foods Co., Ltd. secured FSSC
22000 food safety certification
Strengthened the company’s managerial
foundations by adopting a new executive
officer system, establishing the Marine
Products Business Division, Freshfoods
Business Division and Processed FoodBusiness Division, and introducing a newhuman resources system

2020
Formulated the Kyokuyo Group Basic
Procurement Policy to outline our basic
approach to responsible procurement
activities
Formulated the Kyokuyo Group Supplier
Guidelines, our code of conduct for business partners

Kyokuyo Group Integrated Report 2023

12

Corporate Information

1954

Changed company name to Kyokuyo Co., Ltd.

The Foundation of Our Value Creation

Began manufacture of canned products

1971

Pacific bluefin tuna farmed
Farmed red sea breamusing full-life-cycle aquaculture

Business Strategy

Founding

1949

11

Our Value Creation Story

HistoryOur Value Creation Story
Our Value Creation Story

Value Creation Process
The Kyokuyo Group incorporates the response to changes in the business environment (social issues) into its
Medium-term Business Plan in line with corporate philosophy, and practices ESG-focused management to address relevant issues. We further aim to do our part to realize a sustainable society while enhancing our corporate value.

Outcomes (created value)

••
••
•

Social value (➡P.32-54)

••
•
••

 rowing global demand for marine products
G
Carbon neutrality by 2050
W orsening environmental issues, including
climate change and marine pollution
Changes in food lifestyles
Increasing food options, including restaurants,
ready-made meals, and eating at home

 eclining birthrate and aging population
DChanging need for frozen foods
Increasing interest in food safety and reliability
Shortage of labor at manufacturing sites andfood preparation environments
Growing awareness of human rights and thediversity of society••• evelopment of IT technology
DAccelerating digital transformation(DX)Acceleration of ESG-driven investment

Financial capital•

Shareholders’ equity:

Corporate
Philosophy

Helping to build a sustainable society(➡P.3)

43,736 million yen

Stably delivering the rich bounty ofthe sea to dining tables

Medium-term Business Plan
“Build Up Platform 2024”

Intellectual capital•••

Creating a workplace environmentthat respects human rights and emphasizes diversity

The Foundation of Our Value Creation

Strategy (➡P.21)

CapitalA corporate group that grows together
with society and contributes to a healthy
and happy lifestyle and food culture

Contributing to a healthy and happy
lifestyle and food culture

Input

KyokuyoGroup’s
VisionBusiness Strategy

Changes in the business environment (social issues) (➡P.19-20)

338

R&D expenses:
million yen
Production and processing technology
Marine product expertise

Together withcustomers

Together withbusiness partners

Together withshareholders andinvestors

Together with
employees

Together withgovernments

Together withrelated organizations

Together withlocal communities

Together withthe global environment

2,112
27.6%

Female employee ratio:*Non-consolidated

 o. of employees undertaking distance learningNthrough the Kyokuyo Business School program:*Non-consolidated

R&D(➡P.15)

Value chain(➡P.15)2,292 million yen
Manufacturing sites: 16 sites
Cold-storage capacity: 52,655 t
Purse seiners: 4 vessels
Aquaculture farms: 5 locations (4 companies)kMarine Products
Business

Aqu
acu
ltu
re,
fi

Freshfoods
Business

po

nd

pr o

qua

a nd

Processed FoodBusiness

ga

a ls

s

13

Procurement network elationships of trust, cooperation, andRcollaboration with suppliers
Sales networks in and outside Japan
Participation in initiatives

Kyokuyo Group Integrated Report 2023lityc

S a le s*Including Group Companies

Logistics
BusinessontrolCapital investment:

Social and related capital••••

Economic value

nt
reme
ocu
, pr
ing
sh

Marine products, other raw materials
EnergyWater resources

Four business fields

Manufacturing capital

•
•
•
•
•

Output171

Natural capital•••Business strategies (➡P.25-31)

No. of consolidated employees:

Fee
db
ac

•
•
•

L o g isCorporate Information

Human capitaltics and storage

c
Pro

in
es s

Medium-term Business Plan
Target: Fiscal year ending March 31, 2024

•
•
•
•

300 billion yen
Operating profit: 7.0 billion yen
Ordinary profit: 6.5 billion yen
Overseas net sales: 30 billion yen
Net sales:•••

D/E ratio:

1.5

Operating income margin:

2

Over %
Ordinary income margin:
Over

2%

Kyokuyo Group Integrated Report 2023

14

Our Value Creation Story
Our Value Creation Story

Business Development
As a general food company focused on the integrated procurement, processing and sale of marine products using a domestic and international network built up over a period of many years, Kyokuyo delivers the bounty of the sea from allover the world to dinner tables both in Japan and overseas.

Value chain
Processing

Marine Products Business

Freshfoods Business

Purchasing
Fishing

Customers

Sales

R&D

Production
andprocessing

Logistics

Business Strategy

Procurement

Restaurants

Aquaculture
The Foundation of Our Value Creation

Retail
Processed Food Business

Logistics Business

Ready-mademeals

Storage

Four business fields

This business harnesses our global network to
select the best procurement, processing and sales
options••
15

T hrough mutual partnerships with domestic and foreign branches,business offices, representative offices, and subsidiaries, it achieves
the stable procurement of high-quality marine products sourced
from around the world, also selling processed products including
fillets, shelled/peeled products, and moreE xport of marine products caught in Japan, and engaging in offshore trade

Kyokuyo Group Integrated Report 2023

Freshfoods BusinessThis business handles the integrated sale of sushi
and sashimi products, as well as skipjack and tuna,
which are widely used for making sushi and sashimi••• ith KYOKUYO GLOBAL SEAFOODS Co., Ltd. in Thailand as theWmain production facility, the Freshfoods Business is expanding both
export sales to Japan and the sale of sushi products for use by theoverseas branches of Japanese-owned conveyor belt sushi restaurant chains rocurement, production, and sales systems with integrated operaP
tions from fishing and farming to purchasing, processing, and salesof skipjack and other tunaT he Freshfoods Business is working to strengthen the aquaculturebusiness, including “Hon Maguro no Kiwami” (Kyokuyo’s farmed Pacificbluefin tuna brand), “Hon Maguro no Kiwami TUNAGU” (Pacific bluefin
tuna farmed using full-life-cycle aquaculture), and farmed red sea bream

Processed Food BusinessFoodservice Business

Retail and Consumer Foods BusinessThis business provides a diverse
product lineup that responds tothe various needs of customers,
focusing on saving customers’
time and delivering convenience

This business offers solutions for avariety of different sales channels,
with the aim of saving customers’
time, delivering convenience andsafeguarding healthS ale of products, designed to beeaten after heating, to medical caregiving and other institutions. This
includes “Dandori Jozu” series productsS a l e o f p r o d u c t s u n d e r t h e S e a
Marché consumer brand as well asother products frozen home foods
including simmered fish, grilled fish,
and fried marine products to convenience stores and mass retailers••

S ales of simmered fish, grilled fish,
fried marine products, imitation crab
meat, meat from livestock, frozen
vegetables and other products via
restaurants and other channels•••

Corporate Information

Marine Products Business

Logistics Business

Maintaining product quality throughstrict control of freezing temperature••

 peration of cold storage warehouses in three locaO
tions: Ohi, Jonanjima (both in Tokyo), Fukuoka
 roviding logistics services including delivery of stockPfrom warehouses

Sale of canned products, which havea long history - the manufacture ofthese products started in 1949
S ale of seafood delicacies such as shredded
squid in addition to health products suchas glucosamine and DHA supplements
Kyokuyo Group Integrated Report 2023

16

Our Value Creation Story

In FY2022, the second fiscal year of implementation of the “Build Up Platform 2024” Medium-term Business Plan, as in
the previous fiscal year, the Group’s business was affected by developments that included the impact of geopolitical risks
related to the ongoing situation in Ukraine and the rapid depreciation of the yen, factors that combined to produce growing uncertainty. In the marine products and foods business, despite rebounding consumer demand and an upturn in thefood services industry following the tail-off of the COVID-19 pandemic, business conditions remained difficult due to rising prices caused by the increase in energy costs, raw materials costs, etc. resulting from the situation in Ukraine.

Despite this difficult environment, our Group’s net sales, operating profit, ordinary profit and profit attributable to ownersof the parent company all increased to reach the highest figures ever recorded in the company’s history. The businessconditions in each of our segments are as detailed below.
Note that from the previous consolidated fiscal year onwards, we have reorganized the categories used to manage
and control our products. Starting from FY2021, we have integrated the previous categories of “frozen food products”
and “shelf-stable foods products” into the “foods products” category. We have therefore restated previous year data on
the basis of the new segments in order to facilitate comparison between FY2020 and FY2021. Beginning from FY2023, wehave switched over to a new segment composition, and so the content of measures implemented in FY2023 is based on
this new segment structure.

Marine Products Purchasing BusinessNet sales(Billion yen)
150.0
124.9

Segment profit

127.1■Operating profit(Million yen)
6,000
118.9

120.7

122.7

4.0
4,000

100.0

2,000

50.0

0
2018

2019

2020

2021

2022

(FY)

5,150

2.6
2.0

0

Operating income margin
(%)
5.0
4.3

2,444

2018

1.4

2.2

3,067

2,683

2.0
1.0

1,750
2019

3.0

2020

2021

2022

0.0
(FY)

•
•
•

Marine Products BusinessE xpand the volume of product handled bystrengthening procurement capabilities
I mprove profitability by expanding sales of
products produced at our own plants
Put in place the production facilities needed to“produce overseas, sell overseas”

The Foundation of Our Value Creation

•
•
•
•

[Sales in Japan]
With prices in the marine products market remaining high, there was a
noticeable falling off in demand from the third quarter onward, and transaction volume fell for salmon, shrimp, and crab
The rapid rise in market prices was followed by a fall in demand, and thisSales updownturn in the market squeezed profits[Overseas business]O verseas sales of scallops and salmon grew, partly due to the depreciation of the Japanese yen
Profit downWith consumer spending in China and the US having fully recovered,sales in these markets were brisk

FY2023 measures (under the new segment structure)

Net sales/segment profit (consolidated)

Business Strategy

Market environment and FY2022 performance

Salted salmon fillets

Foods Business•

Tuna Business

Sales upProfit up
Hon Maguro no Kiwami TUNAGU

Logistics Business

Sales upProfit down

•
•

•
••
•
•

[Processing and Sales Business]P rices in the raw materials market remained high, but sales performance was satisfactory thanks to strong demand resulting from the recovery in the food services sector
Sales of southern bluefin tuna were satisfactory
There was substantial growth in sales of processed food products, mainly
manufactured in Kyokuyo’s own plants, to conveyor belt sushi restaurants[Aquaculture Business]
We have been striving to maintain the quality of domestically-produced
Pacific bluefin tuna, and have succeeded in maintaining profitability[Overseas Purse Seine Fishing Business]
Sales and revenue increased thanks to the rise in the price of skipjack•••[Cold Storage Business]
With freight movement relatively low, the warehouse space utilization
rate* remained high, and storage fee revenue increasedDespite adjusting prices in response to the rise in electricity charges (themain factor responsible for squeezing revenue), overall, earnings fell
[Consigned Forwarding Business]
Sales grew thanks to an increase in the volume of transactions with external business partners* Space utilization rate: the percentage of actual products compared to the capacity of cold storage

Net sales(Billion yen)
120.0
101.3

Segment profit

104.3

98.8

96.8

■Operating profit(Million yen)
2,000

108.3

1.4

1,500

80.0

1,000
40.0

1,414

1.6
1,654

1,685

1.1
1,046

500

1.5
0.9
936

0

0
2018

2019

2020

2021

2022

29.6

29.9

34.2

39.2

2,000

0

0

2022

0.5
0.0
(FY)

2019

2020

2021

2022

Operating income margin
13.6

5,325

2018

(FY)

Net sales

0.7

1.7

506
213
2019
2020

(%)

15.0
6.0
4.0

2.9

2.6
737

988

2.0

2021

0.0
(FY)

2022

Segment profit(Billion yen)
1.5(Million yen)
600

1.3
0.9

1.0

■Operating profit

1.1
400

0.5

200

0

0
2019

2020

2021

2022

Operating income margin
(%)
40.0
36.9

35.0

29.4
265

2018

2021

4,000

20.0

0.9

2020

■Operating profit(Million yen)
6,000

40.0

2018

2019

1.0

Segment profit(Billion yen)
60.0

28.4

2018

(FY)

Net sales

1.0

Operating income margin
(%)
2.0

1.7

(FY)

2018

315

369

30.0
19.8
218

2019

2020

2021

15.6

20.0

203

10.0

2022

0.0
(FY)

•
•
•
•
•
•

•
•

Freshfoods BusinessM ake business operation more efficient by
having a dedicated unit to handle sushi andsashimi materials
E nhance profitability by expanding sales of
products produced at our own plants
Strengthen production management and expand
the range of fish species produced through aquaculture by establishing a dedicated aquaculture unit

Corporate Information(left) Dandori Jozu series mackerel fillets(right) Dandori Jozu series grilled red snapper marinaded in mirin (sweet rice wine)

•
•
•
•

[Foodservice frozen food products] [Canned food]S ales of sushi products to conveyor beltD espite rising costs and having had to temsushi restaurants were satisfactory
porarily suspend sales of canned mackerel at
S ales of marine product fillets andone point, overall sales remained roughly at
shrimp fritters for sale at mass merthe same level as in the previous year, due toSales upa focused sales effort targeting core products
chandisers’ deli counters have grownA lthough prices have been raised, this has [Snacks and seafood delicacies]S ales fell due to changes in connot been enough to cover rising costs,
sumer behavior
and profit margins have been squeezed
Profit down [Frozen food products for the retail market]
P rofits were squeezed by risingS ales increased, particularly fish for boiling and grillingmaterials costs

Processed Food BusinessE nhance profitability by expanding sales of
products produced at our own plants
Strengthen plant productivity by consolidating
the range of items produced
S peed up the introduction of new productsthat reflect market needs

Logistics BusinessE xpand sales by maintaining high storage volume
Enhance business efficiency through systematization

Kyokuyo Akitsu Reizo Co., Ltd.’s Tokyo cold storage
Note that the “accounting standard on recognition of earnings” (corporate accounting standard number 29) has been applied from the start of the fiscal year ended March 2022, and that data for the
fiscal year ended March 2022 is shown after conversion to reflect the application of the above standard.

17

Kyokuyo Group Integrated Report 2023

Kyokuyo Group Integrated Report 2023

Our Value Creation Story

Overview by Business18

Our Value Creation Story

The relationship between recognition of the business environment and our materiality
We have examined the social and natural environment in which the Kyokuyo Group operates from different perspectives,
identified the risks and opportunities, and used these to specify the Group’s materiality.
◦ Risks● Opportunities

STEP❶ Identification of key issues

STEP❷ Internal discussion

STEP❸ Setting targets

STEP❹ Approval by the Board of Directors meeting▶ T he departments responsible for formu- ▶ Directors discuss the draft of Medium- ▶ The responsible departments draw up ▶ T he proposed Medium-term Businesslating the Medium-term Business Plan
term Business Plan collated by thetarget values and measures based on
Plan, including the targets and meaconsider our long-term vision of the future
responsible departments based on thethe proposed Medium-term Businesssures, is discussed at the Group Meeting
and where we want to be in the future,
issues that have been identifiedPlan▶ T he proposed Medium-term Businessbased on our Corporate Philosophy andPlan is discussed and approved by thethe issues where satisfactory results were ▶ Draft the outline of the Medium-term ▶ The results of this work are reported toBusiness Plan
not achieved in the implementation ofBoard of Directors Meeting
the Board of Directors
the previous Medium-term Business Plan e recognize society’s expectations, the▶W
SDGs and various social issues, and use
these to identify issues

Our Value Creation Story

Recognition of the Business Environment

The process used to specify the key issues to be addressed in the Medium-term Business Plan

Materiality (P.23)

•

•
•
•
••
•
19

◦ Increasing procurement costs due to intensified purchasing competition◦ Decrease and depletion of fishery resources● Increased demand for sustainable marine products● Growing interest overseas in Japanese cuisine, increasing demand for marine products

 arbon neutrality by 2050
C
Worsening environmental issues, including climate change
and marine pollution◦ Increase in costs for preventing pollution and reducing environmental impact, including
responding to the plastics issue◦ Damage to corporate value due to a delayed response to the need for building sound supply chains◦ Impact on fishery resources, and destabilization of the supply system◦ S uspension of management activities due to natural disasters, and damage to corporate value● Diversification of raw materials procurement sources● Earning the trust of society by being responsive● Promoting the development of new technology for creating a low-carbon society andresolving plastic waste issues

 hanges in food lifestyles
CIncreasing food options, including restaurants, ready-mademeals, and eating at home
Declining birthrate and aging population
Changing need for frozen foods◦ Decrease and contraction in demand at fresh food markets◦ Decrease in the sale of loose items in supermarkets deli sections◦ Decrease in sales due to delay in responding to changes● Growing need for health-oriented products and functional foods● Growing need for foods for the elderly● Growing influence of personal preferences

I ncreasing interest in food safety and reliability◦ Increase in costs for system construction◦ Decrease in customer trust due to product quality complaints and trouble● Earning customer trust by improving quality● Earning trust by promoting accurate and prompt information to customers

 hortage of labor at manufacSturing sites and food preparation environments◦ Impact on safety and health management and increase in risk of occupational accidents◦ Lower productivity, product quality, employee motivation and efficiency as a result of
more days working long hours ◦ H
 igher labor and logistics costs● Significant increase in mechanization and energy-conservation

 rowing awareness of humanGrights and the diversity ofsociety◦ Risk of human rights violations◦ Reduced employee motivation and operational efficiency due to delays in response◦ Loss of human resources due to delays in response● Increasing productivity and motivation through the creation of a comfortable workplace environment● Increasing creativity by securing diverse human resources● Transforming from a business that seeks human resources to a business that attracts human resources evelopment of IT technology
DAccelerating digital transformation (DX)◦ Increase in cost of system construction ◦ Changes in sales channels, and loss of sales opportunities● Improving operational efficiency and sophistication by introducing new technologies● Visualizing production and marketing technologies, and improving sustainability throughleveling (standardization) of production

 cceleration of ESG-driven
A
investment

Kyokuyo Group Integrated Report 2023

Expanding Foods andOverseas Businesses

Stabilizing profitabilityof Marine Products
Purchasing and
Aquaculture Businesses

Strengthening accessto resources

Strengthening of ourmanagement baseESG-focusedmanagement

Corporate Information••••

 rowing global demand forGmarine products

SDGs to which we cancontribute

The Foundation of Our Value Creation••

Risks and opportunities for the Kyokuyo Group

Business Strategy

Business environment◦ Concerns about corporate strategy resilience and risk management capabilities● Improving corporate value and performance through ESG-focused management

Kyokuyo Group Integrated Report 2023

20

Our Value Creation Story

In April 2021, Kyokuyo launched its Medium-term Business Plan “Build Up Platform 2024” for the period from FY2021
through FY2023. Based on the basic policy shown right, we will move forward with our business while fulfilling our responsibilities to help realize a sustainable society, including ESG and the SDGs.

