Financial Results
for the Fiscal Year Ended
September 30, 2021
November 25, 2021

T. HASEGAWA CO., LTD.

Contents

I. Summary of Consolidated Financial Results
II. Impact of COVID-19
III. Management Policy
IV. Global Strategy
V. Medium-Term Three-Year Plan Summary
VI. Capital Policy
VII.Accompanying Materials
1

I.

Summary ofConsolidated Financial Results

2Market Environment
Japanese Market• Trends by category
FYE September 2021 (October 2020 to September 2021)
Category

Trend

Decrease• Sluggish consumption owing partly to consumers refraining from going out as a result of
COVID-19• Sluggish demand from the office sector, particularly in large cities, with commercial andvending machine sales remaining weak
• Cool summer resulted in poor sales of sports drinks, barley tea, and other thirst-quenching
beverages

Flat YoY• In potato products, sales of bagged products increased slightly, and the proportion of premium
products in the sales mix increased• In corn products, chips and puffs declined slightly, while popcorn grew
• Sales of wheat flour products fell, and in other snacks, sales of small pouch-type products
were strong

Increase• Sales of chocolate bars fell back from a large increase in the previous year
• Sales of high-cocoa and functional products increased due to an expanded product lineup oflarge-bag products• Chocolate snacks grew, particularly for large-bag products

Frozen desserts

Increaseslightly• During the summer, when demand is strongest, sales increased significantly in July, but fell inAugust and September owing to cooler temperatures• Multipack products remained on par with the previous year despite a fallback from the previous
year's increase• New products contributed

Instant noodles

Decrease• Struggled in March-May owing to a fallback from special demand in the previous year
• For cup noodles, the introduction of new products and stronger promotions at
supermarkets,and other factors made up for the delayed recovery in convenience store sales

Sweet and savory
snacksBeverages

Savorysnacks

Chocolate

Source: Nikkan Keizai Tsushin

3

Summary of Consolidated Performance• YoY
Sales increased mainly due to the contribution of MISSION (U.S.), which T. HASEGAWA U.S.A. Inc. acquired in December 2020, as wellas higher sales at Chinese subsidiaries
Operating profit, ordinary profit, and net profit increased mainly due to an increase in net sales and an improvement in the cost-of-sales
ratio• Vs. target
Achieved our net sales target, mainly due to performance at the Company (non-consolidated), U.S. subsidiaries, and Chinese subsidiaries
exceeding targets
Achieved our operating profit target, mainly because net sales exceeded the target and SG&A expenses came in under the target(Million yen)

FY 2020(actual)*FY 2021(targets revisedon August 2)

FY 2021(actual)ChangeYoY
AmountVs. target％

Amount％Net sales

50,19254,70055,755

5,562

11.1%

1,055

1.9%

Cost of sales

30,78332,65033,106

2,322

7.5%

456

1.4%

Gross profit

19,40822,05022,648

3,239

16.7%

598

2.7%

SG&A expenses

14,052

15,98015,788

1,736

12.4%

-191

-1.2%

Operating profit

5,356

6,070

6,859

1,503

28.1%

789

13.0%

Ordinary profit

5,861

6,560

7,466

1,605

27.4%

906

13.8%

Income before
income taxes

7,028

8,380

9,692

2,664

37.9%

1,312

15.7%

Net profit

5,090

5,950

6,763

1,672

32.9%

813

13.7%

EBITDA （※）

8,360

9,800

10,618

2,258

27.0%

818

8.4%

EBITDA = Operating profit + Depreciation + Amortization of goodwill
EBITDA-to-sales ratio: 19.0%

4

Net Sales by Segment• Sales growth factors
Contribution of MISSION (U.S.) and higher sales at Chinese subsidiaries(Million yen)Segment

FY 2020(actual)FY 2021(actual)ChangeAmountFactorChange(%)

Flavors

43,15948,115

4,955

11.5%

Contribution of MISSION
Higher sales at Chinese subsidiaries

Fragrances

7,032

7,640

607

8.6%

Higher sales at the Company (non-consolidated)

Total

50,19255,755

5,562

11.1%

－

Overseas net sales as apercentage of consolidated
net sales
FY9/21: 41.4%(FY9/20: 35.4%)(Million yen)5

Net Sales by Group Company• Sales growth factors
Contribution of MISSION (U.S.)
Higher sales at Chinese subsidiaries

Currency

FY2020

FY2021

Change(%)

1US$¥107.88¥107.50

Yen up 0.4%

1RMB

¥15.39¥16.54

Yen down 7.5%

1MYR

¥25.61¥26.08

Yen down 1.8%

（Million Yen）

FY 2020(actual)FY 2021(actual)(Million yen)

Change
(%)

YoY

+96

Japan

36,82137,362

541

1.5%

U.S.

