Financial Results for
the Second Quarter of
the Fiscal Year Ending
September 30, 2022
May 30, 2022

T. HASEGAWA CO., LTD.

Contents

I.

Business Overview

II.

Overview of Financial Statement

III. Revision of Full-Year Targets(Consolidated)
IV. Business Environment
V.

Management Policy

VI. Global Strategy
VII. Capital Policy
VIII. Accompanying Materials
1

I. Business Overview

2

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 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 Statement

4Market Environment
Trends by Category (Domestic Market)

・ 2nd Quarter, FYE September 2022 (October 2021 to March 2022)
Category
Beverages

Sweet andsavorysnacksSavorysnacks
Chocolate

Frozen Desserts
Instant Noodles

Trend
Increase

・ Following the lifting of the state of emergency in September 2021, the recovery
accelerated and demand for thirst-quenching beverages increased.
・ Remained sluggish in 2022 due to renewed spread of COVID-19
・ Upward trend after lifting of quasi-state of emergency measures in March

Decrease・ Potato Snacks - potato chips decreased due to poor potato crop in Hokkaido・ Corn Snacks and Wheat Flour Products - increased due to greater frequency ofspecial sales
・ For sales of other snacks, sales of small pouch-type products remained strong
・ Chocolate bars impacted by weak Valentine’s Day sales, while sales of high cacao

Decrease
content chocolate also struggled
Slightly ・ Sales of chocolate snacks struggled for large-bag products, although sales ofstandard products were strong

Increase・ Sales of family-type products decreased due to a fallback from the previous year’s
increase・ Sales of premium products were strong with double-digit growth

Increase・ Sales of both package-type instant noodles and cup noodles remained steady as the
fallback from the special demand during the COVID-19 pandemic has run its course
・ Anniversary commemoration measures of leading brands and aggressive new productlaunches also contributed

Impact of COVID-19

Source: Nikkan Keizai Tsushin•

Japan: Due to the spread of infections at the beginning of 2022, priority quasi-state of emergency
measures were applied, resulting in sluggish sales in the food service industry and CVS.
Since the lifting of the quasi-state of emergency measures, overall demand has been on a recovery
trend, and development of new products by customers has also increased from the previous fiscal year.

•

Overseas: No impact in the U.S.
No impact in China until the second quarter of the fiscal year ending September 30, 2022. Impact ofShanghai lockdown since end of March under scrutiny.
In Southeast Asia, impact varied by customer and industry, despite economic recovery trend.

5Summary of Consolidated Performance• Net sales Increased YoY
Progress rate against full-year target was 47.2% (average progress rate: 48%)
• Operating profit Increased YoY
Progress rate against full-year target was 52.5% (average progress rate: 44%)
FY21 2Q
Actual

FY22 2Q
ActualProgress
vs Annual

Achievement
yr/yr
Value

Plan*¹％％

Averageprogress rate

Millions of yen
Differences

Net sales

26,13529,199

3,063

11.7%

47.2%

47.5%

-0.3%

Cost of sales

15,582

17,110

1,527

9.8%

46.5%

47.6%

-1.1%

Gross profit

10,55312,088

1,535

14.6%

48.4%

47.4%

1.0%

SG&A expenses

7,584

8,265

681

9.0%

46.7%

48.4%

-1.7%

Operating income

2,968

3,823

854

28.8%

52.5%

44.4%

8.0%

Ordinary income

3,304

4,266

961

29.1%

53.3%

45.4%

8.0%

Income before
income taxes

4,435

4,739

304

6.9%

46.7%

45.9%

0.8%

Net income

3,138

3,318

180

5.8%

45.5%

44.8%

0.7%

EBITDA *

4,660

5,796

1,135

24.4%

50.6%

* Current FY progress rate is the rate of progress compared to the targets published on May 11, 2022.
* The average progress rate is the average progress rate for the past 10 fiscal years (excluding the maximum and minimum values).
* Net income refers to profit attributable to owners of parent.
* EBITDA = Operating income + Depreciation (including amortization of customer-related assets) + Amortization of goodwill
EBITDA margin (%) : 19.9%