Basic Policy
We are aiming to “change to a high–profit structure” that will serve as a foundation for new growth,achieving this goal by creating value shared by both society and Kyokuyo through the implementation of strategies based on the core concepts of “continuous efforts to address business issues” and“a challenge for sustainable growth, as we work to strengthen our business foundations”.

Business Strategy

Overview of the Medium-term Business Plan “Build Up Platform 2024”

Our Value Creation Story

Medium-term Business Plan
“Build Up Platform 2024”

Medium-term Business Plan “Build Up Platform 2024”
The goals of Medium-term Business Plan “Build Up Platform 2024” and our performance during FY2022
Forecast for FY2023, final
year of implementationof the current Mediumterm Business Plan

272.1

300.0

300.0

Operating profit

8.1

7.0

8.5

Ordinary profit

8.1

6.5

8.5

Operating income margin

3.0%

Over 2.0%

2.8%

Ordinary income margin

3.0%

Over 2.0%

2.8%

Overseas net sales

25.4

30.0

—

1.6 times

1.5 times—

Net sales

Creating value shared by bothsociety and Kyokuyo
Various social issues•••

 onserving biodiversityCAchieving a carbon-neutral and circular societyContributing to a healthy and happy lifestyle andfood culture

Various social issues

Debt-to-equity ratio (D/E ratio)

Continuous efforts to address
business issues•••

E xpanding Foods and Overseas Businesses
Stabilizing profitability of Marine Products
Purchasing and Aquaculture Businesses
Strengthening access to resources

A challenge for sustainable growth••••Enhancing product development andbranding capabilities
Focusing on gourmet foodsA ccelerating digital transformation (DX)Carbon neutrality by 2050

Strengthening of our management base(business, finance, and human resources bases) & ESG-focused management

Performance bysegment(Billion yen)

FY2022 performance

Target for final (third)
year of Medium-term
Business Plan

Corporate Information

FY2022 performance

Target for final (third)
year of Medium-term
Business Plan

Group (consolidated)(Billion yen)

Forecast for FY2023*, final year of
implementation of the current Medium-term
Business Plan
Net sales

Segment
profitMarine Products
Business

153.0

5.5

3.0

Freshfoods Business

73.0

2.5

33.0

1.4

Processed Food Business

73.0

1.7

1.0

0.2

Logistics Business

1.0

0.2

(1.2)

Other

0.0

(1.4)

300.0

8.5

Net sales

Segment
profitNet sales

Segment
profitMarine Products
Purchasing Business

122.7

2.6

142.0

3.6

Foods Business

108.3

0.9

124.0

Tuna Business

39.2

5.3

Logistics Business

1.3

0.2

Other

0.4

(1.0)

Total

272.1

8.1

300.0

7.0

New segmentcomposition structure* Forecasts for FY2023 are based on the new segment composition structure

21

Kyokuyo Group Integrated Report 2023

Kyokuyo Group Integrated Report 2023

The Foundation of Our Value Creation

Change to a high-profit structure

22

Our Value Creation Story
Our Value Creation Story

Medium-term Business Plan “Build Up Platform 2024”
Progress of our Medium-term Business Plan “Build Up Platform 2024” and future initiatives
Social background

Important issues

Globalaffairs••

E stablishing new production and sales locations to realize“produce overseas, sell overseas”
Completion of the new KGS plant

Expanding overseas businessStabilizing profitability of marine
products purchasing businessStabilizing profitability of theaquaculture business

Strengthening access to resources▶ Global warmingE ▶ Climate change risk

▶ Ocean plastic waste issues

ESG

S▶ Increased health consciousness▶ Increased awareness of the SDGs

▶ Thorough complianceG▶ Strengthening governance

23

Strengthening businessfoundations

Kyokuyo Group Integrated Report 2023

ESG-focused management

•
•
•
•
•
••
••
•
•

E xpanding the share held by processed food products
Realizing centralized budgeting and inventory managementby the Marine Products Business DivisionE stablishment of the new Resources Research &Development Department to formulate strategies aimed at
expanding the aquaculture businessStriving to maintain the quality of domestically-produced
Pacific bluefin tuna, and maintaining profitability
 eaching agreement on the sale of salmon producedRthrough inland aquaculture in Japan, harvesting of which isdue to begin in 2025
Construction of the Wakaba Maru No. 11, a large, internationally-competitive fishing vesselInvestment in EBIS Algae Research Institute, Inc.
 doption of a new human resources systemAAdoption of an executive officer system
Organizational restructuringEstablishment of three business divisions: Marine Products,
Freshfoods, and Processed FoodImplementing initiatives to address climate change related
issuesInvestment in EBIS Algae Research Institute, Inc.

•
•
•
•
•

E nhancing profitability by expanding sales of products produced in Kyokuyo’s own plants (stabilize plant utilizationrate)Enhancing production facility productivity by consolidating the range of items manufactured
Speeding up the introduction of new products tailored tomarket needsE stablishment of a new plant and commencement of production at subsidiary Kyokuyo Vina Foods Co., Ltd. (KVF) in
Vietnam, with the aims of spreading processing-related risk
and expanding sales in Southeast Asia
Establishment of a new plant and commencement of production at second-tier subsidiary Ocean’s Kitchen Property
Management LLC in the US, to manufacture and sell imitation crab meat
Expansion of production locations in the US and Europe
Strengthening of overseas sales with KGS as the hub
factoryE xpanding the volume of product handled by strengthening procurement capabilities
Commencement of processed food product operations at
the KVF plant in Vietnam
S trengthening production management and expanding
the range of fish species raised in our aquaculture business,through the establishment of the Resources Research &Development Department

Corporate Information

Economy▶ Increased demand for marine products
around the world▶ Continued depreciation of Japanese yen▶ Rising raw materials prices▶ Rising expenses for fuel and feed

••

•
•
•
•
•
••

The Foundation of Our Value Creation▶ Stronger control of resources and stronger
regulations on fishing in order to conserve
marine resources▶ The situation in UkraineR estructuring to create a business-type based organization
Completion of the new production facility of KYOKUYOGLOBAL SEAFOODS Co., Ltd. (KGS) in Thailand

Major Initiatives

Business Strategy

Expanding foods business••

Progress made in the Build Up Platform 2024
Medium-term Business Plan rocurement of raw materials by Wakaba Maru No. 11,P
the overseas purse seine fishing vessel, in a manner thatis considerate of the sustainability of marine resources
Maintaining stable sales through collaboration with inlandaquaculture companies••

S triving for centralized management and enhanced overall
efficiency through the business division structure
Accelerating digital transformation (DX)

•
••
••
•

 educing the amount of plastic used in packaging (aimingR
for a 30% reduction by 2030 compared to 2019, on a plastic
usage intensity basis)R educing CO2 emissions (aiming for carbon neutrality by 2050)
Disclosing information based on the TCFD
Recommendations
Continue with Clean River Activities
Promotion of diversity
Thorough implementation of complianceKyokuyo Group Integrated Report 2023

24

Business Strategy
Our Value Creation Story

Marine Products Business▶︎Main products handled◦“Group-wide integrated system” from procurement to processing and sales◦Networks in and outside Japan◦Knowledge and know-how accumulated in each of the Group’s segments

Strengths of our Marine
Products Business

Shigeru Kondo

Regarding sales in the Japanese market, in the first half of the
fiscal year, when the lingering after-effects of the COVID-19 pandemic were still being felt, the profits posted in Japan were thehighest ever, thanks to the impetus provided by rising market
prices for the main fish species (including salmon and trout).
However, consumption slowed from the third quarter onward,
as a result of the continuing high prices, and this in turn led to adramatic fall in the market price of the main ingredient categories(including salmon, trout, shrimp, and crab), resulting in a decline
in sales revenue.
In our overseas business, although the first half of 2022 saw anupturn in consumer sentiment in Europe and North America thanks

Based on our reflections on the previous fiscal year’s performance, we will continue working to “change to a high-profit
structure”, which is the most important goal of our current
Medium-term Business Plan, and we will be undertaking
measures aimed at stabilizing the profitability of the Marine
Products Business, strengthening access to resources, and expanding our overseas business, all of which are positioned asimportant aspects of achieving this goal.
As regards stabilizing the profitability of the Marine
Products Business, we will be driving the development of thisbusiness based on three key policies: centralized risk management utilizing the Business Division system, expanding therange of products handled by the business, and working tofurther enhance quality and differentiate our products fromthose of competitors. With the new Business Division systemthat has been adopted in FY2023, we are aiming to reduceand mitigate risk on a company-wide basis by having theMarine Products Business Division at headquarters implement
centralized management of branch offices’ procurement,
sales, and inventory management activities at the level of individual products. At the same time, by expanding the rangeof products that the Marine Products Business handles, wewill be able to deliver our companies’ products to consumers
in a more stable manner. We are constantly striving to further
enhance the quality of our products and to realize product(tons)
60,000■ Salmon and trout
Salmon and trout■ Northern ocean fish ■ Shrimp
Northern ocean fish
Shrimp(Yen/kg)
1,500

FY2022 performance (Marine Products Purchasing Business)
40,0001,000

20,000

500

0

0
2018

2019

2020

2021

2022 (FY)* Note that data for FY2020 is recorded prior to the application of the“Accounting Standard for Revenue Recognition”.
Note also that data for FY2021 is recorded after the application of thesame standard.

25

Kyokuyo Group Integrated Report 2023

Net sales:

122.783 billion yen (up 1.6% year-on-year)

Operating profit:

2.683 billion yen (down 47.9% year-on-year)

FY2022 consolidated overseas net sales performance
Net sales:

25.400 billion yen (up 38.5% year-on-year)

Shrimpdifferentiation, and to mitigate the impact of fluctuations in
the raw materials market; going forward, we will be providing
products that absorb the cost increases which can be expected to continue in the future. While striving to strengthen the
production efficiency of our overseas production facilities, we
also recognize the need to increase the amount of processingthat takes place within Japan, so that we can respond rapidly
to changes in market demand, and we will be proceedingwith measures to improve the production equipment at bothour own plants and those of partner plants.
To strengthen access to resources, we are continuing withpreparations aimed at beginning the sale of salmon farmed
through inland aquaculture in Japan from 2025 onwards. We
will also be expanding our collaborative projects with overseas
producers, taking as a model the exclusive agreement that we
signed with a salmon aquaculture facility in Chile last year.
In our overseas business, to realize our vision of “produce
overseas, sell overseas”, we will be implementing aggressive
investment and M&A activity to ensure that we have adequate production sites, and to build up our sales network, as
we seek to expand the scale of our overseas business.
FY2023 forecast
Net sales:

153.0 billion yen

Operating profit:

5.5 billion yen

Kyokuyo Group Integrated Report 2023

26

Corporate Information

FY2023 policies

Marine Products Purchasing <Non-consolidated>
Sales weight and unit price of each seafood type by year

SalmonCrabBusiness overview by segment (April 2022 to March 2023)
to the tail-off of the COVID-19 pandemic, from the summer onward,
the rising consumer prices caused by the conflict in Ukraine led toan economic downturn, resulting in lower consumption of products with a high unit price (including crab and shrimp). Faced withthis business environment, in the US we proceeded with efforts todevelop new relationships with mainstream US wholesalers, in addition to our existing relationships with wholesalers affiliated withJapanese companies. In China, despite the continuing implementation of the “Zero-COVID” policy, there was an upturn in the marine
products market that saw increased sales of raw materials (such as
scallops) in the processed foods sales channel. As a result, although
the situation in Europe was challenging because of depressed consumer spending resulting from the war in Ukraine, overall, overseas
sales were higher than had originally been anticipated.
As a result of the above, net sales exceeded the previous fiscal year, but profit fell below the previous fiscal year.

/troutmacker

The Foundation of Our Value Creation

In FY2022, although the Marine Products Business’s net sales
remained roughly the same as in the previous fiscal year, there
was a significant fall in profit. While reflecting on last fiscal year’s
performance, we will continue to position stabilizing the profitabilityof the Marine Products Business, strengthening access to resources,and expanding our overseas businesses, as important policies.

Senior Managing Director
Business Division Supervisor
Control over Marine Products
Business Segment
In charge of Marine Products
Business Division, Overseas Business
Dept and Sales Administration
General Manager of Marine
Products Business Divisionel, etc.)

Business Strategykafish (AtFrozenBusiness Strategy▶︎Main products handled

roducts

Tuna pMasaki Miyama
Control over Freshfoods
Business Segment
In charge of Freshfoods
Business Division
Director and General
Manager of Freshfoods
Business Divisionndream ad sea b ed chilled)erde
Farm cies (shippether sps

oppingSushi tThe Foundation of Our Value Creation

The tuna business saw growth in both sales and profits. The sushi andsashimi business saw growth in sales, but this did not keep pace withrising costs, and as a result, posted a fall in profits. In FY2023, basedon the new systems that we have put in place, we will be focusing
on expanding sales of products manufactured in-house in our own
plants, to achieve further growth in the sushi and sashimi business.

cts

k produSkipjac

Business Strategy◦A seamless system within the Group covering everything from raw materials procurement (including fishing, aquaculture, and purchasing) to processing, and sales◦Initiatives in fisheries to produce and raise fish, enabling high quality anda stable supply◦A comprehensive “three-in-one” business development system

Strengths of ourFreshfoods Business

Our Value Creation Story

Freshfoods BusinessoBusiness overview by segment (April 2022 to March 2023) (Tuna segment)

Overseas purse seine fishing business: Catches■Weight

30,000300

20,000200

10,000

100

0

27

0

Kyokuyo Group Integrated Report 2023

39.220 billion yen (up 14.4% year-on-year)

Operating profit:

5.325 billion yen (up 438.8% year-on-year)■Weight(Yen/kg)
400

2020

Net sales:

Fish price(tons)

2019

FY2022 performance (Tuna Business)

Pacific bluefin tuna aquaculture business: Sales trend

40,0002018

In the overseas purse seine fishing business, while the catchdecreased, there was an increase in both net sales and profits,
thanks to a rise in the wholesale price of skipjack reflecting acontinuing shortage of supply in the market as a whole.
As a result, both net sales and profit exceeded the previous fiscal year.

2021

2022
(FY)

■Fish price

1,000(Million yen)
2,500

800

2,000

600

1,500

400

1,000

200

500

(tons)

0

0
2018

2019

2020

2021

2022
(FY)

The Freshfoods Business Division comprises three departments: the Tuna Business Department, which handles skipjack and tuna; the Sushi and Sashimi Department, whichhandles sushi toppings, and the newly-established Resources
Research & Development Department, which handles aquaculture-related business. The Freshfoods Business represents
a new business segment, launched in April 2023 and basedon the concept of “generating new business by having three
departments that mainly handle fresh food work together as
one to offer proposals to customers and develop new sales
channels”.
The Tuna Business will be proceeding with the development of its business, building on the seamless integration of
every stage from fishing and aquaculture to processing andsales which is one of Kyokuyo’s main strengths.
The Sushi and Sashimi Business will be focusing on enhancing the quality of staple products, as well as further
strengthening sales of products manufactured in-house at
Kyokuyo’s own plants. By expanding sales of products fromour own plants—including salmon products and wild shrimp
products from our subsidiary in Thailand, which is our coreoverseas production facility, and salmon roe products fromour plants in Japan—we will be striving to achieve high-capacity utilization rates at the plants, and maintain stable profits. In the aquaculture business, we will be working to expand

sales through the food services sales channel and the massmerchandiser channel.
The Resources Research & Development Department,
which was established this year, will be seeking to improve
profitability by strengthening production management
through the effective use of expert professionals, and we will
be expanding the aquaculture business through new businessestablishment and M&A activity, aiming to realize the goals ofstrengthening access to resources and stabilizing aquaculturebusiness profitability that were outlined in the company’s
Medium-term Business Plan.
FY2023 forecast
Net sales:

73.0 billion yen

Operating profit:

2.5 billion yen

Kyokuyo Group Integrated Report 2023

28

Corporate Information

In the tuna business, market prices for tuna remained elevated
due to a high intensity of transactions at the global level, andalthough there was a trend toward weaker demand for some
ingredient categories, overall, sales of processed items, fatty
meat of tuna (toro), red meat, and skipjack were strong, andboth net sales and profits rose. Sales of southern bluefin tuna
improved, and there was significant growth in sales of processed items (particularly items produced in-house in our own
plants) through the conveyor belt sushi restaurant channel.
In the aquaculture business, we focused on maintaining
the high quality of Pacific bluefin tuna farmed in Japan, whichenabled us to secure reasonable profitability.