6,146

9,187

3,041

49.5%

China

6,870

8,699

1,829

26.6%

Malaysia

902

998

96

10.7%

Adjustment

-547

-493

54

-

+54

+1,829+541+3,04155,75550,1920

Consolidated

50,19255,755

5,562

11.1%

Japan

Increase in sales to toiletry makers in fragrance segment

Sales Increase

U.S.

Contribution of MISSION (nine months)
Increase in sales to beverage makers at existing company

Sales Increase

China

Increase in sales to beverage and instant noodle makers in flavor
segment

Sales Increase

Malaysia

Increase in sales to sweet and savory snack and beveragemakersSales Increase
6

Operating Profit by Group Company• Profit growth factors
Higher operating profit at Chinese subsidiaries

Currency

FY2020

FY2021

Change(%)

1US$¥107.88¥107.50

Yen up 0.4%

1RMB

¥15.39¥16.54

Yen down 7.5%

1MYR

¥25.61¥26.08

Yen down 1.8%

（Million Yen）

FY 2020(actual)Japan

FY 2021(actual)

3,704

3,891

(Million yen)

Change
(%)

YoY

187

+22

5.1%

U.S.

549

662

112

20.6%

China

1,084

2,267

1,182

109.0%

Malaysia

92

114

22

24.1%

Adjustment

-74

-76

-1

-

Consolidated

5,356

6,859

1,503

28.1%

-1

+1,182
+187

+112
6,859

5,356

0

Japan

Increase in net sales and improvement in cost-of-sales ratio

Profit Increase

U.S.

Increase in net sales and improvement in cost-of-sales ratio

Profit Increase

China

Increase in net sales and improvement in cost-of-sales ratio

Profit Increase

Malaysia

Increase in net sales

Profit Increase7II. Impact of COVID-19

8

Impact of COVID-19• Japan and Southeast Asia continued to be affected by COVID-19⇒ Negative impact of approx. 1.30 billion yen on full-year net sales for FYE September 2021
RegionFiscal year ended September 30, 2021 (actual)
Business impact

Net sales impact

Japan• Sluggish consumption of beverages (including weak vending machine andconvenience store sales and lower sales of commercial products), small-bag
sweet and savory snacks, etc., from self-imposed restraints on going out,
teleworking, and requests to restaurants, etc., for temporary closures andshortened operating hours• Fallback from stocking up demand in the previous fiscal year (instant noodles,large-bag sweet and savory snacks, etc.)• Slow Decrease in demand growth for handwashing and disinfection products• Decreases and delays in new product development as customers shifted toteleworking

Sales Decrease
approx. 1.22 billion
yen

U.S.

• Some negative impact carried over from FYE September 2020 remained in thefood service industry• Impact varied by customer and industry• Recovery trend strengthened in the latter half of the fiscal year as vaccination
progressed

-

China

• No impact from COVID-19• China's economy is trending toward recovery-

SoutheastAsia• Affected by economic recession, weak demand, etc., in each country• Increased demand for some products for home consumption, including
seasonings and instant noodles• Decrease in perfume and cologne demand as consumers refrained from goingout• Impact varied by customer and industry
Total

Sales Decrease
approx. 80 million
yen
Sales Decrease
approx. 1.30 billion
yen

9III. Management Policy

10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
Market11

Basic Policies Related to Business Portfolio• Develop our businesses based on three basic strategies: (1) expand flavors and fragrances,(2) secure earnings in Japan, and (3) expand overseas businesses• Achieve abundant and healthy living through aromas and contribute to the creation of a sustainable society■ Entered ■ Not entered
Earnings foundation
Japan Broad usage in the beverageand food industries

FlavorBusiness
Providing flavorsthat make fooddelicious Strengthen response to
SDGs• Develop flavors to
substitute for foodingredients• Capital and businessalliance with DAIZ Inc.
 Strengthen measures in new
sectors• Health foods, medical
foods, etc.
 Broad usage in daily
necessities and cosmetics
industries

Fragrance
Business
Providingfragrances that
add color tovarious aspectsof life

Growth drivers
U.S.

