Financial Results for
the Second Quarter of
the Fiscal Year Ending
September 30, 2023
May 24, 2023

T. HASEGAWA CO., LTD.

Contents

I.

Business Overview

II.

Overview of Financial Statements

III. Business Environment
IV. Management Policy
V.

Global Strategy

VI. Capital PolicyVII. Accompanying Materials
1

I. Business Overview

2

Flavor and Fragrance Business
Products

Ingredients(Compound Flavors and Fragrances)

Natural aromatics

Flavors

調合Compounding

Synthesizedaroma chemicals

FormulasFragrances

Integration of research anddevelopment capabilities

Flavorists : Experts who formulate flavors
Perfumers : Experts who formulate fragrances
Flavors and fragrances are in accordance with customer requests⇒ Formulas created by flavorists and perfumers based on experience are invaluableassets for flavor and fragrance companies
3

Ⅱ．Overview of
Financial Statements

4Market Environment
Trends by Category (Domestic Market)

・ 2nd Quarter, FYE September 2023 (October 2022 to March 2023)
Category

Beverages

Sweet
and
savorysnacksSavorysnacks

Chocolate

Frozen Desserts

Instant Noodles

Impact on
performance

Trend

Decrease• Sales decreased due to price increases for small-sized drinks from
October 2022
• Amid price increases, preferences of consumers tend to shift fromnational brands to private brands in mineral water and tea• Commercial demand grows, driven by major beverage makers

Increase• Sales of Potato Chips were strong after poor potato crops last year
• Sales of Wheat Flour Products, Corn Snacks and Bean Snacks, which arecheaper-than Potato Snacks, increased despite sales prices increases due
to price revision

Increase• Sales of chocolate bars remained strong from the end of 2022, withhigher Valentine’s Day sales• Sales of Nuts Product fell from the previous fiscal year, because of fewer
discount sales due to price revisions• Sales of chocolate snacks were strong, due to increase in outing
occasions and more purchases for pocket-sized snack products

Increase• The price increases in many regular products in March 2023 boosted
concern about a fallback from the temporary demand in February, but
sales were strong thanks to fine weather

Increase• Sales of both packaged-type instant noodles and cup noodles remained
steady• Overlapped by the rash of planned price increases in food products during
the peak demand period in autumn and winter, relatively cheaper prices
also contributed to sales: Positive direction: Negative direction

Source: Nikkan Keizai Tsushin

5Summary of Consolidated Performance• Net sales Increased Yr/Yr
Progress rate against full-year target was 47.4% (average progress rate: 48%)
• Operating profit Decreased Yr/Yr
Progress rate against full-year target was 51.2% (average progress rate: 45%)
FY22 2Q

FY23 2Q

ActualActualChangeProgress vs

Yr/Yr

Annual Plan

Amount％（Million yen）

Averageprogress rate

Differences％

Net Sales

29,19931,313

2,114

7.2%

47.4%

47.5%

-0.1%

Cost of Sales

17,11018,885

1,775

10.4%

47.1%

47.5%

-0.4%

Gross Profit

12,08812,428

339

2.8%

48.0%

47.5%

0.5%

SG&A Expenses

8,265

8,842

577

7.0%

46.8%

48.2%

-1.4%

Operating Profit

3,823

3,585

-238

-6.2%

51.2%

45.3%

5.9%

Ordinary Profit

4,266

3,728

-538

-12.6%

50.0%

45.7%

4.3%

Profit before
Income Taxes

4,739

3,947

-792

-16.7%

45.8%

45.6%

0.3%

Net Profit

3,318

2,824

-493

-14.9%

45.8%

44.6%

1.2%

EBITDA *

5,796

5,822

26

0.5%

50.3%

* The average progress rate is the average progress rate for the past 10 fiscal years (excluding the maximum and minimum values)* Net Profit refers to profit attributable to owners of parent* EBITDA = Operating Profit + Depreciation (including amortization of customer-related assets) + Amortization of goodwill
EBITDA to Net Sales (%) : 18.6%

6

Net Sales by Segment• Sales growth factors
Higher sales of U.S. subsidiaries (due to depreciation of the yen), T. Hasegawa (non-consolidated),and Chinese subsidiaries(Million yen)Segment

FY22 2Q

FY23 2Q

ActualActualYr/YrAmount25,22327,131

1,908

Fragrances

3,975

4,182

206

Total

29,19931,313

2,114

Flavors

Remark%Higher sales of U.S. subsidiaries (due to depreciation

7.6% of the yen), T. Hasegawa (non-consolidated), andChinese subsidiaries

5.2%

Higher sales in Chinese subsidiaries and
T. Hasegawa (non-consolidated)

7.2% －

FY23 2Q ActualOverseas net sales asa percentage of consolidated
net salesFYE September 30, 2023, 2Q
46.1%(FYE September 30, 2022: 45.9%)

7

Net Sales by Group Company• Sales growth factors
Higher sales of U.S. subsidiaries (due to depreciationof the yen), T. Hasegawa (non-consolidated), and Chinese
subsidiaries
FY22 2Q

FY23 2Q

ActualActual(Million Yen)

Yr/Yr
yr/yr

585

3.1%

5,485

6,121

635

11.6%

China

4,517

5,087

569

12.6%

Malaysia

590

791

201

34.1%

Others

1,599

1,784

185

11.6%

Adjustment-1,651-1,715-63-

Consolidated

29,19931,313

2,114

7.2%

18,658U.S.

FY2022 2Q

FY2023 2Q

Yr/Yr

1US$

¥114.96¥136.96

Yen down 19.1%

1RMB¥18.04¥19.61

Yen down 8.7%

1MYR

¥27.46¥30.60

Yen down 11.4%%

19,243Japan

Currency(Million Yen)

33,000

+201

+585

+635

+185

-63

+569

31,31329,199• Effect of exchange rate
Due toforex rates(Million Yen)othersAmount ofchange

Japan

252

333

U.S.

