Financial Results
for the 2nd Quarter
Ended March 31, 2021
T．HASEGAWA CO., LTD.
May 26, 2021

AgendaⅠ. Overview of Consolidated Financial Statement
Ⅱ. Impact of COVID-19
Ⅲ. Revision of Annual Plan (Consolidated)
Ⅳ. Management Policy
Ⅴ. Global Strategies
Ⅵ. Capital Policy
Ⅶ. Appendix

1

Ⅰ. Overview of Consolidated
Financial Statement

2Market Environment
Domestic Market

・Market Trends by Product Category

2nd Quarter - FY Ending Sept. 2021 (Oct. 2020 – March 2021)
Category

Beverages

Snacks

Chocolate

Frozen Dessert

Instant Noodles

Trend

Decreased

・Low consumer spending affected by avoidance of outing from an impact
of COVID-19
・Slumping demand at workplaces mainly in Metropolitan area
・Sluggish sales for restaurant use and vending machines continued

Decreased

・Potato Snacks – Bagged products were robust but seasonal limited
products and tub-type package products had hard time・Corn Snacks – New product sales decreased and existing products also
had hard time・Flour Products – Sales at supermarkets and drug stores were strong

Decreased

・Recovery trend of chocolate bars peaked out
・For high cacao contents and health-promoting chocolates, small bagged
and personal products were slow
・Chocolate confections, mainly multi pack products, sales grew・Event needs, such as Valentine’s Day, Christmas and Halloween, wereslow due to impact of COVID-19

Increased・Restaurant use products had hard time but commercial products werestrong・Treat size products were still robust due to impact of avoidance of outing
・New products contributed

Decreased

・Package-type instant noodles performed well from heightened trend of
eating at home
・Bowl-type instant noodles experienced CVS demand decrease andrebound decrease from previous year’s booming demands (demand
increase associated with typhoon and COVID-19)
Data Source: Nikkan Keizai Tsushin Co., Ltd.

3

Performance Overview (Consolidated base)
Sales
Increase comparing to pervious year
Progress ratio against annual plan was 48.7％ (average progress ratio: 48％)
Operating Income
Increase comparing to pervious year
Progress ratio against annual plan was 56.8％ (average progress ratio: 45％)
FY20 2Q
ActualFY21 2Q
ActualProgress
vs Annual

Achievement
yr/yr
Value

(Million yen)Plan*¹％％

Net sales

24,462

26,135

1,672

6.8%

48.7%

Cost of sales

15,114

15,582

467

3.1%

48.1%

Gross profit

9,348

10,553

1,204

12.9%

49.5%

SG&A expenses

6,878

7,584

705

10.3%

47.2%

Operating income

2,469

2,968

499

20.2%

56.8%

Ordinary income

2,688

3,304

616

22.9%

58.0%

Income before
income taxes

3,008

4,435

1,426

47.4%

58.7%

Net income

2,092

3,138

1,045

49.9%

58.7%

EBITDA *²

3,951

4,660

708

17.9%

49.8%

*¹ Progress rate against revised plan announced on May 7, 2021*² EBITDA = Operating income + Depreciation and Amortization + Amortization of goodwill

4Net Sales by Product Segments
・Reason for Increase
Sales increase at Chinese subsidiaries, sales of MISSION (U.S.) acquired in Dec. 2020 contributed(Million yen)

Category

FY20 2Q
ActualFY21 2Q
Actualyr/yrRemarkValue%

Flavors

20,85322,189

1,335

6.4%

Sales increase at Chinese subsidiaries andcontribution from sales of MISSION covered
sales decrease at Parent company

Fragrances

3,608

3,946

337

9.4%

Sales increased at Parent company

Total

24,462

26,135

1,672

6.8%

－

*FY21 2Q Overseas sales ratio 40.5%
Million Yen

5

Sales by Group Company
Reason for Increase
Sales increase at Chinese subsidiaries
Sales of MISSION (U.S.) contributed（Million Yen）

FY20 2Q
ActualFY21 2Q
ActualJapan

18,147

17,897

-249

-1.4%

U.S.

3,075

3,898

823

26.8%

China

3,067

4,027

960

31.3%

yr/yr

Currency

FY2020 2Q

FY2021 2Q

Yr/Yr

1US$

¥108.84¥105.20

3.3% higher

1RMB¥15.52¥16.08

3.6% lower

1MYR¥26.13¥25.77

1.4% higher

27,000(Million Yen)

%

+62

+76

+960
-249

+823

26,13524,462
Malaysia

431

494

62

14.6%

Adjustment

-259

-183

76

0

Consolidated

24,462

26,135

1,672

6.8%

Japan

Sales of flavors for beverages decreased

Decreased

U.S.