6

Net Sales by Segment•

Sales growth factors
Higher sales of U.S. subsidiaries (including MISSION) and T. HASEGAWA non-consolidated
Newly consolidated Thai and Taiwanese subsidiaries from current fiscal year.
Millions of yen
Segment

FY21 2Q
Actual

FY22 2Q
Actual

yr/yr
Value

Remark

%Flavors

22,18925,223

3,033

Fragrances

3,946

3,975

29

Total

26,13529,199

3,063

13.7%

Higher sales of U.S. subsidiaries (including MISSION) andT. HASEGAWA non-consolidated
Newly consolidated Thai and Taiwanese subsidiaries from current fiscal year

0.7% Sales increased at Parent company
11.7%

－

Overseas net sales as apercentage of consolidated
net salesFYE September 30, 2022, 2Q
45.6%(FYE September 30, 2021:
41.4%)

7

Net Sales by Group Company•

Sales growth factors
Higher sales of U.S. subsidiaries (including MISSION)
and T. HASEGAWA non-consolidated（Million Yen）

FY21 2Q
Actual

FY22 2Q
ActualJapan

17,897

18,658

761

4.3%

U.S.

3,898

5,485

1,586

40.7%

China

4,027

4,517

489

12.2%

Malaysia

494

590

95

19.4%

Others

561

1,599

1,038

185.0%

Adjustment-744-1,651-907-

Consolidated

26,13529,199

3,063

11.7%

yr/yr

FY2021 2Q

FY2022 2Q

Yr/Yr

1US$

¥105.20¥114.96

9.3% lower

1RMB¥16.08¥18.04

12.2% lower

1MYR¥25.77¥27.46

6.6% lower%• Effect of exchange rate
Due toforex rates

Currency(Million Yen)

+489

+95

+1,038 -907

+1,586+761
29,19926,1350（Million Yen）

Amount ofchangeothers

Japan

-

761

761

U.S.

466

1,120

1,586

China

491

-2

489

Malaysia

36

59

95

Others

0

1,038

1,038

Adjustment

-7

-900

-907

Consolidated

986

2,077

3,063

Japan

U.S.

China
Malaysia

Increase in sales in Flavor segment
Increase in sales to health sector at existing
company
Contribution of MISSION(3 months in same period of previous fiscal
year, 6 months in current fiscal year)
Same as the previous year on a local currency
basis
Increase in sales on yen basis due todepreciation of yen
Increase in sales to savory snacks

Sales
Increase
Sales
Increase

Sales
Increase
Sales
Increase

8

Operating Profit by Group Company• Profit growth factors
Higher operating profit at T. HASEGAWA nonconsolidated（Million Yen）
FY21 2Q
Actual

FY22 2Q
Actual

yr/yr

%

Japan

1,668

2,522

854

51.2%

U.S.

210

274

64

30.5%

China

1,067

986

-81

-7.6%

Malaysia

58

60

2

3.6%

Others

12

108

95

755.3%

Adjustment

-49

-129

-80

-

Consolidated

2,968

3,823

854

28.8%

FY2021 2Q

FY2022 2Q

Yr/Yr

1US$

¥105.20¥114.96

9.3% lower

1RMB¥16.08¥18.04

12.2% lower

1MYR¥25.77¥27.46

6.6% lower(Million Yen)

4,400

+64

-81

+2

+95

-80

+854

3,823
2,968

0

• Effect of exchange rate
Due toforex rates

Currency（Million Yen）

Amount ofchangeothers

Japan

-

854

854

U.S.

23

41

64

China

107

-188

-81

Malaysia

4-2

2

Others-095

95Adjustment

41

-121

-80

Consolidated

175

679

854

Japan

Increase in net sales and improvement in costof-sales ratio,
decrease in SG&A expenses

ProfitIncrease

U.S.

