Financial Results for the Year
Ended September 30, 2015

T．HASEGAWA CO., LTD.
November 13, 2015

IndexⅠ．Summary of the Consolidated Financial Statements

・・・ P2 - P7

－ Market Environment－ Consolidated Results－ Net Sales by Segments－ Net Sales by Region－ Operating Income by Region

Ⅱ. Global Strategies

・・・ P8 - P16－ Domestic Strategies－ Overseas Strategies

Ⅲ． Three-Year-Plan
Ⅳ. Shareholder Redemption
Ⅴ. Management Strategies
Ⅵ. Appendix

・・・ P17 - P19
・・・ P20 - P21
・・・ P22 - P23
・・・ P24 - P45

Note1：T. HASEGAWA's date for settlement of accounts is September 30.
Note2：Unless otherwise noted, the indication of the fiscal year are as follows.
・FY14(From October 2013 to September 2014)
・FY15(From October 2014 to September 2015)

T．HASEGAWA CO., LTD.

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1

Ⅰ． Summary of the Consolidated
Financial Statements

T．HASEGAWA CO., LTD.

Copyright© T.HASEGAWA CO., LTD. All rights reserved.

2

Market Environment

Ⅰ． Summary of the Consolidated
Financial Statements

Domestic Market• Domestic flavors and fragrances market in 2014 (January-December) shrank by approximately 5% due to the impactof the consumption tax increase.
• Beverage market slightly grew in 2015 (January-September).
• The market in summer season (June-August) has marked higher levels compared to the same period of theprevious year as a result of a short rainy season and hot weather in early August.

Overseas Market••••

Global flavors and fragrances market in 2014 grew by approximately 4%.
Beverage market in China has expanded due to the growing demand for carbonated drinks and tea beverages.
Beverage market in USA expanded slightly.
In Southeast Asia, beverage, dairy product, instant noodle, snack and confectionery market expanded, withremarkable growth in tea beverage category.

T．HASEGAWA CO., LTD.

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3

Ⅰ． Summary of the Consolidated
Financial Statements

Consolidated Results

Year-on-Year: Net sales increased due to the sales growth of overseas subsidiaries in China, USA and Malaysia.
Operating income slightly decreased due to the increase in SG&A expenses.
Vs. Plan：Net sales of the parent company was lower than planned which is largely due to the decrease in sales of“Fruit processing products.” Net sales was also impacted by economic slowdown derived from the consumption
tax increase, which lasted longer than expected.
Yen million

Achievement
FY14
Actual

FY15
Plan

FY15
Actual

yr/yr
Value

vs. Plan
％

Value

％

Net sales

44,91747,35047,228

2,310

5.1%

-121

-0.3%

Cost of sales

28,55829,77029,949

1,391

4.9%

179

0.6%

Gross profit

16,35917,58017,278

919

5.6%

-301

-1.7%

SGA expenses

11,977

12,55012,925

947

7.9%

375

3.0%

Operating income

4,381

5,030

4,352

-28

-0.7%

-677 -13.5%

Ordinary income

4,939

5,250

4,852

-87

-1.8%

-397

-7.6%

Income before
income taxes

4,832

5,100

4,613

-219

-4.5%

-486

-9.5%

Net income

3,239

3,510

3,043

-195

-6.0%

-466 -13.3%

T．HASEGAWA CO., LTD.

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4

Ⅰ． Summary of the Consolidated
Financial Statements

Net Sales by Segments

Overall sales increased due to the sales growth of Chinese subsidiaries in both flavor and fragrance segments,
as well as the acquisition of Malaysian subsidiary.

Yen million
FY14
Actualyr/yr

FY15
ActualValue

Remark%Fragrances

6,062

6,219

157

2.6%

Sales of the subsidiary in China increased

Flavors

38,85541,008

2,153

5.5%

Sales of the subsidiary in China increased
Increase in sales related to acquisition

44,91747,228

2,310

5.1%

－

Total

yr/yr (%)

FY15 Actual
Domestics

Fragrances+2.6％

Overseas

Flavors

+5.5％

Total

+5.1％
0

10,00020,00030,000 40,000
Yen million

50,000* FY2015 overseas sales ratio 31.8%

T．HASEGAWA CO., LTD.

Copyright© T.HASEGAWA CO., LTD. All rights reserved.

5

Ⅰ． Summary of the Consolidated
Financial Statements

Net Sales by Region

Consolidated sales increased due to the sales growth of overseas subsidiaries despite the decrease in sales ofthe parent company.

Yenmillion
millionYen

Yen million
FY14
Actual

FY15
ActualParentcompany

36,251

36,081

-170

-0.5%

China

6,700

8,230

1,530

22.8%

USA

2,481

2,895

414

16.7%

yr/yr

%

+683
+414
-1,726+1,530-170
47,22844,917
Malaysia

-

683

683

-

Adjustment

-515

-662

-147

-

Consolidated

44,91747,228

2,310

5.1%

0

• Parent company : Sales decreased in “Fruit processing products” and household products⇒ Decrease in net sales⇒ Increase in net sales• China: Sales increased in both flavor and fragrance segments• USA: Sales increased owing to the depreciation of JPY while dollar-based sales remained flat
⇒ Increase in net sales• Malaysia: Sales have been added to consolidated sales since January

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6

Ⅰ． Summary of the Consolidated
Financial Statements

Operating Income by Region

Consolidated operating income decreased due to the decline in profit of subsidiaries in China and USA.

