Securities Code: 2004

Financial Results Briefing for 2Q of FY2023(Ending March 31, 2023)
November 29, 2022
Showa Sangyo Co., Ltd.

Agenda1

Overview of financial results for 2Q of FY2023

2

Earnings forecast for FY2023

3

Progress of Medium-Term Management Plan 20-22

4

Topics5Reference Materials

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2

Overview of Consolidated Financial Results
FY2022 2Q(0.1 billions ofyen)

FY2023 2Q

1,399

Net sales

1,634

Change(Year-onYear)

Percentage ofchange(Year-on-Year)

234

16.8%

Key points of 2Q of FY2023
 Net sales(+)

Operating profit

24

23

▲0.8

▲3.7%

Ordinary profit

29

33

3

13.1%

Profit

18

19

1

8.0%

Operating profit by segment

Net sales by segment(0.1 billions of yen)

1,153*
24
204

1,399
24
255

482

310

 Operating profit

41
5

Starches andsweeteners

10

Vegetable oils
and household
foods

17

Flour milling

7

(-)

24
4
5

576

362

388

429

2021.3H1

2022.3H1

2023.3
H1

(+)

Other

Animal feed

246

155
405

1,634
25
292

(+)

2021.3
H1

Implementation of price revision in all segments due tocontinuous historically high market price of grain raw
material, and rising import costs and energy costs from the
yen’s increasing depreciation against the U.S. dollar
Increase in sales volume of commercial wheat flour due toproposal-based sales by target business type
Increase in sales volume of commercial food materials forfood services, saccharified products for beverages, andcornstarch due to easing of behavioral restrictions

15-1

2022.3
H1

Decrease in profit from not being able to fully offset theincreased portion of manufacturing costs with price revision
Decrease in sales volume of commercial vegetable oil
products and household products mainly due to impact ofprice revision

23
1
5

(-)

21

 Ordinary profit(+)-52023.3
H1

Increase in profit/loss of entities accounted for by the equity
method (Z.Y. Food Company Limited in Taiwan, etc.) due torecovery from impact of COVID-19*An approximation after applying the accounting standard for revenue recognition
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3

Factors for Changes in Consolidated Operating Profit
By segment

By factor(0.1 billions of yen)(0.1 billions of yen)

Breakdown of raw
material costs

26
215

Wheat

▲40

Soybean▲23

Rapeseed

▲63

Corn

▲26

Exchange rate

▲44

Other

▲29

6
6
24

▲10

23
▲3

*Wheat is calculated on a yen basis▲1624
2022.3
H1

▲225
Sales
Unit priceSales
volumeRaw materials
costs

Utility
costs

▲1

2

▲2

Distribution
costs

Selling,
general andadministrative
expensesothersGroup
companies
and others

23
2023.3H1

2022.3
H1

Flour milling

Vegetable Starches and Animal feedoils andsweeteners
householdfoods2023.3
H1

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4

Implementation of Price Revision (Period: From 2021 to present)
Commercial/household vegetable oil products
300

Commercial wheat flour

Cumulative price increase of 240 yen /kg or
more since March 2021

1000

240

800

180

200

110

140

30

2021.6.1

2021.8.2

2021.11.1

2022.3.1

200

110

0

80

80

60

110

50yen

40

2021.12.20

Strong (yen/25 kg)

Medium-strength/weak (yen/25 kg)

Cumulative price increaseof 20–40 yen/ kg or more
40
since April 2022

20-40

15

30

20

235

2021.6.19

2022.7.1

Commercial cornstarch andsaccharified products

Commercial soybean protein products
Cumulative price increase of
110 yen/kg or more since
July 2021

2022.6.20

Household premixes
40

30

Cumulative price increaseof 10–32% or more since
July 2021

10-32%

8-17%

20

30

6-10%

10

10

0
2022.4.1

02021.7.1

750

425Household/commercial general-purpose oil (yen/kg)

120

795

400

0
2021.3.1

Cumulative price increase of 795 yen/ 25 kg or more
for strong, 750 yen/ 25 kg or more for mediumstrength /weak since June 2021

600

60yen

60

100

*For details, refer to “Reference Materials”