Increase in net sales

ProfitIncrease

China

Deterioration in cost-of-sales ratio and increasein SG&A expenses

ProfitDecrease

Malaysia

Due to deterioration in cost-of-sales ratio andincrease in SG&A expenses,
Profit decreased on a local currency basis.
Increase in profit on yen basis due todepreciation of yen

ProfitIncrease

9

Ⅲ．Revision of Full-Year
Targets (Consolidated)10

Revision of Full-Year Targets (Consolidated)• On May 11, 2022, the full-year targets published on November 12, 2021 were revised.
FY21
ActualValue

Original Plan
(Nov. 12, 2021)
Share

Value

Share

Revised Plan
(May 11, 2022)
Value

vs. FY20 Actual

vs. Original Plan

value

%

value

%

Millionsof yenShare

Net sales

55,755100.0%

59,200100.0%

61,800100.0%

6,044

10.8%

2,600

4.4%

Cost of sales

33,10659.4%

34,40058.1%

36,810

59.6%

3,703

11.2%

2,410

7.0%

Gross profit

22,64840.6%

24,80041.9%

24,990

40.4%

2,341

10.3%

190

0.8%

SG&A expenses

15,78828.3%

17,17029.0%

17,700

28.6%

1,911

12.1%

530

3.1%

Operating income

6,859

12.3%

7,630

12.9%

7,290

11.8%

430

6.3%

-340

-4.5%

Ordinary income

7,466

13.4%

8,090

13.7%

8,000

12.9%

533

7.1%

-90

-1.1%

Income before
income taxes

9,692

17.4%

10,25017.3%

10,160

16.4%

467

4.8%

-90

-0.9%

Net income

6,763

12.1%

7,290

12.3%

7,300

11.8%

536

7.9%

10

0.1%

[Reasons for Revision of Full-Year Targets]
Net sales: Upward revision of full-year targets• Upward revision of T. HASEGAWA non-consolidated full-year targets• Weaker yen than initially assumed forex rate
→Anticipate yen-denominated net sales at overseas subsidiaries
will exceed expectations(Reference) Net sales increase due to forex rates: + 1,930 million yen(Reference)
Revised forecast exchange rate

1US$¥120.00

1RMB¥18.50

1MYR¥27.50

Profit: Downward revision of operating profit and ordinary profit, net profit in line with initial full-year target(Operating profit and Ordinary profit)• Cost of sales will increase more than expected due to soaring raw material costs and increased utility costs,
and gross profit margin is expected to deteriorate.
(Net Profit)• Income taxes are expected to decrease due to the downward revision of ordinary profit.
* Net income refers to profit attributable to owners of parent.
11

Ⅳ．Business Environment12

Size of Global Flavors and Fragrances Market (Our Estimate)• Worldwide flavors and fragrances sales: Approx. 3.2 trillion yen (approx. 30.0 billion U.S. dollars)
Europe, Africa, Middle East

‐ Market size: Approx. 1,160 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. 810 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
Manufacture and sale of food and beverage flavors, mainly in the health sector‐ 2020: Acquired MISSION FLAVORS & FRAGRANCES, INC.
Manufacture and sale of flavors and fragrances with strength in sweet flavors
used in dairy products, ice cream, etc.

Asia

‐ Market size: Approx. 940 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. 260 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 = 105.8 yen (2020)● = the Company’s site
13

Global Flavors and Fragrances Market (Our Estimate)• Global flavors and fragrances market in 2020: Grew approx. 1% YoY
Global Flavors and Fragrances Market (Our Estimate)(Million US$)

CAGR
7.4%
4.4%

3.0%

3.2%

14

Japanese Flavors and Fragrances Market Size
• Flavors account for approximately 80% of the Japanese flavors and fragrancesmarket (approx. 50% of the global market).
Breakdown of flavors and fragrances(FY2021)

Domestic flavor and fragrance market sales(Billion yen)

2017

2018

2019

2020

2021

Total

216.2

223.8

227.5

225.7

235.7

Yr/Yr

1.7%

3.5%

1.7%

-0.8%

4.4%

Source of reference :Japan Flavor & Fragrance Materials
Association Magazine

15

Ⅴ．Management Policy

16

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
Market17

Ⅵ．Global Strategy

18

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

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

Sales breakdown• 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.)• Making plant-based meat developed by DAIZ Inc. delicious through flavors and foodingredient technologies⇒ Contribute to solving social issues• 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, 2022,
2Q results
Net sales: 18.6 billion yen(+4.3% YoY)
Operating profit: 2.5 billion
yen(+51.2% YoY)
19

Overseas Strategy –U.S.–

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

Current initiatives and progress

Realization of
MISSION synergies• Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020
⇒ PMI completed at the end of September 2021 as originally planned,
with synergies⇒ Aim for further growth in the U.S. market

Create new
production system• Promotion of second plant construction plan as part of measures to create
a new production system (California)
Sales breakdown⇒ Phase 1 construction completed in April 2022, with full operation
scheduled for June.