 Usage mainly in savory foods,  Usage mainly inbeverages, and health sector
beverages and instantnoodles Trade mainly with local
companies Trade mainly withinternational and local
 Expand business throughcompanies
M&A• Strengthen sweet flavors
 Tap unentered sectors andwith M&A in 2020
potential demand• Focus on large and Strengthen collaboration withmidsize local companies
research departments in• Expand sales area byJapanutilizing agents
 Establishment of bases byforeign flavor and fragrance
makers Strengthen measures in new  Introduction of preferredsupplier system by many
sectors
customers• Address need to maskodors in day-to-day life, etc.
⇒ T. HASEGAWA Group has• Use fragrances to resolve
yet to enter
discomfort people feel
 Strengthen response to
SDGs• Develop environmentallyconscious fragrances(biodegradable
microcapsules, etc.)

China

Southeast Asia
 Usage mainly in seasoning
powders and beverages• Target further expansion
among beverage makers
 Strengthen collaboration
between subsidiaries
 Increase sales in Malaysia,
Thailand, and Indonesia
 Expand operations into
countries aroundsubsidiaries
・Expand into Vietnam,
the Philippines, and Myanmar

 Usage mainly in daily
necessities industry
 Trade mainly with local
companies Address with
exports from Japan
Produ
ction

 Focus on expansion
among toiletry makers
 Strengthen collaboration
with research departments
in Japan

Sales⇒ Consider local
production basedon businessdevelopment
 Usage mainly
among body careproduct makers
 Focus on acquiring
new customers

12IV. Global Strategy

13Summary of Global Strategies

Japan• Business Solutions Division established in October 2020
• Promote proposal-based sales utilizing collaboration among sales, research,and marketing• Focus on the development of flavors to substitute for food ingredients andstrengthen response to SDGs
• Entered into capital and business alliance agreement with DAIZ Inc.

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• 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⇒ Results (cut manufacturing costs, established cost-conscious mindset, etc.)• New research building construction project underway

Southeast
Asia• Established Corporate Planning Division in Malaysia in order to formulate andpromote strategies for Southeast Asia.
• Promote efficient R&D in Malaysia• Manage progress of new plant construction plan in Malaysia based on economic
trends14

Domestic Strategies
Basic strategy: Expand market share by anticipating new market demand caused by declining birthrate andaging population, as well as growing health consciousness

Current initiatives and progress
Strengthen
collaboration between
departments
Promote solution sales• Strengthen collaboration among sales, research, and marketing departments⇒ Business Solutions Division established in October 2020
⇒ Promote proposal-based sales utilizing collaboration among departments⇒ Further strengthen customer successes• Utilize market research, analysis, etc., to identify potential “wants”• Improve the quality of sales activities and enhance operational efficiency•

Address expansion inflavor and fragrance
applications••

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 (soymeat, etc.)
Entered into capital and business alliance agreement with DAIZ Inc.
⇒ Making plant-based meat developed by DAIZ Inc. delicious through flavors and food ingredienttechnologies⇒ 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 2021 results
Net sales: 37,362 million yen(+1.5% YoY)
Operating profit: 3,891 million yen(+5.1% YoY)15

Business Solutions Division Initiatives
Purpose• Promote reforms based on the following policies:(1) Create an organization that is willing to change, (2) accelerate management, and (3) share
information across divisions• Through the Business Solutions Division:
 Strengthen collaboration among sales, research, and marketing departments
 Formulate and promote sales strategies and clarify key areas for research departments tofocus on Quickly address increasingly diverse and sophisticated customer needs

Main Initiatives
Identify issues insales and research
departments

Consider measures
for improvement

Implement
measures

Enhance the quality ofsales activities

Improve operational efficiency and thoroughlymanage pipeline

Enhance the quality of
proposals

Leverage marketing data
Promote sales activities utilizing R&D results

Speed up responses tocustomers

Revise organizational structure within laboratories
Maximize results with limited resources

Further strengthen
customersuccesses

Increase
adoption rate

16

Conclusion of Capital and Business Alliance Agreement with DAIZ Inc.

Background• A "protein crisis" is expected to occur in 2030 as a result of global population growth• The Company has been focusing on the development of flavors to substitute for foodingredients and on responding to the alternative meat market for some time
• The plant-based meat market will continue to grow as a means of avoiding thedepletion of food ingredients and reducing environmental impact, in our assessment• Achieve abundant and healthy living througharomas• Contribute to the creation of a sustainable
society through the resolution of social issues
The Company
Unique flavors as well as foodingredient technologies

×• Start-up developing, producing and selling plantbased meat
• Developed plant-based meat (Miracle Meat)derived from germinated soybeans, with strength
in core "Ochiai Germination Method" technology

DAIZ Inc.
Developed plant-based meat

Make DAIZ Inc.'s plant-based meat delicious
Offer new value to the plant-based meat market