Sales of MISSION contributed (for 3 months)

Increased

China

Sales of flavors for instant noodles and beverages increased

Increased

Malaysia

Sales of products for beverages increased

Increased

6

Operating Income by Group Company
Currency

FY2020 2Q

FY2021 2Q

Yr/Yr

1US$

¥108.84¥105.20

3.3% higher

1RMB¥15.52¥16.08

3.6% lower

1MYR¥26.13¥25.77

1.4% higher

Reason for Increase
Operating income of Chinese subsidiaries increased（Million Yen）

(Million Yen)
3,500

FY20 2Q
ActualFY21 2Q
Actual

Japan

1,880

1,668

-212

-11.3%

U.S.

283

210

-72

-25.7%

China

320

1,067

747

233.4%

Malaysia

21

58

37

178.9%

Adjustment

-36

-36

-0

-

yr/yr

%

+37

-212

-72

-0

+747

2,968
2,469

0

Consolidated

2,469

2,968

499

20.2%

Japan

Sales decreased
SGA expense increased in association with reporting of costs
related to acquisition of MISSION

Declined

U.S.

Reporting of goodwill amortization costs and costs related toacquisition of MISSION

Declined

China

Sales increased, sales cost ratio improved, SGA expensedecreased

Increased

Malaysia

Sales increased, SGA expense decreased

Increased

7

Ⅱ. Impact of COVID-19

8

Impact of COVID-19• COVID-19 continued to impact Japan, U.S. and Southeast Asia
• Despite our expectation that impact would continue up to 2nd quarter of FY ending Sept. 2021, impact prolonged more than
expected⇒ Impact on annual sales of FY ending Sept. 2021 is estimated to be approx. 1.45bil yen decrease
FY ending Sept. 2021
RegionImpact on Business1st Half (Actual)

・Sluggish consumption of beverages, small packaged snacks, etc. associated with avoidance ofouting, work from home and closure/shortened operating hours of restaurants (CVS, vending
machines and products for restaurant use, etc.)
・Special demand increase in products related to hand-wash and sterilization, and instant noodles
・There were impact of postponement/cancellation of clients’ new product launch

Approx. 690mil yen Decrease

2nd Half (Estimate)・Continued impact of sluggish consumption of beverages, small packaged snacks, etc.
associated with avoidance of outing, work from home and closure/shortened operating hours
of restaurants (CVS, vending machines and products for restaurant use, etc.)
・Special demand in products related to hand-wash and sterilization, and instant noodles will calm
down・Clients’ new product launch will be vitalized gradually

Approx. 530mil yen DecreaseJapan

1st Half (Actual)
U.S.

2nd Half (Estimate)

AnnualApprox. 1.22bil yen Decrease・Impact on products for restaurants associated with avoidance of outing, etc.
・Impact level differs by client and industry

Approx. 150mil yen Decrease

・Expecting continued impact on products for restaurants associated with avoidance of outing, etc.

Approx. 60mil yen Decrease

Annual
1st Half (Actual)
China

2nd Half (Estimate)

1st Half (Actual)Southeast
Asia

Impact on Sales

2nd Half (Estimate)

Approx. 210mil yen Decrease・No impact of COVID-19－

・Chinese economy shows recovery trend－

Annual－・Recession at each country, impact of sluggish demand, etc.
・Demand increase in some home-use products, such as seasonings and instant noodles

Approx. 10mil yen Decrease・Impact level differs by client and industry, need to watch closely

Approx. 10mil yen Decrease

AnnualTotal

Approx. 20mil yen Decrease
Approx. 1.45bil yen Decrease9Ⅲ. Revision of Annual Plan
(Consolidated)10

Revision of Annual Plan for FY Ending Sep. 2021 (Consolidated)
・Annual plan announced on Nov. 6, 2020 was revised on May 7, 2021
FY20
ActualOriginal Plan
(Nov. 6, 2020)(Million Yen)
Revised Plan
(May 7, 2021)
vs. FY20 Actual

Value

Share

Value

Share

Value

vs. Original Plan

Share
value

%

value

%

Net sales

50,192100.0%

52,100100.0%

53,700100.0%

3,507

7.0%

1,600

3.1%

Cost of sales

30,78361.3%

31,98061.4%

32,400

60.3%

1,616

5.3%

420

1.3%

Gross profit

19,40838.7%

20,12038.6%

21,300

39.7%

1,891

9.7%

1,180

5.9%

SG&A expenses

14,05228.0%

14,96028.7%

16,070

29.9%

2,017

14.4%

1,110

7.4%

Operating income

5,356

10.7%

5,160

9.9%

5,230

9.7%

-126

-2.4%

70

1.4%

Ordinary income

5,861

11.7%

5,570

10.7%

5,700

10.6%

-161

-2.7%

130

2.3%

Income before
income taxes

7,028

14.0%

6,590

12.6%

7,550

14.1%

521

7.4%

960

14.6%

Net income

5,090

10.1%

4,730

9.1%

5,350

10.0%

259

5.1%

620

13.1%

【Reason for Revision of Annual Plan】
The exchange rates of Revised Plan
Sales
1US$
¥105.20
・Upward revision of annual plan from good performance of Chinese subsidiaries
1RMB¥16.08and reflection of performance of MISSION (U.S.) acquired in Dec. 2020 to the plan
1MYR