Strengthen sales
activities• Strengthen marketing system and thoroughly manage pipeline⇒ Formulate long-term growth strategies and customer-specific strategies by sector basedon analysis of market trends, etc.

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

FYE September 30, 2022,
2Q results
Net sales: 47 million U.S. dollars(5.4 billion yen)(+28.7% YoY)
Operating profit: 2.3 million U.S.
dollars(0.27 billion yen)(+19.4% YoY)
* Savory flavors
Salty flavors used in savory snacks,
dressings, seasonings, and otherproducts

20

Status after PMI Completion and Second Plant Construction Plan
Acquisition of MISSION Status after PMI completion• Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020
⇒ PMI completed at the end of September 2021 as originally planned, with synergies⇒ Enabled MISSION to propose and sell a wide range of flavor products to existing customers⇒ Aim for growth in the U.S. market by further realizing synergies

Second plant construction plan
• Promotion of second plant construction plan as part of measures to create a new production system(California)• Phase 1 construction completed in April 2022 with operations scheduled to begin in June 2022 (partial
start of operations).
• After completion of Phase 1, U.S. production capacity increased by approximately 2,000 tons.
Expect an additional 2,000 tons to be added after completion of all work
⇒ Able to adequately respond to future business expansion in the U.S.

◀ Second plant in California, U.S.

21

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

Current initiatives and progress•

Strengthen sales
systems••

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

Sales breakdown

Improve profitability•

Thorough cost management ⇒ Results include cuts to manufacturing costs, establishment of
cost-conscious mindset, etc.

Strengthen researchsystems•

New research building construction project underway ⇒ Aim to strengthen research functions
and improve operational efficiency

Impact of Shanghai lockdown• Shanghai operations were suspended due to the lockdown from the end of March 2022, but partially resumed in late April.
• Suzhou site still operating, but some impact on the production and shipping of flavor products.

FYE September 30, 2022,
2Q results
Net sales: 250 million yuan
(4.5 billion yen)
(Flat YoY)
Operating profit: 54.6 million
yuan (0.98 billion yen)(-17.6% YoY)

* IFRS 15 "Revenue from Contracts with Customers" has been applied to consolidated subsidiaries overseas, excluding the U.S., from FYE
September 2019For ease of comparison, net sales figures for FYE September 2018 and prior are calculated using the same standards

22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 for new customer development and strengthenorganization• Appoint someone to take responsibility for (manage) the Southeast Asian
region⇒ Coordinate organic collaboration among Southeast Asian sites• 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 research and development• Promote sharing of formulation and technical information with head office research
departments• Manage progress of new plant construction plan in Malaysia based on economic trends

FYE September 30, 2022,
2Q results
Net sales: 1.75 billion yen(+31.0% YoY)
Operating profit: 0.27 billion
yen(+84.3% YoY)

* Net sales are calculated by summing net export sales to Southeast Asia, which are included in the Company's non-consolidated net sales* As its importance within the Group has increased, T. HASEGAWA (SOUTHEAST ASIA) CO., LTD. (Thailand) has been included in the scope of
consolidation from FYE September 2022

23

Basic Policies Related to Business Portfolio• Develop our 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
among beverage makers
 Strengthen collaboration
between sites• Increase sales in Malaysia,
Thailand, and Indonesia
 Expand operations into
countries around sites• Expand into Vietnam, thePhilippines, and Myanmar

 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

24Summary of Global Strategies

Japan• Strengthen collaboration between sales, research, and marketing through theBusiness Solutions Division• Focus on enhancing quality of sales activities and proposals⇒ Promote solution sales and further strengthen customer success• Focus on the development of flavors to substitute for food ingredients andstrengthen response to SDGs
• Making plant-based meat developed by DAIZ Inc. delicious through flavors and foodingredient technologies

U.S.

• Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020
• Post-merger integration (PMI) completed at the end of September 2021 as
originally planned⇒ Synergies achieved• Progress on plans for the construction of the second plant as scheduled

China• Utilize marketing functions to focus on large and midsize local companies, andutilize agents to expand sales area
• Thorough cost management⇒ Effective (cut manufacturing costs, established cost-conscious mindset, etc.)• New research building construction project underway

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 in Malaysia• Manage progress of new plant construction plan in Malaysia based on economic
trends25

Ⅶ．Capital Policy

26Capital Policy
Basic Policy• Maintain a level of shareholders' equity that will enable us to execute growth investments
and appropriately respond to risks, in order to achieve sustainable growth in corporate
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 expenditures
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.

Cross-Shareholdings• 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

27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

28

Capital Policy
Sale of Cross-Shareholdings(Partially Completed)• February 4, 2022 : Published “Notice Concerning Expected Recording of Gain on Salesof Investment Securities (Extraordinary Income)”[Overview]
Reason: Review of cross-shareholdings
Shares sold: 2 listed securities held by the Company
Scheduled date of sale : From February 7, 2022 to September 30, 2022
Gain on sale
: 2,200 million yen (forecast)[Progress]• The sale of the investment securities was partially completed between February andMarch 2022.
Shares sold

: 1 listed security held by the Company * The sale of the listed
security is ongoing: 478 million yen * Extraordinary income recorded in FYE
September 2022, 2Q financial statements

Gain on sale

(Reference)
Ratio of investment securities to consolidated net assets
FYE September
2019

FYE September
2020

FYE September
2021

25.1％

21.5％

18.2％

*Aim for 10% or less by FYE September 2026

29

Ⅷ．Accompanying Materials

30

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

Company nameCountry

Million USD
Sales(2021Yr) Market Share

1

IFF

U.S.

8,510

28.7%

2

Givaudan

Switzerland

6,099

20.6%

3

Firmenich

Switzerland

3,924

13.2%

4

SymriseGermany

3,242

10.9%

5

ADM/Wild Flavors

Germany

3,189

10.8%

6

Mane SAFrance

1,569

5.3%

7

Takasago

Japan

1,369

4.6%

8

Sensient Technologies

U.S.

739

2.5%

9

T.Hasegawa

Japan

512

1.7%

10

Robertet SA

France503

1.7%

29,656100.0%

Total* Estimated by the Company based on information disclosed by each company* Excluding the following segments
IFF: Nourish Segment and Scent Segment; Takasago International Corporation: Real Estate
Segment; Sensient Technologies: ColorGroup ・ AsiaPacific Group; Robertet: Les actifs* Human Nutrition only for ADM/Wild Flavors* FY2020 figures used for Mane SA

31

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

Others14.9%
Company SI
5.2%

Company T
31.2%

Company SO
6.3%
Company O
11.4%
Company G
12.1%

T.Hasegawa
18.9%(As of Mar. 2021）*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 fiscal year ends 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 2020 to March 2021.
32

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
Millions of yen
T. Hasegawa(Consolidated）

Company T(Consolidated）

FY ended in Sep. 2021

FY ended in Mar. 2022

Sales

Sales

Share

Share

Flavors

48,115

86.3%

94,292

58.1%

Fragrances

7,640

13.7%

48,481

29.8%

Aroma Chemicals--

18,219

11.2%

Others

-

-

1,446

0.9%

55,755100.0%

162,440

100.0%

Total
Ratio of gross profits to sales

40.6%

31.5%

Ratio of operating income to sales

12.3%

5.4%

* Synthesized aroma chemicals for T shows the total amount from the aroma ingredients andfine chemicals segments

33

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. 11%

To beverageindustry
Approx. 31%

To instant noodle
industry
Approx. 10%

To sweet andsavory snacks
industry
Approx. 13%

To dairy industry
Approx. 24%

Note: Reference data is calculated by taking the cumulative total net sales(non-consolidated) of customers classifiable by industry for FYE
September 2022 2Q as 100.