Contribute to resolving the social issue of the "protein crisis"
Expand use of flavors and strengthen response to SDGs
17

Overseas Strategy –U.S.–
Basic strategy: Increase sales in the savory, health, and beverage sectors, and quickly achieve synergies from acquisitions
Current initiatives and progress

Acquisition of
MISSION
Create new production
system• Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020
⇒ PMI completed at the end of September 2021 as originally planned⇒ Aim for further growth in the U.S. market• Promotion of second plant construction plan as part of measures to create a
new production system⇒ Purchased property in California⇒ Phase 1 construction to be completed in February 2022

Sales breakdown

Strengthen sales
activities• 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.

Utilize and deploy
Japanese technology• 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 making sample proposals tocustomers

FYE September 2021 results
Net sales: 85 million U.S. dollars(9.1 billion yen)(+50.0% YoY)
Operating profit:
6.1 million U.S. dollars(0.66 billion yen)(+21.0% YoY)*

Savory flavors
Salty flavors used in savory snacks,
dressings, seasonings, and other products

18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 and potential
demandFocus on large and midsize local companies and utilize agents to expand
sales area
• Deepen collaboration between sales, research, and marketing• Thoroughly manage pipeline and sales activities⇒ Start introducing IT tools

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

Sales breakdown

FYE September 2021 results
Net sales: 525 million RMB(8.6 billion yen)(+17.8% YoY)
Operating profit: 137 million RMB(2.26 billion yen)(+94.5% YoY)*IFRS 15 "Revenue from Contracts with Customers" has been applied to consolidated subsidiaries overseas, excluding theU.S., from FYE September 2019For ease of comparison, net sales figures for FYE September 2018 and prior are calculated using the same standards

19Overseas Strategy –Southeast Asia–
Basic strategy: Increase sales through collaboration between manufacturing and sales bases in Malaysia (THKL) andsales sites in Thailand and Indonesia
Current initiatives and progress

Strengthen sales
systems• Acquire sales personnel for new customer development and strengthen organization• 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

Sales breakdown

Respond to customers
Increase speed• Promote utilization of application laboratories⇒ Respond quickly to customer needs

Strategic development inSoutheast Asia using
THKL as a hub• Established Corporate Planning Division 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⇒ Increase the number of researchers dispatched from Japan, and through the increase in personnel havepersonnel dedicated to R&D and personnel dedicated to research management and strategic planning,and clarify the division of roles between them.
• Manage progress of new plant construction plan in Malaysia based on economic trends

FYE September 2021 results
Net sales: 2,589 million yen(+9.4% YoY)
Operating profit: 227 million yen(+20.5% 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 scopeof consolidation from FYE September 2022

20

V. Medium-Term Three-Year Plan
Summary

21

Medium-Term Three-Year Plan (Consolidated)
The Company(nonconsolidated)

We expect COVID-19 to continue to impact performance in FYE September 2022
We expect sales growth partly from the promotion of solution sales based on stronger collaboration between
sales, research, and marketing departments, as well as measures to address expansion in flavor andfragrance applications

U.S.

We expect sales growth in the savory, health, and beverage sectors, as well as synergies from the acquisitionof MISSION

China

We will strengthen our sales systems through means including utilizing marketing functions and deepening
cooperation between sales, research, and marketing, and we expect sales growth from tapping unenteredsectors and potential demand

Malaysia

We expect sales growth as a result of efforts such as strengthening collaboration among Southeast Asiansites and strengthening sales systems for new customer development(Million yen)

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

55,75559,20061,50064,200

Cost of sales

33,106

34,40035,70036,940Operating profit

6,859

7,630

8,090

9,200

Ordinary profit

7,466

8,090

8,530

9,620

Net profit

6,763

7,290

7,500

8,350

¥107.50 per US$¥16.54 per RMB

Forex rate

¥110.00 per US$¥17.00 per RMB¥110.00 per US$¥17.00 per RMB¥110.00 per US$¥17.00 per RMB

Net sales growth rate

11.1%

6.2%

3.9%

4.4%

Cost-of-sales ratio

59.4%

58.1%

58.0%

57.5%

Operating profit margin

12.3%

12.9%

13.2%

14.3%

Ordinary profit margin

13.4%

13.7%

13.9%

15.0%

Net profit margin

12.1%

12.3%

12.2%

13.0%

Overseas net sales as apercentage of consolidated net
sales

41.4%

44.0%

45.0%

45.8%

*
*
*
*

The Group's Medium-Term Three-Year Plan is restated each fiscal year; see slide 49 for details
As their importance within the Group has increased, T. HASEGAWA (SOUTHEAST ASIA) CO., LTD. (Thailand) and T. HASEGAWA FLAVOURS AND FRAGRANCES (TAIWAN) CO.,LTD. have been included in the scope of consolidation from FYE September 2022
Net profit in the table refers to profit attributable to owners of parent
Savory flavors: Salty flavors used in savory snacks, dressings, seasonings, and other products