Yenmillion
millionYen

Yen million
FY14
Actual

FY15
Actualyr/yr%Parentcompany

2,790

2,836

45

1.6%

+45

China

1,564

1,400

-164

-10.5%-1,367

USA

18

-50

-68

-

Malaysia

-

95

95

-

Adjustment

7

70

62

-

Consolidated

4,381

4,352

-28

-0.7%

-164

-68

4,381

4,352

0

• Parent company : Cost of sales ratio decreased⇒ Increase in operating income• China: Cost of sales ratio increased due to the expansion of Suzhou plant⇒ Decrease in operating income• USA• Malaysia: SG&A expense increased⇒ Decrease in operating income: Recorded favorable sales and maintained operating income

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7

Ⅱ．Global Strategies

T．HASEGAWA CO., LTD.

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8

Ⅱ．Global Strategies

Domestic Strategies
Basic
Strategy

Expand market shares by anticipating new markets stemming from aging society and healthy trends

Ongoing Projects and Progress

FY2015 Performance

Promotion of Solution-Oriented Sales Activities•••

Launch project team aimed to strengthen marketing in order to increase sales
Proposition of new materials with high durability of aromas and sweet taste, and functional materials
Proposition of materials which add delicious flavors to low-sugar, low-salt and low-fat diet

Enhancing Capability to Provide Flavors and Fragrances for New Applications••

Focusing on new categories such as non-alcoholic beers, alcoholic beverages, health foods, and foods
for medical uses
Developing flavors which can replace food materials (milk, vegetables, fruit juice, meat etc.)

Mid-to-Long Term Project••

Research and development of fermentation-derived natural flavors through business alliance with
Ajinomoto Co., Inc.
Pilot project with Universal Leaf Tobacco Company, Inc. to grow and harvest vanilla beans to diversify
supply sources

NetsaleｓNets ales（million yen）

Net sales
39,400 million yen
Operating income
4,600 million yen

15,00050,00040,000

Sales & Profit Target(FY2020)

Operating
Income”Net sales” and ”Operating Income”

Opereting
Incom eNet Sales
36,081million yen(-0.5% Yr/Yr)
Operating Income
2,836 million yen(+1.6% Yr/Yr)

Yr/Yr
-2.4％

Yr/Yr
-0.1％

Yr/Yr
-3.1％

Yr/Yr
-4.5％

Yr/Yr
-0.5％

Yr/Yr
+2.8％

Yr/Yr
+1.0％

Yr/Yr
+1.0％

12,00030,0009,000

20,000

6,000

10,0003,000

00Fy2011Fy2012Fy2013

T．HASEGAWA CO., LTD.

Fy2014Fy2015Fy2016(Plan)

Fy2017(Plan)

Fy2018(Plan)

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9

Ⅱ．Global Strategies

Mid-to-Long Term Project

Business Alliance with Ajinomoto Co., Inc.
•
Background

Reason••Dramatically growing market for natural flavors backed by emerging
demands for natural beverages & foods
Increasing demand for natural flavors in Europe and USA
Major food companies announced the removal of all synthetic
flavors derived from chemical raw materials, from theirconfectionery products• Natural flavor is defined by European and American regulations as anatural extract or a fermentation product.
⇨ Fermentation products have become a hot topic, as extract
products face problems with costs and securing raw materials.
• Ajinomoto Co., Inc. has its original leading technology in the fields ofbiotechnology and fermentation technology, cultivated through theirresearch and development of amino acids.

Prospect

Necessity to reinforce thesupply of natural flavors

The collaboration of TH
and Ajinomoto’s technology
will enable the research,development andcommercialization of
fermentation-derived natural
flavors

Aim to commercialize fermentation-derived natural flavors in a few years and expand the business overseas

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Ⅱ．Global Strategies

Mid-to-Long Term Project

Business Alliance with Universal Leaf Tobacco Company, Inc.
BackgroundPre-existing concerns about the necessity to diversify and to reinforce supply sources of naturalingredients•
Reason•Plan

Current
Situation

Universal has an advantage in plant cultivation such as tobacco leaf, dried vegetable andfruits
The alliance will ensure the access to steady supply sources of natural raw materials.

• Plan to collaborate in a pilot project for growing vanilla beans in Brazil• Decisions on the commercialization of the vanilla beans will be made according to trial
outcomes••

Details of the project are currently under discussion
Plan to run growing trial by January 2016

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11

Ⅱ．Global Strategies

Overseas Strategies -ChinaBasic
Strategy

Reinforce revenue base for further sales expansion in the Chinese market by active investments

Ongoing Projects and Progress

FY2015 Performance
Net Sales
RMB 430million (8,230million yen)(+7.0% Yr/Yr)
Operating Income
RMB 73 million (1,400 million yen)(-22.0% Yr/Yr)

Enhancement of Production Capacity in Suzhou•••

The total investment to Suzhou plant was approx. 2 billion yen
This project is expected to increase the productive capacity in China by approx. 30%
The operation started in June 2015, and approx. 70% capacity utilization is expected throughout
Suzhou plant