34

Analysis of Changes in Consolidated Statement of Income•

Operating profit growth factors
Increase sales at U.S. subsidiaries (including MISSION) and T. HASEGAWA non-consolidated
and improvement in cost-of-sales ratio are main factors
Millions of yen
前期
FY21
2Q

(Cumulative
第2四半期
results)（累計実績）

当期

増減
ChangeFY22 2Q(Cumulative
第2四半期
results)（累計実績）

金額
Amount要因
Factor％Higher sales of U.S. subsidiaries (including MISSION) and T. HASEGAWA non米国子会社（MISSION社含む）、当社単体の売上増加

11.7% consolidated* MISSION : Results for three months in the previous fiscal year and six

26,135 100.0% 29,199 100.0%

3,063

売上原価
Cost
of sales 15,582

59.6% 17,110

58.6%

1,527

10,553

40.4% 12,088

41.4%

1,535

14.6%

7,584

29.0% 8,265

28.3%

681

9.0%

営業利益profit
Operating

2,968

11.4% 3,823

13.1%

854

28.8%

経常利益
Ordinary
profit3,304

12.6% 4,266

14.6%

961

29.1% Foreign exchange gains increased by 84 million yen due to the depreciation of

売上高
Net
sales

売上総利益
Gross
profit
販売費及びSG&A expenses

一般管理費※MISSION社：前年同期は3ヵ月間、当期は6か月間の業績
months in the current fiscal year

Cost-of-sales ratio improved due to changes in sales breakdown of
9.8% 当社単体の売上構成の変化により売上原価率が改善
T. HASEGAWA non-consolidated

Increase in amortization of intangible assets at MISSION (net increase for 3
MISSION社の無形資産償却費増加（3ヵ月分純増）
months)（のれん310百万円、顧客関連資産195百万円）(Goodwill of 310 million yen and customer-related assets of 195 million yen)

Non-operating income（営業外収益）円安により為替差益が84百万円増加
the yen(Extraordinary income)（特別利益）

Previous FY : The Company (non-consolidated) Extraordinary income from

Profitbefore
税引前当期純利益
income taxes

4,435

17.0% 4,739

16.2%

304

1,137百万円
6.9% 前期
sales of当社単体
investment 投資有価証券売却による特別利益
securities: 1,137 million yen

当期純利益
Net
profit3,138

12.0% 3,318

11.4%

180

△36百万円Profit (loss) attributable tonon-controlling interests (36) million yen
5.8% 非支配株主持分損益

Current FY : The Company (non-consolidated) Extraordinary income from

当期
sales of当社単体
investment 投資有価証券売却による特別利益
securities: 486 million yen

486百万円* Net profit refers to profit attributable to owners of parent.

35Analysis of Changes in Consolidated Balance Sheet
Millions of yen
Sep.
30,
前期末
2021
流動資産
Current
assets55,242

当期31,
Mar.
2022
第2四半期末58,302

増減
Change要因
Factor3,059

・現金及び預金の増加 2,379百万円• Increase in cash and deposits: 2,379 million yen
・棚卸資産の増加
1,316百万円• Increase in inventories:
1,316 million yen• Decrease in accounts receivable - trade: (455) million yen
・売掛債権の減少 △455百万円
・有形固定資産の増加• Increase in property, 1,768百万円
plant and equipment: 1,768 million yen•
Increaseingoodwillandcustomer-related assets
・のれん及び顧客関連資産増加（円安により評価額増）
773百万円(valuation increase due to depreciation of yen): 773 million yen
・投資有価証券の減少△3,667百万円• Decrease in investment securities: (3,667) million yen

Non-current
固定資産
assets65,70364,849

△ 854

資産合計
Total
assets120,945

123,151

2,205

Current
流動負債
liabilities

11,604

10,546△ 1,057

・賞与引当金の減少• Decrease in provision △581百万円
for bonuses: (581) million yen• Decrease in income taxes
payable: (483) million yen
・未払法人税等の減少△483百万円

Non-current
固定負債
liabilities

11,0409,892△ 1,147

・繰延税金負債の減少• Decrease in deferred △878百万円
tax liabilities: (878) million yen(Decreasein unrealized gains on investment securities)（投資有価証券の含み益の減少）

負債合計
Total
liabilities

22,644

20,438△ 2,205

純資産
Net
assets

負債・純資産Total
liabilities
andnet
合計 assets

98,301

102,713

4,411

120,945

123,151

2,205

・四半期純利益 3,318百万円• Net profit: 3,318 million yen
・剰余金の配当△1,356百万円• Dividends of surplus:(1,356) million yen• Increase in foreign currency translation adjustment: 4,331・為替換算調整勘定の増加
4,331百万円
million yen• Decrease in valuation difference
on securities: (2,501) million
・有価証券評価差額金の減少△2,501百万円
yen (Decrease in unrealized gains on investment securities)（投資有価証券の含み益の減少）