2022.4.1

2022.7.1

2022.10.1

Cornstarch products (yen/kg)

Commercial soybean protein products (yen/kg)

Saccharified products (yen/kg)

2-4%02021.7.1

2022.1.4

2022.7.1

2023.1.4

Household premixes

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5

Progress of Price Revision (Soybean and Rapeseed) (Precondition) Changes in raw material price (unit price) and product price when prices in October 2020 are set as 100*Sourced by Showa Sangyo data

Soybean priceRaw material price(unit price)

Average price of vegetableoil products (kg)

 Soybean price (unit price)
Price soared significantly and rapidly driven by strong demand forvegetable oil and continues to be high Revision of vegetable oil product prices
Price was revised six times; March, June, August, and November 2021,
and in March and July 2022

Rapeseed priceRaw material price(unit price)

Average price of vegetableoil products (kg)

 Rapeseed pricePrice continues to mark a record high due to strong demand for vegetable
oil and significant decrease in production caused by heat wave in Canada
 Revision of vegetable oil product prices
Price was revised six times; March, June, August, and November 2021,
and in March and July 2022

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6

Progress of Price Revision (Corn and Wheat) (Precondition) Changes in raw material price (unit price) and product price when prices in October 2020 are set as 100*Sourced by Showa Sangyo data

Corn price

Wheat price+17.3% 72,530 yen (tax included)+19.0%+5.5%

61,820 yen (tax included)

51,930 yen (tax included)

49,210 yen (tax included)
Raw material
price (unit price)

Average saccharified
product price (kg)

Average cornstarch price(kg)

 Corn pricePrice soared significantly and rapidly due to China’s large-scale purchase
and Russia’s invasion of Ukraine, and continues to be high Revision of saccharified products and cornstarch prices
Price was revised in April and September 2021, and in April and July2022

Raw material price(unit price)

Average wheat flour
price (25 kg) Wheat price
Government resale price of imported wheat increased by 19.0% in
October 2021 and 17.3% in April 2022 in terms of five-brand average
 Revision of wheat flour pricePrice was revised in June and December 2021, and in June 2022
(unchanged in October 2022)

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7

By Segment: Flour Milling Business
Key points of H1 of FY2023

Main Business
Wheat flour, premixes, bread,bran

Percentage ofchange(Year-on-Year)

2023.3(H1)

2022.3 H1(0.1 billions of yen)
Net sales

388

429

10.4%

Operating profit

15

21

38.5%

(0.1 billions of yen)

Operating profit

 Performance(1) Increase in net sales and profit due to implementation of revision in wheat flour price inline with the revision of wheat price(2) Increase in sales volume of commercial wheat flour through securing of new customers
via enhancement of proposal-based sales by target business type
 Initiatives(1) Concentration of production and improvement in processes through operation system
integrated among Group’s five companies and seven plants, improvement in profitability
mainly through cost reduction by reviewing of logistic system and streamlining of brands(2) Continuous implementation of structural reform of earnings in baked bread business(3) Implementation of strategic sales of export flour and improvement in profitability due toyen’s depreciation
Factors for changes in operating profit

30

11

21
20
10
0
1Q
2Q
H1

(0.1 billions of yen)

41

15
7
2021.34
372022.378
152023.3
10
11
21

21

▲40

15

▲1

▲1

▲4

0
2022.3
H1

Sales
Unit priceSales
volumeRaw materials
costs

Utility
costs

Distribution
costs

Selling,
general andadministrative
expenses andothersGroup
companies
and others

2023.3
H1

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8

By Segment: Vegetable Oils and Household Foods Business
Key points of H1 of FY2023
Main Business Performance

Edible oil, soybean protein,premixes, pasta, household foods,
frozen foods
Percentage ofchange(Year-on-Year)

2023.3(H1)

2022.3 H1(0.1 billions of yen)
Net sales

482

576

19.5%

Operating profit

▲1

5

-

(0.1 billions of yen)

