Financial Results for
the Fiscal Year Ended
September 30, 2022
November 29, 2022

T. HASEGAWA CO., LTD.

Contents

I.

Business Overview

II.

Overview of Financial Statements

III.

Business Environment

IV.

Management Policy

V.

Global Strategy

VI.

Medium-Term Three-Year Plan Overview

VII. Capital Policy
VIII. Accident at the Itakura Facility
IX.

Accompanying Materials
1

I. Business Overview

2

Flavor and Fragrance Business
Products

Ingredients(Compounded Flavors and Fragrances)

1. Natural aromatics

3. Flavors

Compounding

2. Synthesized aroma
chemicals

Formulas

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 areinvaluable assets for flavor and fragrance companies
3II. Overview of Financial
Statements

4Market Environment
Trends by Category (Domestic Market)• Fiscal Year Ended (FYE) September 30, 2022 (October 2021 to September 2022)
Category

TrendsIncrease• Personal products are recovering as COVID-19 related restrictions
are eased• Good weather conditions during the peak demand period from Julyto September 2022 boosted for thirst-quenching beverages(mineral water, barley tea, sports drinks, carbonated drinks, etc.)• There was temporary demand in September 2022 before productprices were raised

Decrease• Potato Snacks - potato chips were sluggish due to poor raw
material harvests in Japan and overseas and soaring prices ofimported raw materials• Wheat Flour Products, Corn Snacks and Bean Snacks - increased
due to greater exposure at stores

Decrease• In chocolate bars, sales of milk chocolate struggled, while sales ofhigh cacao content chocolate exceeded previous year
• Sales of chocolate snacks leveled off

Frozen Desserts

Increase• Prices were raised from June 2022, but the impact was minor due
to the heat wave during the peak demand period• Sales of flavored ice were strong while sales of family-type products
were sluggish

Instant Noodles

Increase• Sales of both package-type instant noodles and cup noodles
remained steady and hits of new products also contributed

Sweet and savory
snacksBeverages

Savorysnacks

Chocolate

Source: Nikkan Keizai Tsushin

5Summary of Consolidated Performance• YoY
Sales increase mainly due to higher sales at U.S. subsidiaries (including MISSION), T. HASEGAWA(non-consolidated), and new consolidation of Thai and Taiwanese subsidiaries
Operating profit, ordinary profit, and net profit increased mainly due to higher sales and improved
cost-of-sales ratio• Vs. target
Achieved sales target mainly due to T. HASEGAWA’s non-consolidated sales exceeding target
Achieved operating profit target mainly due to higher sales than target and lower cost of sales
and SG&A expenses than target
JPY million

FY 2021(actual)FY 2022(targets revisedon May 11)

FY 2022(actual)ChangeYoY
AmountVs. target％

Amount％Net sales

55,75561,80062,398

6,643

11.9%

598

1.0%

Cost of sales

33,10636,81036,776

3,669

11.1%

-33

-0.1%

Gross profit

22,64824,99025,622

2,973

13.1%

632

2.5%

SG&A expenses

15,78817,70017,570

1,781

11.3%

-129

-0.7%

Operating profit

6,859

7,290

8,051

1,192

17.4%

761

10.4%

Ordinary profit

7,466

8,000

9,075

1,609

21.6%

1,075

13.4%

Income before
income taxes

9,692

10,16011,267

1,574

16.2%

1,107

10.9%

Net profit

6,763

7,300

8,007

1,243

18.4%

707

9.7%

EBITDA （※）

10,61811,452

12,281

1,663

15.7%

829

7.2%

* Net profit refers to net profit attributable to owners of parent* EBITDA = Operating profit + Depreciation (including amortization of customer-related assets) + Amortization of goodwill
EBITDA margin (%): 19.7%

6

Net Sales by Segment
・Sales growth factors
Higher sales at U.S. subsidiaries (including MISSION) and T. HASEGAWA (non-consolidated)
Newly consolidated Thai and Taiwanese subsidiaries from FY 2022
JPY million
Segment

FY 2021(actual)FY 2022(actual)ChangeAmountFlavors

48,11554,3596,243

Fragrances

7,640

8,039

399

Total

55,75562,398

6,643

Factor%13.0%

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

5.2% Higher sales at T. HASEGAWA non-consolidated
11.9%

－

Overseas net sales as a percentage
of consolidated net sales
FY9/22: 45.9%(FY9/21: 41.4%)(JPY million)

7

Net Sales by Group Company• Sales growth factors
Higher sales at U.S. subsidiaries (including
MISSION) and T. HASEGAWA (non-consolidated)

Currency

FY2021

FY2022

Change(%)

1US$¥107.50¥124.46

Yen down 15.8%

1RMB¥16.54¥18.96

Yen down 14.6%

1MYR¥26.08¥28.90

Yen down 10.8%

JPY million
FY 2021(actual)FY 2022(actual)YoY

JPY million

%

Japan

37,362

39,174

1,812

4.9%

U.S.