36

Consolidated Statement of Cash Flows
前期

FY21 2Q(Cumulative
第2四半期
results)（累計実績）

当期

Millions of yen

FY22 2Q(Cumulative
第2四半期
results)（累計実績）

増減
Change

当期第2四半期の主要科目
Major
items in FY22 2Q

・税金等調整前四半期純利益 4,739百万円• Profit before income taxes: 4,739 million yen
・減価償却費1,590百万円• Depreciation:
1,590 million yen•
Amortizationofgoodwill: 382 million yen
・のれん償却額 382百万円△ 842 • Gain on sales of investment securities: (486)
・投資有価証券売却益△486百万円
million yen• Increase in inventories:(851) million yen
・棚卸資産の増加額△851百万円• Income taxes paid: (1,698) million yen
・法人税等の支払額 △1,698百万円

営業活動によるCashflows fromoperatingactivities
キャッシュ・フロー

4,393

3,551

投資活動によるCashflows frominvestingactivities
キャッシュ・フロー△ 13,001△ 1,392

11,608

財務活動によるCashflows fromfinancing
activities
キャッシュ・フロー△ 934△ 1,403△1,350百万円△ 469 ・配当金の支払• Dividends paid:(1,350) million yen

Effectof exchange
現金及び現金同等物
rate change on cashに係る換算差額
andcash equivalents

278

640

361

Net
increase
現金及び現金同等物(decrease) in cashの増減額
andcash equivalents△ 9,263

1,394

10,657Cashand cash
現金及び現金同等物
equivalents atの期首残高
beginningof period

25,36019,378Cashand cash
現金及び現金同等物
equivalents at end ofの期末残高
period16,097

20,773• Purchase of property,
plant and equipment:
・有形固定資産の取得△1,862百万円(1,862) million yen
・投資有価証券の売却• Sales of investment 708百万円
securities: 708 million yen• Increase due to 2 newly consolidated
subsidiaries:
515百万円△ 5,981 ・新規連結2社による増加額
515 million yen

4,675
37

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

Millions of yen

FY2022Plan

FY2022 2Q
ActualProgress(%)

CapitalInvestment

3,731

1,980

53.1%

Depreciation& Amortization

3,429

1,590

46.4%

Amortizationof Goodwill

733

382

52.1%

R&D
Expenses

4,858

2,396

49.3%

* Depreciation includes amortization of customer-related assets.

38

T. HASEGAWA Non-consolidated (Actual)
Millions of yen
FY2021 2Q
ActualValue

FY2022 2Q
Actual

Share

Value

Achievement

Share

Progress*vs annual Plan

yr/yr
Value

％

％

Net sales

17,897100.0%

18,658100.0%

761

4.3%

48.5%

Cost of sales

10,941

61.1%

11,009

59.0%

67

0.6%

46.7%

Gross profit

6,955

38.9%

7,649

41.0%

693

10.0%

51.2%

SG&A expenses

5,287

29.5%

5,126

27.5%

-160

-3.0%

46.6%

Operating income

1,668

9.3%

2,522

13.5%

854

51.2%

64.0%

Ordinary income

1,965

11.0%

2,925

15.7%

960

48.9%

40.5%

Profit before
income taxes

3,096

17.3%

3,404

18.2%

307

9.9%

36.3%

Net income

2,310

12.9%

2,567

13.8%

257

11.1%

34.6%

• Net sales increased mainly thanks to higher sales in the flavor segment.
• Operating profit increased thanks to higher sales, improved cost-of-sales ratio due tochanges in sales breakdown, and lower SG&A expenses.
(In the same period of the previous fiscal year, expenses related to the acquisition of
MISSION were recorded.)* Progress rate against revised targets published on May 11, 202239