FY2023 policies (Freshfoods Business segment)

Business Strategy▶︎Main products handled◦A broad range of sophisticated manufacturing technology◦Global processing bases and procurement capabilities◦Product development capabilities and organizational strength for safe andreliable products◦Extensive product lineup

Strengths of ourProcessed Food Business

Atsushi Hattori

Business overview by segment (April 2022 to March 2023) (Foods segment)
segment saw an increase in net sales compared to the previous fiscal year.
In terms of shelf-stable foods for home use, as regards
canned foods, the environment here remained challenging;for example, we were forced to temporarily suspend sales ofcanned mackerel because of rising production costs and poor
catches. However, by implementing a sales strategy focusedon our flagship products, we were able to keep overall net
sales at around the same level as in the previous fiscal year.
Snack foods and seafood delicacies were affected by a fall indemand for home consumption, as well as rising raw materials prices, leading to a deterioration in net sales.
As a result of the above, net sales exceeded the previous
fiscal year, but profit fell below the previous fiscal year.

FY2022 net sales by business type

FY2022 performance
Net sales:

For
Home use
Approx.
For
Industrial use
Approx.

70%

29

Kyokuyo Group Integrated Report 2023

108.328 billion yen (up 11.8% year-on-year)

Operating profit:

0.936 billion yen (down 10.5% year-on-year)

ods,
table fo
Shelf-s products
healthcies

d delica

SeafooFY2023 policies (Processed Food Business segment)
The Processed Food Business Division is a new unit established in FY2023, which consists of: the Foodservice Business
Department, handling sales of frozen food products (otherthan sushi and sashimi products) to the commercial sector;
Retail and Consumer Business Department 1, which handles
frozen food products for the consumer market; and Retail andConsumer Business Department 2, which handles shelf-stable
food products for the consumer market. Each department
carries out every stage from raw materials procurement to processing and sales, with Kyokuyo’s own plants playing a central
role. From the perspective of the Processed Food Business,
comprising frozen and chilled food products, canned foods,
snack foods, etc., as the final year of implementation of the current Medium-term Business Plan, FY2023 will see the final steps
in strengthening the foundations for expanding sales in theProcessed Food Business and stabilizing its profits. We are aiming to increase profitability by specializing in frozen and chilled
food products that require a high level of processing, and by
consolidating the range of items that we produce.
In terms of frozen and chilled food products for the commercial market, we will be focusing our sales efforts on products manufactured in Kyokuyo’s own plants, including productitems that require cooking in oil such as breaded shrimp,
imitation crab meat, and the sashimi, simmered fish, grilled
fish, and meat products in our Dandori Jozu product line. We

will also be emphasizing the sale of ready-made products thatuse raw materials produced in Japan, such as walleye pollock,horse mackerel, mackerel, sardines and hairtail.
Regarding frozen and chilled food products for home use,going forward, we will be proceeding with the developmentof new products that can serve as the main dish on the dinnertable, and working to strengthen the line-up of deli products(particularly fish-based products) that are manufactured in
Kyokuyo’s own plants. In addition, by constantly adopting acustomer-focused perspective, we will be concentrating ourefforts on creating new products that provide a high level ofvalue.
In the canned foods segment, besides striving to expand
our market share in sales of flagship products such as cannedmackerel, canned sardines, and canned tuna by strengthening
our relationships with leading business partners, we will beworking to develop and meet new needs, for example by offering western-style taste canned items and new retort pouchproducts. We will also be working to expand sales of snack
food products by developing new product items.
FY2023 forecast
Net sales:

73.0 billion yen

Operating profit:

1.7 billion yen

Kyokuyo Group Integrated Report 202330

Corporate Information

As regards frozen food products for industrial use, sales ofsushi toppings (mainly for the conveyor belt sushi restaurant
channel) increased. In addition, we strove to increase sales ofour flagship products, including imitation crab meat, breaded shrimp, shrimp fritters, and the fish fillet products in our
Dandori Jozu product line, and succeeded in boosting sales
compared to the previous fiscal year. However, profits weresqueezed by a rise in the cost of main and ancillary raw materials that exceeded the amount by which prices were raised.
Regarding frozen foods for home use, sales of deli fish
products (particularly simmered fish and grilled fish products),
which constitute Kyokuyo’s flagship products in this segment,
remained strong, and sales of products that require cooking inoil for use in bento boxed lunches were steady, so overall thisme used for hofoo
FrozenThe Foundation of Our Value Creation

Control over Processed FoodBusiness Segment
In charge of Processed FoodBusiness Division and Researchand Development Division
Director and General Manager ofProcessed Food Business Division

The Processed Food Business Division, a new unit, was launched in FY2023. Focusing on the development of Kyokuyo brandproducts, going forward, the Division will be striving to provide
delicious flavors, enjoyment, and products from the Kyokuyo
Group’s own production facilities that provide high quality andreal value.

sestrial u

r indufood foBusiness Strategy

Frozen30%

Our Value Creation Story

Processed Food Business

The Foundation of Our Value Creation

Business Strategy

Logistics Business

Our Value Creation Story

Sustainability
Kyokuyo Group’s Approach to Sustainability

Strengths of our Logistics BusinessCorporate Philosophy ➡P.3

◦Accumulated know-how for “safe, reliable, and accurate delivery of products”

Kyokuyo Group Corporate Action Charter ➡P.3

◦Logistics network throughout Japan

Business Strategy

Kyokuyo Group Basic Sustainability Policy
Policy for realizing the sustainable growth of the Kyokuyo Group and of society as a whole

Kyokuyo Group Basic Procurement Policy

Action Guidelines

Basic approach to procurement ➡P.53
https://www.kyokuyo.co.jp/en/environment/client/

Shuichi Kiyama

Kyokuyo Group Human Rights Policy

Kyokuyo Group Supplier Guidelines

Guideline for initiatives that embody respect for human rights
https://www.kyokuyo.co.jp/en/environment/human_rights_policy/

Action guidelines for our business partners
https://www.kyokuyo.co.jp/en/files/202103supplierguidelinese.pdf

Kyokuyo Group Environmental Policy
Basic approach to environmental protection ➡P.38*1 S pace utilization rate: the percentage of actual products compared to the capacity of cold storage

Kyokuyo Group Basic Sustainability Policy
Kyokuyo Akitsu Reizo Co., Ltd.

Business overview by segment (April 2022 to March 2023)
FY2022 performance
Net sales:

1.361 billion yen (up 15.8% year-on-year)

Operating profit:

0.203 billion yen (down 6.9% year-on-year)

31

Kyokuyo Group Integrated Report 2023

We solve various social issues and contribute to a healthy and happy lifestyle and food culture
by creating and sharing value for society via the provision of safe and reliable products and services.

2. Communication with Society

We promote active communication with various stakeholders to respond to the demands andexpectations of society, fulfill our social responsibilities, and thereby contribute to the creationof a prosperous society.

3. C reating an Environment where
Diverse Human Resources Can Flourish
4. Harmony with the Environment

FY2023 policies
In the cold storage business, we will be striving to implement
appropriate, stable management of the space utilization rate,focusing mainly on the Kyokuyo Group’s own inventory. By
constantly having an accurate picture of current space utilization status, and implementing sales activities appropriately inline with this status, we aim to ensure that we are storing theright products and expanding our sales.
Regarding the consigned forwarding business, by strengthening sales efforts encouraging external customers to makeuse of our integrated services, which combine delivery withstorage, we are aiming to expand the scope of our business. In
our response to the “2024 Problem”,*2 which involves concerns

1. Creation and Sharing of Value

5. Enhancing Corporate Governancethat there may be a shortage of truck drivers, by promoting theuse of an advance reservation system for truck arrivals, we areaiming to reduce the time needed to process truck loading andunloading and the amount of time that drivers spend waiting
around, thereby improving operational efficiency.
Related pages: A ddressing social problems through the adoption of a truck arrival reservation system at the Kyokuyo Group’s cold storage warehouses ➡ P.37

FY2023 forecast
Net sales:

1.0 billion yen Operating profit: 0.2 billion yen*2 2024 Problem: the anticipated shortage of truck drivers caused by tighter restrictions on drivers’ working hours, which will come into effect in 2024.

Corporate Information

With relatively few freight movements, the space utilization rate
in our cold storage business remained high, and the resulting
increase in storage fee income led to higher sales overall. Sales
also rose in the consigned forwarding business, thanks to astrengthening of sales efforts targeting external clients. However,
although prices were raised in response to a profit-crimping increase in electricity costs, profits in this business fell.
As a result of the above, net sales exceeded the previous
fiscal year, but profit fell below the previous fiscal year.

As a general food company with a focus on fish, the Kyokuyo Group aims to achieve sustainable growth while solving social issues
and contributing to the sustainable development of society, by creating social and economic value in our business activities basedon the following five themes aligned with our Corporate Philosophy.

We strive to respect the diversity of human resources, which are the source of new value
creation, and create an environment where everyone can flourish.
We strive to conduct business activities in harmony with the environment, via efforts such as
reducing environmental impact, mitigating climate change, and conserving biodiversity andecosystems.
We strive to conduct fair business activities based on swift and highly transparent management, ensure compliance, and enhance risk management.

Sustainability Organization Structure

Board of Directors Meeting

With the Sustainability Committee, which is chaired by the
President, playing a key role, we are promoting sustainability
activities throughout the Kyokuyo Group as a whole, while
thinking carefully about how to achieve greater business efficiency (in terms of cost reduction, etc.) and sustainability.

Representative Director
Sustainability Committee
Secretariat

Kyokuyo Co., Ltd.
■Divisions and ■Laboratory ■Branch office
departments

Group companies

Kyokuyo Group Integrated Report 2023

The Foundation of Our Value Creation

Senior Managing Director
Management Division Supervisor
Control over Logistics Business
Segment
In charge of Compliance, General
Affairs Dept, Human Resources
Dept, Quality Assurance Dept andLogistics Dept

Although sales rose in FY2022, profits fell due to the impact ofrising electricity charges. In FY2023, we will be striving to realize
appropriate, stable management of the space utilization rate,*1
with the main focus being on the Kyokuyo Group’s own inventory, and we will also be addressing the “2024 Problem”.*2

Concrete action guidelines for intra-Group use

32

The Foundation of Our Value Creation
Our Value Creation Story

Approach to Stakeholders
The Kyokuyo Group believes that incorporating the requests and expectations of stakeholders into its business strategies
and activities is an essential part of sustainable corporate management. While attaching great importance to communication with stakeholders, we also strive to ensure compliance with laws and regulations, fulfill information disclosure requirements and realize accountability, and build good relationships. We aim to be a business group that grows together
with its stakeholders.

Business Partners

Customers
Shareholders /Investors

Employees
Kyokuyo Group

Local
communities

Globalenvironment

Business Strategy

Government

Relatedorganizations

Our attitude to stakeholders, the communication methods and opportunities used, the results achieved, and evaluation of these results
Stakeholders

Business
Partners(suppliers,
partnercompanies)

We place great importance on highly transparent management and dialogue, realize accountability, and make use of shareholder and investor feedback in management.

Employees

Based on the principle of respect for human dignity, we will work together with our employees to create workplace environments that embody concern for fairness, impartiality,and human rights, where employees can play an active role with job satisfaction.

Government

Besides implementing appropriate reporting, we will work together with government
authorities to implement initiatives aimed at realizing a sustainable marine products industry and safeguarding a healthy ocean environment.

Relatedorganizations

Local
communities

Globalenvironment

33

We are committed to conducting fair and equitable transactions with our business partners, building relationships of trust, and fulfilling our social responsibilities together.

Kyokuyo Group Integrated Report 2023

By liaising with related organizations, we will strive to ensure the sustainable utilization ofmarine resources, while also promoting initiatives aimed at ensuring the stable supply of
products that can be consumed with safety and reliability.

We will advance activities that contribute to the development of local communities andwork to solve social issues through collaboration with various related organizations.

We will further our response to climate change, striving to reduce the burden on the
global environment, and demonstrating concern for safeguarding biodiversity, while realizing sustainable utilization of resources.

•• •• 
•• 
• 
•• 
•• 
•
•• 
•
•• 
•• 
•
•• 
•
•
•
•

Daily sales activities
Customer Relations Center
Product introductions at new product presentations
Exhibiting at Japan International Seafood & Technology Expo andother exhibitions
Cooperation with campaigns
Introduction of products and recipes on our websites; television commercials
Holding recipe contests
Daily procurement activities
Kyokuyo-kai Customers’ Association at each branch office
Regular plant visits and guidance
Kyokuyo Cooperation Association Technical Research MeetingTechnical Exchange Workshop in China
Fair, continuous, and accurate information disclosure
A ctive information dissemination and dialogue at shareholders’meetings, IR Presentation, etc.
Business reports
Human resources consultations
Stress checks
Harassment consultation hotline
Consultation with labor union; Occupational Safety Committee
Displaying important notices at group companies in both Japaneseand local languages
Implementing appropriate, timely reporting and provision of information
Participating in meetings to exchange views and exchange information
Technology development through cooperation between industry,
government and academia
Participating in collaborative initiatives by government and industry
aimed at expanding consumption of marine productsWorking together with other companies to solve problems throughorganizations such as the Japan Fisheries Association, the Marine EcoLabel Japan Council, and the Japan Frozen Food Association
Implementing initiatives aimed at realizing a sustainable society

•
•
•
•• 
•

Providing sponsorship for the Japan Cup Kyokuyo Series canoe slalom
competition, as an official partner of the Japan Canoe Federation
Acceptance of internships

Promoting environmental conservation activities in line with environmental policies
Use of environmentally friendly raw materials
Initiatives for “Eco Label” products (MSC, ASC, MEL, etc.)
Participation in SeaBOS (Seafood Business for Ocean Stewardship) and
CLOMA (Clean Ocean Material Alliance)••

Results / evaluation

Developing and selling products that reflect customers’ needs(including the “Dandori Jozu” product line, designed to provide
meals that can be cooked easily in a short space of time)
D eveloping and selling products that embody concern forhuman health (including “karushio” products with reduced saltcontent, and products with additional lactic acid bacteria.)

•
•
•

Developing closer relationships with business partners by sharing
information about the marine products market and catch data, etc.
Using periodic visits to factories and the provision of guidance
to build relationships in regard to hygiene and facilitate aspeedy response in the event of issues emerging
Strengthening the mutual understanding between our company, shareholders and investors, through constructive dialogue••

Allocating the right people to the right posts, by taking into account the results of human resources interviews, etc.
Building mutual trust between labor and management throughdialogue•Holding recipe contests to demonstrate support for “Fish Day”,(established to increase consumption of marine products) as
designated by Japan’s Fisheries Agency••Working together with various organizations to popularize sustainable marine products, and to transition to the use of freezers
that utilize natural refrigerants and do not use CFCs
M ake effective use of Kyokuyo’s participation in SeaBOS and
CLOMA (which are working to address environmental problems) to obtain the latest information and be able to use firstclass case studies to enhance Kyokuyo’s own sustainability

•
•
•
•
•

Helping to prevent plastic waste from entering the oceans bycarrying out cleaning activities in the area around the canoe
competition venue (Clean River Activities)
Hosting students from special needs schools for employment
experience internships (Apex Kyokuyo Co., Ltd.)C ontrolling the generation of plastic waste by reducing theamount of plastic used in the packaging utilized in plants of the
Kyokuyo Group companies
P reventing plastic waste from flowing into the oceans by effectively managing the periodic maintenance and repair of theplastic nets and buoys used by the Kyokuyo Group aquaculturecompanies
Using by-product generated when processing skipjack to makeneribushi for use as a raw material in dashi broth
Kyokuyo Group Integrated Report 2023

34

Corporate Information

Shareholders /Investors

We emphasize dialogue with customers, think carefully about customers’ perspectives,and make effective use of the feedback we receive from customers, and by doing so we
can deliver Kyokuyo products that embody a striving for the value that comes from “foodto enjoy life”.

Methods and opportunities for communication

The Foundation of Our Value Creation

Customers

Our attitude to stakeholders

The Foundation of Our Value Creation

The Kyokuyo Group is working to address various contemporary issues including growing public awareness of the needfor safe, reliable and healthy products, in addition to issues such as climate change, sustainable use resources, and the reduction of ocean plastic waste.

Participation in initiatives

1. Improve transparency
2. Reduce IUU fishing

SeaBOS holds a Keystone Dialogue (at which the CEOs of
member companies meet together with scientists) every year
in October, where they discuss initiatives and activities relating to the key issues tackled by each task force, and decide on
the strategy for the future.
SeaBOS specifically aims to contribute to the achievementof the United Nations’ 14th Sustainable Development Goal
(SDG): the conservation and sustainable use of oceans andmarine resources. Through initiatives at SeaBOS, Kyokuyo will
help to resolve various social issues, addressing matters that
include ocean plastic waste, while also improving our own
sustainability.
* For more information about the ten commitments, please visit the following
page on the Kyokuyo website.
https://www.kyokuyo.co.jp/en/environment/stakeholder/index.html

1. Dissemination & Promotion WG: Sharing 3Rs
technologies and the technological information to
select the alternative materials easily

2. Technology WG: Holding seminars on cutting-edge
technologies
3. International WG: Collecting information incollaboration with international organizations
and institutions, and dispatch of information andtechnical consulting for developing countries

been established, and are working to address society’s problems, mainly through the exchange of information.
The Kyokuyo Group recognizes that the problem of marine pollution caused by plastic waste is an issue that has adirect relationship with the Kyokuyo Group’s business, andwhich poses substantial risks. Through its participation in
CLOMA’s initiatives, Kyokuyo is able to access the latest information on new materials and potential substitute products,
and by utilizing this knowledge effectively in its own businessactivities, the Kyokuyo Group works to help solve related
issues.