Enhancement of R&D Facilities in Shanghai••

New R&D facility in Shanghai has been designed aimed to start operation in the first half of 2017
The total investment is expected to be approx. 1.5 billion yen, with a total floor area of approx.
5,000 square meters

Sales & Profit Target(FY2020)

Localize and Strengthen Management Structure to Acquire New Customers,
Further Cooperate with Existing Customers, and to Increase Sales••

Net sales
RMB 680 million (13,000 million yen)
Operating income
RMB 130 million (2,500 million yen)Classification of customers: International Companies 60%, Local Companies 30%,
Japanese Companies 10%
Aim to increase business opportunities with both International and local companies”Net sales” and ”Operating Income”

Netsaleｓ（Million RMB）

600
Netsales

500
400

Yr/Yr
+3.7％

Opereting
Income

Yr/Yr
-1.3％

Yr/Yr
+10.9％

Yr/Yr+11.0％

Yr/Yr
+7.0％

Yr/Yr
+8.4％

Yr/Yr
+10.0％

Yr/Yr+10.2％

Operating
Income

300
250
200

300

150

200

100

100

50

0

0
Fy2011Fy2012Fy2013

T．HASEGAWA CO., LTD.

Fy2014Fy2015Fy2016(Plan)

Fy2017(Plan)

Fy2018(Plan)※Consolidated Net sales and operating
income of T. Hasegawa’s two
subsidiaries in China

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12

Ⅱ．Global Strategies

Overseas Strategies -ChinaBeverage and Food Market in China

Although economic growth is slowing down, steady sales growth is expected in beverage and food market.

Transition of Food Market in China

Transition of Beverage Market in China
350
300
250

Other
Sports and Energy Drinks
RTD Tea
Juice
Carbonates

Yr/Yr+11.2％
Yr/Yr+11.9％

8
22

Yr/Yr
+8.9％

9
27

(Foods contains flavors)
350

10
33

300

Ice Cream, Frozen Desserts and Yoghurt
Instant Noodles
Snack
Confectionery

250
Yr/Yr
+9.2％

85
77

200

200

70

Yr/Yr
+8.6％

Yr/Yr
+8.6％

78
67

57

150
65

100
50

67

72

150
54

4
21

100

24

98

106

24

117

50

50

0

56

50

55

59

2013

2014

2015
（Prospect）

25
26

53

52

47

25

53

0

2005

・・・・・・・

2013

2014

2015
（Prospect）

Beverage market in China has tripled in the last ten years.
The market is expected to mark a double-digit growth rate in2015 with notable growth in carbonated drink and tea
beverage.
T．HASEGAWA CO., LTD.

2005

・・・・・・・

Each category has more than doubled. It is assumed to
expand at the same rate in 2015.
* Reference: Euromonitor International* Calculated compared with the market size of 2005 as 100%
Copyright© T.HASEGAWA CO., LTD. All rights reserved.

13

Ⅱ．Global Strategies

Overseas Strategies -ChinaTransition of Sales and Capital Investment in China(RMB million)

700

600

Capital Investment
Net sales

500

400

1st constructionof Suzhou Plant
RMB 293 Million
2nd constructionof Suzhou Plant
RMB 160 Million

300

New R&D facility
in Shanghai
Approx. RMB 80 Million(Plan)

Total capital
investment from 2000
RMB 740 Million

200

100

0
FY2008FY2009FY2010FY2011

November
2009
Suzhou plant
starts operation

FY2012FY2013

FY2014FY2015June 2015
Suzhou plant
No.2 starts
operation

FY2016…

FY2017…

FY2018…

The first half of2017
New R&D facility inShanghai will start
operation*TH Shanghai established in 2000. Shanghai plant started operation in 2001 with capital investment approx. RMB 73 Million.
*TH Suzhou established in 2006.

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14

Ⅱ．Global Strategies

Overseas Strategies -USABasic
Strategy

Aim to expand sales of savory and beverage flavors
FY2015 Performance

Ongoing Projects and Progress
Realignment of New Management Structure••

Recruitment of staff experienced in beverage industry, in order to grow sales in beveragecategory
Aim at sales growth in local beverage market in USA⇨ Beverage market can be divided into two categories: beverages for the global market, andbeverages for the local market that capture the preferences of the region⇨ There seem to be more chances to become a big player in the local market

Enhancement of R&D Facilities and Approach to Customers••

Renovated R&D and administration building which enhance communication between R&D
staff and customers
Strengthening R&D support by maintaining close exchanges of information between Japanand USA⇨ Making use of Japanese technology which has an advantage in tea and coffee beverage

Net sales（Million USD）

”Net sales” and ”Operating Income”

40
Netsales

30

20

Yr/Yr
+16.8％

Opereting
IncomeYr/Yr+15.8％

Yr/Yr+16.3％
Yr/Yr+12.3％

Yr/Yr
+4.7％

Yr/Yr
+11.0％

Sales & Profit Target(FY2020)
Net sales
40 million US$ (4,800 million yen)
Operating income
3.3 million US$ (400 million yen)

Operating
IncomeYr/Yr+11.0％

4

3

Yr/Yr
+0.1％

2

10

1

0

0
Fy2011Net Sales
24 million US$ (2,895 million yen)(+0.1% Yr/Yr)
Operating Income/Loss-0.42 million US$ (-50million yen)
(FY2014 Operating Income 1.8 million
US$ )Fy2012Fy2013-10