22Capital Expenditures, Depreciation, and R&D Expenses• The Company (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
23

VI. Capital Policy

24Capital Policy
Basic Policy• Maintain a level of shareholders' equity that will enable us to execute growth investments andappropriately respond to risks, in order to achieve sustainable growth in corporate value andmaximize it going forward

Policy on Use of Funds• Appropriately use funds, taking into consideration factors such as the maintenance of a sound 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 for growth, as well as renewal and maintenance of existing facilities- M&A
Make comprehensive assessments from perspectives including market size, business risk, andacquisition amountAchieve M&A with expected synergies in terms of customer networks, technology, human resources, etc.

Investment Securities• Reduce the total number of shares held from the perspective of improving capital efficiency, etc. (someshares 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 the necessaryinternal reserves to further strengthen the Group's management foundations and engage in future businessdevelopment• 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 the Company’s
shares over the medium- to long-term• In the fiscal year under review, the annual dividend was increased by 15 yen from 40 yen in FYE September 2020
(resulting in an annual dividend of 55 yen), comprehensively taking into account consolidated performance and otherfactors26

Capital Policy
Sale of Investment Securities (Completed)FYE September 2021: Recorded extraordinary income on sales of investment securities[Reason]
Review of investment securities[Shares sold] 10 listed securities held by the Company[Gain on sale]FYE September 2021

Gain on sales ofinvestment securities(extraordinary income)

Q1

1,137 million yen

Q2

-

Q3

342 million yen

FYE September
2019

FYE September
2020

FYE September
2021

Q4

784 million yen

25.1%

21.5%

18.2%

Total

2,265 million yen(Reference)
Ratio of investment securities to consolidated net assets* Aim for 10% or less by FYE September 2026

Acquisition of Treasury Stock (Completed)• May 7, 2021: Announced "Notice Concerning Acquisition of Own Shares and Repurchase of Own Shares
Through Off-Auction Own Share Repurchase Trading System (ToSTNeT-3)"• Objectives are to flexibly implement capital policies in response to changes in the business environment,
improve capital efficiency, and enhance shareholder returns• Acquired treasury stock on May 10, 2021
• Details of acquisition[Class of shares acquired]
Common stock of the Company[Total number of shares repurchased] 400,000 shares[Total acquisition amount]
845 million yen[Method of acquisition]
Purchase through the Tokyo Stock Exchange's Off-Auction Own Share
Repurchase Trading System (ToSTNeT-3)

27

VII. Accompanying Materials

28

Flavors and Fragrances Industry

29

Flavor and Fragrance Business
Products

Ingredients(Compound Flavors and Fragrances)

1. Natural Aromatics

3. Flavors

調合Compounding

2. SynthesizedAroma Chemicals

Recipes

4. Fragrances

Integration of research anddevelopment capabilities

Flavorists : Experts who formulate flavors
Perfumers : Experts who formulate fragrances
Flavors and fragrances are tailor-made in accordance with customer requests⇒ Formulas created by flavorists and perfumers based on experience are invaluableassets for flavor and fragrance companies.
30

Market Size

31

Global Flavors and Fragrances Market (Our Estimate)• Global flavors and fragrances market in 2019: Grew approx. 7% YoY
Global Flavors and Fragrances Market (Our Estimate)(Million US$)

CAGR
7.9%
4.8%

3.3%

3.5%

32

Size of Global Flavors and Fragrances Market (Our Estimate)• Worldwide flavors and fragrances sales: Approx. 3.2 trillion yen (approx. 29.8 billion U.S. dollars)
Europe, Africa, Middle East

‐ Market size: Approx. 1,170 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. 820 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. 950 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 = 108.1 yen (2019)● = the Company’s site
33

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

Company nameCountry

Million USD
Sales(2020Yr) Market Share1

Givaudan

Switzerland

5,926

23.4%

2

IFF

U.S.

5,084

20.1%

3

Firmenich

Switzerland

3,656

14.5%

4

SymriseGermany

3,096

12.3%

5

ADM/Wild Flavors

Germany

2,812

11.1%

6

Mane SAFrance

1,569

6.2%

7

Takasago

Japan

1,441

5.7%

8

Sensient Flavors

U.S.