¥25.77

Income・Upward revision of operating income, ordinary income and current net income as upward revision of sales andperformance of Chinese subsidiaries are exceeding expectation, despite reflection of MISSION’s goodwill
amortization costs and sales costs and SGA expense of MISSION

11Ⅳ. Management Policy

12Management Policy
Become an
Organization that
Takes on Challenges

Strengthen Proposal
Capabilities
Promote Reform

Focus Areas

Concentration and Selection
Enhance Human Resources(Develop Human Resources, Hire Experienced Personnel)

Accelerate Expansion in Overseas Market

Basic Strategy
ExpandCompounded
Flavors andFragrances
Sales

Secure Profits
in Domestic
MarketGrowth inOverseas
Market13

Ⅴ. Global Strategies

14Summary of Global Strategies

Japan・Established Business Solution Headquarters in Oct. 2020
・Promote solution-oriented sales making use of cooperation among Sales,
R&D and Marketing Divisions
・Focus on development of substitute flavors for food materials, and strengthen
measures in support of SDGs
⇒Focus on milk products, vegetables, fruit juice, meat substitutes (such as
soy meat etc.)

U.S.

・THUSA acquired MISSION in Dec. 2020
・Steadily implement PMI (Post Merger Integration), and pursue further
growth in U.S. market
・2nd Factory construction plan is proceeding as planned
・Utilize Marketing Function, and focus on local large enterprises andSouth China area

China

Southeast
Asia

・Had accomplishment in manufacturing cost compression project(manufacturing cost reduction and establishment of cost consciousness, etc.)
・New laboratory building construction project is underway
・Promote efficient R&D activities in Malaysia⇒Increased specialists seconded from Japan, clarified division of roles ofJapanese staff between R&D and management/strategy planning・New manufacturing facility construction plan in Malaysia: watch status ofprogress in light of economic trend

15

Domestic Strategy
Basic Strategy：Expand market share by anticipating new market demands stemming from aging society andheightening of health consciousness
Ongoing Project and Progress
Organizational Change
Promote SolutionOriented Sales Activity

・ Reinforced cooperation among Sales, R&D, Marketing Divisions⇒ Established Business Solution Headquarters in Oct. 2020
⇒ Under new organization, promote solution-oriented sales activities
making use of cooperation among divisions
・ Grasp customers’ “Wants” through utilization of market survey results,
analysis
Sales composition

Promote Efficient Sales
Activity

・ Sales activity quality and efficiency enhancement⇒ Introduced Free Address system, promoted paperless operations and built remote accessenvironment⇒ Draw-up measures for sales expansion at the Project Team, progress management
・ Focus on development of substitute flavors for food materials, and strengthen measures in

Expand Range of New
Applications

support of SDGs
⇒ Focus on milk products, vegetables, fruit juice, meat substitutes (such as soy meat etc.)
・Focus on new areas, such as healthy foods, medical foods, and demands for masking living odor,etc.
⇒ Propose new materials, materials that brings good taste to health-oriented foods

FY2021 2Q Sales Performance
Net Sales：17,897 mil. yen（Decreased 1.4% YOY）
Operating Income：1,668 mil. yen(Decreased 11.3% YoY)

16

Overseas Strategies －U.S.－
Basic Strategy：Expand sales of savory flavors, health care products and flavors for beverages and exert theacquisition effectOngoing projects and progress
Acquisition of
MISSION

・THUSA acquired MISSION in Dec. 2020
⇒Steadily implement PMI and pursue further growth in U.S. market

Set up New Production
System・ Promote 2nd Factory construction plan to set up a new production
system⇒ Purchased properties in California⇒ First stage construction scheduled to complete in 2021

Reinforce Sales
Activities
Utilize/Deploy JapaneseTechnology

Sales composition

・ Reinforce marketing structure, thorough pipeline management⇒Draw-up long-term growth strategy by area and strategy by client throughmarket trend analysis
・Bridge to Tokyo Project:
Send project team to Japan to utilize and deploy Japanese technology in the U.S.
・Completed localization of some technologies in U.S., started sample proposals to clients

FY2021 2Q Sales Performance
Net Sales：37.0 mil. USD(Increased 31.2% YoY)
(3,898 mil. yen)
Operating income：2.0 mil. USD(Decreased 23.1% YoY)
(210 mil. yen)
※Savory flavors : salty flavor for snacks,
dressing for salad, and seasoning etc.