4. Eliminate modern slavery
5. Reduce use of antibiotics

481

6. Reduce use of plastics

member companies
and organizations

7. Reduce gas emissions
8. Grow aquaculture

Inter-enterprise
information sharing•
Business matching

Contributing
to society andenhancing
corporate value
through businessgeneration

Business
opportunities•
Ideas

As of April 1, 2023

Group photo of participants in the 7th Keystone Dialogue
9. Develop and deploy new tech
10. Support innovations

Sustainability Organization Structure
Working through SeaBOS’s five task forces – IUU Fishingand Modern Slavery, Biodiversity and Ecosystems, Antimicrobial Resistance, Climate Resilience, and Reducing Ocean
Plastics – its member companies work to address various issues, based on a scientific approach.
A meeting during the 7th Keystone Dialogue

35

Kyokuyo Group Integrated Report 2023

The Kyokuyo Group is working to address various sustainability-related issues including environmental conservation,
climate change, responsible procurement and respect for human rights. The Sustainability Committee, led by the President
and Representative Director of Kyokuyo Co., Ltd., and with theattendance of every Director, division and department leader,and group company president, meets twice a year, to set sustainability-related targets, and evaluate and report on sustainability-related activities.

Related page Sustainability➡ P.32

Kyokuyo Group Integrated Report 2023

36

Corporate Information

3. Listen to science

The Japan Clean Ocean Material Alliance(CLOMA), in which industry plays a central role, was established, with support
from Japan’s Ministry of Economy, Tradeand Industry (METI), to address the
problem of plastic waste in the oceans,
which is a new issue affecting the global
environment, by aiming to foster the more sustainable use ofplastic products as well as the development and adoption ofrevolutionary substitute products that can reduce the amountof plastic waste generated.
CLOMA implements measures that include inter-enterprise business matching, sharing information about case studies of cutting-edge solutions, keeping pace with the latest
trends in technology, liaising with international organizations
and overseas research institutes, and promoting collaboration
among diverse business enterprises. CLOMA’s activities havealready led to the creation of new businesses, to the making
of a positive contribution to society and to the enhancementof corporate value.
CLOMA’s member companies come from a variety ofdifferent industries, and to ensure that the organization’s activities proceed smoothly, speedily, and efficiently, the three
Working Groups shown in the upper right hand corner have

The Foundation of Our Value Creation

SeaBOS is a global initiative in whichnine of the world’s leading seafood
companies across the wild capture,
aquaculture, and feed production sectors work with scientists to address thechallenges involved in achieving thesustainable utilization of marine resources and the realization of a healthy ocean and global environment. SeaBOS’s activities are based on the ten commitments
listed below.

Participating in the Japan Clean Ocean Material Alliance (CLOMA)

Business Strategy

Participating in SeaBOS: Seafood Business for Ocean Stewardship

Our Value Creation Story

Promotion of ESG-focused
Management

The Foundation of Our Value Creation

Environment

In order to continue meeting the needs of our customers and of society while faced with the continuous transformation of
our business environment, the Kyokuyo Group is aiming to improve its operations through the effective utilization of digital technology, to enhance productivity and working efficiency, and to address social problems such as labor shortages.

Helping to solve social problems through theuse of AI in frozen food manufacturing plants

Basic Policies

Kyokuyo’s corporate mission is “Aiming to grow together
with society, contributing to a healthy and happy lifestyleand food culture based on management of human respect”.
Based on this corporate mission, the management will takeleadership to contribute to sustainable social development
by considering environmental impacts, including climatechange, throughout all our business activities and meetingthe needs of the international society. As a global seafood
company, we are committed to ensuring food safety and security by efficiently using natural resources to conserve biodiversity and ecosystems.

1. Contribute to Sustainable Social Development throughout Our Business Activities
2. Commit to Improving Our Environmental
Performance
3. C omply with Environmental Laws andRegulations
4. S hare Our Environmental Education beyond the Kyokuyo Group to Help People
Understand Our Environmental Policy

The Foundation of Our Value Creation

For further information on The Kyokuyo Group Environmental Policy, please refer to our website.
https://www.kyokuyo.co.jp/en/environment/environmental_policy/

TopicsGlobal trends in the state of the world’s marine fishery stocks andaquatic food consumption (1974-2019)

According to the Food and Agriculture Organization of
the United Nations (FAO), the percentage of sustainably-fished resources is gradually decreasing, while consumption of marine products is tending to rise.
In 1974, approximately 90% of marine resources werefished at an appropriate level or lower (a sustainablelevel), by 2019, that percentage had reduced to 64%. Of

the world’s marine resources, 57% were being maximallysustainably fished, while the percentage of underfishedstocks (abundant resources with room to increase catch)
was only 7%.
To be able to continue providing a stable supply of
marine products in the future, there is a need for measures to realize a sustainable fisheries sector.

Corporate Information

In the logistics industry, the problem of truck drivers working
excessively long hours has been a long-standing problem.
With the Act on the Arrangement of Related Acts to Promote
Work Style Reform scheduled to come into effect in April 2024,
restrictions will be placed on how much work truck drivers can
do beyond regular working hours, which it is feared will makethe problem of a shortage of drivers even more serious.
By adopting a reservation system that enables times forloading and unloading of trucks to be booked in advance,
the Kyokuyo Group aims to reduce the time that drivers needto spend waiting to be able to load or unload their trucks.
Besides reducing the burden on the drivers, the aim is to also
to make it possible for the group’s cold storage warehouses
to operate more efficiently.
As well as using the new reservation system to address the social problems of long working hours and needing to make logistics more efficient, the Kyokuyo Group is also considering further
measures in response to the impending “2024 Problem”, referringto the shortage of truck drivers and reduction in available delivery
resources that we will face in Japan from 2024 onwards.

Environmental Philosophy

Business Strategy

The production processes for manufacturing processed marine
products normally require products to be sorted by eye, relying on
experienced operatives. However, with the aging of the populationand the decrease in the number of people working in the marine
products processing sector, labor shortages and the inability totransmit skills to a new generation have become a serious problem.
Kyokuyo Co., Ltd. and Kyokuyo Shokuhin Co., Ltd. have beenworking together with NEC Solution Innovators, Ltd. and theIntelligent Information System Research Center at the Schoolof Engineering, Tohoku University, to conduct field testing for
adopting AI-based sorting technology in production facilities.
On the production lines for shrimp fritters, because the shrimps that
constitute the raw material all differ slightly in shape from one another,
there is inevitably some variation in the shape of the finished product.
By adopting AI inspection, not only will it be possible to screen out thesecond-grade items (which cannot be shipped for sale), the data collection which AI facilitates will also allow Kyokuyo to identify trends in what
the finished product looks like, and by making slight adjustment to production line conveyor belt speed and ancillary raw materials, production
can be rendered more efficient, keeping the amount of second-grade
product that must be rejected down to the absolute minimum.
Through the effective utilization of AI technology equipped with thiskind of quality management function, going forward, we will be working
both to solve social problems and to make our operations more efficient.

Addressing social problems through the
adoption of a truck arrival reservation system at
the Kyokuyo Group’s cold storage warehouses

Environmental Policy

Our Value Creation Story

Digital Transformation (DX)Global trends in the state of the world’s marine fishery stocks and aquatic food consumption (1974-2019)
Sustainable (left axis)(%)

Unsustainable (left axis)

World per capita consumption of aquatic food (right axis)

100(kg/year)25

Overfished

CameraAI
AI judges images anddetects second-grade
products

Production line

2075
Maximally sustainably fished

15
50
10

Coating

Processing
by heating

Quick freezing
and packaging

Photo showing a production line that uses
diagnostics based on AI technology

25

5

Underfished (abundant resources
with room to increase the catch)

0

1974

1980

1990

2000

2010

0
2019 (year)

Source: Compiled by Kyokuyo based on FAO, The State of World Fisheries and Aquaculture 2022
https://www.fao.org/3/cc0461en/cc0461en.pdf

37

Kyokuyo Group Integrated Report 2023

Kyokuyo Group Integrated Report 2023

38

The Foundation of Our Value Creation•••

Conservation of Biodiversity

Social issues (background)Preventing pollution of the marine environment
Sustainable and efficient use of marine resources
Excessive catches due to overfishing and illegal fishingmethod/operation

In our aquaculture business, which focuses on fish including
Pacific bluefin tuna and red sea bream, we are engaged, fromthe perspective of respecting nature and conserving biodiversity, in the following activities, with the aim of reducing theimpact on the world’s ocean environment.
(1) Reducing leftover feedW e work to adjust the volumes of food provided according to the season, age of the fish and the volume of
feed provided on the previous day.
We also use moist pellets (semi-solid feed), which placeless of a burden on the environment.
(2) Cleaning fish farming cages
Nets are cleaned regularly using a net-cleaning robot (This helps
to improve the flow ofseawater, and maintains a high-quality
environment within
the cage).
Net-cleaning robot

•
•
•

39

Kyokuyo Group Integrated Report 2023

Kyokuyo Suisan Co., Ltd. is, based on the guidelines of theFisheries Agency (which belongs to The Western and Central
Pacific Fisheries Commission (WCPFC)), working to manage
fishery resources in order to ensure sustainable fishing.
In order to prevent overfishing, we have established a fishing season in which we do not use fish aggregating devices(FADs), a type of device used to aid fishing. We are also promoting free school fishing*1 in which adult fish swimming at highspeed are located using a helicopter and caught in an effort toprevent by-catch of young fish with less swimming power.
When by-catch includes endangered species other thantuna including whales, sharks, rays, seabirds and other species,
we act in accordance with regulations.
We carefully control the use of our fishing aids. We attachsonar satellite buoys marked with an identification number
and the name of their affiliated vessel to prevent the loss of
FADs. We recover these FADs after use. Fishing nets are managed with a priority on preventing damage. When damage
occurs, we work to repair nets on board our vessels. Any artificial waste objects caught in our fishing nets are taken back toport and disposed of after we land our catch.
*1 Free school fishing: A method of catching skipjack and tuna that swim at highspeed in a school by following the sardines and other prey on which they feed.

Given the marked decline in fishery resources, demand for
certified marine products, which are certified as being sustainable, is expected to significantly increase in the future, bothin Japan and abroad. The Kyokuyo Group began handling
MSC* 2 - and ASC*3 - certified marine products in 2006, andsince then has steadily increased its number of registered fish
species and handling volumes, while expanding the scope of
certification.
In addition, Kyokuyo Co., Ltd. and Kyokuyo Suisan Co., Ltd.
are members of the Marine Eco-Label Japan (MEL) Council,
which is the scheme owner of the Japanese Fisheries EcoLabel “MEL”, and our affiliates are also preparing to obtain MEL
certification.
Through these initiatives, the Kyokuyo Group strives toincrease its handling of MSC / ASC and MEL certified products,
contributing to conservation of biodiversity and the sustainable use of fishery resources.

Topics

MSC-C-51738

ASC-C-00459*2 MSC: Abbreviation of the Marine Stewardship Council. An international non-profit organization established in 1997 and headquartered in the United Kingdom.
The MSC blue fish label is awarded only to natural marine products caught using
sustainable fishing methods from a fishery that has obtained MSC Fisheries
Standard certification.
*3 ASC: Abbreviation of the Aquaculture Stewardship Council. An international non-profit organization established in 2010 and headquartered in the
Netherlands. ASC manages a system of certification that recognizes only products grown through environmentally and socially responsible aquaculture.

Kyokuyo invests in EBIS Algae Research Institute, Inc.

Microalgae can use sunlight, water, and carbon dioxide
to create protein and lipids through photosynthesis, andcan reproduce through cell division in the space of just a
few days. The special characteristics of microalgae, which
include the potential for highly efficient production processes that are also environmentally friendly, have attracted a great deal of interest. The Kyokuyo Group believes
that utilizing microalgae in its business operations willcontribute toward the achievement of the SDGs, and has
invested in EBIS Algae Research Institute, Inc., which is the

only company in Japan to have established large-scalecultivation technology for Nannochloropsis*4, and has realized commercial-scale production.
It has been confirmed that fish which are fed with fish
feed that has Nannochloropsis as part of the formula haveenhanced natural immunity, and it is anticipated that effective use can be made of Nannochloropsis in the fish feed
utilized in Kyokuyo’s aquaculture business. We also believethat Nannochloropsis has a useful role to play in the development of original nutrient-dense food products.

Nannochloropsis

EBIS Algae Research Institute’s cultivation facility

Corporate Information

Initiatives for reducing the environmental
impact of the aquaculture businessInitiatives for sustainable fishing,
preventing by-catch, and preventing
the outflow of ocean waste

Initiatives for the sustainable use offishery resources

The Foundation of Our Value Creation

As the demand for marine products increases due to the growing
global population and the wider diffusion of a culture of eating fish,
it is becoming increasingly important to use limited fishery resources in a sustainable fashion. In particular, the appropriate management and control, based on scientific evidence, of fishery resources
used internationally is a global issue. Therefore, the fishing industry
must respect ecosystems and prevent overfishing, ensuring the appropriate conservation of fishery resources and their effective use.
The Kyokuyo Group, as a company that handles marine products,
is working to ensure this sustainable and efficient use of fishery resources and the active conservation of biodiversity and ecosystems.

 onservation of the marine environment
CPreventing excessive catchesA ppropriate conservation and effective use of fishery resources, and full-life-cycle aquaculture of Pacific bluefin tuna
Expanding the production and sale of certified marine
products, which are certified as being sustainable

Business Strategy

Kyokuyo Group’s position and policy

•
•
➡•
•

Kyokuyo Group’s approach

Our Value Creation Story

Environment*4 Nannochloropsis is a type of phytoplankton that has a diameter of 2–5 µm (0.002–0.005 mm)

The Wakaba Maru fishing vessel with a helicopter

Kyokuyo Group Integrated Report 2023

40

The Foundation of Our Value Creation

Climate change countermeasures

Reducing greenhouse gas emissions
 ccurate understanding and analysis of energyA
consumption
Efficient use of energy resources

Reputation

 educing environmental impact factors associated withR
business activities•➡••

Kyokuyo Group’s approach

Policies / regulations

Social issues (background)

Risk categories

Transition risks*2••

Reducing Greenhouse Gas Emissions

Risk and opportunity response measures, based on scenario analysis

Strengthening of countries’ regulations aimed
at reducing greenhousegas emissions
Strengthening of regulations
governing fishing catches

Impactsncrease in compliance-related• Icosts(including electricity charges,••

Changes in investors’
judgments and actions

Extent of impact
1.5°C scenario 4°C scenario

packaging costs, etc.) resulting fromthe adoption of carbon pricing and/or the raising of carbon taxesR eduction in the quantities of fishand shellfish caught or purchasedW eakening of the company’s brandand image, with criticism on social
media, etc.

*1 Task Force on Climate-related Financial Disclosure (TCFD)
The Financial Stability Board established this task force in 2015 following request from theG20. The task force evaluates the financial impact on business management of the risks andopportunities associated with climate change, encouraging companies to disclose information related to corporate governance, strategy, risk management and indicators and targets.

41

Kyokuyo Group Integrated Report 2023

The Sustainability Committee identifies and evaluates major risks,
based on the potential size of the impact and the likelihood/frequency of occurrence, and formulates response strategies toprevent, avoid, mitigate, and minimize risks, as well as monitoring the progress made in implementing these strategies.
3. Strategies
We have posited scenarios in which average global temperature rises by 1.5°C and 4°C respectively, and we have examined the associated risks and opportunities for our company’sbusiness a whole, and the response strategies that we canimplement (in terms of mitigation and adjustment strategies).
The 1.5°C scenario assumes that the rise in average global
temperature by the end of the 21st century compared to the situation prior to the Industrial Revolution is kept down to withinsignificantly less than 2°C. Referencing scenarios formulated by
the International Energy Agency (IEA) and the United Nations’Intergovernmental Panel on Climate Change (IPCC), we haveexamined the anticipated impact of the 1.5°C scenario by 2050.
The 4°C scenario assumes that decarbonization efforts are
inadequate, with a continuing high level of dependency on
fossil fuels, and that average global temperatures rise by at least
4°C. Referencing scenarios formulated by the IPCC, we have examined the anticipated impact of the 4°C scenario by 2050.

Abnormal weather(Changes in rainfall andweather patterns)••

fish caught and reduction in catchsizeO bstacles to raw materials procurement and product supply caused
by logistics disruptions
Increased damage to aquaculture facilities and plant and cold storage buildings

Moderate

Moderate

Moderate

Large

Moderate

Moderate

Large

Moderate

Large

Related page: Kyokuyo invests in EBIS Algae
Research Institute, Inc. ➡P.40

aquaculture)ncreased demand for products with • Risk-hedging through dispersal and• Ilong
storage life
adjustment of logistics hubs
trengthening the disaster resilience of• Saquaculture
facilities, plants, and cold
storage facilities*2 Risks arising from the transition to the decarbonized society *3 Risks relating to natural disasters, etc. caused by climate change

4. Indicators and targets
In our Build Up Platform 2024 Medium-term Business Plan, the Kyokuyo Group has announced that we will be implementing measures aimed at realizing carbon neutrality by 2050. In line with this policy, we have established the following indicators and targets,
and we will be evaluating and managing our efforts to mitigate climate change related risk.
TargetTarget year

Scope

Indicators

CO2 emissions reduction (Scope 1 + 2*4)

2050

As noted below*5

Reducing CO2 emissions by 1% comparedto the previous year (Scope 1 + 2)

Reducing the amount of plastic used inpackaging

2030

Affiliated companies’ plants

Reducing the volume of plastic used inpackaging by 30% (reference year: 2019,
on a plastic usage intensity basis)

Response measures ctivities, such as inspections, to reduce resource consump• Ationin day-to-day business activities
 doption of energy-saving equipment when replacing• Arefrigerationequipmentover to materials with lower CO emissions•• SU witchingtilization of non-tray packaging
R
educingthesize of packaging materials, etc.
•
2

*4 Scope 1: Greenhouse gases emitted directly by the company itself (through the burning of fuel, and emissions from industrial processes)
Scope 2: Indirect emissions associated with electric power, heat, steam, etc. supplied by other companies (including electricity purchased from power companies, etc.)*5 Scope: Kyokuyo Co., Ltd. (headquarters, branch offices, and Research and Development Division Laboratory); Kyokuyo Akitsu Reizo Co., Ltd. (Jonanjima sales office, Tokyo cold
storage facility, and Fukuoka cold storage facility); Kyokuyo Shoji Co., Ltd.; Kyokuyo Shokuhin Co., Ltd. (Shiogama Plant, Hachinohe Plant, and Hitachinaka Plant); Kyokuyo
Suisan Co., Ltd. (Oigawa Plant and Souemon Plant); Kyokuyo Sougou Service Co., Ltd.; Kyokuyo Foods Co., Ltd.; Kyokuyo Fresh Co., Ltd; Ibusuki Shokuhin Co., Ltd.;
Integrate System Service Co., Ltd.; and Kaiyo Foods Co., Ltd.
For more details, please visit our corporate website.