983

-348

635

China

407

162

569

Malaysia

81

120

201

Others

133

52

185

Adjustment

-176

113

-63

Consolidated

1,681

433

2,114

0

585
Japan

U.S.

Higher sales in the flavor and fragrance
segments
Net sales decreased on a local currency basis
due to temporary slow downs in orders caused
by unstable market outlooks. Net sales
increased on a yen basis due to thedepreciation of yen

Sales
Increase
Sales
Increase

China

Increase in sales in flavor segment

Sales
Increase

Malaysia

Increase in sales to savory snacks

Sales
Increase

8

Operating Profit by Group Company• Profit decline factors
Decrease in operating profit of U.S. subsidiary
and T. Hasegawa (non-consolidated)(Million Yen)

FY22 2Q

FY23 2Q

ActualActual

Japan

2,522

U.S.

Yr/Yr

%

-142

-5.7%

274

-197

-472

-

China

986

1,219

232

23.6%

Malaysia

60

102

41

68.3%

Others

108

91

-16

-15.1%

Adjustment

-129

-10

119

-

Consolidated

3,823

3,585

-238

-6.2%

Due toforex rates(Million Yen)

Amount ofothers

101

-243

-142

U.S.

-32

-440

-472

China

98

134

232

Malaysia

10

31

41

Others

9

-25

-16

Adjustment

47

72

119

Consolidated

233

-471

-238

FY2023 2Q

Yr/Yr

1US$

¥114.96¥136.96

Yen down 19.1%

1RMB¥18.04¥19.61

Yen down 8.7%

1MYR

¥27.46¥30.60

Yen down 11.4%(Million Yen)

-142
-472

+41

-16

+119

+232

3,823

2,000

0

changeJapan

FY2022 2Q

4,400

2,379

• Effect of exchange rate

Currency

22.3

3,585

日本

米国

実績

中国

ﾏﾚｰｼｱ

その他

調整

連結子会社

23.3
実績

Japan

Deterioration in cost-of-sales ratio(due to increase of raw material priceand increased utility costs)

ProfitDecrease

U.S.

Deterioration in cost-of-sales ratio (affected byincrease of material price and depreciation costs
due to the commencement of the second plant
operation, and decrease in production volume)
Increase in SG&A expenses (due to thedepreciation of yen)

ProfitDecrease

China

Increase in net sales and improvements incost-of-sales ratio

ProfitIncrease

Malaysia

Increase in net sales

ProfitIncrease

9

Analysis of changes in operating profit
・ Deterioration in cost-of-sales ratio due mainly to increase of raw material price・ Operating profit decreased from the previous fiscal year due to negative factors of deteriorationin cost-of-sales ratio, despite an increase in net sales and positive effect of exchange rate

(Million Yen)
ProfitIncrease+433

・Higher sales at
T. Hasegawa

-815

-89

・Increase of raw
material price+233

・Depreciationof yen3,823

FY22 2Q
Operating Profit：百万ProfitDecrease

3,585

Sales growth
factors

Cost of sales
Factors affecting
deterioration factors SG&A expenses

Effect ofexchange rate

FY23 2Q
Operating Profit

10

Ⅲ．Business Environment11

Size of Global Flavors and Fragrances Market (Estimated by the Company)• Worldwide flavors and fragrances sales: Approx. 31.0 billion U.S. dollars (approx. 4.0 trillion yen)
Europe, Africa, Middle East

‐ Market size: Approx. 11.3 billion U.S. dollars(approx. 1,480 billion yen)*‐ Many users have introduced a preferredsupplier system, and major flavor andfragrance companies in Europe and the U.S.
have established foundations

North America‐ Market size: Approx. 8.0 billion U.S. dollars (approx. 1,030 billion yen)*‐ Many users have introduced a preferred supplier system, and major flavor andfragrance companies in Europe and the U.S. have established foundations‐ The Company established a U.S. subsidiary in California in 1978
‐ 2017: Acquired FLAVOR INGREDIENT HOLDINGS, LLC It manufactures andsells food and beverage flavors, mainly in the health sector‐ 2020: Acquired MISSION FLAVORS & FRAGRANCES, INC. It manufacturesand sells flavors with strength in sweet flavors used in dairy products, ice cream,
etc.

Asia

‐ Market size: Approx. 9.2 billion U.S. dollars (approx. 1,200
billion yen)*‐ Market expansion due to economic growth in China and otheremerging markets.
‐ Major global flavor and fragrance companies are entering China‐ The Company established subsidiaries in Shanghai (2000),
Suzhou (2006), Thailand (2003), Indonesia (2014), and Taiwan(2017)‐ Secured a manufacturing site in Malaysia through M&A (2014)

South America‐ Market size: Approx. 2.5 billion U.S.
dollars (approx. 330 billion yen)*‐ Mainly imports from North America,
Mexico, etc.
‐ Competition intensifying in the Brazilian
market owing to economic growth* The Company’s estimates for market size by region* Forex rate: 1 U.S. dollar = 130.4 yen (2022)● = the Company’s base12

Global Flavors and Fragrances Market (Estimated by the Company)• Global flavors and fragrances market in 2022: Grew approx. 3% Yr/Yr
Global Flavors and Fragrances Market (Estimated by the Company)(Million US$)

40,000CAGR
30,000South America

6.9%

Asia

3.9%

North America

2.5%

Europe, Africa
and Middle East

2.7%

20,00010,00002011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

13

Japanese Flavors and Fragrances Market Size
• Flavors account for approximately 80% of the Japanese flavors and fragrancesmarket (approx. 50% of the global market)
Japanese flavor and fragrance market sales(Billion yen)

Breakdown of flavors and fragrances(FY2022)