Fy2014Fy2015Fy2016(Plan)

Fy2017(Plan)

Fy2018(Plan)-1

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15

Ⅱ．Global Strategies

Overseas Strategies –Southeast AsiaBasic
Strategy

Expand sales through cooperation of sales base in Thailand, Indonesia and production base in Malaysia

Ongoing Projects and Progress

FY2015 Performance

Visit Customers with Sales and R&D Staff•

Net Sales
2,133 million yen (+23.5% Yr/Yr)
Operating Income
402 million yen (+40.3% Yr/Yr)

This effort brought good results for “Strengthening business relationship with major local
customers located in “High-priority-countries”

Acquisition of Local Production Base in Malaysia••

Acquired “Peresscol Sdn. Bhd.,” , a Halal-certified flavors sales and production company which
has its strengths in areas such as seasoning powder and liquid flavors⇨ Advantage: Reduced shipping time/ Capturing the preferences of the region/ Price advantage
derived from low manufacturing cost/ Halal-certification
Developing flavors which capture the preferences of the region, under the leadership of R&D staff
and production staff from Japan

Reinforce Sales Activities in Southeast Asia••

Assignment of local staff members in Vietnam & Philippines in addition to the current sales bases
Strengthening sales activities in Southeast Asia through collaboration of each main bases
Netsales”Net sales” and ”Operating Income”

4,000

Operating（ million yen） Income

Sales & Profit Target(FY2020)
Net sales
3,800million yen
Operating income
800 million yen

2,000

Peresscol Sales

3,500

Other Sales
Yr/Yr+12.8％

Peresscol Operating Income

3,000

Other Operating Income
Yr/Yr+23.5％

2,500
2,000
1,500

Yr/Yr
+1.5％

Yr/Yr
+11.0％

1,500

Yr/Yr
+20.1％

Yr/Yr+26.3％

1,000

1,000

500

500
0
Fy2013Fy2014

T．HASEGAWA CO., LTD.

Fy2015Fy2016(Plan）

Fy2017(Plan）

Fy2018(Plan）

0

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16

Ⅲ．Three-Year-Plan

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17

Income statements (Consolidated)

Ⅲ．Three-Year-Plan

Non-consolidated: The declined sales of “Extract product for tea beverages“ is assumed to bottom out,
and contributions from new products are expected.
China: Although economic growth is slowing down, steady sales growth is expected due to further expansion ofbeverage market.
USA: Steady growth of savory products and contribution of flavors for beverage products are expected.
Southeast Asia : Aim at further sales growth by acquisition of local production base
Yen million

FY2015(Actual)

FY2016(Plan)FY2017(Plan)FY2018(Plan)Net sales

47,22849,43051,10053,000

Cost of sales

29,94931,73032,46033,550Operating income

4,352

4,380

4,870

5,340

Ordinary income

4,852

4,640

5,090

5,570

Net income

3,043

3,070

3,450

3,780

¥119.31 per U.S.$¥19.14 per RMB¥120.00 per U.S.$¥19.00 per RMB¥120.00 per U.S.$¥19.00 per RMB¥120.00 per U.S.$¥19.00 per RMB

Sales growth ratio

5.1%

4.7%

3.4%

3.7%

Sales cost ratio

63.4%

64.2%

63.5%

63.3%

Operating income ratio

9.2%

8.9%

9.5%

10.1%

Ordinary income ratio

10.3%

9.4%

10.0%

10.5%

Net income ratio

6.4%

6.2%

6.8%

7.1%

Overseas net sales ratio

31.8%

33.9%

36.1%

38.2%

Exchange rates* Three-Year-Plan of T. Hasegawa group is revised every year

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18

Capital Investment, Depreciation & Amortization, R&D Expenses

Ⅲ．Three-Year-Plan• Capital investment increased due to rebuilding of Head Office scheduled to be completed in March 2016.
(FY2015 ¥0.6bn, FY2016 ¥1.4bn )• The second expansion phase of Suzhou plant finished. Operation of the new plant is scheduled to start from June 2015.
(FY2015 ¥0.7bn)• Construction of new R&D facility in Shanghai is planned to start its operation in first half of 2017.
(FY2016 ¥0.8bn, FY2017 ¥0.6bn )• R&D expenses is planned to be kept at around 9% of consolidated sales.
Yen million

Fy2015(Actual)Fy2016(Plan)

Fy2017(Plan)

Fy2018(Plan)

Consolidated

4,075

4,324

2,427

1,907

Non-consolidated

2,780

2,795

1,376

1,476

Depreciation
Consolidated&
Amortization Non-consolidated

3,017

3,111

2,941

2,923

2,336

2,216

1,972

1,883

Consolidated

4,238

4,449

4,653

4,834

Non-consolidated

3,301

3,376

3,348

3,338

CapitalInvestment

R&D
Expenses

T．HASEGAWA CO., LTD.

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19

Ⅳ. Shareholder Redemption

T．HASEGAWA CO., LTD.