9,187

12,157

2,970

32.3%

China

8,699

9,828

1,128

13.0%

Malaysia

998

1,358

359

36.0%

Others

1,110

3,506

2,396

215.9%

Adjustment-1,603-3,627-2,024-

Consolidated

55,75562,398

6,643

11.9%

+1,128+359+2,396 -2,024+2,970+1,81262,39855,7550・Effect of exchange rate
Due toforex rates

JPY million
othersAmount ofchange

Japan

448

1,364

1,812

U.S.

1,657

1,313

2,970

China

1,255

-127

1,128

Malaysia

133

226

359

Others

56

2,340

2,396

Adjustment-245-1,779-2,024

Consolidated

3,304

3,339

6,643

Japan

Increase in sales in Flavor and Fragrance segments

Sales
Increase

U.S.

Increase in sales to health sector at existing company
Contribution of MISSION (9 months in FY2021, 12 months
in FY2022)

Sales
Increase

Decrease in sales on a local currency basis

Sales
Increase

China
Malaysia

Increase in sales on JPY basis due to depreciation of JPY
Increase in sales to seasonings and savory snacks

Sales
Increase

8

Operating Profit by Group Company• Profit growth factors
Higher operating profit at T. HASEGAWA (nonconsolidated)
JPY million

FY 2021(actual)FY 2022(actual)YoY

FY2021

FY2022

Change(%)

1US$¥107.50¥124.46

Yen down 15.8%

1RMB¥16.54¥18.96

Yen down 14.6%

1MYR¥26.08¥28.90

Yen down 10.8%

JPY million

%

Japan

3,891

5,151

1,259

32.4%

U.S.

662

510

-151

-22.9%

China

2,267

2,156

-110

-4.9%

Malaysia

114

187

73

64.2%

Others

14

252

238

1662.4%

Adjustment

-90

-207

-117

-

Consolidated

6,859

8,051

1,192

17.4%

-151

-110

+73

+238

-117

+1,259
8,051
6,859

0
0

• Effect of exchange rate
Due toforex rates

Currency

JPY million
Amount ofchangeothers

Japan

137

1,122

1,259

U.S.

70

-221

-151

China

275

-385

-110

Malaysia

18

55

73

Others

-2

240

238

Adjustment

-137

20

-117

Consolidated

362

830

1,192

Japan

Increase in net sales and improvements incost-of-sales ratio and SG&A expenses ratio

ProfitIncrease

U.S.

Deterioration in cost-of-sales ratio andincrease in SG&A expenses

ProfitDecrease

Deterioration in cost-of-sales ratio andProfitDecrease

China
Malaysia

increase in SG&A expenses
Increase in net sales and improvement incost-of-sales ratio

ProfitIncrease

9III. Business Environment10Size of Global Flavors and Fragrances Market (Our Estimate)・Worldwide flavors and fragrances sales: Approx. USD 30.0 billion (approx. JPY 3.3 trillion)
Europe, Africa, Middle East

- Market size: Approx. USD 11.0 billion (approx. JPY
1,190 billion*)- Many users have introduced a preferred suppliersystem, and major flavor and fragrance companies
in Europe and the U.S. have establishedfoundations

North America- Market size: Approx. USD 7.7 billion (approx. JPY 840 billion*)- Many users have introduced a preferred supplier system, and major
flavor and fragrance companies in Europe and the U.S. have establishedfoundations- The Company established a U.S. subsidiary in California in 1978
- 2017: Acquired FLAVOR INGREDIENT HOLDINGS, LLC It manufacturesand sells food and beverage flavors, mainly in the health sector- 2020: Acquired MISSION FLAVORS & FRAGRANCES, INC.
It manufactures and sells flavors with strength in sweet flavors used in] dairy products, ice cream, etc.

Asia

- Market size: Approx. USD 8.9 billion (approx. JPY 970 billion*)- 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. USD 2.4 billion (approx.
JPY 270 billion*)‒ 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: USD 1 = JPY 108.8 (2021)● = the Company’s base11

Global Flavors and Fragrances Market (Our Estimate)• Global flavors and fragrances market in 2021: Flat YoY
Global Flavors and Fragrances Market (Our Estimate)
40,000

USD million
CAGR(Compound Annual
Growth Rate)

30,000South
America

6.5%

Asia

3.5%

North
America

2.1%

20,00010,000Europe, Africa
and Middle East

2.3%

02010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

12

Japanese Flavors and Fragrances Market Size
• Flavors account for approximately 80% of the Japanese flavors andfragrances market (approx. 50% of the global market)
Japanese flavor and fragrance market sales (JPY billion)
3,000

Breakdown of Flavors and Fragrances(FY2021)
フレーバー
Flavors
フレグランスFragrances

2,500

2,000

1,500

166

169

163

306

304

333

353

344

356

358

360

148

154
380

21%

382

79%
1,000

500

0

1,364

1,412

1,415

1,382

1,441

2017

2018

2019

2020

2021

合計
Total

2,162

2,238

2,275

2,257

2,357

前年比増減率YoY (%)