Source of reference :Japan Flavor & Fragrance Materials
Association Magazine

14

Ⅳ．Management Policy

15

Management Policy
Become an Organizationthat takes on challenges

Strengthen Proposal
Capabilities

Focus Areas

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

Accelerate Expansion in Overseas Market
Strengthen Sustainability Initiatives

Basic Strategies
ExpandCompounded
Flavors andFragrances
Sales

Secure Profits
in Domestic
MarketGrowth inOverseas
Market16

Ⅴ．Global Strategy

17

Domestic Strategies

Basic Strategy: Expand market share by anticipating new market demand caused bydeclining birthrate and aging population, as well as growing health consciousness

Current initiatives and progress

Strengthen
collaboration between
departments
Promote solution sales
Strengthen R&D
capabilities

Address expansion inflavor and fragrance
applications• Strengthen collaboration between sales, research, and marketing
departments under the Business Solutions Division• Enhance the quality of sales activities ⇒ Improve operational efficiency
and thoroughly manage pipelines• Enhance the quality of proposals ⇒ Utilizing marketing data, enhance
technical materials, and promote sales activities utilizing R&D results⇒ Promote solution sales and further strengthen customer success

Sales breakdown

・ Speed up R&D ⇒ Review operations and work to improve operational efficiency
・ Create new value ⇒ Utilize AI technology and promote open innovation
・ Strengthen collaboration between formulation, analysis, application, sensory
evaluation, etc.
• Focus on the development of flavors to substitute for food ingredients and strengthen
response to SDGs
⇒ Focus on applications among dairy products, vegetables, fruit juices, and alternative
meat market (soy meat, etc.)• Strengthen measures in new sectors such as health foods, medical foods, and needs
related to masking odors in day-to-day life
⇒ Propose new ingredients, ingredients that make health-conscious foods delicious, etc.

FYE September 30, 2023,
2Q results
Net sales: 19.2 billion yen(+3.1% Yr/Yr)
Operating profit: 2.3 billion yen(-5.7% Yr/Yr)*Reference
EBITDA：3.1 billion yen（Plan）（Plan）（Plan）(-4.8% Yr/Yr)
18

Overseas Strategy –U.S.–

Basic Strategy: Increase sales in the savory, health, and beverage sectors, and achieve synergies fromacquisitions

Current initiatives and progress

・ Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020, PMI
completed by the end of September 2021
・ Aim for further growth in the U.S. market by realizing synergies

Realization of
MISSION synergies⇒ Propose and sell a wide range of flavor products to MISSION’s existing customers

Promotion of second plant construction plan as part of measures to create a new
production system (California)⇒Phase 1 construction completed with operations from June 2022, andPhase 2 construction is scheduled to begin in May 2023
⇒With increased production capabilities, able to adequately respond to
future business expansion

Create new
production system

Sales breakdown

Strengthen marketing system and thoroughly manage pipeline⇒ Formulate long-term growth strategies and customer-specific strategies by sector based on
analysis of market trends, etc.
・ Aim to recover net sales and operating profit in the second half of FYE September 2023•

Strengthen sales
activities
Utilize and deploy
Japanesetechnology•••

Bridge to Tokyo project:
Project team currently working to utilize and deploy Japanese technology in the U.S.
Localization of some technologies completed in the U.S. and begun sales to customers
Promote sharing of formulas and technical information with R&D in JapanFYE September 30, 2023,
2Q results

Yr/Yr

Yr/Yr

+50.0%

Yr/Yr+14.3%

Yr/Yr

+8.1%

Yr/Yr

+6.0%

Yr/Yr
+5.9%

Net sales: 44.6 million U.S. dollars(6.1 billion yen, -6.3% Yr/Yr)
Operating loss: 1.4 million U.S.
dollars(0.19 billion yen)

+9.7％

*Reference
EBITDA：5.6 million U.S. dollars(0.77 billion yen, -35.6% Yr/Yr)(Plan)(Plan)(Plan)* Savory flavors
Salty flavors used in savory snacks,
dressings, seasonings, and other products

19Overseas Strategy –China–
Basic Strategy: Grow earnings through various measures based on a stronger organizational foundation

Current initiatives and progress••

Utilize marketing functions⇒ Develop strategic approaches to customers, tap unentered sectors andpotential demand
Focus on large and midsize local companies and utilize agents to
expand sales area
Deepen collaboration between sales, research, and marketing
Thoroughly manage pipelines and sales activities ⇒ Start introducing IT tools•

Thorough profit management ⇒ Aim for growth both in terms of sales and profit•

Strengthen sales
systems

Improve profitability
Strengthen researchsystems

Fragrances
24％

Flavors
76％

Sales breakdown

New research building construction project underway⇒ Construction of building will be completed in November 2023, operation planned to startin January 2024
⇒ Aim to strengthen research functions and improve operational efficiency• Promote sharing of formulas and technical information with R&D in Japan•FYE September 30, 2023,
2Q results
Yr/Yr
+6.7%

Yr/Yr
+17.8%

Yr/Yr
-1.4%

Yr/Yr
+5.3%

Yr/Yr
+5.0%

Yr/Yr
+5.0%

Net sales: 259 million yuan
(5.0 billion yen, +3.6% Yr/Yr)
Operating profit: 62.1 million
yuan(1.21 billion yen, +13.7% Yr/Yr)(Plan)(Plan)(Plan)*Reference
EBITDA：78.8 million yuan
（1.54 billion yen, +11.3% Yr/Yr ）20

Overseas Strategy –Southeast Asia–
Basic Strategy: Increase sales through collaboration between manufacturing and sales bases in Malaysia (THKL) andsales sites in Thailand and Indonesia
Fragrances 8％

Current initiatives and progress
Strengthen sales
systems• Acquire sales personnel and strengthen organization for new customer
development• Appoint someone to take responsibility for the Southeast Asian region⇒ Coordinate organic collaboration among Southeast Asian bases• Thoroughly manage pipelines and sales activities ⇒ Start introducing IT tools

Flavors 92％

Sales breakdown

Speed up responses tocustomers• Promote utilization of application laboratories ⇒ Respond quickly to customer needs• Improve efficiency by expanding library and utilizing flavor kits