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20

Ⅳ. Shareholder Redemption

Shareholder Redemption
Basic Policy• Strengthening operating foundations and retaining undistributed profits in order to reinvest in future development,
while also meeting shareholders’ expectations by paying dividends which correspond to our business performance• Targeting approximately 35% of consolidated dividend payout ratio for interim and year-end dividends• Launched a shareholders’ courtesy program starting September 2015 to encourage investors to hold stocks in the
mid-to-long term
Annualdividends

Annual dividends per share(Yen)Consolidated payout ratio

50

50%

40.1％

38.5％

41.0％

41.5％

35.4％

40

40%

30

20

Consolidated
payout ratio

30%

25

30

30

30

30

20%

10%

10

0

0%
Fy2012

T．HASEGAWA CO., LTD.

Fy2013Fy2014Fy2015Fy2016(Plan)

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21

Ⅴ. Management Strategies

T．HASEGAWA CO., LTD.

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22

Ⅴ. Management Strategies

Management Strategies

Basic Strategies
Concentrate management resources on high added value
and profitable compound flavors and fragrances

Achieve steady revenues in domestic market

Aim for growth in overseas market

China Enhancement of production/R&D
structure Acquire new customers, further
cooperation with existing customers

 Enhancing capability to provide flavors andfragrances for new applications

USA Strengthen the efficiency of sales functions
to expand beverage market shares Further increase sales of savory flavors

 Shift sales policies from "Current: 1.Safe, 2.Secure,
3.Inexpensive" to “Taking this one step further: 1.Trust,
2.New proposals, 3.Familiarity"

SoutheastAsia Strengthen regional ties throughcollaboration with oversea bases
 Strengthen business relationship with major
local customers

 Create a well organized team to make solutionoriented suggestions which capture potential
demands of customers

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23

Ⅴ. Appendix

T．HASEGAWA CO., LTD.

Copyright© T.HASEGAWA CO., LTD. All rights reserved.

24Outline of Flavor and Fragrance
Business

T．HASEGAWA CO., LTD.

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25

Ⅴ. Appendix

Flavor & Fragrance Business

Products

Ingredients(Compound Flavors & Fragrances)① Natural Aromatics③ Flavoring（Flavors）

Compounding② SynthesizedAroma Chemicals

Recipes④ Fragrances

Integration of all the R&D
capabilities
Experts who formulate flavors are known as “flavorists”
Experts who formulate fragrances are known as “perfumers”
Flavors and fragrances are tailor-made in accordance to customer requests➩ Formulas created by knowledge and experience of flavorists and perfumers are invaluableassets to flavor and fragrance companies

T．HASEGAWA CO., LTD.

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26

Market Size of
Flavor & Fragrance Industry

T．HASEGAWA CO., LTD.

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27

World Market of Flavor & Fragrance Industry

Ⅴ. Appendix

・Estimated sales volume of global market： 2.6 trillion yen (25 billion US$)North America

Europe, Africa, Middle East

- Market size: Approx.670 billion yen (*)- Market size: Approx. 950 billion yen(*)- As many of the end-users adopt a“preferred supplier” system, major
European and American companies havebuilt the solid business bases- As many of the end-users adopt a “preferred supplier”
system, major European and American companies havebuilt the solid business bases- T. Hasegawa’s subsidiary in California, established in
1978, has sales branches in Atlanta, Chicago, Mexico,
and a laboratory in Princeton

Asia- Market size: Approx. 770 billion yen (*)- Market is growing due to the economic growth ofdeveloping countries including China- Most major flavor and fragrance companies have
expanded operation branches in China- T. Hasegawa established subsidiaries in Shanghai(2000), Suzhou (2006),Bangkok (2003), andIndonesia (Jakarta) (2014)- T. Hasegawa acquired Peresscol Sdn. Bhd. in Kuala
Lumpur, Malaysia in 2014 as a production base

South America- Market size: Approx. 210 billion yen (*)- Majority of flavors and fragrances areimported from North America and Mexico- Competition in Brazilian market
becoming severe due to economic growth(*) = T. Hasegawa estimates● = T. Hasegawa’s offices and plants
T．HASEGAWA CO., LTD.

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28

Ⅴ. Appendix

Worldwide Market Scale of Flavor and Fragrance
・Top 12 companies account for approx. 80% of the global market share
Company nameCountry

USD million
Sales(2014Yr) Market Share1

Givaudan

Switzerland

4,819

19.4%

2

Firmenich

Switzerland

3,291

13.2%

3

IFF

USA

3,089

12.4%

4

SymriseGermany

2,818

11.3%

5

Takasago

Japan

1,247

5.0%

6

Wild Flavors

Germany

1,241

5.0%

7

Mane SAFrance

1,022

4.1%

8

Frutarom

Israel

820

3.3%

9

Sensient Flavors

USA

725

2.9%

10

Robertet SA

France

518

2.1%

11

Huabao Intl.

Hong Kong

436

1.8%

12

T.Hasegawa

Japan

426

1.7%

Subtotal－

20,451

82.2%

Others

－

4,439

17.8%

Total

－

24,890－* US $1≒ 105.6Yen

Source : Leffingwell & Associates
http://www.leffingwell.com/top_10.htm
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29

Ⅴ. Appendix

Size of Domestic Flavor and Fragrance Market
・Sales composition of domestic market ➩ Flavors: 82%, Fragrances: 18%(Global market ➩ Flavors: 50%, Fragrances: 50%)

(Yen billion)

250

Annual Sales
200

12

11

13

12

Fragrances
18%

14
37

34
150

Composition Rate (2014Yr)

Natural Aromatics
Aromatic Chemicals
Fragrances
Ｆｌａｖｏｒｓ

31

34

30
26

25

27

27

28

Flavors
82%

100

134

137

135

139

2010

2011

2012

2013

128

50

0
2014
(Yen billion)

Total

204

212

208

210

200

Year-on-year

7.9%

3.9%

-2.2%

1.0%

-4.8%

T．HASEGAWA CO., LTD.