1.7%

3.5%

1.7%

-0.8%

4.4%

Source of reference:
Japan Flavor & Fragrance Materials
Association Magazine

13

IV. Management Policy

14

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 Market

Grow in Overseas
Market15

V. Global Strategy

16

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

Fragrances
15%

Current initiatives and progress
Strengthen collaboration between sales, research, and marketing departments
under the Business Solutions Division• Enhance the quality of sales activities  Improve operational efficiency andthoroughly manage pipelines• Enhance the quality of proposals  Utilizing marketing data, enhance technicalmaterials, and promote sales activities utilizing R&D results
 Promote solution sales and further strengthen customer success•

Strengthen collaboration
between departments
Promote solution sales

Strengthen R&D
capabilities

Address expansion inflavor and fragrance
applications

Net
Sales

400

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 (soymeat, 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.

•

Net Sales

YoY
+0.9%

YoY
+2.0%

YoY
(2.2%)

Sales
breakdown•••

Net Sales and Operating Profit of T. HASEGAWA non-consolidated

500

Flavors
85%

YoY
+1.5%

Operating profit

Operating profit

YoY
+4.9%

YoY
+1.3%

(JPY 100 million)

YoY
+3.3%

YoY
+4.1%

150
120

FY2022 Actual

300

90

200

60

Net sales: JPY 39.1 billion(+4.9% YoY)

100

30

0

2018

2019

2020

2021

2022

2023
(Plan)

2024(Plan)

2025(Plan)

Operating profit: JPY 5.1 billion(+32.4% YoY)

017

Overseas Strategy - U.S.
Basic Strategy: Increase sales in the savory, health, and beverage sectors, and achieve synergies from acquisitions

Current initiatives and progress•

Realization of MISSION
synergies

Create new production
systemStrengthen sales
activities
Utilize and deploy
Japanese technology

0•Strengthen marketing systems, thoroughly manage pipelines Formulate long-term growth strategies and customer-specific strategies by sector based on analysis ofmarket trends, etc.

•

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 Japan••(USD million)

YoY+34.5%

2018

Operating profit

Operating profit

YoY+50.0%

100

YoY+14.3%

YoY
YoY
+6.0%
+8.1%

YoY
+5.9%

2020

30

20

YoY
YoY
+9.7%
+2.1%

2019

Sales
breakdown

Promotion of second plant construction plan to establish a new production system (California) Phase 1 construction completed in April 2022 and started full operation in June 2022
 Increased production capacity makes it possible to adequately respond to future business expansion

Net Sales

150

Flavors
100%•

Net Sales and Operating Profit of U.S. Subsidiaries

Net
Sales

50

Acquisition of MISSION by T. HASEGAWA U.S.A. INC.in December 2020
 PMI completed by the end of September 2021 as originally planned, synergies
realized enabling proposals and sales of wide range of flavors to MISSION’s
existing customers
 Aim for further growth in the U.S. market

10

2021

2022

2023
(Plan)

2024(Plan)

2025(Plan)

0

FY2022 Actual
Net sales: USD 97 million(JPY 12.1 billion)(+14.3% YoY)
Operating profit: USD 4.1 million(JPY 0.51 billion)(33.4% decrease YoY)
*Savory flavors
Flavors used in savory snacks, dressings,
seasonings, and other salty products

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

Fragrances
22%

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

Strengthen sales
systems

Flavors
78%
Sales breakdown

Improve profitability•

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

Strengthen researchsystems•

New research building construction project underway  Aim to strengthen research functions andimprove operational efficiency
Promote sharing of formulas and technical information with R&D in Japan•

Impact of Shanghai lockdown (from the end of March to end of May 2022)
Shanghai facility operations were suspended, but partially resumed in late April and resumed normal operations in June.
Suzhou facility continued operations, but some impact on the production and logistics of flavor products.

•
•

Net
Sales

Net Sales and Operating Profit of Consolidated China Subsidiaries
Net Sales

800

600

YoY
-2.0%

YoY
-0.1%

YoY
+6.7%

(RBM million)
Operating profit
400

Operating profit

YoY+17.8%

YoY
-1.4%

YoY
+5.3%

YoY
+5.0%

YoY
+5.0%

400

200

0

300

FY2022 Actual

200

Net sales: RMB 518 million(JPY 9.8 billion)(1.4% decrease YoY)

100

2018

2019

2020

2021

2022

2023
(Plan)

2024(Plan)

2025(Plan)

Operating profit: RMB 113.7 million(JPY 2.15 billion)(17.0% decrease YoY)

0

*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

19Overseas Strategy - Southeast Asia

Fragrances10%

Basic Strategy: Increase sales through collaboration between manufacturing and sales bases in Malaysia (THKL) andsales bases in Thailand and Indonesia

Current initiatives and progress•

Acquire sales personnel and strengthen organization for new customer
development
Assigned a manager 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••

Promote utilization of application laboratories  Respond quickly to customer needs
Improve efficiency through expanding library and utilizing flavor kits•