Strategic development
in Southeast Asia
using THKL as a hub• Established Corporate Planning Office at THKL in order to formulate and promote strategies forSoutheast Asia.
• Utilize THKL as a hub in Southeast Asia (for addressing Halal demand)• Guidance on research and production with personnel dispatched from Japan• Promote efficient R&D by systemizing operations• Promote sharing of formulas and technical information with R&D in Japan• Promote new plant construction plan in Malaysia

Yr/Yr+31.1%
Yr/Yr-13.1%

Yr/Yr
+8.5%

Yr/Yr
+7.3%

Yr/Yr
+10.8%

Yr/Yr
+8.9%

FYE September 30, 2023,
2Q results
Net sales: 1.99 billion yen(+20.1% Yr/Yr)
Operating profit: 0.31 billion yen(+15.9% Yr/Yr)*Reference
EBITDA： 0.39 billion yen(+12.2% Yr/Yr)* Net sales are calculated by summing net export sales to Southeast Asia, which are included in the Company's non-consolidated net sales* T. HASEGAWA (SOUTHEAST ASIA) CO., LTD. (Thailand) has been included in the scope of consolidation since FYE September 2022. For conformity,
the figures before FYE September 2021 have been revised to include the company retroactively

21Basic Policies Related to Business Portfolio• Develop the businesses based on three basic strategies: (1) Expand Compounded Flavors andFragrances Sales, (2) Secure Profits in Domestic Market, and (3) Growth in Overseas
Market• Achieve abundant and healthy living through aromas and contribute to the creation of asustainable society■ Entered □ Not entered
Earnings foundation
Japan

FlavorBusiness
Providing flavorsthat make fooddelicious

U.S.

China

 Broad usage in thebeverage and foodindustries

 Usage mainly in savory
foods, beverages, andhealth sector

 Usage mainly inbeverages and instantnoodles Strengthen response to
SDGs• Develop flavors to
substitute for foodingredients• Capital and businessalliance with DAIZ Inc.

 Trade mainly with local
companies Trade mainly withinternational and local
companies Strengthen measures in
new sectors• Health foods, medical
foods, etc.

 Strengthen collaboration
with research
departments in Japan

 Broad usage in daily
necessities and cosmetics
industries
 Strengthen measures in
new sectors
Fragrance• Address need to mask
Businessodors in day-to-day life,etc.
• Propose ways to resolve
Providing
discomfort withfragrances that add
fragrancescolor to various

aspects of life

Growth drivers

 Strengthen response to
SDGs• Develop environmentallyfriendly fragrances Expand business throughM&A• Strengthen sweet flavors
with M&A in 2020

T. Hasegawa Group has
yet to enter Tap unentered sectors
and potential demand• Focus on large andmidsize local companies• Expand area of sales byutilizing agents

Southeast Asia

 Usage mainly in seasoning
powders and beverages• Target further expansion
in beverage sectors
 Strengthen collaboration
between sites• Increase sales in Malaysia,
Thailand, and Indonesia
 Expand operations into
countries around sites• Expand into Vietnam, thePhilippines

 Usage mainly in daily
necessities industry
 Trade mainly with local
companies

Produ
ction

 Focus on expansion
among toiletry makers
 Strengthen collaboration
with research
departments in JapanSales Address with
exports fromJapan
⇒ Consider local
production basedon businessdevelopment
 Usage mainly
among body careproduct makers
 Focus on acquiring
new customers

22Summary of Global Strategies
Japan• Strengthen collaboration between sales, research, and marketing departments
under the Business Solutions Division• Focus on enhancing quality of sales activities and proposals⇒ Promote solution sales and further strengthen customer success• Speed up R&D, create new value, and promote stronger collaboration
between departments• Focus on the development of flavors to substitute for food ingredients andstrengthen response to SDGs

U.S.

• Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020,
PMI completed by the end of September 2021
⇒Aim for further growth in the U.S. market by realizing synergies• For the second plant construction plan, Phase 1 construction completed with
operations from June 2022
Phase 2 construction will start in May 2023
• Aim to recover net sales and operating profit in the second half of FYE
September 2023

China

• Utilize marketing functions to focus on large and midsize local companies, andutilize agents to expand sales area
• Thorough profit management⇒Aim for growth both in terms of sales and profit• New research building construction project underway⇒Building construction has started and will complete in November 2023
with operations scheduled to begin in February 2024
⇒Aim to strengthen research functions and improve operational efficiency

Southeast
Asia• Established Corporate Planning Office in Malaysia in order to formulate andpromote strategies for Southeast Asia.
• Speed up customer response by expanding library and utilizing flavor kits
• Promote efficient R&D by systemizing operations• Promote new plant construction plan in Malaysia
23

Ⅵ．Capital Policy

24Capital Policy
Basic Policy• Maintain a level of shareholders' equity that will enable the Company to execute growthinvestments and appropriately respond to risks, in order to achieve sustainable growth incorporate value and maximize it going forward

Policy on Use of Funds• Appropriately use funds, taking into consideration factors such as the maintenance of asound financial position and enhancement of capital efficiency- Shareholder returns
Pay dividends from surplus twice a year, including interim and year-end dividends,
targeting a consolidated payout ratio of approximately 35%- Capital investment
Investment to increase production capacity for growth, as well as renewal andmaintenance of existing facilities- M&A
Make comprehensive assessments from perspectives including market size, business risk,
and acquisition amountAchieve M&A with expected synergies in terms of customer networks, technology,
human resources, etc.
- Share buybacks
Consider if conditions (PBR, etc.) set by our company are met

Investment Securities• Reduce the total number of shares held from the perspective of improving capital efficiency,
etc. (some shares have already been sold and the Company will continue to consider
opportunities to sell shares)• Each year, the Board of Directors verifies the appropriateness of holding shares from a
medium- to long-term perspective, based on the holding purpose, economic rationality,
and other factors