Source：Japan Flavor and Fragrance
Materials Association

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30

Business Outline of
T. Hasegawa Co., Ltd.

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31

Ⅴ. Appendix

Sales of Domestic Flavor & Fragrance Companies
・Top 5 companies account for approx. 80% of market share (as of March, 2015)

Others23.8%

Company T
32.9%

Company N
5.9%

Company S
7.5%

Company O
9.8%

T. Hasegawa
20.1%*Data is based on non-consolidated sales breakdown of top 10 companies in domestic market, calculated byprivate market research firm
*Fiscal year of Company T, O, S, and N is from April to March* As T. Hasegawa’s fiscal year is from October - September, figure indicated above have been adjusted tocorrespond to reports of other companies

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Ⅴ. Appendix

Sales Breakdown - Segments - (Consolidated)

・Specialize in compound flavors and fragrances with high added value
・Capable of catering to a wide range of products in various quantities➩ Approx. 14,000 products per year
Yen million

Yen million

Company S(Consolidated）
FY ended in Mar. 2015
Sales
Share

T. Hasegawa
Company T(Consolidated）(Consolidated）
FY ended in Sep. 2015 FY ended in Mar. 2015
Sales
Share
Sales
Share
Flavors

41,00886.8%

78,355

Fragrances

6,219

13.2%

36,553

Aroma Chemicals

0

0.0%

15,367

Others00.0%47,228100.0%

Total
Ratio of gross profits
to sales

36.6%

T. Hasegawa（Consolidated）

Compound flavors &Fragrances
27.8% Aroma Chemicals

59.5%

11.7% Overseas
1,376
1.0% Others
131,653
100.0% Subtotal
Ratio of gross profits
30.9%
to salesCompany T（Consolidated）

7,482

45.7%

4,541

27.7%

3,101

19.0%

1,246

7.6%

16,370100.0%

35.0%

Company S（Consolidated）

OthersFragrances

Aroma
Chemicals

OthersOverseas
Fragrances

Flavors

T．HASEGAWA CO., LTD.

Compoundflavors &Fragrances

Flavors
Aroma
Chemicals

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33

T. Hasegawa’s Flavors Sales by Market (Non-Consolidated)

Ⅴ. Appendix

・Large part of total sales accounted by beverages, whose sales are affected by seasonal factors

Seasonings
Approx. 10%

Instant Noodles
Approx. 7%

Confectionery
Approx. 13%

OthersApprox. 11%

Beverage
Approx. 35%

Dairy Products
Approx. 24%

Note: Data calculated based on T. Hasegawa FY15 sales with identifiable industry segments

T．HASEGAWA CO., LTD.

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34

Ⅴ. Appendix

What is HASEAROMA® ?

HASEAROMA® won the “2015 Japan Bioscience, Biotechnology and Agro chemistry Society Award for Achievement inTechnological Research“. This is the first time that the technical development for flavors won this award.
What is the “Japan Bioscience, Biotechnology and Agro chemistry Society Award
for Achievement in Technological Research“?
Awarded to members with technical achievements of practical use in the fields of bioscience,
biotechnology, and agro chemistry by The Japan Bioscience, Biotechnology and Agro chemistrySociety.
It awards companies that record significant achievement in the field of bioscience, biotechnology,
and agro chemistry.
Brochures of HASEAROMA®

What is HASEAROMA® ?
Processed foods are often demanded to equip the same deliciousness as natural foods and meals served at restaurants.

⇩

In many cases, the taste of processed foods depend largely on Flavors. Therefore Flavors need to have elements that add
natural and delicious flavors.

⇩

HASEAROMA® is a flavor series developed through the discovery of new compounds or functions, as a result of close
cooperation with core technology of R&D of flavors (analysis, synthesis and flavor creation)

T．HASEGAWA CO., LTD.

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35

Ⅴ. Appendix

What is HASEAROMA® ?
An example of HASEAROMA® Flavor series

Fruit Flavor

Orange, Lemon, Grapefruit, Apple
Strawberry, Mango, Guava, etc.

Savory Flavor

Wagyu beef, Pork, Chicken soup
Dried bonito, Cod roes, Sauce,Corn, Egg

Beverage Flavor

Coffee, Black tea
Ume liqueur

Dairy & Other Sweet
FlavorMelted butter, Milk, Ricotta cheese

Japanese Flavor

Yuzu, Mandarin orange (Unshu Mikan)

Parmigiano reggiano, etc.

Brown sugar, Wasabi,
Powdered green tea (Matcha/ Maccha)
Soybean flour (Kinako)

T．HASEGAWA CO., LTD.