742

2.9%

9

T.Hasegawa

Japan

474

1.9%

10

Robertet SA

France

473

1.9%

Total

－

25,273100.0%* Estimated by the Company based on information disclosed by each company

34

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(FY2020)

Domestic flavor and fragrance market sales(Billion yen)

2016

2017

2018

2019

2020

Total

212.5

216.2

223.8

227.5

225.7

Yr/Yr

5.5%

1.7%

3.5%

1.7%

-0.8%

Source of reference :Japan Flavor & Fragrance Materials
Association Magazine

35

Current Status of the Company

36

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.
37

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

T. Hasegawa(Consolidated）

Company T(Consolidated）

FY ended in Sep. 2021

FY ended in Mar. 2021

Sales

Sales

Share

Share

Flavors

48,115

86.3%

88,93659.1%

Fragrances

7,640

13.7%

43,443

28.9%

Aroma Chemicals--

16,540

11.0%

Others

-

-

1,445

1.0%

55,755100.0%

150,367

100.0%

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

40.6%

30.0%

12.3%

4.2%

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

38

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

To seasoning industry
Approx. 11%

To beverage industry
Approx. 32%

To instant noodle
industry
Approx. 9%

To sweet and savory
snacks industry
Approx. 13%

To dairy industry
Approx. 25%(Note) Reference data is calculated by taking the total net sales (non-consolidated) ofcustomers classifiable by industry for FYE September 2021 as 100.
39

Other: Financial Statements

40

Analysis of Changes in Consolidated Statement of Income• Operating profit growth factors
Increase in net sales (contribution from MISSION and increased sales at subsidiaries in China)
and improvement in cost-of-sales ratio are main factors(Million yen)
FY2020(actual)ChangeFY2021(actual)Amount Change(%)

Factor50,192100.0%

55,755100.0%

5,562

11.1%

Contribution from net sales of MISSION (U.S.) (2,101 million yen)
Higher sales at Chinese subsidiaries

30,78361.3%

33,106

59.4%

2,322

7.5%

Increase in net sales at Chinese subsidiaries and improvement in cost-of-sales ratio from change
in sales mix

19,40838.7%

22,648

40.6%

3,239

16.7%

14,05228.0%

15,788

28.3%

1,736

Start of amortization of intangible assets associated with acquisition of MISSION (goodwill of 434
12.4% million yen and customer-related assets of 273 million yen)
Expenses related to acquisition of MISSION (231 million yen)

Operating profit

5,356

10.7%

6,859

12.3%

1,503

28.1%

Ordinary profit

5,861

11.7%

7,466

13.4%

1,605

27.4%

Net sales

Cost of sales

Gross profit

SG&A expenses

Profit before
income taxes

7,028

14.0%

9,692

17.4%

2,664

(Extraordinary income)Previous FY The Company (non-consolidated) Extraordinary income from sales of non-current
37.9% assets: 320 million yen Extraordinary income from sales of investment securities: 867 million yen
Current FY The Company (non-consolidated) Extraordinary income from sales of investment
securities: 2,265 million yen

Net profit

5,090

10.1%

6,763

12.1%

1,672

32.9%

41

Analysis of Changes in Consolidated Balance Sheet(Million yen)Sep. 30
2020

Mar. 312021

Increase or
Decrease

Current assets

59,01355,242-3,771

・Increase in cash and deposits: 2,453 million yen
・Increase in accounts receivable: 1,591 million yen
・Decrease in securities: (8,000) million yen

Non-current assets

54,43165,703

11,272・Increase in goodwill from MISSION (U.S.): 5,583 million yen
・Increase in customer-related assets from MISSION (U.S.): 7,310 million yen
・Decrease in investment securities: (1,907) million yen

Total assets

113,445

120,945

7,500

Current liabilities

10,261

11,604

1,342

Non-current liabilities

10,965

11,04075

Total liabilities

21,226

22,644

1,417

Net assets

Total liabilities andnet assets

92,21898,301

6,082

113,445

120,945

7,500

Factor・Increase in trade payables: 257 million yen
・Increase in income taxes payable: 987 million yen

・Net profit: 6,763 million yen
・Dividends of surplus: (1,825) million yen
・Increase in treasury shares: (809) million yen
・Increase in foreign currency translation adjustment: 3,169 million yen
・Decrease in valuation difference on securities: (1,279) million yen

42Consolidated Statement of Cash Flows(Million yen)