25Capital Policy
Shareholder Returns• Strive to return profits to shareholders in accordance with business performance, while also securing thenecessary internal reserves to further strengthen the Group's management foundations and engage infuture business development• Pay dividends from surplus twice a year, including interim and year-end dividends, targeting a
consolidated payout ratio of approximately 35%• Introduced a shareholder benefit program in FYE September 2015 to encourage investors to hold theCompany’s shares over the medium- to long-term

50.0%

100
80

35.3%

32.6%

33.6%

31.3%

40.7%

30.0%

60

31

40
20
0

40.0%

35

2019

40

2020

55

2021

61
30
2022

2023
（計画）
(Plan)

20.0%
10.0%
0.0%

26

Capital Policy
Sale of Investment Securities(Partially Completed)• February 3, 2023 : Published “Notice Concerning Expected Recording of Gain on Salesof Investment Securities (Extraordinary Income)”[Overview]
Reason: Review of investment securities
Shares sold: 2 listed securities held by the Company
Scheduled date of sale : From February 6, 2023 to September 30, 2023
Gain on sale
: 1,200 million yen or less (forecast)[Progress]• The sale of the investment securities was partially completed between March and May
2023.
Shares soldGain on sale

: 2 listed securities held by the Company* The sale of one of the securities is ongoing:

FY2023Gain on Sales of Investment Securities(Extraordinary Income)

１Q

－

２Q

253 million yen* Announced on March 3 and March 29, 2023

3Q（Plan）

681 million yen* Announced on April 21, April 28 and May 16, 2023

Total

934 million yen(Reference)
Ratio of investment securities to consolidated net assets
FY 2020

FY 2021

FY 2022

21.5％

18.2％

11.3％

* Aim for 10% or less by FYE September 2026

27

Ⅶ．Accompanying Materials

28

Top 10 Companies by Share of Net Sales in the Global Flavors andFragrances Market

Company nameCountry

Million US$
Sales (2022Yr) Market Share

1

IFF

U.S.

9,130

26.3%

2

Givaudan

Switzerland

7,454

21.4%

3

Firmenich

Switzerland

4,946

14.2%

4

SymriseGermany

4,835

13.9%

5

ADM

Germany

3,769

10.8%

6

Mane SAFrance

1,577

4.5%

7

Takasago

Japan

1,234

3.6%

8

Sensient Technologies

U.S.

738

2.1%

9

Robertet SA

France

622

1.8%

10

T.Hasegawa

Japan

478

1.4%

34,783100.0%

Total* Estimated by the Company based on information disclosed by each company* Excluding the following segments
Takasago: Real Estate Segment; Sensient Technologies: ColorGroup ・ AsiaPacific Group;
Robertet: Les actifs* Nourish Segment and Scent Segment only for IFF, and Human Nutrition only for ADM* FY2021 figures used for Mane SA and Robertet SA

29

Top 10 Companies by Share of Net Sales in the Japanese Flavors andFragrances Market

Others
14.3%
FY21：14.9%

Company SI
5.5%
FY21：5.2%

Company T
32.5%
FY21：31.2%

Company SO
6.1%
FY21：6.3%

Company O
11.2%
FY21：11.4%

Company G
11.9%

T.Hasegawa
18.5%
FY21：18.9%

FY21：12.1%(As of Mar. 2022）*1 Market shares calculated by taking the total non-consolidated net sales of the top 10 companies as 100, based ondata from a private research organization*2 The Company’s FYE in September; T, SO, and SI in March; and G and O in December
The Company's net sales in the above graph are calculated for the period from April 2021 to March 2022
30

Sales Breakdown• The Company specializes in high value-added compounded flavors and fragrances• High-mix production: Sales of approximately 12,000 flavors and fragrances per year
(Million yen)

T. Hasegawa

Company T(Consolidated）(Consolidated）

FY ended in Sep. 2022

FY ended in Mar. 2023

Sales

Share

Sales

Share

Flavors

54,35987.1%

105,551

56.5%

Fragrances

8,039

12.9%

56,39330.2%

Synthesized Aroma Chemicals－－

23,420

12.5%

Others

－

－

1,426

0.8%

62,398100.0%

186,792

100.0%

Total
Ratio of gross profit to sales

41.1%

29.1%

Ratio of operating profit to sales

12.9%

3.2%

* Synthesized Aroma Chemicals for Company T shows the total amount from the aroma
ingredients and fine chemicals segments

Fragrances

SynthesizedAroma Chemicals

Fragrances

31Breakdown of Flavor Segment Customers by Industry• Many sales are to the beverage industry, and sales are seasonal
To other industries
Approx. 11%
To seasoning
industry
Approx. 10%

To beverageindustry
Approx. 31%

To instant noodle
industry
Approx. 10%

To sweet andsavory snacks
industry
Approx. 13%

To dairy industry
Approx. 25%

Note: Reference data is calculated by taking the cumulative total net sales(non-consolidated) of customers classifiable by industry for FYE
September 2023 2Q as 100

32

Analysis of Changes in Consolidated Statement of Profit•

Operating profit decline factors
Deterioration in cost-of-sales ratio due mainly to increase of raw material price is the main
factor(Million yen)
FY22 2Q(Cumulative
results)

ChangeFY23 2Q(Cumulative
results)

AmountNet sales

Cost of sales

FactorHigher sales of U.S. subsidiaries (due to depreciation of the yen),
T. Hasegawa, and Chinese subsidiaries
Of the increase, 1,681 million yen is attributable to yen down
Cost-of-sales ratio deteriorated due mainly to increase of raw material price,
while net sales increased

Gross profit

SG&A expenses

Of the increase, 488 million yen is attributable to yen down

Operating profit

Ordinary profit(Foreign exchange gains/losses)
FY2022: Foreign exchange gains: 196 million yen
FY2023: Foreign exchange losses: (146) million yen * Difference of 342
million yen is the main factor of decrease in ordinary profit