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36

Financial Information

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37

Ⅴ. Appendix

Comparative Income Statements (Consolidated)

・ Gross profit increased due to increase in net sales and decrease in cost of sales ratio.
However, operating income decreased due to increase in SG&A expenses
Yen million
FY2014
Actual

FY2015
Actual

yr/yr
Value

％

RemarkNet sales

44,917 100.0% 47,228 100.0%

2,310

5.1%

Cost of sales

28,558

63.6% 29,949

63.4%

1,391

4.9% Improvement on sales cost ratio due to slash on manufacturing expenses

Gross profit

16,359

36.4% 17,278

36.6%

919

5.6%

SGA expenses

11,977

26.7% 12,925

27.4%

947

7.9% SGA expenses increased in personnel expenses and goodwill amortization

Operating income

4,381

9.8%

9.2%

-28

-0.7%

4,352

Ordinary income

4,939

11.0%

4,852

10.3%

-87

(FY2014)
Foreign exchange gain of 198m was calculated as Non-operating income-1.8% (FY2015)
Foreign exchange gain of 160m was calculated as Non-operating income

Income before
income taxes

4,832

10.8%

4,613

9.8%

-219

-4.5%

Net income

3,239

7.2%

3,043

6.4%

-195

-6.0% accordance with the resulting reduction in the effective corporation tax rate from

Increase in tax expenses due to a partial reversal of deferred income taxes innext fiscal year (-246m)

T．HASEGAWA CO., LTD.

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Ⅴ. Appendix

Comparative Balance Sheets (Consolidated)
Yen million

September 30 September 30
2014
2015

Increase or
Decrease

Current assets

47,90949,744

1,835

Fixed assets

44,03651,8607,823

Total assets

91,946

101,604

9,658

Remark・Decrease in cash and deposits: -737m Yen
・Increase in marketable securities: 499m Yen
・Increase in Inventries: 715m Yen
・Increase in account receivable-trade: 1,471m Yen
・Increase in goodwill: 1,319m Yen
・Increase in leasehold: 728m Yen
・Increase in property, plant and equipment : 1,858m Yen
・Increase in investment securities: 3,675m Yen

Current liabilities

10,37012,107

1,736

・Increase in account payable-other: 570m Yen
・Increase in income taxes payable: 500m Yen
・Increase in accured consumption taxes: 391m Yen

Long-term liabilities

8,778

10,061

1,283

・Increase in deferred tax liabilities: 1,200m Yen
・Increase in retained earnings: 3,043m Yen
・Cash dividends paid: -1,245m Yen
・Sales of treasury stock: 1,159m Yen
・Disposal of treasury stock: 591m Yen
・Foreign currency translation adjustment: 356m Yen
・Valuation difference on available-for-sale securities: 2,773m Yen

Total net assets

72,796

79,436

6,639

Total liabilities andnet assets

91,946

101,604

9,658

T．HASEGAWA CO., LTD.

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39

Ⅴ. Appendix

Comparative Statement of Cash Flows (Consolidated)
Yen million
FY2014
Actual

FY2015
ActualIncrease or
Decrease

Remark・Income before taxes: 4,613m Yen
・Depreciation & Amortization: 3,017m Yen
・Increase in notes and accounts receivable-trade: -1,138m Yen

Cash flows from operating
activities

5,019

5,969

Cash flows from investing
activities-1,518-6,769Cash flows from financing
activities-1,460337

Effect of currency change
on cash and cash
equivalents

262

165

-97

―

Net Change in cash andcash equivalents

2,303

-297

-2,601―

Cash and Cashequivalents at beginningof period

18,59520,8982,303―

Cash and cash
equivalents at end of
period20,89820,601-297―

T．HASEGAWA CO., LTD.

949

・Acquisition of stock in subsidiary: -3,026m Yen-5,251 ・Acquisition of tangible fixed assets: -3,293m Yen
・Cash dividends paid: -1,246m Yen

1,798 ・Proceeds from disposal of treasury shares：1,621m Yen

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40

Capital Investment, Depreciation & Amortization, R&D Expenses

Ⅴ. Appendix

Yen million

FY2015
Plan
CapitalInvestment
Depreciation&
Amortization
R&D
Expenses

FY2015
ActualProgress(%)

Consolidated

3,732

4,075

109.2%

Non-consolidated

2,599

2,780

107.0%

Consolidated

3,118

3,017

96.8%

Non-consolidated

2,465

2,336

94.8%

Consolidated

4,257

4,238

99.6%

Non-consolidated

3,424

3,301

96.4%

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T. HASEGAWA CO., LTD (Non-consolidated) Income statements

Ⅴ. Appendix

Yen million

FY2014
Actual
Value

Share

FY2015
Plan
Value

Share

FY2015
ActualValue

Achievement

Share

yr/yr

vs Plan

Value

％

Value

％

Net sales

36,251 100.0% 37,720 100.0% 36,081 100.0%

-170

-0.5%

-1,638-4.3%

Cost of sales

24,001 66.2% 24,690 65.5% 23,684 65.6%

-317

-1.3%

-1,005-4.1%

Gross profit

12,249 33.8% 13,030 34.5% 12,396 34.4%

146

1.2%

-633

-4.9%

SGA expenses

9,458 26.1%

9,530 25.3%

9,560 26.5%

101

1.1%

30

0.3%

Operating income

2,790

7.7%

3,500

9.3%

2,836

7.9%

45

1.6%

-663 -19.0%

Ordinary income

3,356

9.3%

3,810 10.1%

3,405

9.4%

48

1.5%

-404 -10.6%

Income before
income taxes

3,261

9.0%

3,660

9.7%

3,172

8.8%

-89

-2.8%

-487 -13.3%

Net income

2,177

6.0%

2,590

6.9%

2,068

5.7%

-109

-5.0%

-521 -20.1%

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42

Ⅴ. Appendix

T. HASEGAWA Shanghai and Suzhou Comparative Income Statements
Consolidated profit and loss statements of TH Shanghai and TH Suzhou
Yen million