FY2020(actual)FY2021(actual)Increase or
Decrease

Major Account Item for Current Fiscal Year・Profit before income taxes: 9,692 million yen
・Depreciation: 3,186 million yen
3,593 ・Amortization of goodwill: 572 million yen
・Gain on sales of investment securities: (2,265) million yen
・Income taxes paid: (1,693) million yen

Cash flows fromoperating activities

6,387

9,980

Cash flows frominvesting activities-431-14,130-13,698 ・Purchase of shares of subsidiaries: (12,885) million yen

Cash flows fromfinancing activities-1,511-2,733-1,222 ・Dividends paid: (1,824) million yen

17

385

368

Net Change in cash andcash equivalents

4,461-6,497-10,959

Cash and Cashequivalents at beginningof period

20,89825,3604,461

Cash and cash
equivalents at end of
period25,36018,863-6,497

Effect of currencychange on cash andcash equivalents

・Purchase of treasury shares: (846) million yen

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

FY2021(plan)FY2021(actual)Progress(%)

CapitalInvestment

3,605

2,767

76.8%

Depreciation&
Amortization

3,158

3,186

100.9%

R&D
Expenses

4,682

4,675

99.9%

44

T. Hasegawa Non-consolidated (Actual)(Million yen)

FY2020(actual)AmountFY2021(targets revised on May 7,2021)

Share

AmountShare

FY2021(actual)AmountChangeShareAmount

YoY

Vs. target
Amount％％Net sales

36,821100.0%

36,900100.0%

37,362100.0%

541

1.5%

462

1.3%

Cost of sales

22,91462.2%

22,75061.7%

22,834

61.1%

-80

-0.3%

84

0.4%

Gross profit

13,90737.8%

14,15038.3%

14,528

38.9%

621

4.5%

378

2.7%

SG&A expenses

10,202

27.7%

10,73029.1%

10,636

28.5%

433

4.2%

-93

-0.9%

Operating profit

3,704

10.1%

3,420

9.3%

3,891

10.4%

187

5.1%

471

13.8%

Ordinary profit

5,168

14.0%

3,880

10.5%

4,449

11.9%

-719

-13.9%

569

14.7%

Profit before
income taxes

6,302

17.1%

5,730

15.5%

6,689

17.9%

386

6.1%

959

16.7%

Net profit

4,821

13.1%

4,170

11.3%

4,819

12.9%

-2

-0.0%

649

15.6%

•
•
•
•

Sales increased mainly due to higher sales to toiletry makers in the fragrance segment.
Operating profit increased due to higher net sales and an improved cost-of-sales ratio, despite
higher SG&A expenses owing to the recording of expenses associated with the acquisition of
MISSION
Ordinary profit decreased because the Company recorded dividends from Chinese subsidiaries in
the previous fiscal year.
Net profit was unchanged as a result of an increase in gain on sales of investment securities.
45

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 fiscal year under review are for the nine months from January to September 2021 (noresults for the previous fiscal year)(Million yen)

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

FY2020
AmountShare
6,146
100.0%
3,642
59.3%
2,503
40.7%
1,953
31.8%
549
8.9%
560
9.1%
436
7.1%

FY2021
AmountShare
9,187
100.0%
5,416
59.0%
3,770
41.0%
3,108
33.8%
662
7.2%
679
7.4%
519
5.7%

Yen 107.88/USD

Yen 107.50/USD

YoY
Amount
3,041
1,773
1,267
1,154
112
118
83

％
49.5%
48.7%
50.6%
59.1%
20.6%
21.2%
19.1%

Yen up 0.4%
(Thousand US$)

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

FY2020
AmountShare
56,972100.0%
33,76859.3%
23,20340.7%
18,112
31.8%
5,091
8.9%
5,195
9.1%
4,042
7.1%

FY2021
AmountShare
85,466100.0%
50,38859.0%
35,07741.0%
28,917
33.8%
6,159
7.2%
6,320
7.4%
4,832
5.7%

YoY
Amount28,493
16,62011,873
10,805
1,068
1,124
789

％
50.0%
49.2%
51.2%
59.7%
21.0%
21.7%
19.5%

• Net sales increased mainly because of MISSION’s contribution (2,101 million yen overnine months), as well as the increase in sales to beverage makers at our existing
company.
• Operating profit increased owing to higher net sales and an improved cost-of-sales
ratio.