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
Promote sharing of formulas and technical information with R&D in Japan
Promote new plant construction plan in Malaysia•

Strengthen sales systems•

Speed up responses tocustomers

•
•
•
•
•

Strategic development inSoutheast Asia using
THKL as a hub

Net
Sales

Net Sales and Operating Profit in Southeast Asia

60
YoY
+51.6%

40

20

0

YoY
YoY
+11.9%(2.6%)

2018

2019

YoY
YoY
+10.1%
+8.1%

YoY
+8.4%

30

20

10

2021

2022

Sales
breakdown

売上高
Net Sales(JPY 100 million)
THKLの売上高
THKL Sales
Operating profit
営業利益
Operating profit
THKLの営業利益
THKL Operating profit

YoY
YoY
+9.4%
(7.9%)

2020

Flavors
90%

2023
2024
2025
（計画） （計画） （計画）FY2022 Actual
Net sales: JPY 3.92 billion(+51.6% YoY)
Operating profit: JPY 0.6 billion(+165.3% YoY)0

Net sales are calculated by summing net export sales to Southeast Asia, which are included in T. HASEGAWA (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 since FYE September 2022

20

Basic Policies Related to Business Portfolio• Develop our businesses based on three basic strategies: (1) Expand Compounded Flavors and Fragrances
Sales, (2) Secure Profits in Domestic Market, and (3) Grow in Overseas Markets• Achieve abundant and healthy living through aromas and contribute to the creation of a sustainable society■Entered ■Not entered

Providing flavors thatmake food delicious

Japan

U.S.

China

 Broad usage in the beverageand food industries

 Usage mainly in savory
foods, beverages, and healthsector Usage mainly in beverages
and instant noodles

 Strengthen response to
SDGs• Develop flavors to substitutefor food ingredients• Capital and business alliancewith DAIZ Inc.

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

 Broad usage in daily
necessities and cosmetics
industries

Fragrance
Business
Providing fragrances that
add color to various
aspects of life

 Strengthen measures in new
sectors• Address need to mask odors
in day-to-day life, etc.
• Propose ways to resolve
discomfort with fragrances Strengthen response to
SDGs• Develop eco-friendly
fragrances Expand business throughM&A• Strengthen sweet flavors
with M&A in 2020
 Strengthen collaboration
with research departments
in Japan

T. HASEGAWA Group has yet
to enter Trade mainly withinternational and local
companies Tap unentered sectors andpotential demand• Focus on large and midsize
local companies• Expand area of sales byutilizing agents

 Usage mainly in daily
necessities industry
 Trade mainly with local
companies
 Focus on expansion among
toiletry makers
 Strengthen collaboration
with research departments
in JapanSoutheast Asia
 Usage mainly in seasoning
powders and beverages• Target further expansion
among beverage makers
 Strengthen collaboration
between bases• Increase sales in Malaysia,
Thailand, and Indonesia
 Expand operations into
countries around bases• Expand into Vietnam and thePhilippines

Production

Flavor Business

Growth drivers

Sales

Earnings foundation

 Address with exports
from Japan
 Consider local
production based on
business development

 Usage mainly among
body care productmakers Focus on acquiring
new customers

21Summary of Global Strategies

Japan• Strengthen collaboration between sales, research, and marketing departments under theBusiness 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 and strengthen
response to SDGs

U.S.

• Acquisition of MISSION by T. HASEGAWA U.S.A. INC. in December 2020
• Post-merger integration (PMI) completed by the end of September 2021 as originallyplanned Synergies achieved• For the second plant construction plan, the first phase of construction was completed
in April 2022, and full operations started in June 2022

China

• Utilize marketing functions to focus on large and midsize local companies, and utilize
agents to expand sales area
• Thorough profit management
Aim to growth both in terms of sales and profit• New research building construction project underway• Promote sharing of formulas and technical information with R&D in Japan

Southeast
Asia• Established Corporate Planning Office in Malaysia in order to formulate and promotestrategies for Southeast Asia
• Speed up customer response through expanding library and utilizing flavor kits
• Promote efficient R&D in Malaysia• Promote new plant construction plan in Malaysia
22VI. Medium-TermThree-Year Plan Overview

23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 inflavor and fragrance applications

U.S.