Yen Basis
Net Sales
Cost of sales
Gross profit
SGA expenses
Operating income
Ordinary income

FY2014
Value
Share
6,700
100.0%
3,512
52.4%
3,187
47.6%
1,622
24.2%
23.4%
1,564
1,644
24.5%

FY2015
Value
Share
8,230
100.0%
57.8%
4,758
3,472
42.2%
2,071
25.2%
1,400
17.0%
1,414
17.2%

Yen16.67/RMB

Yen19.14/RMB

yr/yr
Value
1,530
1,246
284
448
-164
-230

％
22.8%
35.5%
8.9%
27.7%
-10.5%-14.0%

14.8% lawer

RMB thousand

Local Currency
Basis
Net Sales
Cost of sales
Gross profit
SGA expenses
Operating income
Ordinary income

FY2014
Value
Share
401,928100.0%
210,70352.4%
191,22547.6%
97,34524.2%
93,87923.4%
98,66824.5%

FY2015
Value
Share
430,035
100.0%
248,61557.8%
181,42042.2%
108,237
25.2%
73,18317.0%
73,890
17.2%

yr/yr
Value
28,10737,912-9,804
10,891-20,696-24,778

％
7.0%
18.0%
-5.1%
11.2%
-22.0%-25.1%

・Sales increased on both local currency basis and Japanese yen basis
・Operating income decreased due to increase in cost of sales from
1. changes in product mix (sales composition by product)
2. increase in depreciation and amortization, labor expenses from operation of new Suzhou plant
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Ⅴ. Appendix

T. HASEGAWA U.S.A., INC. Comparative Income statements
Yen million

Yen Basis
Net Sales
Cost of sales
Gross profit
SGA expenses
Operating income
Ordinary income

FY2014
Value
Share
2,481
100.0%
1,498
60.4%
982
39.6%
963
38.8%
18
23
-

FY2015
Value
Share
2,895
100.0%
1,776
61.4%
1,119
38.6%
1,169
40.4%
-50
-57
-

Yen102.33/USD

Yen119.31/USD

yr/yr
Value
414
278
136
205
-68
-80

％
16.7%
18.5%
13.9%
21.3%
-

16.6% lawer

USD thousand

Local Currency
Basis
Net Sales
Cost of sales
Gross profit
SGA expenses
Operating income
Ordinary income

FY2014
Value
Share
24,246100.0%
14,647
60.4%
9,599
39.6%
9,419
38.8%
179
0.7%
226
0.9%

FY2015
Value
Share
24,272100.0%
14,893
61.4%
9,379
38.6%
9,803
40.4%
-423
-484
-

yr/yr
Value
25
245
-219
383
-603
-710

％
0.1%
1.7%
-2.3%
4.1%
-

・Net sales increased on JPY basis owing to JPY depreciation, while USD (local currency)
based sales remained flat・Operating income turned from surplus to deficit due to increase in SG&A expenses

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Ⅴ. Appendix

Three-Year Plan (Consolidated Income statements)

Yen million

FY2015(Actual)
Value

Share

FY2016(Plan)
yr/yr

Value

Share

FY2018(Plan)FY2017(Plan)
yr/yr

Value

Share

yr/yr

Value

Share

yr/yr

Net sales

47,228 100.0%

5.1% 49,430 100.0%

4.7% 51,100 100.0%

3.4% 53,000 100.0%

3.7%

Cost of sales

29,94963.4%

4.9% 31,730

64.2%

5.9% 32,460

63.5%

2.3% 33,550

63.3%

3.4%

Gross profit

17,27836.6%

5.6% 17,700

35.8%

2.4% 18,640

36.5%

5.3% 19,450

36.7%

4.3%

SGA expenses

12,92527.4%

7.9% 13,320

26.9%

3.1% 13,770

26.9%

3.4% 14,110

26.6%

2.5%

Operating income

4,352

9.2%

-0.7%

4,380

8.9%

0.6%

4,870

9.5% 11.2%

5,340

10.1%

9.7%

Ordinary income

4,852

10.3%

-1.8%

4,640

9.4%

-4.4%

5,090

10.0%

9.7%

5,570

10.5%

9.4%

Income before
income taxes

4,613

9.8%

-4.5%

4,520

9.1%

-2.0%

4,970

9.7% 10.0%

5,450

10.3%

9.7%

Net income

3,043

6.4%

-6.0%

3,070

6.2%

0.9%

3,450

6.8% 12.4%

3,780

7.1%

9.6%

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Caution with Respect to Forward-Looking Statements:
This material contains forward-looking statements about the future performance ofT. Hasegawa, which are based on our management’s assumptions and beliefs
taking into account all information currently available to it.
Therefore, please understand that a number of important risks and uncertainties
could cause actual results to differ materially from those discussed in our forwardlooking statements, and that you should not place undue reliance on them.
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 the company.
The content is not to be copied or distributed without permission.

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46