Japanese link: https://www.kyokuyo.co.jp/environment/climate/index.html

Decarbonization and eliminating the use of CFCs
We are proceeding with initiatives to reduce fossil fuel usage by switching over from gasoline-powered vehicles to hybrid vehicles
and electric vehicles, while investing in renewable energy and transitioning to refrigeration equipment that does not rely on CFCs.
Focusing mainly on our plants and cold storage facilities, going forward, we will be proceeding with activities to enhance energy
efficiency through regular inspections and improvement efforts, and promoting a transition to using machinery with a lower environmental footprint, as we aim to realize decarbonization and a move away from CFCs.
For environment-related data such as energy consumption and CO₂ emissions performance, please refer to the Kyokuyo Group ESG Databook.
https://www.kyokuyo.co.jp/en/ir/library/library_reports02/index.html

Examples of our initiatives
Installation of charging points
for electric vehicles
Kyokuyo Akitsu Reizo Co., Ltd.

Installation of solar panels

Jokki Co., Ltd.

Adoption of CFC-free refrigerationequipment
Kyokuyo Akitsu Reizo Co., Ltd.

Kyokuyo Group Integrated Report 2023

42

Corporate Information

The operational flow from identifying risks andopportunities through to formulating strategies in response① Identifying the risks and opportunities associated with climate change② Evaluating the potential impact of the risks and opportunities that have been identified, based on future global temperature rise scenarios③ Formulating strategies in response to those risks and opportunities
that are assessed as being likely to have a particularly strong impact

2. Risk management

temperatures, and rising
sea levels)

Moderate educing the burden associated• Rwith• Switching over to renewable energy
the management of machinery • Switching over to energy-saving
machinery and equipment that usesthat uses CFCs
costs resulting from changes
natural refrigerants• Rin educed
Reducing the amount of plastic used in packaging
packaging specifications•• Increased demand for farmed fish • Using farmed fish as substitute products nhancing the company’s social
roactive disclosure of climate change• Evalue• Presponse
through promotion of ESGdataD
evelopment of environmentallyfocused management• friendly
the company fromproducts and increased use of• Dits ifferentiatingcompetitors by developing
certified products
eco-friendly and ethical products
ncreased demand for eco-friendly
evelopment of environmentally• Iand• Dfriendly
ethical products
products and increased use ofcertified products
 arine product production that is
evelopment of products that use• Mnot• Dalternative
dependent on the sea (inland
protein sources

The Foundation of Our Value Creation

The concerns regarding the impact of climate change caused
by global warming on social and corporate activities are growing steadily, and there is clearly a need to take appropriate
measures in response to the risks posed by climate change.
Based on the recommendations issued by the Task Force on
Climate-related Financial Disclosures (TCFD),*1 the Kyokuyo
Group has been analyzing the risks and opportunities that climate change will bring for our business activities, and considering strategies that can be implemented in response.

Related page: Sustainability Organization Structure ➡ P.32

Acute

Initiatives in response to climate change—Following the TCFD Recommendations

With the Sustainability Committee playing a key role, we are
implementing company-wide initiatives to address society’s
problems, including the issue of climate change.
Chaired by the company’s President and Representative
Director, the Sustainability Committee meets twice a year. With
members that include Directors, the heads of each department
and branch office, and the presidents of affiliated companies,
the Committee deliberates on and makes decisions relating
to our response to societal issues such as climate change, andreports to the Board of Directors regarding important mattersand the progress made in related initiatives.

Chronic

Global warming, caused mainly by the increase in emissionsof greenhouse gases such as carbon dioxide (CO 2 ), has beentransforming the ocean environment and leading to abnormal
weather conditions, and there are concerns that it could havevarious negative impacts on society and on the ability of the
Kyokuyo Group to realize business continuity over the long term.
So that the Kyokuyo Group can carry on its business into
the future and continue growing together with society, we areworking to help keep global warming under control throughthe reduction of greenhouse gas emissions, for example byusing energy more efficiently and utilizing renewable energy.

1. GovernancePhysical risks*3

Kyokuyo Group’s position and policy

Moderate

Key response strategies

Business Strategy

 hange in purchasing behavior to• Ctakemore account of the environmental footprint and sustainability
Changes in the oceanncreased procurement risk result• Iing
environment (rising sea
from changes in the types of

Changes in consumer
behavior

Large

Opportunities

Our Value Creation Story

Environment

The Foundation of Our Value Creation••

Efforts to Reduce Plastic Waste

Social issues (background)Preventing pollution of the marine environmentCombatting global warming➡ ••Initiatives to reduce the amount ofplastic used in packaging

Kyokuyo Group Integrated Report 2023••

Kyokuyo Shokuhin Co., Ltd.’s Hitachinaka Plant

Jokki’s seafood delicacy products are no longer packaged
using plastic trays, instead being placed directly into bags•⬇
T he weight of packaging material has been reduced from
4.1g to 2.5g, reducing the volume of plastic used to package each product by 39%

Reflecting our awareness of the issues, in 2022 we identified
the goal of reducing the volume of plastic used by 30% by
2030 (reference year: 2019, on a plastic usage intensity basis).
Our whole Group is working together to achieve this goal.
Our efforts to reduce plastic usage focus on three areas:
replacing materials, using non-tray packaging, and downsizing. In future, we need to collaborate with our business partners, promoting various initiatives as we take on board new
methods.

•

The amount of plastic used for a shock-absorbing urethane
mat used to package Alaska pollock roe products for business customers was reduced by 10mm in both dimensions⬇
 educing the width of the package in by 10mm reducesRthe amount of plastic required by 8%
Product

Downsized urethane material (shown in orange)
330mm × 200mm

⬇

30 %

320mm × 190mm

reduction

50 .0kg/t

35 .0kg/t

2019

2030

Replacing packaging materials
Kyokuyo Shokuhin Co., Ltd.’s Hachinohe Plant•

Product (before improvement)

Bag and tray

Inserted as shockabsorbing material
between the box
and product

Both length andwidth of material
reduced by 10mm

Preventing plastic from flowing into the oceans: Regular replacement of fishing nets
Group companies in Shikoku responsible for the aquacultureof tuna (Kyokuyo Marine Ehime Co., Ltd., Kyokuyo Marine
Farm Co., Ltd., Kyokuyo Feed One Marine Co., Ltd.) conduct
repairs and maintenance in the course of their daily work toprevent plastic components of fishing nets and buoys used inaquaculture facilities from getting damaged and flowing into
the ocean. In addition, nets are removed from the water for
regular inspection every three years, and are replaced in the
ninth year.

Checking buoys for damage

Aquaculture fish cages and buoys

 aterial used in boxes for salt-cured coho salmon wasMswitched from expanded polystyrene (Styrofoam) to paper(cardboard)

Prior to the change

43

Jokki Co., Ltd.

After the change

Kyokuyo Group Integrated Report 2023

44

Corporate Information

Reference: National Consumer Affairs Center of Japan website
Japanese link: https://www.kokusen.go.jp/wko/pdf/wko-202102_07.pdf

Preventing the outflow of plastic waste into the oceans

Downsizing

The Foundation of Our Value Creation

Approximately 8 million tons of plastic reportedly enter theworld’s oceans every year, and ocean plastic waste is currently
a major global issue. The majority of ocean plastic waste is
generated in urban areas and reaches the ocean via rivers.
While ultraviolet light, waves and other factors reduce thesize of plastic particles, plastic continues to drift in the ocean,
without breaking down. As a result, the volume of plastic continues to grow.
The Kyokuyo Group’s business depends on the oceans,
which cover 70% of the earth’s surface. If ocean plastic waste
continues to increase at current rates, not only will the healthof the ocean be compromised, but it will also cause a major
problem for the sustainability of our Group’s business.
Our Group plants, which use plastic packaging materials
in the manufacturing of their products, are working, from theproduct design stage onward, to consider appropriate materials, assess product safety, and review manufacturing processes, and our Group aquaculture companies, which use plastic
buoys, fishing nets and other equipment, carry out daily maintenance and inspection work to help keep plastic waste out of
the oceans. The Kyokuyo Group is making a concerted effort
to reduce both the volume of plastic used in packaging (which
is a major source of plastic waste) and the overall amount ofplastic waste entering the oceans.

Non-tray packaging

Reducing the amount of plastic used in packaging

Business Strategy

Kyokuyo Group’s position and policy

Kyokuyo Group’s approach

Our Value Creation Story

Environment

The Foundation of Our Value Creation•

Achieving a Circular Society

Social issues (background)Reducing environmental impact associated withbusiness activities➡ ••Kyokuyo Group’s approach

Efficient use of food waste
Sustainable use and management of water

The Kyokuyo Group’s business is underpinned by nature’s bounty, and being able to utilize limited natural resources properly isvitally important for our operations. While proceeding with efforts to reduce waste, we are also striving to help realize a circular society by making effective use of by-product, etc.

Achieving a circular society

Kyokuyo Group

Generation offood waste*2

In-house processing

Improvement ofwaste water treatment
facilities*3

Reducing
the amount ofwater usage

Effective utilization of resources and waste reduction

Efficient utilization of food waste and sustainable use and management of water
For data relating to the amount of food waste processed and the amount of water used, please refer to the Kyokuyo
Group ESG Databook.
h ttps://www.kyokuyo.co.jp/en/ir/library/library_reports02/index.html

45

Kyokuyo Group Integrated Report 2023

*3 Improvement of waste water
treatment facilities
The production of salmon roe at Kyokuyo
Shokuhin Co., Ltd.’s Hitachinaka Plant has
been transferred to Kyokuyo ShokuhinCo., Ltd.’s Shiogama Plant. As a result, it
was determined that the Shiogama Plant
would require wastewater processing
facilities with approximately 1.2 times
the capacity of existing facilities, but wesucceeded in achieving the required
wastewater processing capacity with theexisting facilities by activating bacteria andefficiently mixing the wastewater, and wewere also able to reduce the amount ofwater needed for processing.
The Kyokuyo Group will continue to
use knowledge from our laboratory andthe latest technology in an effort to reduce
all kinds of impacts on the environment.

Promoting productive and rewarding employment withdecent work
Providing opportunities for women to participate indecision-making in various areas of society

Kyokuyo Group’s position and policy
Kyokuyo believes that creating a comfortable workplace has
many benefits, including motivating employees to work andencouraging them to demonstrate their abilities. This resultsin improved productivity and efficient management, while
helping to prevent mental health issues. Therefore, we areworking to introduce and operate systems that conformto laws and regulations and which are consistent with our
Corporate Philosophy and the principle of “human respect”.

Creating a comfortable working environment
Diversity Management Initiatives
We implement various programs to ensure that the talents of female
employees are fully reflected into our company’s work including training and consultation for potential future female leaders, a job rotation
system designed to provide a wide range of experience for careerbuilding and improve motivation, and a system of reemployment for
employees who left the company for reasons including taking timeaway to look after their children. Through these programs, we aim toincrease the percentage of female executives, create an environmentthat supports female employees, and foster personnel development.
We encourage the active participation of male employees
in housework and childcare and we raise awareness of thisissue through internal company newsletters, etc., working tocreate environment in which it is easy for male employees totake time off to look after the children.
Overview of the new human resources system

Corporate
Philosophy
Corporate
Action Charter

Enhancing employees’
enthusiasm and motivation•➡••

Kyokuyo Group’s approachFair and equitable employment regardless of nationality
or genderCreating workplaces that respect the diversity of work
styles and are conscious of work-life balancePromoting women’s empowerment

Adopting a new human resources system
Introducing a fairer, more transparent human resources system which is suited to today’s diversified workstyles and changing lifestyles
In FY2023, we introduced a new human resources system, withthe aim of making Kyokuyo a dynamic company where employees can work with a high level of enthusiasm and motivation.
The new human resources system is a flexible framework
suited to today’s diversified workstyles and changing lifestyles,
which enables employees to be evaluated more appropriately
based on their contribution to the organization, their capabilities, and their attributes. The system is designed to increase
the speed at which capable younger employees are promoted, so that they can take on managerial roles earlier thanwould have been the case in the past.
In addition, the mandatory retirement age is being increased
from 60 to 65, so that we can effectively utilize senior talent
who possess enthusiasm and expertise, while also helping us toadapt to the changing external environment (with the decline in
the working-age population and changing legal requirements).
By introducing a human resources system that aligns withthe motivation and capabilities of all employees regardless ofage, from young employees to senior personnel, we will beable to enhance overall fairness and employees’ acceptance ofevaluations, realizing a situation where promotions and pay rises
reflect the results that individuals have achieved in their work.
The making of these adjustments to the human resources
system has brought about an increase in average annual salary ofaround 20%, and an increase of around 30% in starting salaries.

Strengthening
managerial foundations

Transitioning toa high-revenue
structure

Employeewellbeing

Kyokuyo Group Integrated Report 2023

46

Corporate Information

Commercializationof by-product*2 Generation of food waste
Since 2003, Kyokuyo Foods Co., Ltd., which
produces imitation crab meat, has beenusing microbes to dispose of waste foodgenerated during the production process.

Social issues (background)

The Foundation of Our Value Creation*1 Generation of by-product inproduction processes
Ibusuki Shokuhin Co., Ltd., which principally manufactures skipjack-based products,
uses material removed during the processing of skipjack to produce neribushi, aproduct sold commercially as soup stock.

The Kyokuyo Group’s approach to achieve a circular society••

Creating a Comfortable
Working Environment andHuman Resource Development

Business Strategy

Kyokuyo Group’s position and policy

Generation of
by-product inproduction processes*1

SocialOur Value Creation Story

Environment

The Foundation of Our Value Creation

The types of work that I have undertaken up until now
When I first joined the Kyokuyo Group, I was assigned to theGeneral Affairs Department of a Kyokuyo subsidiary, where
the work that I was involved in covered every aspect of accounting, human resources, and labor affairs, so I was able
to develop a systematic understanding of how the company operated. Initially, because the scope of my work was so
broad, I had to work very hard to get tasks completed within
the deadline, but as I accumulated experience, by spending
the time needed to acquire specialist knowhow, I found that
I was able to overcome all kinds of obstacles.
After transferring to the Sales Administration at headquarters, I had overall responsibility for management accounting, accounting relating to individual departments,
and customs clearance related matters. I constantly strove
to upgrade my skills so that I could develop a multi-faceted understanding of the Kyokuyo Group’s revenue andexpenditure, and be able to make good decisions.

After taking maternity/childcare leave for thesecond time, I returned
to work in 2022. As the
COVID-19 pandemic
was still ongoing, thiswas a period with a lotof uncertainty, but because I had been talking
with my supervisor ever
IT Operation Section
since my pregnancy, I
Division of Information Technology
was able to take up my
General Affairs Department
work again with peaceof mind. I am currently
making use of the company’s Shortened Working Hours forChildcare System, enabling me to pick up my children at
17:30 every day. As I want to be able to find as much time forwork as possible, being able to take care leave in hourly increments is a great system, enabling me to take the children
to see the doctor in emergencies. Working at a company
that has these kinds of systems in place provides encouragement for balancing work and childcare responsibilities.

At Kyokuyo, the numberof female employees
who are making a significant contribution whilebalancing work andchildcare responsibilities
has grown rapidly. With
the comprehensive
range of systems thathave been put in place
Takuya Koizumi
by the company to proManager,
vide support for working
Sales Administration Section 3
women, including theSales Administrationmaternity and childcare
leave system and the shortened working hours system for employees with childcare needs, the fact that senior employees
have been proactively making use of these systems creates
an environment in which it is easier for younger employees to
use them. In addition, because we implement job rotation ona regular basis within our section and share tasks, when one of
the staffs in the section wants to take childcare leave, we canhandle the transferring of their work to others very smoothly.

Words that helped me to grow as a person
My career since joining the company was not all plain
sailing, and I frequently encountered setbacks. At suchtimes, one thing that helped me was to ponder on apoem by Noriko Ibaragi:“The least you can do isdefend your own sensitivity you fool!” I do notthink of myself as beinga particularly strong
person, but I do feelthat I have grown as aperson, at least slightly,
in terms of being able
to control myself andcope with problems
better than I used to.

Risa Toma
General Manager
Sales Administration

Looking ahead to the
futureI feel that, in the future, it will be more important than everto be aware of what is going on around you, and to carryout your work rapidly and efficiently. In addition, I want to
try to promote the building of a workplace environment
which is conducive to cultivating the skills of younger
employees so that their human capital can make a strong
contribution to the Kyokuyo Group.

Background to joining Kyokuyo
Prior to joining Kyokuyo, I worked at a tax accountant corporation, where my work involved tax returns, tax consultations,etc. I wanted to be involved in company management as aparticipant rather than as an outsider, and although the fisheries sector was unfamiliar to me, I decided to apply to join
Kyokuyo, because I knew that the company was constantly
expanding into new business areas, and that the scope of its
operations was increasing, both within Japan and overseas.
Types of work undertaken
The Accounting Section of the Business Management
Department mainly undertakes work relating to management accounting and tax returns, including accountsettlement (both non-consolidated and consolidated),compilation of materials for disclosure (such as annual
securities reports), and preparation of monthly revenue
and expenditure forecasts. The section also examines theaccounting treatment needed for accounting in relation
to new businesses, and for responding to changes in theaccounting and taxation system.