Consolidated U.S. Subsidiaries (Actual)* Consolidated statements of income of the Company's two U.S. subsidiaries (T. HASEGAWA U.S.A., INC. and MISSION FLAVORS &FRAGRANCES, INC.)* MISSION FLAVORS & FRAGRANCES, INC.'s financial results for the previous fiscal year are for the three months from January to March
2021, and the financial results for the fiscal year under review are for the six months from October 2021 to March 2022.
(Million yen)

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

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

FY2022 2Q
Value
Share
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%
Yen 114.96/USD

yr/yr
Value
1,586
972
614
550
64
57
41

％
40.7%
41.5%
39.5%
40.9%
30.5%
25.5%
23.9%

9.3% lower(Thousand US$)

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

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%

FY2022 2Q
Value
Share
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%

yr/yr
Value
10,653
6,563
4,090
3,701
388
315
220

％
28.7%
29.4%
27.7%
29.0%
19.4%
14.9%
13.4%

• Net sales increased mainly because of an increase in sales to the health sector at
our existing company and MISSION’s contribution(3 months in same period of previous fiscal year, 6 months in current fiscal year)• Operating profit increased thanks to higher sales.
40Consolidated China Subsidiaries (Actual)* Consolidated statements of income 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)(Thousand RMB)

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

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%
31,68612.6%

FY2022 2Q
Value
Share
250,422100.0%
148,41859.3%
102,003
40.7%
47,30818.9%
54,695
21.8%
58,91623.5%
29,698
11.9%

yr/yr
Value
-68
8,048
-8,116
3,591-11,708-10,846-1,988

％
-0.0%
5.7%
-7.4%
8.2%
-17.6%-15.5%-6.3%• Net sales were unchanged on the local currency basis due to a decrease in sales
in the fragrance segment despite an increase in sales in the flavor segment. Net
sales increased on the yen basis due to depreciation of the yen.
• Operating profit decreased due to deterioration in cost-of-sales ratio andincrease in SG&A expenses.

41

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

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

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

FY2022 2Q
Value
Share
100.0%
590
346
58.6%
244
41.4%
183
31.1%
10.3%
60
11.5%
68
46
7.9%
Yen 27.46/MYR

yr/yr
Value
95
58
37
35
2
2
-1

％
19.4%
20.3%
18.1%
23.8%
3.6%
3.8%
-3.3%

6.6% lower(Thousand Malaysian Ringgit)

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

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%

FY2022 2Q
Value
Share
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%

yr/yr
Value
2,307
1,440
866
930
-63
-66
-172

％
12.0%
12.9%
10.8%
16.2%
-2.8%
-2.6%
-9.2%

・ Net sales increased mainly as a result of higher sales to savory snack makers.
・ Operating profit decreased on the local currency basis due to a deterioration in
the cost-of-sales ratio and an increase in SG&A expenses, but increased on
the yen basis due to depreciation of the yen.

42

Capital Expenditures, Depreciation, and R&D Expenses• T. HASEGAWA non-consolidated DX promotion and IT reform project:
Approx. 3.0 billion yen(Plan: FY9/22: Approx. 0.5 billion yen, FY9/23: Approx. 1.0 billion yen, FY9/24: Approx. 1.5
billion yen)

• U.S. second plant construction plan: Approx. 2.7 billion yen(Actual: FY9/20: Approx. 1.1 billion yen, FY9/21: Approx. 0.4 billion yen)
(Plan: FY9/22: Approx. 1.2 billion yen)

• China new research building construction plan: Approx. 2.0 billion yen(Plan: FY9/23: Approx. 2.0 billion yen)

• Malaysia new plant construction plan: Approx. 2.0 billion yen(Plan: FY9/23: Approx. 1.0 billion yen, FY9/24: Approx. 1.0 billion yen)

• R&D expenses trended at around 8% of consolidated net sales
Million Yen

FY2021(actual)FY2022(plan)FY2023(plan)FY2024(plan)

Capital Investment

2,767

3,731

5,910

4,528

Depreciation &Amortization

3,186

3,429

3,529

3,613

R&D Expenses

4,675

4,858

5,086

5,249

* Reprinted from the “Financial Results for the Fiscal Year Ended September 30, 2021 " disclosed on
November 25, 2021.
43

This presentation is based on data as of May 30, 2022, and was createdwith the intention of providing information on future management plans andresults for the second quarter of the fiscal year ending September 30,
2022.
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.

44