Increase sales in the savory, health, and beverage sectors, and expect synergies from the acquisitionof 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
and tapping unentered sectors and potential demand

Malaysia

Expect sales increase via initiatives including strengthening collaboration among Southeast Asian bases
and strengthening sales systems to acquire new customers
JPY million
FY2022(actual)FY2023(plan)FY2024(plan)FY2025(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

Forex rate

¥124.46 per US$¥18.96 per RMB¥135.00 per US$¥19.00 per RMB¥125.00 per US$¥19.00 per RMB¥125.00 per US$¥19.00 per RMB

Net sales growth rate

11.9%

5.8%

3.0%

4.7%

Cost-of-sales ratio

58.9%

60.8%

59.5%

58.6%

Operating profit margin

12.9%

10.6%

12.2%

13.8%

Ordinary profit margin

14.5%

11.3%

12.8%

14.3%

Net profit margin

12.8%

9.3%

10.0%

10.9%

Overseas net sales as apercentage of consolidated net
sales

45.9%

48.0%

47.8%

48.4%

*The Group's medium-term three-year plan is revised each fiscal year. See page 45 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 soaring raw material costs, increased
utility costs and increased labor and personnel costs
Net Sales and Operating profit of T. HASEGAWA consolidated(JPY 100 million)
Net Sales
売上高

800

600

YoY
+11.9%

YoY
+5.8%

YoY
+3.0%

Operating profit
営業利益

YoY
+4.7%

200

150

400

100

200

50

0
Net
Sales

2022

2023
（計画）
(Plan)

2024（計画）(Plan)

02025
Operating（計画）(Plan) profit

24Capital Expenditures, Depreciation, and R&D Expenses• T. HASEGAWA (non-consolidated) DX promotion and IT reform project:(Actual FY9/22: Approx. JPY 0.5 billion)(Plan: FY9/23: Approx. JPY 1.5 billion, FY9/24: Approx. JPY 0.8 billion, FY9/25: Approx. JPY
0.8 billion)• U.S. second plant construction plan:(Actual FY9/20: Approx. JPY 1.1 billion, FY9/21: Approx. JPY 0.4 billion, FY9/22: Approx. JPY
1.6 billion)(Plan: FY9/23: Approx. JPY 0.2 billion, FY9/24: Approx. JPY 1.4 billion, FY9/25: Approx. JPY
0.7 billion)• China new research building construction plan:(Actual FY9/22: Approx. JPY 0.3 billion)(Plan: FY9/23: Approx. JPY 1.7 billion, FY9/24: Approx. JPY 0.3 billion)• Malaysia new plant construction plan:(Plan: FY9/24: Approx. JPY 1.5 billion, FY9/25: Approx. JPY 1.5 billion)• R&D expenses trended at around 8% of consolidated net sales
FY2022(actual)FY2023(plan)FY2024(plan)

JPY million
FY2025(plan)

Capital Investment

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
25

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 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 investment
Investment to increase production capacity for growth, as well as renewal and maintenance 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. (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
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 in futurebusiness development• Pay dividends from surplus twice a year—interim and year-end dividends—targeting a consolidated payout ratioof 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• In FY2022, taking into consideration consolidated performance and other factors, we increased the annual
dividend by JPY 6 from JPY 55 in FYE September 2021 (annual dividend of JPY 61)
Annual dividends per share (JPY)Annual dividends per share (JPY)

Payout ratio (consolidated) (%)

100
80

35.3%

32.6%

33.6%

40.0%
31.3%

60
40
20
0

40.7%
30.0%

Increase
annualdividendby JPY 6

JPY
35

JPY
40

2019

2020

JPY
55

2021

50.0%

JPY
61

2022

20.0%

JPY
61

2023
(Plan)

10.0%
0.0%
28

Capital Policy
Sale of Investment Securities(Completed)• February 4, 2022: Published “Notice Concerning Expected Recording of Gain on Sales ofInvestment Securities (Extraordinary Income)”• In FYE September 30, 2022, extraordinary income in accordance with the sales of investment
securities published in the relevant press release was recorded[Reason] Review of investment securities[Shares sold] 2 listed securities held by the Company[Gain on sale]FYE September 2022

Gain on sales ofinvestment securities(Extraordinary
Income)1st Quarter-

2nd Quarter

JPY 478 million

3rd Quarter

JPY 1,744 million

4th Quarter

-

Total

JPY 2,222 million(Reference) Ratio of investment securities to consolidated net assets
FYE September
2020

FYE September
2021

FYE September
2022

21.5%

18.2%

11.3%

*Aim for 10% or less by FYE September 2026

29

VIII. Accident
at the Itakura Facility

30

Accident at the Itakura Facility
A serious accident occurred at the Itakura Facility of the Fukaya Production Center in Japan on September 15,
2022, resulting in the death of an employee and the injuries of two others

Accident overview/causes of the accident• Carbon monoxide released from roasted coffee beans by steam distillation accumulated in the accident tank
and a high concentration of carbon monoxide was retained in the tank
• The deceased employee suffered from carbon monoxide poisoning in the accident tank and became
unconscious. He was transported to hospital, where he was confirmed dead on the same day.
• An employee who entered the tank to rescue the deceased employee also suffered from carbon monoxide
poisoning, resulting in a secondary disaster• There is no tasks executed in tanks during the manufacturing process

Measures toprevent recurrence••••

A change was made to the manufacturing process
Improvements of work areas (ventilatation with air and local exhaust ventilation)
Installation of carbon monoxide monitors all the time and installation of alarms
Provision of safety and health education and training

Impact on Business
Performance• The impact on the consolidated performance for FYE September 30, 2022 is negligible• We will promptly announce any significant impact on consolidated performance for FYE September 30,
2023, if judged to be material*For detailed information on the accident at the Itakura Plant, please refer to the press release dated November
11, 2022, titled "An Accident Resulting in the Death of an Employee of Our Company (Causes of accident,
measures to prevent recurrence, and operating status)."31

IX. Accompanying Materials

32

Top 10 Companies by Share of Net Sales in the Global
Flavors and Fragrances Market
Company nameCountry

USD Million
Sales(2021Yr) Market Share

1

IFF

U.S.