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Kyokuyo Group Integrated Report 2023

Kyokuyo’s corporate
cultureI feel that Kyokuyo is acompany where different departments work
closely with one another, with smooth interdepartmental communication. Kyokuyo also
has a lot of mid-careerhires working here, so
it is a good working
environment.

At Kyokuyo Group companies that host technical intern trainees from Vietnam and other countries under the TechnicalIntern Training Program, efforts are being made to build aworkplace environment that is employee-friendly for all, bydisplaying warning notices in the workplace that are written
in both Japanese and the trainees’ own languages.

Jun Sawano
Manager, Accounting Section
Business Management Department

Looking ahead to the
futureThe Accounting Section is mainly staffed by younger
employees, and I want to help build an environment inwhich every employee can acquire specialist knowhow
and get experience across a diverse range of work areas,so that they can work with a real sense of motivation.

Warning notices displayed at a Kyokuyo Group company (written inboth Japanese and trainees’ own language)

Improving the working and living environment on
overseas purse seine fishing vessels
Wakaba Maru No. 11, an overseas purse seine fishing vessel built
for catching skipjack which put out to sea for the first time inAugust 2022, has been designed, with great attention to detail, asa larger boat with more space to work in. The aim is to make working easier and provide a safer working environment for the crew,
who spend around six weeks at sea on each fishing expedition.

To suit the lifestyle preferences of younger crew members,
the boat uses high-speed Wi-Fi to provide a more convenientinternet access environment. The crew accommodation anddining room have been enlarged, seeking to provide the crewwith a living environment that is virtually the same as on land.

Adoption of mental health measures and stress checks
Besides having established an external contact window, Kyokuyo
also implements stress checks on an annual basis. In addition,
one of the preconditions for promotion to a managerial positionis having taken and completed a distance learning program in
mental health management. Kyokuyo is proceeding with efforts
to build an employee-friendly environment, for the benefit not
only of individual employees but of the organization as a whole.

Harassment prevention and effective utilization of experts
We are working to build a safe and happy working environment in which all employees respect one another. Besides
disseminating circulars and notices at the beginning of eachfiscal year, we have put in place measures relating to theprevention of all types of harassment, including the retentionof qualified experts (clinical psychologists, psychiatric social
workers, etc.) and the establishment of an external contact
window, in order to be able to respond properly in the eventthat incidents of harassment do occur.
Kyokuyo Group Integrated Report 2023

48

Corporate Information

Recruiting human talent from diverse backgrounds – A mid-career hire

Creating a workplace environment that is
employee-friendly for everyone

The Foundation of Our Value Creation

Comment from her supervisor at the time

Business Strategy

Diversified workstyles – Taking childcare leave

Our Value Creation Story

Promoting women’s empowerment – A female manager

The Foundation of Our Value Creation

Social issues (background)C hanges in food lifest yles (increased demand for“time-savings”, such as quicker and easier preparation)and changes in household structureN ew lifestyles choices resulting from the coronavirus
pandemic (the new normal) and an increased tendency
to eat at homeGrowing demand for food safety and increasing healthneeds

Examples of products inthe Dandori Jozu range

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Kyokuyo Group Integrated Report 2023

Creating time value
Helping to solve problems in the elderly food and nursing care markets by creating products that take into
account customer feedback
Staff shortages in medical, care and social welfare facilities constitute an increasingly serious problem for society. Based on
the concept of making food easy to prepare, in 2013 Kyokuyo
launched the Dandori Jozu product line of frozen food products, featuring products that have had the bones removed, etc.,
and which can be cooked rapidly from frozen. The Dandori Jozu
range celebrated its 10th anniversary in 2023.
In creating the products in the Dandori Jozu range, we havemade use of valuable advice from nutritionists, etc. working in
the field in medical and care facilities. Going forward, we willcontinue with similar initiatives, aiming to expand the lineup
of product items in this range, and implementing sales promotion, as we strive to help solve the social problems relating tostaff shortages at medical, care and social welfare facilities.

Fish and shellfish provide much that our bodies require,
including a range of nutrients such as vitamins (D, E, B12),
necessary minerals (calcium, potassium, magnesium), anda diverse range of functional elements including highly
unsaturated fatty acids (DHA: docosahexaenoic acid, EPA:

eicosapentaenoic acid). Research demonstrates that increasing fish consumption reduces the risk of myocardial infarction,and eating marine products has clear health maintenancebenefits. The Kyokuyo Group contributes to a healthy foodculture through the stable supply of marine products.

Major functional nutrients found in marine products
Functional
nutrients

DHA

Species
containing
significant
amounts of
the nutrient

Fatty meat from
Pacific bluefin tuna,
Salted salmon roe,
Yellowtail, Mackerel

Brief
explanationof nutrient /expected
benefits

Promotes brain• development,
prevents

Highly unsaturated fatty• acids
found in significant
amounts in fish oil

dementia, prevents
deterioration of vision,
prevents and improvesarteriosclerosis,
anti-carcinogenic action,other effects

EPA
Maiwashi, a type of sardine(Sardinops melanostictus),
Mackerel, Fatty meat from
Pacific bluefin tuna, Yellowtail
Highly unsaturated fatty• acids
found in significant
amounts in fish oil

Tension of thrombosis,• anti-inflammatory

Astaxanthin
Salmon, Krill,
Sakura shrimp,
Red sea bream
type of carotenoid• AAnti-oxidantin• vivo, benefitseffectfor theimmune system

activity, prevention ofhigh blood pressure,other effects

TaurineTurbo sazae(type of shellfish),Oyster, Cuttlefish,
Dark tuna meat

type of amino acid• APreventing• arteriosclerosis,

preventing cardiac
conditions, preventing
gall stones, preventing
anemia, improved liverdetoxification,
restoration of eyesight,
and other effects

Anserine
Tuna,
Skipjack tuna,
Salmon,Shark meat

Balenine
Whale meat

Dipeptide created• throughthe combination

Dipeptide created• throughthe combination

Anti-oxidant effect,• reductionof uric acid, pH

Anti-fatigue effect due to• antioxidant
actionof two amino acids

buffering effect, othereffectsof two amino acids

Source: based on data taken from “principal functional nutrients included in marine products”, Ministry of Agriculture, Forestry and Fisheries website
Japanese link: https://www.maff.go.jp/j/pr/aff/1401/spe1_01.html

Sale of products produced from opah (moonfish),which includes balenine, a nutrient with anti-fatigue
properties
Balenine is a dipeptide, created through the combinationof two amino acids. It is known to prevent fatigue. There arealso some reports that it may work to prevent dementia. As
such, balenine is drawing attention for its potential to help
improve quality of life among Japanese people, who are living
in a high stress, rapidly-aging society*1. Only a limited numberof marine species contain significant volumes of balenine.
Previously, only in baleen whales were thought to containbalenine. However, our research and development and laboratory, in cooperation with Fisheries Technology Institute,Japan Fisheries Research and Education Agency, analyzed theflesh of an opah (moonfish) by-catch from the long line of an
oceangoing fishing vessel, and discovered the presence ofbalenine at a higher concentration span in baleen whales*2.
By providing opah (moonfish), which contains significant
volumes of balenine, a nutrient with fatigue-reducing anddementia-prevention properties, we hope that we can makesome contribution to improve quality of life in our high-stressrapidly-aging society.

*1 Source: Fisheries Technology Institute, Japan Fisheries Research and Education
Agency; Research Trends, Major research results published by Fisheries
Technology Institute, No. 16 (2017)
Japanese link: http://nrifs.fra.affrc.go.jp/ugoki/pdf/ugoki_016_011.pdf*2 Source: Fisheries Science, Vol. 84, No. 6 Analysis of balenine in muscle extractof opah Lampris guttatus with automatic amino acid analyzer
E nglish abstract, paper in Japanese: https://www.jstage.jst.go.jp/article/
suisan/84/6/84_18-00010/_pdf/-char/ja

Simple and delicious low-salt diets
Having an excessively high salt intake is one of the factors
leading to high blood pressure; it is estimated that around
50% of Japanese adults aged 20 or over suffer from highblood pressure. Controlling one’s salt intake is an effective
method of preventing high blood pressure. The ideal daily salt
intake is believed to be no more than 7.5 g for an adult male,and no more than 6.5 g for an adult female*3.
Japan’s National Cerebral and Cardiovascular Center is currently promoting the concept of karushio (“light on the salt”),
which focuses on reducing salt usage to bring out the taste of ingredients. In accordance with this campaign, the Kyokuyo Group
continues to supply customers with healthy products containing
a lower salt content, including certified karushio products.
*3 Source: Ministry of Health, Labour and Welfare, e-healthnet health information
website for lifestyle disease prevention – “High Blood Pressure”
J apanese link: https://www.e-healthnet.mhlw.go.jp/information/metabolic/m-05-003.html

Kyokuyo Group Integrated Report 2023

50

Corporate Information

In Japan, people are eating less fish than before due to changes in lifestyle and household structure. However, seafood contains high-quality animal protein, and is low in calories andrich in nutrients such as vitamins and essential minerals. It also
contains functional ingredients such as DHA and EPA.
The Kyokuyo Group, as a general food company focusing
on fish products, continues to drive progress in Research andDevelopment, and product development, to provide time-efficient, convenient solutions to meet customers’ demands fortime saving. Through the sales of products that meet consumers’ strongest needs for health-conscious products, we arefocused on providing products that represent “food to enjoylife”, aiming to put in practice our corporate policy of contributing to a healthy and happy lifestyle and food culture.

C ontributing to popularization of eating fish and reductionof labor at food preparation sites through efforts such as
the development of products that meet consumer needs
Contributing to a healthy food culture through productdevelopment that meets the needs of the growing numbers of health-conscious people
Delivering wellness to more people through deliciousness
by making use of customer feedback in an effort to create
products for the elderly and nursing care food markets
Focusing on food that is not only quicker and easier toprepare, but also on “Food to Enjoy Life” and food that
promotes “Feeling well”

The impact of eating fish on health—Functional nutrients contained in marine products

The Foundation of Our Value Creation

Kyokuyo Group’s position and policy

•
•
➡
•
•

Kyokuyo Group’s approach

Food to enjoy life

Business Strategy•••

Contributing to a Healthyand Happy Lifestyle andFood Culture

Our Value Creation Story

SocialThe Foundation of Our Value Creation••

Providing Safe and Reliable Products
Social issues (background)Increasing interest in food safety and reliability
Initiatives to improve quality

Providing Products with Safety and Security

Complying with the Law
We comply with all laws related to food, such as food sanitation law. We also comply with voluntary rules that are
separately defined.
Providing Accurate Information

Sincere Customer Support
If an incident or complaint should occur with one of our
products, we swiftly and sincerely prevent the spread ofdamage, investigate the cause, plan countermeasures,and report to the customer, etc.

Enhancing food defense and foodsafety at processing sites

With the aim of improving product quality at all our factories, inFebruary each year, the Kyokuyo Group holds meetings of the
Kyokuyo Cooperation Association Technical Research Meeting,which brings together the partner companies contracted toprocess our products. These meetings have been held since1986, and a meeting was held for the 49th time in 2023.
We share explanations and requests related to reportsof complaints that have been addressed to the company,
requests we have received, and our response to changes infood-related laws and regulations and food labeling laws,
while also exchanging and sharing information on topics suchas sanitation management methods at each plant, as well as
examples of successful and unsuccessful practice.
We provide opportunities for the personnel responsible
for product quality control at each manufacturing plant and atcompany headquarters to acquire the knowledge they need,for example by inviting speakers from outside the Group to
give lectures on specialist topics.
Kyokuyo Cooperation Association Technical Research Meeting
This meeting shares information on the following initiatives, etc.
Quality control
Elimination of insects and miceLectures on inspection equipment
Lectures on microbe inspection••••

The Kyokuyo Group works to achieve quality assurance. These
activities center on our Quality Assurance Department andprioritize the procurement of safe and reliable foods. In orderto manufacture safe and reliable products, members of staff
from our Quality Assurance Department directly visit processing subcontractors in Japan, as well as processing subcontractors overseas that do not have onsite quality control staff, inorder to conduct audits and provide guidance.

At processing subcontractors in China, Vietnam andThailand, Japanese and local product quality control specialists are permanently stationed on-site, where they work toprovide for product quality and sanitation management.
For further information on our quality assurance system, please refer to our
website.
h ttps://www.kyokuyo.co.jp/en/company/point/reliability/index.html

Checking specifications(partner company in China)

China

Thailand
Vietnam

Swabbing test
(group company in Thailand)

Product inspections(partner company in Vietnam)

Securing of FSSC 22000 certification by Kyokuyo Foods
Kyokuyo Foods Co., Ltd., which manufactures more than
6,000 tons of frozen foods—mainly Ocean King imitation crab
meat—every year and is developing export sales, has secured
FSSC 22000 certification, which includes food defense, which
is not covered by HACCP management (the foundation forfood safety) or by ISO 9001 international quality management
system certification. By undergoing periodic auditing by athird-party certification body and implementing ongoing
improvement activities to maintain this certification, Kyokuyo
Foods is aiming to enhance food quality and take the entire
organization to an even higher level.
Going forward, we will be striving to ensure that theGroup as a whole supplies products that embody safety andreliability.

Kyokuyo Foods Co., Ltd.

Imitation crab meat production

Major Categories of Kyokuyo Food Defense Guidelines

•
•
•
•
•

Organization Management
Human Factor of Employees
Human Factor of Outsiders
Facility Management
Management of Storage and Retrieval
Kyokuyo Cooperation Association Technical Research Meeting

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Kyokuyo Group Integrated Report 2023

Kyokuyo Group Integrated Report 2023

52

Corporate Information

We accurately convey information on our products tocustomers in a manner that is easy to understand.

Initiatives to improve quality

Improving the environment at production sites

The Foundation of Our Value Creation

We give highest priority to providing safe and secure
products to customers, and construct, maintain, and continuously review systems to achieve this goal.

• reating a system for safety and reliabilityCDisseminating accurate product information
Improving the environment at production sites

Business Strategy

Basic Policy for Quality Assurance➡ ••Kyokuyo Group’s approach

Our Value Creation Story

SocialThe Foundation of Our Value Creation•••

Supply Chain Management
Social issues (background)R ealizing a sustainable societyIncreasing interest in food safety and reliabilityG rowing awareness of human rights and the diverse societies

 ompliance with laws❶Cand social norms❺ Fair business practices❷ R espect for humanrights❻ S afe and reliable products and services❸ S afe and employee-friendly
workplace environment❼C oexistence with local
communities❹C onsideration for global
environment❽ Information security

Building a sustainable supply chain
In order to build a sustainable supply chain based on responsible procurement, we need to address not only the operations of our Group, but also the operations of all contractors
providing services to the Group including raw materials,

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Kyokuyo Group Integrated Report 2023

*1 *2 For further information on Kyokuyo Group Basic Procurement Policy andSupplier Guidelines, please see the website below.
https://www.kyokuyo.co.jp/en/environment/client/index.html

O cean plastic waste issuesD iversity

Kyokuyo Group’s position and policy
We are working to promote greater cooperation and communication between our companies and the communities in which
they are based, encouraging understanding and respect for
local cultures, customs and traditions. Engaging proactively inevents that bring us closer to local communities helps to build
mutual trust. Through our businesses, we aim to address issues
that affect the lifestyles of local people and the global environment, contributing to the development of each community.

Related page Kyokuyo Group’s Approach to Sustainability ➡ P.32

Hosting a work experience internfrom a special needs school
Acquiring CoC certification from MSC/
ASC/MEL, etc. as part of our supply chain
management efforts; promoting thehandling of certified marine products
In order to handle MSC-, ASC- and MEL-accredited marine
products, processing and logistics operations must meet thestandards of the chain of custody (CoC) management certification, and CoC certification must be acquired.
This certification is primarily aimed at establishing traceability by preventing certified and noncertified marine
products from mixing through from certified fisheries andaquaculture farms to product sales. Certification also requires
in its stipulated principles and precautions that there is noconnection to forced labor, child labor, and vessels deemed toengage in illegal, unreported, and unregulated (IUU) fishing.
In order to sell marine products as certified, they must be procured from suppliers that have also obtained the certification.
The Kyokuyo Group supports the management and control methods defined under this certification and, as part ofour efforts toward responsible procurement, we will continue
working to handle certified products.
Related pages About MSC, ASC, and MEL ➡ P. 39 – 40

In October 2022, Apex Kyokuyo Co., Ltd. hosted a work experience intern from the senior high school division of the Hyogo
Prefectural Himeji School for Students with Special Needs.
This school aims to help students secure employment,
and provides vocational education that emphasizes experiential learning. It has achieved impressive results.
The second-year student from the senior high school division
who took part in the work experience internship activity was given
training in burn and injury prevention, hygiene rules and the company rules, and then undertook work which included arranging fish fillets on a perforated tray on the grilled fish production line, as well astransporting materials. The intern was particularly interested in how
fish are processed and turned into tray-packaged food products.
Up until this time, the Kyokuyo Group had had no experienceof hosting work experience trainees with disabilities. Althoughseveral months of preparation
were required, the experienceof hosting this intern marked
an important step forward toward employment of people
with disabilities at the company. Going forward, Apex
Kyokuyo will continue striving Work experience intern arranging
to make a positive contribution fish fillets on a perforated tray on
the grilled fish production line
to the local community.