Profit before
income taxes
Net profit

FY2022: Losses in non-controlling interests: (36) million yen* Net profit refers to profit attributable to owners of parent

33

Analysis of Changes in Consolidated Balance Sheet(Million yen)Sep. 30,2022

Mar. 31,2023

ChangeFactorCurrent assets• Increase in cash and cash equivalents: 777 million yen• Increase in inventories: 1,316 million yen• Decrease in accounts receivable - trade: (1,351) million yen

Non-current
assets• Decrease in property, plant and equipment: (1,464) million yen• Decrease in intangible assets: (2,022) million yen

Total assets

Current
liabilities• Decrease in accounts payable: (911) million yen• Decrease in provision for bonuses: (673) million yen• Decrease in income taxes payable: (611) million yen

Non-current
liabilities

Total liabilities

Net assets• Net profit: 2,824 million yen• Dividends of surplus: (1,316) million yen• Decrease in foreign currency translation adjustment: (3,288)
million yen• Increase in valuation difference on securities: 135 million yen

Total liabilities
and net assets

34

Consolidated Statement of Cash Flows(Million yen)
FY22 2Q(Cumulative
results)

FY23 2Q(Cumulative
results)

ChangeMajor items in FY23 2Q

Cash flows fromoperating activities• Profit before income taxes: 3,947 million yen• Depreciation: 1,786 million yen• Amortization of goodwill: 450 million yen• Gain on sales of investment securities: (253)
million yen• Increase in inventories: (541) million yen• Income taxes paid: (1,670) million yen

Cash flows frominvesting activities• Purchase of property, plant and equipment: (1,139)
million yen• Purchase of intangible fixed assets (339) million yen• Sales of investment securities: 269 million yen

Cash flows fromfinancing activities• Dividends paid: (1,318) million yen

Effect of exchange
rate change on cash
and cash equivalents
Net increase(decrease) in cash
and cash equivalents
Cash and cash
equivalents at
beginning of period
Cash and cash
equivalents at end of
period35

Capital Expenditures, Depreciation, and R&D Expenses (Consolidated)(Million yen)

FY2023Plan

FY2023 2Q
ActualProgress(%)

CapitalInvestment

6,404

1,127

17.6%

Depreciation& Amortization

3,705

1,786

48.2%

Amortizationof Goodwill

876

450

51.4%

R&D
Expenses

5,316

2,528

47.6%

* Depreciation includes amortization of customer-related assets

36

T. Hasegawa non-consolidated (Actual)(Million yen)
FY2022 2Q
ActualAmountFY2023 2Q
Actual

Share

AmountChangeShare

Progress vsannual PlanYr/YrAmount％％Net Sales

18,658100.0%

19,243100.0%

585

3.1%

48.5%

Cost of Sales

11,00959.0%

11,750

61.1%

740

6.7%

47.9%

Gross Profit

7,649

41.0%

7,493

38.9%

-155

-2.0%

49.3%

SG&A Expenses

5,126

27.5%

5,114

26.6%

-12

-0.2%

45.8%

Operating Profit

2,522

13.5%

2,379

12.4%

-142

-5.7%

59.2%

Ordinary Profit

2,925

15.7%

2,485

12.9%

-439

-15.0%

55.9%

Profit before
Income Taxes

3,404

18.2%

2,709

14.1%

-695

-20.4%

48.3%

Net Profit

2,567

13.8%

1,996

10.4%

-570

-22.2%

48.9%• Net sales increased due to higher sales in the flavor and fragrance segments• Operating profit decreased due to deterioration in cost-of-sales ratio (affected bymaterial price rises and increased utility costs)

37

Consolidated U.S. Subsidiaries (Actual)* Consolidated statements of profit of the Company's two U.S. subsidiaries (T. HASEGAWA U.S.A., INC. and MISSION FLAVORS &FRAGRANCES, INC.)(Million yen)

Yen Basis
Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit
Ordinary Profit
Net Profit

FY2022 2Q
AmountShare
5,485
100.0%
3,316
60.5%
2,168
39.5%
1,894
34.5%
274
5.0%
280
5.1%
215
3.9%

FY2023 2Q
AmountShare
6,121
100.0%
4,028
65.8%
2,092
34.2%
2,290
37.4%
-197
-203
-166
-

Yen 114.96/USD

Yen 136.96/USD

Yr/Yr
Amount
635
712
-76
395
-472
-483
-381

％
11.6%
21.5%
-3.5%
20.9%
-

19.1% lower(Thousand US$)

Local Currency Basis
Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit
Ordinary Profit
Net Profit

FY2022 2Q
AmountShare
47,715100.0%
28,85060.5%
18,86539.5%
16,475
34.5%
2,389
5.0%
2,440
5.1%
1,873
3.9%

FY2023 2Q
AmountShare
44,692100.0%
29,41765.8%
15,27434.2%
16,72037.4%-1,445-1,483-1,213-

Yr/Yr
Amount-3,023566-3,590244-3,835-3,923-3,087

％
-6.3%
2.0%
-19.0%
1.5%-• Net sales decreased on a local currency basis due to temporary slow downs in orders caused byunstable market outlooks. Increased on a yen basis due to the depreciation of the yen• Operating profit decreased due to deterioration in cost-of-sales ratio (affected by material price rises,
increase in depreciation costs due to the commencement of the second plant operation, and decreasein production volume) and increase in SG&A expenses
38Consolidated China Subsidiaries (Actual)* Consolidated statements of profit of the Company's two consolidated subsidiaries in China (T. HASEGAWA FLAVOURSAND FRAGRANCES (SHANGHAI) CO., LTD. and T. HASEGAWA FLAVOURS (SUZHOU) CO., LTD.)(Million yen)

Yen Basis
Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit
Ordinary Profit
Net Profit

FY2022 2Q
AmountShare
4,517
100.0%
2,677
59.3%
1,840
40.7%
853
18.9%
986
21.8%
1,062
23.5%
535
11.9%