17Acquisition of MISSION
Background・Efficient injection of management recourses, basic strategy for steady global deployment⇒ Focus on U.S. and China as well as Asian region, mainly Southeast Asia
・U.S. is having population growth and has stable regime and legal system

U.S. is an appealing market
Policies for further growth in U.S. market were considered necessary
・Located in California, U.S., geographically close to THUSA, our U.S subsidiary

Rationale for
Selection

・Produces and sells high quality customized flavors
・Diligently responds to broad range of diversified needs of food and beverage companies
・Has strength in sweet flavors for various applications such as dairy products, cookies andice-cream

Benefit ofAcquisition

・High potential for mutual benefit with THUSA
・Synergy in sales and production can be expected

Current Status

・Implementing PMI (Post Merger Integration)⇒ Developed detailed action plan by division, and works in progress
Smoothly proceeding towards completion of integration aimed at the end of FY ending Sept. 2021
⇒Pursue early realization of synergy effect

Goodwill, etc.

(Total Value of Goodwill, etc.) USD 121,797 thousand (at the time of acquisition)(Goodwill Amortization Cost) Annual amortization cost: USD 8,787 thousand (from FY ending Sept.
2022)

Contribution to
Performance

FY ending Sept. 2021 (Estimate) (for 9 months from Jan. to Sept. 2021)(Sales) USD 20,000 thousand(Operating Income) USD 100 thousand* After reporting goodwill amortization cost of USD 6,590 thousand

18

Overseas Strategy －China－
Basic Strategy： Expand performance through various measures under reinforced organizational baseOngoing Projects and Progress

Reinforce Sales
Structure

Enhance Profitability
Reinforce R&D
Structure・Utilize Marketing Function⇒Deploy strategic approach to clients, develop new market and potential
demands
Focus on local large enterprises and South China area
・Deepen Sales/R&D/Marketing Co-work
・Thoroughly enforce pipeline, sales activity management⇒Start consideration of IT tool introduction

Sales composition

・ Promoting Manufacturing Cost Compression Project⇒Had accomplishment in manufacturing cost reduction andestablishment of employee’s cost consciousness, etc.
・New laboratory building construction project is underway⇒ Aiming at reinforcement of R&D function, streamlining operations
FY2021 2Q Sales Performance
Net Sales：250 mil. RMB(Increased 26.7% YoY)
(4,027 mil. yen)
Operating Income：66.4 mil. RMB(Increased 221.8% YoY)
(1,067mil. yen)

From this Fiscal Year, the Company started to apply IFRS 15 “Revenue from Contracts with Customers” for overseas consolidated subsidiaries excluding subsidiaryin the U.S. For ease of comparison, the same standards applied to the calculation of the sales in the same period of the previous year

19Overseas Strategy －Southeast Asia－
Basic Strategy：Expand sales through cooperation of sales base in Thailand, Indonesia and production base in
Malaysia
Ongoing Projects and Progress
Reinforce Sales
Structure・Hire sales personnel/reinforce organization for new clients development
・Assign General Manager covering entire Southeast Asia region⇒ Coordinate organic cooperation among offices in Southeast Asia region
・Thoroughly enforce pipeline, sales activity management⇒ Start
consideration of IT tool introduction
Sales composition

Speed-Up Client Care・ Promote utilization of Application Laboratories⇒ Promptly respond to clients’ requests

Develop
Strategy in Southeast
Asia by using THKL as
Hub

・Utilize THKL (Halal-certified) as a hub in Southeast Asia
・Support research and production by dispatching specialists from Japan to train local staffs
・Promote efficient R&D activities⇒Increased specialists seconded from Japan, clarified division of roles of Japanese
staff between R&D and management/strategy planning・New manufacturing facility construction plan in Malaysia: watch status of progress in light of
economic trend

FY2021 2Q Sales Performance
Net Sales：1,340mil. yen(Increased 10.2% YoY)
Operating Income：147 mil. yen(Increased 66.6% YoY)

* Sales include the export sales to the Southeast Asia comprising a part of T. Hasegawa's sales.

20

Ⅵ. Capital Policy

21Capital Policy
Basic Policy
Aiming at continued growth and maximization of corporate value in the future, maintain level ofstockholders’ equity sufficient to appropriately deal with investment and risks.

Fund Utilization Policy
Properly use funds considering maintenance of sound financial strength and improvement of
capital efficiency, etc.
－Shareholder Returns
Paid mid-term dividends and year-end dividends aiming at consolidated dividend payout
ratio of approx. 35%－Capital Investment
Investment for production increase for growth, update/maintenance of existing facilities－M&A
Comprehensive judgment from various viewpoints, such as market size, business risk,
acquisition priceRealize M&A with an expectation of acquisition effect in terms of customer base,technology aspects and personnel aspects

Cross-Shareholdings
Cut down on aggregate number of shares held from viewpoint of enhancement of capitalefficiency, etc. (sale completed for certain portion, and continue to sell during this Fiscal Year).
Validate appropriateness of cross-shareholding from mid to long term viewpoints of purposeand economic reasonableness at the Board of Directors’ meeting every year.
22Capital Policy
Shareholder Returns•