46

Consolidated China Subsidiaries (Actual)* Consolidated statements of income of the Company's two consolidated subsidiaries in China (T. HASEGAWAFLAVOURS AND 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

FY2020
AmountShare
6,870
100.0%
4,382
63.8%
2,488
36.2%
1,403
20.4%
1,084
15.8%
1,173
17.1%
939
13.7%

FY2021
AmountShare
8,699
100.0%
4,897
56.3%
3,801
43.7%
1,534
17.6%
2,267
26.1%
2,383
27.4%
1,808
20.8%

Yen15.39/RMB

Yen16.54/RMB

YoY
Amount
1,829
515
1,313
131
1,182
1,210
869

％
26.6%
11.8%
52.8%
9.4%
109.0%
103.2%
92.5%

Yen down 7.5%
(Thousand RMB)

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

FY2020
AmountShare
446,435
100.0%
284,772
63.8%
161,66336.2%
91,17420.4%
70,48915.8%
76,21917.1%
61,03913.7%

FY2021
AmountShare
525,978
100.0%
296,11156.3%
229,866
43.7%
92,78417.6%
137,08126.1%
144,10227.4%
109,354
20.8%

YoY
Amount79,542
11,33968,202
1,610
66,591
67,88348,315• Net sales increased mainly due to higher sales to beverage and instant noodle
makers in the flavor segment.
• Operating profit increased owing to higher net sales and an improved cost-ofsales ratio.

％
17.8%
4.0%
42.2%
1.8%
94.5%
89.1%
79.2%

47

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 profit
Ordinary profit
Net profit

FY2020
AmountShare
902
100.0%
504
55.9%
398
44.1%
306
33.9%
92
10.2%
104
11.6%
68
7.6%

FY2021
AmountShare
998
100.0%
570
57.1%
428
42.9%
314
31.4%
114
11.4%
121
12.2%
86
8.6%

Yen 25.61/MYR

Yen 26.08/MYR

YoY
Amount
96
66
30
7
22
17
17

％
10.7%
13.1%
7.6%
2.6%
24.1%
16.4%
25.9%

Yen down 1.8%
(Thousand Malaysian Ringgit)

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

FY2020
AmountShare
35,236100.0%
19,68355.9%
15,55344.1%
11,955
33.9%
3,598
10.2%
4,089
11.6%
2,675
7.6%

FY2021
AmountShare
38,297100.0%
21,86857.1%
16,42842.9%
12,044
31.4%
4,384
11.4%
4,675
12.2%
3,307
8.6%

YoY
Amount
3,060
2,185
875
89
786
585
632

％
8.7%
11.1%
5.6%
0.7%
21.9%
14.3%
23.6%

• Net sales increased mainly as a result of higher sales to sweet and savory snackand beverage makers.
• Operating profit increased due to higher sales.
48

Medium-Term Three-Year Plan (Consolidated)(Million yen)

FY2021(actual)FY2022(plan)

AmountShare

YoY

AmountShare

Net sales

55,755100.0%

11.1%

59,200100.0%

Cost of sales

33,106

59.4%

7.5%

34,400Gross profit

22,648

40.6%

16.7%

SG&A expenses

15,78828.3%

Operating profit

6,859

Ordinary profit

FY2023(plan)
YoY

Amount

Share

6.2%

61,500100.0%

58.1%

3.9%

35,70024,800

41.9%

9.5%

12.4%

17,170

29.0%

12.3%

28.1%

7,630

7,466

13.4%

27.4%

Profit before
income taxes

9,692

17.4%

Net profit

6,763

12.1%

FY2024(plan)
YoY

Amount

Share

YoY

3.9%

64,200100.0%

4.4%

58.0%

3.8%

36,940

57.5%

3.5%

25,800

42.0%

4.0%

27,260

42.5%

5.7%

8.7%

17,710

28.8%

3.1%

18,060

28.1%

2.0%

12.9%

11.2%

8,090

13.2%

6.0%

9,200

14.3%

13.7%

8,090

13.7%

8.4%

8,530

13.9%

5.4%

9,620

15.0%

12.8%

37.9%

10,250

17.3%

5.7%

10,690

17.4%

4.3%

11,780

18.3%

10.2%

32.9%

7,290

12.3%

7.8%

7,500

12.2%

2.9%

8,350

13.0%

11.3%

* As their importance within the Group has increased, T. HASEGAWA (SOUTHEAST ASIA) CO., LTD. (Thailand) and T. HASEGAWA FLAVOURSAND FRAGRANCES (TAIWAN) CO., LTD. have been included in the scope of consolidation from FYE September 2022
* Net profit in the table refers to profit attributable to owners of parent

49

This presentation is based on data as of November 12, 2021, and wascreated with the intention of providing information on future management
plans and results for the fiscal year ended September 30, 2021.
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.

50