FY2023 2Q
AmountShare
5,087
100.0%
2,912
57.3%
2,174
42.7%
955
18.8%
1,219
24.0%
1,283
25.2%
617
12.1%

Yen18.04/RMB

Yen19.61/RMB

Yr/Yr
Amount
569
235
334
101
232
221
81

％
12.6%
8.8%
18.2%
11.9%
23.6%
20.8%
15.2%

8.7% lower(Thousand RMB)

Local Currency Basis
Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit
Ordinary Profit
Net Profit

FY2022 2Q
AmountShare
250,422100.0%
148,41859.3%
102,003
40.7%
47,30818.9%
54,695
21.8%
58,91623.5%
29,69811.9%

FY2023 2Q
AmountShare
259,424100.0%
148,52857.3%
110,896
42.7%
48,71018.8%
62,18524.0%
65,471
25.2%
31,482
12.1%

Yr/Yr
Amount
9,002
109
8,892
1,402
7,490
6,555
1,784

％
3.6%
0.1%
8.7%
3.0%
13.7%
11.1%
6.0%

・Net sales increased mainly as a result of higher sales in the flavor segment
・Operating profit increased as a result of higher sales and improved cost-of-sales
ratio
39

Malaysian Subsidiaries (Actual)* Statement of profit of T HASEGAWA FLAVOURS (KUALA LUMPUR) SDN. BHD.
(Million yen)

Yen Basis
Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit
Ordinary Profit
Net Profit

FY2022 2Q
AmountShare
590
100.0%
346
58.6%
244
41.4%
183
31.1%
60
10.3%
68
11.5%
46
7.9%

FY2023 2Q
AmountShare
791
100.0%
465
58.7%
326
41.3%
224
28.3%
102
12.9%
102
12.9%
74
9.4%

Yen 27.46/MYR

Yen 30.60/MYR

Yr/Yr
Amount
201
119
82
40
41
34
27

％
34.1%
34.4%
33.7%
22.3%
68.3%
50.6%
58.3%

11.4% lower(Thousand Malaysian Ringgit)

Local Currency Basis
Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit
Ordinary Profit
Net Profit

FY2022 2Q
AmountShare
21,497100.0%
12,601
58.6%
8,896
41.4%
6,682
31.1%
2,213
10.3%
2,477
11.5%
1,703
7.9%

FY2023 2Q
AmountShare
25,877100.0%
15,20058.7%
10,676
41.3%
7,333
28.3%
3,343
12.9%
3,348
12.9%
2,419
9.4%

Yr/Yr
Amount
4,379
2,599
1,780
650
1,129
871
716

％
20.4%
20.6%
20.0%
9.7%
51.0%
35.2%
42.0%

• Net sales increased mainly as a result of higher sales to savory snack
manufacturers• Operating profit increased as a result of higher sales
40Global Strategy - Actual and Plan by Region
T. HASEGAWA Non-consolidated(Billion yen)
2023

2024

2025

56.9

85.4

97.6

105.6

111.9

118.5

5.6

Operating Profit

5.0

6.1

4.1

2.7

4.2

7.5

6.7

7.3

EBITDA

8.5

16.6

17.2

17.5

19.8

23.6

1.3%

3.3%

4.1%

9.7%

50.0%

14.3%

8.1%

6.0%

5.9%

13.2%

10.1%

12.0%

13.1%

8.9%

7.2%

4.2%

2.6%

3.8%

6.4%

17.5%

14.5%

16.3%

17.1%

15.0%

19.4%

17.7%

16.7%

17.7%

20.0%

36.8

37.4

39.2

39.7

41.0

42.7

Operating Profit

3.7

3.9

5.2

4.0

4.9

EBITDA

5.7

5.8

6.9

5.8

-2.2%

1.5%

4.9%

10.1%

10.4%

15.4%

15.6%

EBITDA

to Net Sales（Plan） （Plan） （Plan）

China(Million RMB)
2023

2024

2021

2022

Net Sales

446.4

525.9

518.3

545.7

573.0

601.5

Operating Profit

70.4

137.0

113.7

114.7

123.0

EBITDA

101.8

167.5

146.0

146.3

6.7%

17.8%

-1.4%

15.8%

26.1%

22.8%

31.9%

Yr/Yr

Operating Profit
to Net Sales

EBITDA

to Net Sales

Sales
Yr/Yr

Operating Profit
to Net Sales

EBITDA

to Net Sales（Plan） （Plan） （Plan）

Southeast Asia

2025

2020

Sales

2025

Net Sales

Net Salesto Net Sales

2024

2022

2022

Operating Profit

2023

2021

2021

Yr/Yr

(Million US$)
2020

2020

Sales

U.S.

(Billion yen)
2023

2024

2025

2020

2021

2022

Net Sales

2.59

2.81

3.69

3.96

4.39

4.78

139.7

Operating Profit

0.26

0.36

0.60

0.60

0.64

0.71

163.9

182.0

EBITDA

0.39

0.50

0.76

0.75

0.79

0.85

5.3%

5.0%

5.0%

-13.1%

8.5%

31.1%

7.3%

10.8%

8.9%

21.9%

21.0%

21.6%

23.2%

10.1%

12.9%

16.3%

15.2%

14.7%

15.0%

28.2%

26.8%

28.6%

30.3%

15.3%

18.1%

20.7%

19.1%

18.1%

18.0%

（Plan） （Plan） （Plan）

Sales
Yr/Yr

Operating Profit
to Net Sales

EBITDA

to Net Sales（Plan） （Plan） （Plan）* Southeast Asia: T. HASEGAWA (SOUTHEAST ASIA) CO., LTD. (Thailand) has been included in the scope of consolidation since FYE September 2022
For conformity, the figures before the FYE September 30, 2021 have been revised to include the company retroactively

41

Medium-Term Three-Year Plan (Consolidated)
T. Hasegawa
non-consolidated

Expect sales increase by promoting solution sales through strengthening collaboration between sales,
research, and marketing departments, strengthening R&D capabilities, and addressing expansion in flavor
and fragrance applications

U.S.