While securing required reserves for further reinforcement of group management base and futurebusiness development, seek to provide profit returns to shareholders according to businessperformance•

Aiming at approx. 35% of consolidated dividend ratio, paid dividends twice a year: interim dividends
and year-end dividends•

Shareholder special benefit program was introduced in Fiscal Year ending in Sep. 2015 for medium
to long term holding of the shares of our company•

In light of revision of annual performance estimate, increased interim dividends per share by 2 yen to
22 yen, and revised estimate of year-end dividends per share upwards by 2 yen to 22 yen (annual
dividends per share = 44 yen)23

Capital Policy
Sale of Shares Held for Facilitation of Business Relationships (Completed)・Sep 25, 2020, “Notification of Expected Reporting of Extraordinary Profit Associated with Sale of Investment Securities”
announced
・November 2020, completed the sale of the said investment securities【Reason】 Revision of policy of holding shares for facilitation of business relationships【Shares Sold】1 Issue of Listed Securities the Company Owned【Gain on Sales】1,137mil yen* Reported as extraordinary profit at 1st quarter of consolidated Fiscal Year ended Sept.2021

Sale of Shares Held for Facilitation of Business Relationships (Plan)
・March 26, 2021, “Notification of Expected Reporting of Extraordinary Profit Associated with Sale of Investment
Securities” announced【Reason】 Revision of policy of holding shares for facilitation of business relationships【Shares Sold】8 Issue of Listed Securities the Company Owned【Scheduled Selling Period】 From April 1, 2021 to Sep. 30, 2021
【Gain on Sales】 750 mil yen (projection)

Acquisition of Treasury Stocks (Completed)
・May 7, 2021, announced “Notification concerning Acquisition of Treasury Stocks and Purchase of Treasury Stocks
through Own Share Repurchase Trading (ToSTNeT-3)”
・Purposes are execution of flexible capital policy in response to management environment change, enhancement of
capital efficiency and refinement of shareholder return
・Acquired treasury stocks on May 10, 2021
・Details of Acquisition【Class of Acquired Shares】 Ordinary Shares of T. Hasegawa Co., Ltd.
【Aggregate Number of Acquired Shares】 400,000 shares【Total Acquisition Price】
845 million yen【Acquisition Method】 Purchase through own share repurchase trading at Tokyo Stock Exchange (ToSTNeT-3)

24

Ⅶ. Appendix

25

Outline of
Flavor and Fragrance Business26

Flavor and Fragrance Business
Products

Ingredients(Compound Flavors and Fragrances)

1. Natural Aromatics

3. Flavors

調合Compounding

2. SynthesizedAroma Chemicals

Recipes

4. Fragrances

Integration of research anddevelopment capabilities

Flavorists : Experts who formulate flavors
Perfumers : Experts who formulate fragrances
Flavors and fragrances are tailor-made in accordance with customer requests⇒ Formulas created by flavorists and perfumers based on experience are invaluableassets for flavor and fragrance companies.
27

Market Size of Flavor andFragrance Industry

28Market Environment
Overseas Market
World market size for Fragrance and Flavor was an approximately 7% growth compared to theprevious year
Transition of world market size for Fragrance and Flavor (Estimated by T. Hasegawa)(Million US$)

CAGR
7.9%

4.8%

3.3%

3.5%

29

Size of Global Fragrance/Flavor Market (Our Estimate)
Global Total Sales of Fragrance/Flavor: Approx. 3.2tril yen (Approx. USD 29.8bil)
Europe / Africa / Middle East
‐Market Size: Approx. 1,170bil yen*
‐Many users adopted preferred suppliersystem, and leading European/USfragrance/flavor companies have built
foundation

North America‐ Market Size: Approx. 820bil yen*
‐ Many users adopted preferred supplier system, and leading European/USfragrance/flavor companies have built foundation‐ We established subsidiary in California, USA (1978)‐ Acquired FLAVOR INGREDIENT HOLDINGS, LLC, food and beverage flavor
manufacturing and sales company concentrating on health product area, in 2017
‐ Acquired MISSION FLAVORS & FRAGRANCES, INC., flavor manufacturing and salecompany having strength in flavor used for sweets, such as dairy products, ice-cream, in
2020

Asia
‐ Market Size: Approx. 950bil yen*
‐ Market expanded through economic growth of emerging
countries, dominated by China.
World leading fragrance/flavor companies penetrated into China‐Our company established subsidiaries in Shanghai (2000),
Suzhou (2006), Thailand (2003). Indonesia (2014) and Taiwan(2017)‐Secured manufacturing base in Malaysia through M&A (2014).