8,510

28.5%

2

Givaudan

Switzerland

6,099

20.4%

3

Firmenich

Switzerland

3,924

13.1%

4

SymriseGermany

3,242

10.9%

5

ADM

Germany

3,189

10.7%

6

Mane SAFrance

1,569

5.3%

7

Takasago

Japan

1,480

5.0%

8

Sensient Technologies

U.S.

739

2.5%

9

T.Hasegawa

Japan

574

1.9%

10
Total

Robertet SA

France503

1.7%

29,828100.0%*Estimated by the Company based on information disclosed by each company*Excluding the following segments
IFF: Nourish Segment and Scent Segment; Takasago: Real Estate Segment;
Sensient Technologies: ColorGroup ・ AsiaPacific Group; Robertet: Les actifs*Human Nutrition only for ADM*For the Company and Takasago, figures for FY 2022 are used, and for Mane SA, figures for FY 2020 are used

33

Top 10 Companies by Share of Net Sales in the Japanese
Flavors and Fragrances Market
Others14.3%
Company SI
5.5%

Company T
32.5%

Company SO
6.1%
Company O
11.2%
Company G
11.9%

T. Hasegawa
18.5%(As of Mar. 2022）*1

Market shares calculated by taking the total non-consolidated net sales of the top 10 companies as 100,
based on data 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
34

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
JPY million

T. Hasegawa(Consolidated）

Company T(Consolidated）

FY ended in Sep. 2022

FY ended in Mar. 2022

Sales

Sales

Share

Share

Flavors

54,35987.1%

94,292

58.1%

Fragrances

8,039

12.9%

48,481

29.8%

Aroma Chemicals－－

18,219

11.2%

Others

－

－

1,446

0.9%

62,398100.0%

162,440

100.0%

Total
Ratio of gross profits to sales

41.1%

31.5%

Ratio of operating profit to sales

12.9%

5.4%

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

T. Hasegawa (Consolidated）
Company T (Consolidated)
Fragrances
OthersAroma Chemicals

Flavors

Fragrances

Flavors35

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. 32%

To instant noodle
industry
Approx. 9%

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 byindustry for FYE September 2022 as 100.

36

Analysis of Changes in Consolidated Statement of Profit• Operating profit growth factors
Increase sales at U.S. subsidiaries (including MISSION) and at T. HASEGAWA (nonconsolidated) and improvement in cost-of-sales ratio are main factors
JPY million
FY2021(Cumulative
results)

FY2022(Cumulative
results)

ChangeAmountNet sales

Cost of sales

FactorHigher sales of U.S. subsidiaries (including MISSION) and T. HASEGAWA(non-consolidated)*MISSION : Results for 9 months in FY2021 and 12 months in FY2022
Of the increase in Net sales, JPY 3,304 million is attributable to the yen down
Cost-of-sales ratio improved due to changes in sales breakdown ofT. HASEGAWA (non-consolidated)

Gross profit

SG&A expenses

Net increase for 3 months in amortization of intangible assets at MISSION(JPY 273 million)(Goodwill of JPY 671 million and customer-related assets of JPY 422 million)
Of the increase, JPY 860 million is attributable to yen down

Operating profit
Ordinary profit

Non-operating profit
Foreign exchange gains increased by JPY 370 million due to the yen down

Income before
income taxes(Extraordinary income)
FY2021 : T. HASEGAWA (non-consolidated) Extraordinary income from salesof investment securities: JPY 2,265 million
FY2022 : T. HASEGAWA (non-consolidated) Extraordinary income from salesof investment securities: JPY 2,230 million

Net profit

Profit (loss) attributable to non-controlling interests (53) JPY million*Net profit in the table refers to profit attributable to owners of parent

37Analysis of Changes in Consolidated Balance Sheet
JPY million
Sep. 30, 2021 Sep. 30, 2022

Current assets

55,242

65,989Change10,747

Non-current assets

65,70367,563

1,860

Total assets

120,945

133,553

12,607

Current liabilities

11,604

13,331

1,727

Non-current
liabilities

11,0409,204(1,835)

Total liabilities

22,644

22,536(108)