Increase sales in the savory, health, and beverage sectors, and expect synergies from the acquisition of
MISSION

China

Strengthen sales systems by utilizing marketing functions and deepening collaboration between sales,
research, and marketing and expect sales increase by developing strategic approaches to customers andtapping unentered sectors and potential demand

Malaysia

Expect sales increase via initiatives including strengthening collaboration among Southeast Asian bases andstrengthening sales systems to acquire new customers(Million yen)
FY22（Acutual）

FY23（Plan）

FY24（Plan）

FY25（Plan）

Net Sales

62,39866,00068,00071,200

Cost of Sales

36,776

40,11040,46041,720Operating Profit

8,051

7,000

8,270

9,800

Ordinary Profit

9,075

7,450

8,680

10,210Net Profit

8,007

6,170

6,770

7,750

EBITDA
Exchange Rate

12,281
11,581
12,953
14,435¥124.46/$¥135.00/$¥125.00/$¥125.00/$¥18.96/RMB ¥19.00/RMB ¥19.00/RMB ¥19.00/RMB

Sales Yr/Yr

11.9%

5.8%

3.0%

4.7%

Cost of Sales to Net Sales

58.9%

60.8%

59.5%

58.6%

Operating Profit to Net Sales

12.9%

10.6%

12.2%

13.8%

Ordinary Profit to Net Sales

14.5%

11.3%

12.8%

14.3%

Net Profit to Net Sales

12.8%

9.3%

10.0%

10.9%

EBITDA to Net Sales

19.7%

17.5%

19.0%

20.3%

45.9%

48.0%

47.8%

48.4%

Overseas net sales as a percentage
of consolidated net sales* The Group's medium-term three-year plan is revised each fiscal year. See page 43 for details* Net profit in the table refers to profit attributable to owners of parent* Savory flavors: Flavors used in savory snacks, dressings, seasonings, and other salty products

FY9/23 Factors for Decrease in Operating Profit
・ Main factors are increase of raw material price,increased utility costs and increased labor andpersonnel costs

Net Sales and Operating Profit of
T. Hasegawa consolidated(Billion yen)Yr/Yr
+11.9%

Yr/Yr
+5.8%

Yr/Yr
+3.0%

Yr/Yr
+4.7%

42

Medium-Term Three-Year Plan (Consolidated)（Million yen）
FY22（Acutual）
AmountShare%

FY23（Plan）
AmountShare

FY24（Plan）%

AmountShare

FY25（Plan）%

AmountShare%

Net Sales

62,398 100.0%

11.9% 66,000 100.0%

5.8% 68,000 100.0%

3.0% 71,200 100.0%

4.7%

Cost of Sales

36,77658.9%

11.1% 40,110

60.8%

9.1% 40,460

59.5%

0.9% 41,720

58.6%

3.1%

Gross Profit

25,622

41.1%

13.1% 25,890

39.2%

1.0% 27,540

40.5%

6.4% 29,480

41.4%

7.0%

SG&A Expenses

17,57028.2%

11.3% 18,890

28.6%

7.5% 19,270

28.3%

2.0% 19,680

27.6%

2.1%

Operating Profit

8,051

12.9%

17.4%

7,000

10.6% -13.1%

8,270

12.2%

18.1%

9,800

13.8%

18.5%

Ordinary Profit

9,075

14.5%

21.6%

7,450

11.3% -17.9%

8,680

12.8%

16.5% 10,210

14.3%

17.6%

11,267

18.1%

16.2%

8,610

13.0% -23.6%

9,440

13.9%

9.6% 10,770

15.1%

14.1%

8,007

12.8%

18.4%

6,170

9.3% -22.9%

6,770

10.0%

9.7%

10.9%

14.5%

Profit before
Income Taxes
Net Profit

7,750* Net profit refers to profit attributable to owners of parent

43Capital Expenditures, Depreciation, and R&D Expenses• T. Hasegawa non-consolidated DX promotion and IT reform project(Actual FY9/22: Approx. 0.5 billion yen)(Plan
FY9/23: Approx. 1.5 billion yen, FY9/24: Approx. 0.8 billion yen,
FY9/25: Approx. 0.8 billion yen)

• U.S. second plant construction plan

(Actual FY9/20: Approx. 1.1 billion yen, FY9/21: Approx. 0.4 billion yen,
FY9/22: Approx. 1.6 billion yen)(Plan
FY9/23: Approx. 0.2 billion yen, FY9/24: Approx. 1.4 billion yen,
FY9/25: Approx. 0.7 billion yen)

• China new research building construction plan

(Actual FY9/22: Approx. 0.3 billion yen)(Plan
FY9/23: Approx. 1.7 billion yen, FY9/24: Approx. 0.3 billion yen)

• Malaysia new plant construction plan
(Plan

FY9/24: Approx. 1.5 billion yen, FY9/25: Approx. 1.5 billion yen)

• R&D expenses trended at around 8% of consolidated net sales（Million yen）

FY2022
ActualFY2023Plan

FY2024Plan

FY2025
Plan

CapitalInvestment

4,306

6,404

6,143

5,144

Depreciation& Amortization

3,406

3,705

3,861

3,924

R&D
Expenses

4,971

5,316

5,628

5,817

44

This presentation is based on data as of May 12, 2023, and was createdwith the intention of providing information on future management plans andresults for the second quarter of the fiscal year ending September 30,
2023.
The views expressed in this material are those of the Company at the timeof preparation. No guarantees are provided in relation to the accuracy orcompleteness of this information, and it is subject to change without noticein future. Please note that the Company will not accept responsibility forany omissions or errors in the data, expressions, etc., used in thisdocument.
This document has been prepared by the Company and all rights related toits contents belong to the Company. Please refrain from copying or
reprinting without permission.

45