••
➡•
•

Kyokuyo Group’s approachC leaning rivers leading to the seaC ross cultural communication
Developing next-generation human resources to implement the SDGs
W
 orking toward the establishment of a system for recruiting people with disabilities

Canoe Slalom Japan Cup Kyokuyo
Series / Clean River Activity
From the standpoint of our environmental activities, in which
we communicate to the community with a focus on living
together with nature and the importance of water resources,
we have, since 2017, supported the activities of Japan Canoe
Federation as one of the Federation’s official partners.
The Kyokuyo Group is the main sponsor of Canoe Slalom
Japan Cup Kyokuyo Series and after each series event, wework together with event organizers and volunteers fromamong the event spectators to clean the area around thecanoe competition courses. These Clean River Activity events
are held across the country.
Up until 2022, Clean River Activities have been held a totalof 29 times, attracting 2,025 participants. We intend to continue with activities designed to address the problem of ocean
plastic waste.
Japan Canoe Federation website
Japanese link: https://www.canoe.or.jp/

Clean River Activity held after the end of the fourth race in the 2022
Canoe Slalom Japan Cup Kyokuyo Series (held in Oshu City, Iwate
Prefecture)

Kyokuyo Group Integrated Report 2023

54

Corporate Information

Eight points of Kyokuyo Group
Basic Procurement Policy*1

products, equipment and machinery.
To ensure an understanding of our Group’s approach, andseek cooperation with our responsible procurement activities,
we have drawn up Kyokuyo Group Supplier Guidelines*2 forour suppliers, with the aim of contributing to the creation of asustainable society through efforts across our supply chain.

••Social issues (background)

The Foundation of Our Value Creation

At present, various social and environmental issues are drivinga growing interest in corporate social responsibility (CSR) for
the realization of a sustainable society. Companies are now
required not only to pursue “economic value” such as sales
and profits, but also “social value” that helps to resolve social
issues.
The Kyokuyo Group is determined to fulfill its social
responsibility and to do its part to realize a sustainable society through ESG-focused business activities, based on its
Corporate Philosophy and the Kyokuyo Group Corporate
Action Charter. Accordingly, we have formulated Kyokuyo
Group Basic Procurement Policy*1 in line with ISO 26000, aninternational standard for social responsibility, and are promoting responsible procurement activities.

F ormulating Kyokuyo Group Basic Procurement PolicyB uilding a sustainable supply chainE nsuring traceability

Contributing to the Community

Business Strategy“Responsible procurement” based on
Kyokuyo Group Basic Procurement Policy➡ •••Kyokuyo Group’s approachSocialOur Value Creation Story

SocialThe Foundation of Our Value Creation

Corporate GovernanceCorporate governance system

Basic approach
we also uphold our company’s Corporate Philosophy, Group
Corporate Action Charter, and Basic Sustainability Policy,building appropriate audit and monitoring systems to ensure thorough implementation of compliance, as we work toachieve and maintain efficient, fair operations.

Corporate governance system

Please refer to the link below for further information on our corporate governance guidelines
Japanese link: https://www.kyokuyo.co.jp/files/20230127CG.pdf

Shareholders’ Meeting

Elects/Dismisses

Elects/Dismisses

Elects/Dismisses

Board of Directors
Consults/Recommends

Nomination
andRemuneration
Committee

Board of Auditors

Elects/Dismisses

Reports

Cooperates with

Reports

Representative Director

AuditsAuditsSustainability Committee

Internal Audit Committee

Audits

Account
auditorDivision of Internal Control
Whistleblowing hotline (internal)

AuditsAuditsWhistleblowing

Each Department within the company

Whistleblowing

Affiliated companies

Corporate
lawyerWhistleblowing
hotline(external)

Progress made in corporate governance reformof independent outside director•• AA ppointment
ppointment of female independent outside director
ddition of an external attorney advisor to our whistleblowing system•• AC ommencementof assessment of Board of Directors performanceof Corporate Governance Guidelines•• FC ormulation
ommencement of examination of the appropriateness of cross-shareholdings held by the company
FY ended March 2017 • Initiation of regular training sessions for company officersof analysis of proxy voting results•• CA ommencement
doption of stock compensation for directors based on company

Executive
directors

FY ended March 2016

Independent
outside directors

11

1 (1)

Total

12 (1)The Nomination and Remuneration Committee’s activities
Nomination/
Remuneration
10

1 (1)

FY ended March 2019

• A ppointment of multiple independent outside directors

FY ended March 2020•of a Nomination and Remuneration Committee• E stablishment
ppointment of independent outside directors accounting for over oneFY ended March 2022 • A
third of Board membersA ppointment of multiple female independent outside directors

FY ended March 2021

FY ended March 2023
FY ended March 2024•A
 doption of an executive officer system

The figures given in parentheses under “Independent outside directors” and “Total” are the sub-totals for female directors.

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Kyokuyo Group Integrated Report 2023

Issue

11 (1)
Nomination

performance

FY ended March 2018

Nomination and Remuneration Committee
A Nomination and Remuneration Committee has been established as an advisory organ to the Board of Directors.
The majority of the committee’s members must be independent outside directors. The committee shall deliberate on
matters related to directors’ nomination and remuneration
based on consultations and requests from directors.

Directorship candidates

Month

Activity

Deliberation andFebruary
report to the Board
2023
of Directors

Basic policies and criteria relating to directors’ remuneration,
Remuneration details of performance-based
compensation, and calculation
methods for this compensation

April
2023

Deliberation andreport to the Boardof Directors

Individual fixed compensation
for directors

June
2023

Deliberation anddetermination

9

2 (1)

11 (1)

10

2 (1)

12 (1)

10

2 (1)

12 (1)

92 (2)

11 (2)

Remuneration

8

4 (2)

12 (2)

7

4 (2)

11 (2)

As of the end of June 2023, the members of the Nomination
and Remuneration Committee were as follows.

8

4 (2)

12 (2)

Chair
Makoto Inoue (President and Representative Director)
Member Masayo Miura (Independent Outside Director)
Member Katsuhiro Machida (Independent Outside Director)

Policy of training for directors and auditors
Newly appointed internal directors attend external seminars
to acquire necessary knowledge as directors. We also promptly provide explanations of the Group’s business to newly
appointed outside directors and newly appointed external
auditors at the time of their appointment.
In addition to regular executive training sessions for directors and auditors, we recommend that directors and auditors
participate in external seminars and other training sessions asnecessary, with the company paying all expenses.

Executive remuneration
Policy for deciding executive remuneration
Our basic policy on remuneration for directors is to have a balanced
remuneration system, the purpose of which is to motivate directors
to contribute more to improving performance and increasing corporate value from a medium- to long-term perspective.
Under the above policy, directors’ remuneration consists offixed basic compensation and performance-based stock compensation, both of which are paid within the total amount of
remuneration set at the Ordinary Shareholders’ Meeting.

Kyokuyo Group Integrated Report 2023

56

Corporate Information

History of corporate governance reform

Board of Auditors
The Board of Auditors, which supervises the company’s management, is composed of four members: two external auditors and two internal auditors.
At the start of each fiscal year, each auditor, in accordancewith the audit policy and audit plan drawn up by the Board
of Auditors, investigates and understands details of the company’s internal controls including the execution of the company’s business management, internal check and balances,compliance, and our internal audit, conducting their audit
with a principal focus on confirming efficiency in these areas.

❶Board composition (total no. of directors, and share held byoutside directors)❷Director diversity (in terms of specialist expertise and careerbackground)❸Amount and content of materials provided prior to deliberation❹Implementation of deliberation, and time taken❺Liveliness of discussion❻Contribution to business strategy❼Extent to which decision-making embodies awareness ofexternal perspectives❽Risk management❾Oversight of individual directors❿Self-assessment

The Foundation of Our Value Creation

AuditsMain evaluation items

Business Strategy

The Kyokuyo Group’s basic corporate governance policy is
to conduct highly transparent management for shareholders
and other stakeholders, and to perform swift and decisive decision-making to achieve sustainable growth and improve ourcorporate value over the medium- to long-term. In addition,

Board of Directors
The Board of Directors convenes regularly, with extraordinary
meetings convened as necessary, to ensure that the directors
carry out their duties efficiently. In order to clarify the management responsibilities of directors and establish a management
system that can swiftly respond to changes in the businessenvironment, we set a one-year term of office for directors. In
addition, we have appointed four independent outside directors, who account for at least one third of the total number of
directors, so by strengthening our oversight systems.

Evaluating the effectiveness of the Board of Directors
We give an annual questionnaire to all directors and auditors
regarding the effectiveness of the Board of Directors as awhole. The results are reported to the Board of Directors, leading to improvements. The questionnaires have been returned
with generally positive evaluations of the composition andoperation of the Board of Directors, the mechanism of governance, etc.
We are also striving to ensure that there is adequate time
to discuss proposals, for example by simplifying business results reports, and we are working to further enhance the performance of the Board of Directors.

Our Value Creation Story

Governance

The Foundation of Our Value Creation

Corporate Governancewith the Company’s shares being paid through a trust upon adirector's retirement.
Since the remuneration of outside directors is independentof business execution, they are only paid fixed basic compensation with no performance-based stock compensation.

Fixed basic compensation is determined based on eachdirector’s responsibilities. For performance-linked stock compensation, the points to be awarded to each director for eachfiscal year are determined according to the degree of achievement of consolidated sales and consolidated operating profit,

Total amount by type of compensation (million yen)

Total amount of
remuneration(million yen)

Executive classification

Basic
compensation

Performance-based
stock compensation

Non-monetarycompensation

Number of eligible
executives

304

274

29

—

8

Auditors(excluding external auditors)

14

14

—

—

3

External executives

91

91

—

—

6

(Notes) 1. The amount of basic compensation for each director and auditor is within the compensation framework established at the Shareholders’ Meeting.
2. Performance-based stock compensation was established at the FY2020 Ordinary Shareholders’ Meeting.
3. Directors’ pay does not include the employee salary portion for directors who are concurrently employees.

addition to meeting the requirements (in relation to independence) established by the Tokyo Stock Exchange and by ourcompany, we also select only those candidates who can provide frank and constructive advice on our company’s business
management. The concrete reasons for the selection of thefour outside directors are as described below.

Names of independent outside directors, and reasons for selection
MasayoMiura

Masayo Miura researches food and nutrition science, and other related subjects, at Kagawa Nutrition University. She has longyears of experience and a wealth of knowledge as an expert in food and nutrition, and as a member of the Board of Directors,
she provides appropriate opinions from a neutral standpoint. We hope that, in future, as we make decisions at Board of
Directors meetings, we can continue to receive appropriate advice, based on her long years of experience and knowledge.

Mika
ShiraoMika Shirao researches food hygiene science and nutritional education at Jissen Women’s University. With a wealth ofexperience in a high level of specialist knowledge, she is able, as a member of Board of Directors, to provide appropriate
advice from a specialist standpoint. We hope that, in future, we can continue to reflect her knowledge and experience
into the management of our business, and that she will continue to play a valuable role in our oversight functions.

Cross-shareholdings*
Recognizing the risk of price fluctuations associated withholding shares, we hold shares other than those for investment purposes, taking fully into account the rationality of theholding purpose, such as maintaining and stabilizing business
relationships and fostering mutual trust.
The Board of Directors carefully examines the purpose ofholding, transaction status, dividends, capital costs, and othermatters related to cross-shareholdings, individually each year
to evaluate the necessity for holding the shares.
In principle, when exercising voting rights, we respect the
judgment of the Board of Directors of the share issuer andvote in the affirmative.
However, when exercising voting rights on matters that
may have an adverse impact on the relationship with all transactions with our Group, or matters that may negatively affectthe common good of shareholders, we will decide whether tovote in favor of the motion after careful consideration.

IR policy
We believe that maintaining transparent and fair management is fundamental to corporate governance with the aimof achieving sustainable growth of the company and increasing corporate value over the medium- to long-term. To thisend, we recognize that it is important to actively engage indialogue with shareholders and reflect their opinions and requests in our management.
Based on this recognition, we disclose accurate corporate
information required by shareholders and investors fairly andpromptly in clear language. As well as providing disclosure
consistent with regulations, including the regulations for
public companies set out under the Financial Instruments andExchange Act and by the Tokyo Stock Exchange, we also strive
to provide timely and proactive disclosure.
Promoting shareholders’ and investors’ understandingof Kyokuyo
In order to provide shareholders with a deeper understandingof the current state of Kyokuyo, we send a Business Reportto people who are shareholders as of the end of March every
year. In addition, at our twice-yearly IR Presentations for analysts and institutional investors, the president himself explains
our financial results and future measures, and successively
conducts dialogues (interviews) at the request of analysts andinstitutional investors.

Changes in cross-shareholdings

Katsuhiro
Machida

Eiji
Yamada57

Katsuhiro Machida has a wealth of knowledge and experience acquired through long years of work as an officialof the Ministry of Agriculture, Forestry and Fisheries and at a research institution. He is able to provide advice anddirection from a specialist standpoint. We also hope that he will continue to exercise appropriate supervision over
our business operations from a neutral standpoint.
Through his work, including his many years as Director and President of Japan Information Processing Service Co.,
Ltd., Eiji Yamada has a wide range of knowledge as a business leader, backed by experience and a track record insystems development. We hope that, in addition to supervising our company’s operations, he can continue to provide advice across all of our operational scope, contributing to stronger corporate governance.

Kyokuyo Group Integrated Report 2023■■ The amount recorded in the balance
sheet for shares held by the Company(Million yen)
12,000
28.4
9,000
6,000
3,000
0

11,364A ratio to consolidated net assets
(%)
32.0
20.5

14.5
8,659

20.2

24.0

9,507

16.0

4,737

March
2020

8.0

March
2021

March
2022

March
2023

0.0

BUSINESS REPORT* Cross-shareholdings: Amount recorded in the balance sheet and ratio to consolidated net assets of shares held by the Company for purposes other than net
investment

Kyokuyo Group Integrated Report 2023

58

Corporate Information

Outside directors
Outside directors are expected to conduct effective management supervision and to provide frank and constructive advice
regarding the Group’s management from an independentand objective standpoint, with a practical perspective thatdraws on abundant experience, knowledge, and expertise.
When selecting candidates for outside directors, in

We have established a basic policy on internal control systems
and have put in place related rules to develop and operate
an internal control system. With the Internal Controls overFinancial Reporting, as stipulated by the Financial Instruments
and Exchange Act, we evaluate the status of the development
and operation of our internal control system. We reported that
the Group’s internal control system was effective in FY2022, asin the past.

The Foundation of Our Value Creation

Directors(excluding outside directors)

Dialogue with shareholders and investors

Business Strategy

Amounts of remuneration for directors and auditors (fiscal 2022)

Internal controls

Our Value Creation Story

Governance

The Foundation of Our Value Creation

Board of Directors and Auditors

Directors ◦Independent director*Attendance at Board of Directors meetings is for FY2022.

Supervisory Board Members ◦Independent director*Attendance at Board of Directors and Board of Auditors meetings is for FY2022.

Shigeru Kondo

Masaji Tamura

Yoichi Kanno

President andRepresentative Director

Senior Managing Director

External Auditor (full-time) ◦External Auditor (full-time) ◦Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings
Attendance rate 100%
Meetings attended 16/16

Attendance rate 100%
Meetings attended 16/16

Attendance rate 100%
Meetings attended 16/16

Attendance at Board of Auditors
meetings
Attendance rate 100%

Attendance at Board of Auditors
meetings
Attendance rate 100%

Meetings attended 13/13

Meetings attended 13/13

Masayuki Nishihama

Norio Suzuki

Auditor (part-time)

Auditor (part-time)
Attendance at Board of
Directors meetings

Shuichi Kiyama

Hitoshi Higaki

Senior Managing Director

Managing Director

Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings

Attendance rate 100%

Attendance rate 100%

Meetings attended 16/16

Meetings attended 16/16

Attendance at Board of
Directors meetings
Attendance rate 100%

Attendance rate 92%

Yutaka Tanaka

Keizo Yamaguchi

Meetings attended 16/16

Meetings attended 12/13

Director

Director

Attendance at Board of Auditors
meetings

Attendance at Board of Auditors
meetings

Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings

Attendance rate 100%

Attendance rate 100%

Meetings attended 16/16

Meetings attended 16/16

Atsushi Hattori

Masaki Miyama

Director

Director

Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings
Attendance rate Newly appointed
Meetings attended Newly appointed

Executive expertise and experience (skill matrix) Our Board of Directors consists of members with the following skills.
Name
Makoto Inoue
Shigeru Kondo
Shuichi Kiyama
Hitoshi Higaki

Mika Shirao

Outside Director (part-time) ◦Outside Director (part-time) ◦Yutaka Tanaka

Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings

Keizo Yamaguchi

Attendance rate 100%

Attendance rate 94%

Meetings attended 16/16

Meetings attended 15/16

Generalmanagement

•
•
•
•

Atsushi Hattori
Masaki Miyama

Eiji Yamada

Outside Director (part-time) ◦Outside Director (part-time) ◦Attendance at Board of
Directors meetings

Attendance at Board of
Directors meetings

Attendance rate 100%

Attendance rate 100%

Meetings attended 16/16

Meetings attended 16/16

Meetings attended 9/10

Meetings attended 13/13

Masayo Miura

Katsuhiro Machida

Attendance rate 90%

Attendance rate 100%

Masayo Miura
Mika Shirao
Katsuhiro Machida
Eiji Yamada••

Industry
insight

•
•

•
•
•
•
•

IT

•
•

•

Legal andcompliance•

Finance andaccounting

Government
and academic
research

Internationality

•

•
•
•
•
•

•
•

The above list shows areas where members have more specialized knowledge based on each individual’s experience, etc., and does not represent their complete knowledge.

59

Kyokuyo Group Integrated Report 2023

Kyokuyo Group Integrated Report 2023

60

Corporate Information

Attendance rate Newly appointed
Meetings attended Newly appointed

The Foundation of Our Value Creation

Attendance rate 100%
Meetings attended 16/16

Business Strategy

Makoto Inoue

Our Value Creation Story

Governance

The Foundation of Our Value Creation

Message from Outside Director

The role of Outside Directors
Kyokuyo’s Board of Directors comprises members who haveexpertise in terms of general business management, industry-specific knowhow, IT, legal affairs, compliance, finance,accounting, administration, academic research, and international business. Of the four Outside Directors, two are women,
making this a board with a significant degree of diversity.
Among these directors, with their various backgrounds, I
see my own role as being to contribute my experience frommany years of working in education and being involved in foodand nutritional science research, and a perspective oriented
toward academic research and human talent cultivation, while
also offering suggestions from a consumer’s perspective, andexercising oversight over the company’s management.