South America‐ Market Size: Approx. 260bil yen*
‐ Mainly imports from North America,
Mexico, etc.
Competition intensified in Brazilian market
along with economic growth* Market size by region is our estimate* Exchange Rate 1US$＝108.1 yen (2019)● = Our local hub

30Market share of the top 10 companies in global flavor and fragrance market

Company nameCountry

Million USD
Sales(2020Yr) Market Share1

Givaudan

Switzerland

5,926

23.4%

2

IFF

U.S.

5,084

20.1%

3

Firmenich

Switzerland

3,656

14.5%

4

SymriseGermany

3,096

12.2%

5

ADM/Wild Flavors

Germany

2,812

11.1%

6

Mane SAFrance

1,553

6.1%

7

Takasago

Japan

1,441

5.7%

8

Sensient Flavors

U.S.

742

2.9%

9

Robertet SA

France

524

2.1%

10

T.Hasegawa

Japan

474

1.9%

Total

－

25,308100.0%*Estimated by T. Hasegawa based on the disclosure materials of each company*Sales of Mane SA and Robertet SA are 2019Yr sales

31Market Size in Domestic
Flavors market accounts for 80% of flavor and fragrance total market share in domestic.
(Flavor market covers 50% of flavor and fragrance market in world wide)
Transition of sales in domestic market

2016

2017

2018

(Billion yen)

2019

2020

Total

212.5

216.2

223.8

227.5

225.7

Yr/Yr

5.5%

1.7%

3.5%

1.7%

-0.8%

Source of reference :Japan Flavor & Fragrance Materials
Association Magazine

32

Outline of Current Status ofT. Hasegawa

33Market share of the top 10 companies in domestic flavor and fragrance market

Others14.3％

Company T
31.8％

Company N
5.1％
Company S
6.5％
Company G
11.5％
Company O
12.2％

T. Hasegawa
18.6％*Data is based on non-consolidated sales breakdown of top 10 companies in domestic market,(As of Mar. 2020)

calculated by private market research firm. Sales amount of 100% in above graph is the total sales of top 10 companies
in domestic flavor and fragrance company.
*Fiscal year period of Company T, S, and N is from April to March, and Jan. to Dec. in Company G and O.
*T. Hasegawa’s figures indicated above have been calculated for the period from Apr. 2019 to Mar. 2020.

34

Sales Composition Comparison< Policy in T. Hasegawa>
Focus on sales of compound flavors and fragrances with high added value.
Sells a kind of approximately 12,000 products of fragrance and flavor per year.
(Million yen)
T. Hasegawa(Consolidated）

Company T(Consolidated）

FY ended in Sep. 2020

FY ended in Mar. 2021

Sales

Sales

Share

Share

Flavors

43,15986.0%

88,93659.1%

Fragrances

7,032

14.0%

43,443

28.9%

Aroma Chemicals--

16,540

11.0%

Others

-

-

1,445

1.0%

50,192100.0%

150,367

100.0%

Total
Ratio of gross profits
to salesRatio of operating
income to sales

38.7%

30.0%

10.7%

4.2%

* Sales amount indicated as Aroma chemicals in Company T is composed of Aroma ingredients division and fine chemical division.

35

Flavor Sales Share by market
Sales share for beverages is high and the sales for beverages has fluctuation in line withseasons.

OthersApprox. 11%
Seasoning
Approx. 11%

Beverages
Approx. 31%

Instant noodle
Approx. 10%

Confectionary
Approx. 13%

Dairy
Approx. 24%*The share indicated above is calculate as 100% for total non-consolidated sales of FY2021 2Q
regarding the companies which are possible to separate sales by industry.

36

Additional
Financial Information

37

Consolidated Income Statement Highlights
Contributing Factors for Operating Income Increase
Key factors are sales increase (sales increase at Chinese subsidiaries, contribution of
MISSION), improvement of sales cost ratio(Million yen)yr/yr

FY2020 2Q
ActualFY2021 2Q
ActualValue％

Net sales

24,462100.0%

26,135100.0%

1,672

6.8%

Sales of Chinese subsidiaries increased
Sales of MISSION contributed

Cost of sales

15,11461.8%

15,582

59.6%

467

3.1%

Sales cost ratio improved through increase of sales at Chinese subsidiaries and change of sales
composition

Gross profit

9,348

38.2%

10,553

40.4%

1,204

12.9%

SG&A expenses

6,878

28.1%

7,584

29.0%

705

Started amortization of intangible fixed assets associated with acquisition of MISSION (goodwill:
10.3% 142mil yen, client-related assets: 89mil yen)
Reported acquisition-related costs for MISSION (231mil yen)

Operating incom

2,469

10.1%

2,968

11.4%

499

20.2%

Ordinary income

2,688

11.0%

3,304

12.6%

616

22.9%

Profit before
income taxes

3,008

12.3%

4,435

17.0%

1,426

(Extraordinary income)
47.4% FY2020 parent company Gain on sales of fixed assets 320 million yen was caliculated
FY2021 parent company Gain on sales of investment securities 1,137 million yen was caliculated