Net assets

98,301

111,017

12,715

Total liabilities andNet assets

120,945

133,553

12,607

Factor• Increase in cash and cash equivalents: JPY 6,313 million• Increase in inventories: JPY 2,761 million• Increase in accounts receivable - trade: JPY 1,658 million• Increase in property, plant and equipment: JPY 3,657 million• Increase in goodwill and customer-related assets (valuation increase
due to depreciation of JPY): JPY 2,937 million• Decrease in investment securities: (5,286) JPY million• Increase in accounts payable: JPY 1,211 million• Decrease in deferred tax liabilities (1,541) JPY million (decrease inunrealized gains on investment securities)• Net profit JPY 8,007 million• Dividends of surplus: (2,549) JPY million• Increase in foreign currency translation adjustment: JPY 10,246
million• Decrease in valuation difference on securities (3,615) JPY million(decrease in unrealized gains on investment securities)38

Consolidated Statement of Cash Flows
JPY million

FY2021

Cash flows fromoperating activities

Cash flows frominvesting activities

9,980

FY2022

8,001

Change(1,979)• Income before income taxes: JPY 11,267 million• Depreciation: JPY 3,406 million• Amortization of goodwill: JPY 824 million• Gain on sales of investment securities: (2,230) JPY million• Increase in inventories: (1,795) JPY million• Income taxes paid: (3,228) JPY million

15,338• Withdrawal of time deposits (over 3 months): JPY 2,778 million• Gain on sales of investment securities: JPY 2,599 million• Purchase of property, plant and equipment and intangible
assets: (4,125) JPY million(14,130)

1,208(2,733)(2,721)

Effect of exchange ratechange on cash andcash equivalents

385

1,559

1,173

Net increase(decrease) in cash andcash equivalents(6,497)

8,047

14,544

Cash and cash
equivalents at
beginning of period

25,36018,863(6,497)

Cash and cash
equivalents at end of
period18,86327,425

8,562

Cash flows fromfinancing activities

Major items in FY2022

11 • Dividends of surplus: (2,548) JPY million• Increase due to 2 newly consolidated subsidiaries: JPY 515
million39

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

JPY million

FY2022 Plan

FY2022 Actual

Progress

CapitalInvestment

3,731

4,306

115.4%

Depreciation &Amortization

3,429

3,406

99.3%

Amortization of
Goodwill

824

824

100.0%

R&D Expenses

4,858

4,971

102.3%*Depreciation includes amortization of customer-related assets

40

T. HASEGAWA non-consolidated (Actual)
FY2021(Actual)AmountShare

FY2022(May 11 Revised Plan)

AmountShare

JPY million

FY2022(Actual)AmountShare

ChangeYoY

Vs. target

Amount%Amount

%

1,812

4.9%

674

1.8%

Net Sales

37,362 100.0%

38,500 100.0%

39,174 100.0%

Cost-of-sales

22,834

61.1%

23,57061.2%

23,368

59.7%

534

2.3%

-201

-0.9%

Gross profit

14,52838.9%

14,93038.8%

15,806

40.3%

1,278

8.8%

876

5.9%

SG&A expenses

10,63628.5%

10,99028.5%

10,654

27.2%

18

0.2%

-335

-3.1%

Operating profit

3,891

10.4%

3,940

10.2%

5,151

13.2%

1,259 32.4%

1,211 30.7%

Ordinary profit

4,449

11.9%

7,230

18.8%

8,992

23.0%

4,543 102.1%

1,762 24.4%

Income before
income taxes

6,689

17.9%

9,390

24.4%

11,20028.6%

4,510 67.4%

1,810 19.3%

Net profit

4,819

12.9%

7,430

19.3%

8,700

22.2%

3,880 80.5%

1,270

17.1%

• Net sales increased mainly due to higher sales in the flavor and fragrances segments• Operating profit increased due to higher sales, improved cost-of-sales ratio due to changes
in sales breakdown, and improved SG&A expenses (In the same period of FY2021,
expenses related to the acquisition of MISSION were recorded)
41

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.)*MISSION FLAVORS & FRAGRANCES, INC.'s financial results for FY2021 are for 9 months from January to September 2021, and thefinancial results for FY2022 are for 12 months from October 2021 to September 2022.

JPY Basis

FY2021
Amount

JPY million
ChangeFY2022

Share

Amount

Share

YoY

%

Net Sales

9,187

100.0%

12,157100.0%

2,970

32.3%

Cost-of-sales

5,416

59.0%

7,488

61.6%

2,071

38.2%

Gross profit

3,770

41.0%

4,669

38.4%

898

23.8%

SG&A expenses

3,108

33.8%

4,158

34.2%

1,050

33.8%

Operating profit

662

7.2%

510

4.2%

-151

-22.9%

Ordinary profit

679

7.4%

499

4.1%

-179

-26.5%Net profit

519

5.7%

443

3.6%

-76

-14.7%

JPY 107.50/USD

Local Currency Basis

FY2021
AmountJPY 124.46/USD(15.8% lower)
USD thousand
ChangeFY2022

Share

Amount

Share

YoY

%

Net Sales

85,466100.0%

97,685100.0%

12,21914.3%

Cost-of-sales

50,38859.0%

60,169

61.6%

9,780

19.4%

Gross profit

35,07741.0%

37,516

38.4%

2,439

7.0%

SG&A expenses

28,91733.8%

33,413

34.2%

4,496

15.5%

Operating profit

6,159

7.2%

4,102

4.2%

-2,057-33.4%

Ordinary profit

6,320

7.4%

4,012

4.1%

-2,307-36.5%Net profit

4,832

5.7%

3,560

3.6%

-1,272-26.3%• Net sales increased mainly because of an increase in sales to the health sector at our existing company
and MISSION’s contribution (9 months in FY2021, 12 months in FY2022)• Operating profit decreased due to deterioration in cost-of-sales ratio and increase in SG&A expenses