The Kyokuyo Group viewed from an outside perspective
It is now eight years since I took up the position of Outside
Director at Kyokuyo, and during this time I have travelled

61

Kyokuyo Group Integrated Report 2023

We have established basic risk management rules for the
Kyokuyo Group, and maintain a risk management system, inorder to consider all risks that could affect the entire Group’sbusiness activities, to prevent the occurrence of such risks, andto minimize the impact of any risks that actually materialize.
Each department and group company manages, ona daily basis, the risks faced in their own work. Kyokuyo’s
headquarters departments, in their role as supervisory departments, oversee the managing of risks relating to their operations in the foregoing departments and group companies.
Furthermore, Kyokuyo’s Business Management Department
oversees headquarters departments and manages risks
throughout the entire Group. We are prepared to respond tocrises and emergencies by organizing level-specific responseorganizations, including countermeasure headquarters,
countermeasure projects, and response teams.
Key risks and countermeasures

Risk

For stakeholders
The Kyokuyo Group plays an important role in providing products
characterized by safety and reliability for dinner-tables both inJapan and overseas, contributing to a healthy and happy lifestyleand food culture. This role matches the academic philosophy of
my alma mater, Kagawa Nutrition University: “Maintain and improve health through a balanced diet and proper nutrition”.
In today’s world, where labor shortages and the aging of
the population are becoming increasingly serious issues, there
is a need to make food preparation easier and reduce thetime taken. Responding to this need, Kyokuyo is expanding its
Dandori Jozu product line. Going forward, I myself will be aiming to provide support for the further expansion of Kyokuyo’s
processed food business, including the Dandori Jozu range.
To achieve continued growth, the Kyokuyo Group is expanding into overseas markets. With the shift to a businessmodel that emphasizes “produce overseas, sell overseas”, andthe expansion in overseas production facilities, global sales
can be expected to grow in the future.
As the Kyokuyo Group continues to transform itself, in the
future, I will continue to provide support and oversight so that it
can carry on maintaining and enhancing human health (which issomething people will always need) through the provision of food,and contributing to a healthy and happy lifestyle and food culture.

We recognize the major risks that could have a material impact on metrics including the financial condition and businessresults of the whole Kyokuyo Group, and we share the statusof risks and countermeasures with the Board of Directors.
Our Internal Audit Team, which is organized by ourDivision of Internal Control, conducts risk management
system audits, reporting the results to the Internal Audit
Committee.

Food safety issues
Risks related to overseas business

Fluctuations in raw material prices

Risks in the aquaculture business
Exchange rate fluctuations
Crude oil prices fluctuations
Countermeasures against natural
disasters

Risks related to information systems

Sustainability-related risks

•
•
••
•
••
••
•
•
•
•
••
•
•
•

CountermeasuresEstablishment and maintenance of a quality assurance system by the Quality
Assurance Department
Product-liability insurance and other forms of insurance

Corporate Information

I am constantly thinking about
what I can do for Kyokuyo, and I
will continue providing support forthe company’s further growth in
the future.

Risk management system

The Foundation of Our Value Creation

Outside Director

Basic approach

Business Strategy

Masayo Miuraalong the same path as the Kyokuyo Group. When I first joined
the board, its discussions tended to make extensive use ofindustry jargon; today, not only is there a greater use of language that is easier for non-specialist Outside Directors to understand, there is also more discussion of the food products
market (which is extremely broad in its scope), including theimportance of food in relation to growing health consciousness, and the potential for developing food functionality, etc.
At the same time, Kyokuyo continues to demonstrate awillingness to challenge itself in various areas. For example,
there are now increased opportunities for female participation, as seen in the appointment of a new female Outside
Director and promotion of women to management positions.
One of the issues facing the Kyokuyo Group is the need toenhance the profitability of the processed food business. There
has been a recovery from the impact of the COVID-19 pandemic,
and processed food sales are starting to improve again. Taking
as a foundation the integrated system covering every stage fromraw materials to finished products which is a major strength of
the Kyokuyo Group, I believe that it is important for Kyokuyo to“spice up” its products through enhanced tastiness and enjoyment, providing products that customers will want to support.

Risk Management

Governance

Our Value Creation Story

Governance iversification of procurement areas
DHolding of appropriate inventory in accordance with procurement risk
Forecasting raw material market conditions based on supply and demand
estimates
Holding of the strategic inventory required to respond to the market environment
Enhancing sales of value-added products
Making use of Fishery Mutual Aid InsuranceT horough facility management
R isk hedging through yen-denominated settlements, foreign exchange
reserves, etc.
Efficient business operations
Fire insurance, domestic comprehensive general cargo insurance, and otherforms of insuranceEstablishment of a business continuity plan (BCP) se of antivirus software
UContinual uninterrupted monitoring of the network, regular security
diagnostics
Multiple backups
Responding to the need to reduce CO2 emissions by utilizing energy more
efficiently and adopting energy-saving equipment
Changing the materials used in packaging, and reducing the size of packaging,so as to reduce the amount of plastic usage

Kyokuyo Group Integrated Report 2023

62

The Foundation of Our Value Creation

Compliance

Basic approach

The current meaning of compliance
has expanded in scope.

Upholdingthe social code of conduct(ethics, morals)

Internal rules (company directives)
Uphold company rules

Management system
In accordance with this basic policy, the Division of Internal
Control, which builds, maintains, and strengthens compliancesystems under the direct supervision of the president, is putting in place an inter-departmental compliance system thatcovers the whole of the Kyokuyo Group.
As regards internal controls relating to compliance andfinancial reporting, the Division of Internal Control implementscompliance audits and monitoring for individual cases of operational execution, and, where necessary, reports to the Board of
Directors regarding the effectiveness of the steps taken.
In addition, to ensure thorough implementation of compliance, we undertake the group-wide dissemination of information and awareness-raising.

Education
To enhance the compliance awareness of every individual
Kyokuyo Group company officer and employee, and enable63

Kyokuyo Group Integrated Report 2023

For the reporting of compliance violations and other compliance-related matters within the Kyokuyo Group, a whistleblowing system has been established, with the department heads
responsible for compliance matters, and attorneys, acting as
contact windows. To ensure the safety of whistleblowers, therules on whistleblower protection have been formulated.
Besides working to ensure that Kyokuyo Group employees
are made more aware of this system, we are also striving to
make the system easy to use.

Responsible procurement
The Kyokuyo Group has formulated the Kyokuyo Group Basic
Procurement Policy, and by fulfilling our corporate social
responsibility through responsible procurement, we are endeavoring to help realize a sustainable society.
As responsible procurement activities are essential
throughout the supply chain, we have established a 10-item
set of Kyokuyo Group supplier guidelines based on Kyokuyo
Group Basic Procurement Policy. These guidelines specify
our obligations to uphold laws, regulations and social codeof conduct, and to engage in fair business practices. We
aim to gain the understanding of our suppliers for Kyokuyo
Group’s approach to responsible procurement, and will workto achieve a fair and sustainable supply chain through our responsible procurement activities.
Kyokuyo Group Basic Procurement Policy
https://www.kyokuyo.co.jp/en/environment/client/index.html

Unit

FY2018FY2019FY2020

FY2021

FY2022

Net sales(Million yen)

256,151

262,519

249,197

253,575

272,167

Operating profit(Million yen)

3,831

2,918

4,657

6,392

8,105

(%)

1.5

1.1

1.9

2.5

3.0

(Million yen)

4,434

3,608

4,879

6,904

8,182

(%)

1.7

1.4

2.0

2.7

3.0

Profit attributable to owners of parent(Million yen)

2,914

2,037

3,838

4,634

5,782

Total assets(Million yen)

114,673

111,184

116,331130,460

146,301

Net assets(Million yen)

31,99632,59339,97542,17446,966

Net assets per share(Yen)

2,941.26

3,046.26

3,753.90

3,969.73

4,436.27

Net profit per share(Yen)

269.63188.53356.95430.83539.10Equity ratio

(%)

27.7

29.4

34.7

32.7

32.5

Return on equity (ROE)

(%)

9.6

6.3

10.5

11.2

12.8

Return on assets (ROA)

(%)

4.0

3.2

4.3

5.6

5.9

Interest-bearing debt

(Million yen)

58,02355,17351,174

58,121

68,973

1.9

1.7

1.4

1.5

1.6

Operating income margin
Ordinary profit
Ordinary income margin

D/E ratio(Ratio)Cash flows from operating activities(Million yen)

(4,118)

9,410

5,997

(1,128)(6,243)

Cash flows from investment activities(Million yen)

(2,494)(2,931)(527)(5,225)(2,338)Cash flows from financial activities(Million yen)

5,958

(4,817)(4,627)

5,743

9,011

Cash and cash equivalents at end of period(Million yen)

4,621

6,313

7,097

6,539

7,042

R&D expenses(Million yen)

304

343

336

317

338

Capital investment(Million yen)

2,201

3,160

2,456

5,064

2,292

Dividend payout ratio

(%)

26.0

37.1

22.4

20.9

18.5

Total shareholder return

(%)

76

71

86

96

101

Dividend per share

(Yen)

70

70

80

90

100

Kyokuyo Group Integrated Report 2023

64

Corporate Information

Uphold laws

Whistleblowing system

Consolidated basis

The Foundation of Our Value Creation

Current interpretations of compliance
The original meaning of complianceis to comply with the law.

them to make effective use of this awareness in their day-today operations, the Division of Internal Control holds compliance lectures on an occasional basis, with a particular focus
on managerial staff. Compliance-related lectures are also provided for new employees as part of their initial training.
The lectures make use of case studies of compliance violations to help attendees develop an understanding of how
problems emerge and become actualized, and of the impactthat compliance violations have on society, and attendees are
given guidance on how to implement compliance thoroughly.
We also encourage Kyokuyo Group company officers
and employees to attend the annual workshop on the Act
against Delay in Payment of Subcontract Proceeds, Etc. to
Subcontractors, and we are continuing to implement compliance education on an ongoing basis.

Business Strategy

The Kyokuyo Group defines “compliance” as complying withlaws and regulations, and adhering to Kyokuyo’s Corporate
Philosophy, Action Guidelines, Corporate Action Charter, internal rules, and corporate ethics, and views compliance as
constituting a fundamental management policy.
In line with this fundamental policy, we believe that it isvitally important for the Kyokuyo Group’s company officers
and employees to comply faithfully with laws and regulations,maintain a thorough understanding of corporate ethics andthe social code of conduct, and carry out their duties withgood judgment as responsible adults.
This approach is shared throughout the group, and byacting with an awareness of compliance on a day-to-day basis, we strive to ensure that there are no violations of laws orinternal rules in our daily operations.

Financial Data Highlights

Our Value Creation Story

GovernanceCorporate Information

Corporate Information(as of March 31, 2023)■ Kyokuyo Akitsu Reizo Co., Ltd.
2-6-1 Jonanjima, Ota-ku, Tokyo 143-0002, Japan
Tel: +81 (3) 3799-1701
Business: Cold storage businessCorporate profile
Kyokuyo Co., Ltd.

Headquarters address

3-3-5, Akasaka, Minato-ku, Tokyo, 107-0052, Japan

Established

September 3, 1937

Stated capital¥5,664 million

Major businesses

Export, import, domestic purchasing, and sales of marine products, and manufacture and sales of processed and frozen foods

Employees

2,112 (consolidated) / 704 (nonconsolidated)

Number of consolidated companies

26■ Kyokuyo Shoji Co., Ltd.
Sumitomo Seimei Akasaka Bldg., 3-3-3 Akasaka, Minato-ku, Tokyo 1070052, Japan
Tel: +81 (3) 6234-4400
Business: Purchasing and sale of marine, agricultural and meat products

No. of shares of treasury stock 1.4%

Securities companies 3.5%
Total number of shares thecompany is authorized to issue

43,700,000

Total number of shares issued

10,928,283

162

390

Foreign companies 5.6%
and individuals 614
Other companies 10.9%

1,196

Shareholding
ratio(FY2023)

Financial institutions
Number of shareholders

29,451

Individuals and others

49.1%
5,367

29.2%

3,197

65

No. of shares held
(thousands)

Number of shares held as a percentageof the total number of outstanding
shares (excluding treasury stock) (%)

The Master Trust Bank of Japan, Ltd.

998

9.27

Resona Bank, Limited

523

4.86

The Norinchukin Bank

445

4.13

Custody Bank of Japan, Ltd.

317

2.95

Toyo Seikan Group Holdings, Ltd.

315

2.92

Mitsui Sumitomo Insurance Co., Ltd.

250

2.32

Tokio Marine & Nichido Fire Insurance Co., Ltd.

224

2.08

Kyokuyo Akitsukai

155

1.44

SMBC Nikko Securities Inc.

144

1.33

Noriaki Nakamura

143

1.33

Kyokuyo Group Integrated Report 2023

■ Kyokuyo Sougou Service Co., Ltd.
Sumitomo Seimei Akasaka Bldg., 3-3-3 Akasaka, Minato-ku, Tokyo 1070052, Japan
Tel: +81 (3) 5545-0770
Business: Insurance agent business, facilitating sales of various products■ Kyokuyo Feed One Marine Co., Ltd.
392-2 Hisayoshi, Ainan-cho, Minamiuwa-gun, Ehime 798-4353, Japan
Tel: +81 (895) 73-7180
Business: Operations include producing nursery stock , aquaculture andsale of tuna and other marine products■ Kyokuyo Foods Co., Ltd.
830 Nobenono, Matsuno-cho, Kitauwa-gun, Ehime 798-2102, Japan
Tel: +81 (895) 42-1600
Business: Manufacture of frozen and chilled products (imitation crab
meat, etc.)■ Kyokuyo Fresh Co., Ltd.
3-3-2 Rinkai-cho, Edogawa-ku, Tokyo 134-0086, Japan
Tel: +81 (3) 3878-4611
Business: Operations include processing and sale of tuna and othermarine products■ Kyokuyo Marine Ehime Co., Ltd.
392-2 Hisayoshi, Ainan-cho, Minamiuwa-gun, Ehime 798-4353, Japan
Tel: +81 (895) 72-6661
Business: Operations include aquaculture, processing and sale of tunaand other marine products■ Kyokuyo Marine Farm Co., Ltd.
2198-4 Obukaura, Sukumo, Kochi 788-0034, Japan
Tel: +81 (880) 65-5617
Business: Operations include aquaculture, processing and sale of tunaand other marine products■ Apex Kyokuyo Co., Ltd.
3246 Nakashima, Shikama-ku, Himeji, Hyogo 672-8035, Japan
Tel: +81 (79) 234-2670
Business: Processing and sale of assorted grilled fish products■ Kaiyo Foods Co., Ltd.
2831-15 Sunayama, Kamisu, Ibaraki 314-0255, Japan
Tel: +81 (479) 46-3851
Business: Processing and sale of products including salt-cured
salmon, fillet, and fish flakes■ Kuroshio Suisan Co., Ltd.
373 Tomariura, Otsuki-cho, Hata-gun, Kochi 788-0353, Japan
Tel: +81 (880) 73-1105
Business: Aquaculture and sale of marine products■ Jokki Co., Ltd.
3-28-5 Kamishakujii, Nerima-ku, Tokyo 177-0044, Japan
Tel: +81 (3) 3920-6885
Business: Processing and sale of seafood delicacies

Corporate Information

Major shareholders
Shareholder’s name

■ Kyokuyo Suisan Co., Ltd.
1441-1 Habuchi, Yaizu, Shizuoka 421-0213, Japan
Tel: +81 (54) 622-5111
Business: Overseas purse seine fishing business, processing skipjack tunaand other tuna, cold storage business■ Integrate System Service Co., Ltd.
Nihon Building Bldg. No. 2, 1-2-5 Nihombashi-Kayabacho, Chuo-ku,
Tokyo 103-0025, Japan
Tel: +81 (3) 5652-8600
Business: General services for computer systems■ Kyokuyo America Corporation
1200 Fifth Avenue, Suite 1575, Seattle, WA,
98101-3131, U.S.A.
TEL: +1 (206) 405-2670
Business: Purchase and sale of marine products■ QINGDAO KYOKUYO INTERNATIONAL CO., LTD.
Room No. 1013, Crowne Plaza Qingdao No.76, Xiang Gang Zhong
Road, Qingdao, 266071 China
TEL: +86 (532) 8578-1350
Business: Purchasing and sales in mainland China and overseas■ KYOKUYO EUROPE B.V.
Tower-B, 7th Floor, WTC Schiphol Airport Schiphol
Boulevard, 193 1118 BG Schiphol, Netherlands
TEL: +31 (20) 405-9060
Business: Purchase and sale of frozen food products■ KYOKUYO GLOBAL SEAFOODS Co., Ltd.
55/237 Moo. 6 Tasai, Mueang Samut Sakhon, Samut Sakhon, 74000,
Thailand
TEL: +66 (3) 444-0828
Business: Manufacturing products including sushi toppings,
simmered fish and grilled fish products

Kyokuyo Group Integrated Report 2023

The Foundation of Our Value Creation

Distribution of shares by shareholder type

■ Kyokuyo Shokuhin Co., Ltd.
3-20-1 Shinhama-cho Shiogama, Miyagi 985-0001, Japan
Tel: +81 (22) 364-6111
Business: Manufacturing of frozen and chilled food products■ Ibusuki Shokuhin Co., Ltd.
1-42 Shinei-cho, Yamagawa, Ibusuki, Kagoshima 891-0501, Japan
Tel: +81 (993) 35-2335
Business: Processing and sale of skipjack tuna, other tuna, othermarine products, and agricultural and livestock products

Business Strategy

Company name

Stock information

List of Group Companies

Our Value Creation Story

Corporate Data and Stock Information

66Effective use of marine resources to create a low-carbon society.
Kyokuyo Group supports Fun to Share.

Kyokuyo Co., Ltd.
3-3-5, Akasaka, Minato-ku, Tokyo, 107-0052, Japan
Websitehttps://www.kyokuyo.co.jp/en