Net income

2,092

8.6%

3,138

12.0%

1,045

49.9%

Contributing Factor

38

Consolidated Balance Sheet Highlights(Million yen)Sep. 30
2020

Mar. 312021

Increase or
Decrease

Current assets

59,01350,241-8,772

Increase of cash and deposits: 854mil yen
Increase of account receivable: 257mil yen
Decrease of securities: -10,000mil yen

Fixed assets

54,431

67,665

13,234

Increase of goodwill of MISSION (U.S.): 5,778mil yen
Increase of MISSION (U.S.) client-related assets: 7,455mil yen

Total assets

113,445

117,907

4,462

Current liabilities

10,261

9,686

-574

Decrease of reserve for bonuses: -524mil yen

Long-term liabilities

10,965

11,465499

Increase of lease liabilities: 216mil yen
Increase of retirement benefit obligations: 184mil yen

Total liabilities

21,22621,151-74

Total net assets

92,21896,755

4,537

113,445

117,907

4,462

Total liabilities andnet assets

Contributing Factor

Quarterly net income: 3,138mil yen
Dividend of surplus: -912mil yen
Increase of foreign currency translation adjustment reserve: 2,484mil yen

39Consolidated Statement of Cash Flows(Million Yen)FY2020 2Q
ActualFY2021 2Q
ActualIncrease or
Decrease

Major Account Item for 2nd Quarter of Current Fiscal Year

Quarterly net income before tax adjustment: 4,435mil yen
Amortization cost: 1,481mil yen
2,213Gain on sale of investment securities: -1,137mil yen
Corporate tax, etc. payment: -727mil yen

Cash flows fromoperating activities

2,179

4,393

Cash flows frominvesting activities

1,163-13,001

Cash flows fromfinancing activities

-753

-934

-180 Dividend payment: -912mil yen

Effect of currencychange on cash andcash equivalents

16

278

262

―

Net Change in cash andcash equivalents

2,606-9,263-11,869―

Cash and Cashequivalents at beginningof period

20,89825,3604,461―

Cash and cash
equivalents at end of
period23,50516,097-7,407―-14,164 Acquisition of shares of subsidiaries: -12,885mil yen

40Capital Investment, Depreciation & Amortization, R&D Expenses (Consolidated)(Million Yen)FY2021Plan

FY2021 2Q
ActualProgress(%)

CapitalInvestment

3,605

1,366

37.9%

Depreciation&
Amortization

3,158

1,481

46.9%

R&D
Expenses

4,682

2,121

45.3%

41

T. Hasegawa Non-consolidated ( Actual )(Million Yen)FY2020 2Q
ActualValue

FY2021 2Q
Actual

Share

Value

Achievement

Share

Progress*vs annual Plan

yr/yr
Value

％

％

Net sales

18,147100.0%

17,897100.0%

-249

-1.4%

48.5%

Cost of sales

11,31462.4%

10,941

61.1%

-372

-3.3%

48.1%

Gross profit

6,832

37.6%

6,955

38.9%

123

1.8%

49.2%

SG&A expenses

4,951

27.3%

5,287

29.5%

335

6.8%

49.3%

Operating income

1,880

10.4%

1,668

9.3%

-212

-11.3%

48.8%

Ordinary income

3,100

17.1%

1,965

11.0%

-1,135-36.6%

50.7%

Profit before
income taxes

3,414

18.8%

3,096

17.3%

-318

-9.3%

54.0%

Net income

2,590

14.3%

2,310

12.9%

-280

-10.8%

55.4%

・Sales declined mainly due to sales decrease in flavors for beverages.
・Operating income declined mainly due to sales decrease and increase of SGA expenses associatedwith reporting of costs related to acquisition of MISSION.
・Ordinary income declined because of previous year reporting of dividends received from Chinese
subsidiaries.
・Net income declined mainly due to decrease of ordinary income, despite increase of gain on sale ofinvestment securities.
* Percentage progress vis-à-vis revised plan published on May 7, 2021

42

U.S. Subsidiaries (consolidated base) (Actual)*Consolidated profit and loss statement for U.S. including T.HASEGAWA U.S.A., INC. and
MISSION FLAVORS & FRAGRANCES, INC.
*Because MISSION FLAVORS & FRAGRANCES, INC. was merged in Dec. 2020, the current year’s data is
3 month performance from Jan. to Mar. 2021
(Million Yen)

Yen Basis
Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY2020 2Q
Value
Share
3,075
100.0%
1,827
59.4%
1,248
40.6%
964
31.4%
283
9.2%
283
9.2%
226
7.4%
Yen 108.84/USD