Operating profit

20

17

-10

▲1

1Q
2Q
H1

2021.39817

 Initiatives(1) Strengthening of efforts to improve profitability through implementation of price revision six times
since 2021
(2) Strengthening of providing small-package products through operation of Funabashi Premix No. 2
Plant(3) Cost reduction through synergy with Boso Oil and Fat Group (cross-selling and joint procurement of
products and sales channels, etc.)(4) Strengthening of adaptability to needs for plant-based foods

Factors for changes in operating profit

100(1) Increase in net sales and profit due to implementation of price revision with rising raw material costs
and utility costs; yet difficult situation in 2Q ⇒ Recovery from September onward due to pricerevision in July(2) Increase in sales volume of commercial food materials for food services (premixes and pasta); yetdecrease in sales volume of commercial vegetable oils and household products due to impact ofprice revision

2022.3
▲1
▲0
▲1

113

5

2023.3
10
▲5
5

▲2

▲1
2022.3
H1

Sales
Unit price(0.1 billions of yen)Salesvolume▲101

Raw materials
costs

▲5

0

0

1

5

Utility
costs

Distribution
costs

Selling,
general andadministrative
expenses andothersGroup
companies
and others

2023.3
H1

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By Segment: Starches and Sweeteners Business
Key points of H1 of FY2023

Main BusinessSaccharified products,
cornstarch, processed starch

2023.3(H1)

2022.3 H1(0.1 billions of yen)
Net sales

Percentage ofchange(Year-on-Year)

246

310

25.7%

Operating profit

5

▲5

-

(0.1 billions of yen)

Operating profit

Performance(1) Increase in net sales due to implementation of price revision with rising grain raw material price andmanufacturing costs(2) Decrease in profit from not being able to fully offset the increased portion of costs price with price revision,
besides the rising utility costs(3) Increase in sales volume of saccharified products for beverages and cornstarch due to easing of
behavioral restrictions and impact of heat wave



Initiatives(1) Promotion of project demonstrating synergy with San-ei Sucrochemical (cost reduction of raw material
procurement, integration of sales and R&D)
(2) Securing of profit through increased sales of high-value-added products such as Kona Ame (powderedcorn syrup), the Company’s original product lineup(3) Improvement in productivity under Group’s three-plant system (Showa Sangyo, San-ei Sucrochemical,
Shikishima Starch MFG)

14

20
10

10

1Q
2Q
H1

▲53

34

5
▲5

0
-10

(0.1 billions of yen)

Factors for changes in operating profit

2021.355
102022.32
3
52023.3▲1▲4▲5

52022.3
H1

Sales
Unit priceSales
volumeRaw materials
costs

▲8

-0

Utility
costs

Distribution
costs

7

▲4

Selling,Groupgeneral and companies andadministrative
othersexpenses andothers▲52023.3
H1

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By Segment: Animal Feed Business
Key points of H1 of FY2023
Main Business
Mixed animal feed, eggs
and processed egg products(0.1 billions of yen)
Net sales

Percentage ofchange(Year-on-Year)

2023.3(H1)

2022.3 H1

255

292

14.2%

Operating profit

4

1▲69.6%(0.1 billions of yen)

Operating profit

 Performance(1) Increase in net sales due to implementation of price revision with rising grain raw material
price and manufacturing costs(2) Decrease in profit from not being able to fully offset the increased portion of cost price withprice revision, besides increase in burden of compound feed price stabilization fund(3) Increase in sales volume of eggs through cooperation with Group companies (Showa
Keiran) and further efforts with livestock breeders, despite decrease in sales volume of
mixed animal feed

 Initiatives(1) Strengthening of adaptability to needs for heated animal feed (Kyushu Showa Sangyo)(2) Expansion of sales of high-value-added products, namely synthetic milk andoligosaccharide mixed animal feed
Factors for changes in operating profit

10
5

5

4

1Q
2Q
H1

2

▲29

1

0
-5

26

(0.1 billions of yen)2021.32
3
52022.32
2
42023.3▲12
1

42022.3
H1▲0
Sales
Unit priceSales
volumeRaw materials
costs

Distribution costs▲1▲1

Selling, general Group companies
and administrativeand others
expenses andothers12023.3
H1