42

Consolidated China Subsidiaries (Actual)*Consolidated statements of profit of the Company's two consolidated subsidiaries in China (T. HASEGAWAFLAVOURS AND FRAGRANCES (SHANGHAI) CO., LTD. and T. HASEGAWA FLAVOURS (SUZHOU) CO., LTD.)

FY2022
AmountShare
9,828
100.0%
5,793
58.9%
4,035
41.1%
1,878
19.1%
2,156
21.9%
2,312
23.5%
1,773
18.0%
JPY 18.96/RMB

JPY million
Change
YoY
%
1,128
13.0%
895
18.3%
233
6.1%
343
22.4%
-110
-4.9%
-71
-3.0%
-35
-1.9%
(14.6% lower)

Net Sales

FY2021
AmountShare
525,978
100.0%FY2022
AmountShare
518,387
100.0%

RMB thousand
ChangeYoY%-7,590-1.4%

Cost-of-sales

296,11156.3%

305,567

58.9%

9,455

3.2%

Gross profit

229,86643.7%

212,82041.1%-17,045-7.4%

SG&A expenses

92,78417.6%

99,063

19.1%

6,278

6.8%

Operating profit

137,08126.1%

113,757

21.9%-23,323-17.0%

Ordinary profit

144,10227.4%

121,951

23.5%-22,151-15.4%Net profit

109,354

20.8%

93,54818.0%-15,806-14.5%JPY Basis
Net Sales
Cost-of-sales
Gross profit
SG&A expenses
Operating profit
Ordinary profit
Net profit

Local Currency Basis

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%
JPY 16.54/RMB• Net sales decreased on a local currency basis due to a decrease in sales in the fragrance segment despite anincrease in sales in the flavor segment. Net sales increased on a JPY basis due to the depreciation of JPY.
• Operating profit decreased due to a deterioration in cost-of-sales ratio and increase in SG&A expenses

43

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

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

FY2021
FY2022
AmountShareAmountShare
998 100.0%
1,358 100.0%
570
57.1%
748
55.1%
428
42.9%
610
44.9%
314
31.4%
422
31.1%
114
11.4%
187
13.8%
121
12.2%
219
16.2%
86
8.6%
177
13.1%
JPY 26.08/MYR
JPY 28.90/MYR

JPY million

Change
YoY
%
359
36.0%
177
31.2%
181
42.4%
108
34.4%
73
64.2%
97
80.2%
91 106.3%(10.8% lower)
MYR thousand

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

FY2021
FY2022
AmountShareAmountShare
38,297 100.0%
46,994 100.0%
21,86857.1%
25,88555.1%
16,42842.9%
21,10844.9%
12,04431.4%
14,612
31.1%
4,384
11.4%
6,496
13.8%
4,675
12.2%
7,604
16.2%
3,307
8.6%
6,156
13.1%

Change
YoY
%
8,697
22.7%
4,016
18.4%
4,680
28.5%
2,567
21.3%
2,112
48.2%
2,929
62.7%
2,849
86.1%

• Net sales increased mainly as a result of higher sales to seasonings and savory snack makers• Operating profit increased due to higher sales and improved cost-of-sales ratio
44Medium-Term Three-Year Plan (Consolidated)
JPY million
FY2022 (Actual)
AmountShare

FY2023 (Plan)
YoY

AmountShare

FY2024 (Plan)
YoY

AmountShare

FY2025 (Plan)
YoY

AmountShareYoY

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

36,776

58.9%

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%

17,570

28.2%

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%

Income before
income taxes

11,267

18.1%

16.2%

8,610

13.0%

-23.6%

9,440

13.9%

9.6%

10,770

15.1%

14.1%

Net profit

8,007

12.8%

18.4%

6,170

9.3%

-22.9%

6,770

10.0%

9.7%

7,750

10.9%

14.5%

SG&A expenses*Net profit in the table refers to profit attributable to owners of parent

45

This presentation is based on data as of November 11, 2022, andwas created with the intention of providing information on future
management plans and results for the fiscal year ended September
30, 2022.
The views expressed in this material are those of the Company atthe time of preparation. No guarantees are provided in relation to
the accuracy or completeness of this information, and it is subject
to change without notice in future. Please note that the Company
will not accept responsibility for any omissions or errors in thedata, expressions, etc., used in this document.
This document has been prepared by the Company and all rights
related to its contents belong to the Company. Please refrain fromcopying or reprinting without permission.

46