FY2021 2Q
Value
Share
3,898
100.0%
2,344
60.1%
1,554
39.9%
1,343
34.5%
210
5.4%
223
5.7%
173
4.5%
Yen 105.20/USD

yr/yr
Value
823
516
306
379
-72
-59
-52

％
26.8%
28.3%
24.5%
39.3%
-25.7%-21.1%-23.1%

3.3% higher(Thousand US$)

Local Currency
Basis
Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY2020 2Q
Value
Share
28,258100.0%
16,792
59.4%
11,466
40.6%
8,864
31.4%
2,602
9.2%
2,604
9.2%
2,077
7.4%

FY2021 2Q
Value
Share
37,061100.0%
22,28660.1%
14,77439.9%
12,774
34.5%
2,000
5.4%
2,124
5.7%
1,652
4.5%

yr/yr
Value
8,802
5,494
3,308
3,909
-601
-479
-424

％
31.2%
32.7%
28.9%
44.1%
-23.1%-18.4%-20.4%・ Sales increased mainly from contribution of sales of MISSION (for 3 months).
・Operating income decreased due to reporting of goodwill amortization costs andcosts related to acquisition of MISSION.

43

Chinese Subsidiaries (consolidated base) (Actual)*Consolidated profit and loss statement for China including T.H. Shanghai and T.H. Suzhou.
(Million Yen)

Yen Basis
Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY2020 2Q
Value
Share
3,067
100.0%
2,038
66.4%
1,029
33.6%
708
23.1%
320
10.4%
366
12.0%
273
8.9%
Yen15.52/RMB

FY2021 2Q
Value
Share
4,027
100.0%
2,257
56.0%
1,770
44.0%
702
17.5%
1,067
26.5%
1,121
27.9%
509
12.6%
Yen16.08/RMB

yr/yr
Value
960
218
741
-5
747
755
235

％
31.3%
10.7%
72.0%
-0.8%
233.4%
206.0%
86.0%

3.6% lower(Thousand RMB)

Local Currency
Basis
Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY2020 2Q
Value
Share
197,647
100.0%
131,329
66.4%
66,31733.6%
45,68023.1%
20,637
10.4%
23,61812.0%
17,6508.9%

FY2021 2Q
Value
Share
250,490
100.0%
140,370
56.0%
110,12044.0%
43,71617.5%
66,403
26.5%
69,76327.9%
31,686
12.6%

yr/yr
Value
52,8439,040
43,802-1,96345,766
46,144
14,036

％
26.7%
6.9%
66.1%
-4.3%
221.8%
195.4%
79.5%

・Sales increased mainly from sales increase in flavors for instant noodles and beverages.
・Operating income increased from sales increase, improvement of sales cost ratio, SGA
expense decrease.
44

Malaysian Subsidiary (Actual)* Profit and Loss Statement of T HASEGAWA FLAVOURS (KUALA LUMPUR) SDN. BHD.

Yen Basis
Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY2020 2Q
Value
Share
431
100.0%
249
57.8%
182
42.2%
161
37.4%
21
4.9%
27
6.3%
18
4.3%
Yen 26.13/MYR

FY2021 2Q
Value
Share
494
100.0%
287
58.2%
206
41.8%
148
30.0%
58
11.9%
65
13.3%
48
9.8%
Yen 25.77/MYR(Million Yen)

yr/yr
％
14.6%
15.3%
13.5%
-8.1%
178.9%
140.7%
160.9%

Value
62
38
24
-12
37
38
29

1.4% higher(Thousand Malaysian Ringgit)

Local Currency
Basis
Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY2020 2Q
Value
Share
16,520100.0%
9,544
57.8%
6,975
42.2%
6,170
37.4%
805
4.9%
1,042
6.3%
709
4.3%

FY2021 2Q
Value
Share
19,190100.0%
11,160
58.2%
8,029
41.8%
5,752
30.0%
2,277
11.9%
2,544
13.3%
1,876
9.8%

yr/yr
Value
2,669
1,615
1,054
-418
1,472
1,501
1,167

％
16.2%
16.9%
15.1%
-6.8%
182.8%
144.0%
164.6%

・Sales increased mainly from sales increase in products for beverages.
・Operating income increased from sales increase and SGA expense decrease.
45

Caution with Respect to Forward-Looking Statements:
This material is composed based on data as of . May 7th 2021 and the purpose to publish thismaterial is to offer information of management plan and consolidated financial statement.
This material contains forward-looking statements about the future performance of T. Hasegawa,which are based on our management’s assumptions and beliefs taking into account all information
currently available to it. Therefore, please be advised that and uncertainties could cause actual
results to differ materially from those discussed in our forward-looking statements, and in addition,
forward looking statements could be changed without notice. Please also note that we will assume
no responsibility for any omission or error in the statements and data in this material.
Please also note that we will assume no responsibility for any omission or error in the statements
and data in this material. This material is published by T. Hasegawa and all contents belong to thecompany. The content is not to be copied or distributed without permission.

46