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11

Overview of Consolidated Balance Sheet
Consolidated Balance Sheets(0.1 billions of yen)Mar. 2022

Sep. 2022

1,092

1,272

180

Cash and deposits

91

83

▲8

Trade receivables

495

536

41

Inventories

467

613

145

Other

38

39

0

Non-current assets/Deferred assets

1,220

1,243

23

Property, plant and equipment/
Intangible assets

895

887

▲7

Investments and other assets

325

356

30

2,313

2,516

203

Mar. 2022

Sep. 2022

1,222

1,401

179

Trade payables

335

380

45

Interest-bearing debt

518

666

147

Provision

18

18

0

Other

350

335

▲ 14

Net assets

1,090

1,114

24

Shareholders’ equity

978

988

10

Comprehensive income and other

78

91

13

Non-controlling interests

33

34

0

47.4%

203

2019

Current assets

Total assets

Liabilities

Total liabilities and net assets

2,313

2,516

Change(0.1 billions of yen)

Change in inventories

467

274
2019

277

359

2020

2021

• Capital investment• Depreciation• Impairment losses

2022

613

2022 (end of
Sept.)+42▲44▲3, etc.

ChangeChange in interest-bearing debt

303
2019

441

(0.1 billions of yen)

518

666

293
2020

2021

2022 2022 (end of Sept.)

49.2%

46.7%

45.7%

42.9%

2020

2021

2022

2022 (end of Sept.)

Change in equity-to-asset ratio

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12

Cash FlowsFY2022 2Q

FY2023 2Q

Profit before income taxes

27

27

▲0

Depreciation <Non-cash item>

49

48

Impairment losses <Non-cash item>

‐

3

▲0
3

Change in working capital (trade receivables, inventories, trade payables)

▲100

▲142

Income taxes paid/refund

▲17

▲3

▲42
13

Other

▲3

▲1

2

▲44

▲67
▲57

Purchase of investment securities

▲67
0

▲23
10

▲12

▲11

Other

▲3

▲6

▲3

Cash flows from investing activities

▲71

▲76

▲5

Free cash flow
Short-term borrowings, commercial papers, long-term borrowings
Redemption of convertible-bond-type bonds with share acquisition rights

▲115
120
▲11

▲144
147
‐

▲28
27
11

Dividends paid

▲11

▲10

1

Other
Cash flows from financing activities

▲1
96

▲1
135

▲0
39

Cash and cash equivalents at end of period

91

83

▲8

Cash flows from operating activities
Purchase of property, plant and equipment

Change(0.1 billions of yen)

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13

Agenda1

Overview of financial results for 2Q of FY2023

2

Earnings forecast for FY2023

3

Progress of Medium-Term Management Plan 20-22

4

Topics5Reference Materials

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14

Key Points of Earnings Forecast for FY2023
 Cost environment [Raw materials, exchange rates, energy]
 Continuous high price range of market price of grain raw material
 Yen’s continuous depreciation against the U.S. dollar and rise in energy costs above level of expectation[Assumption at the time of announcement on August 5]
FY2022
April–Juneresults

July–
September
results

FY2023October–
Decemberresults

January–
March results

April–Juneresults

July–
Septemberassumption

October–
Decemberassumption

January–Marchassumption

49,21051,93051,93061,82061,82072,53072,53072,530

1,422

1,485

1,294

1,307

1,653

1,641

1,425

1,425

Rapeseed C$/MT*3

793

883

902

1,019

1,108

1,022

863

863

Corn ¢/Bu*4

573

658

536

590

730

738

640

640

Sea freight US$/t*5

55

74

83

68

72

78

65

65

107.86109.91111.06114.27120.02

126.30126.30126.30

61

70

74

78

101

102

102

45.8

51.7

61.9

83.8

94.0

104.4

104.4

Wheat yen/t*1
Soybean ¢/Bu

*2

Exchange rate*6
Crude oil US$/barrel*7
LNG yen/kg*8*1: Average price of five brands three months prior to the relevant period*2: Average Chicago market price two months prior to the relevant period*3: Average ICE market price two months prior to the relevant period*4: Average Chicago market price two months prior to the relevant period*5: Panamax vessel of U.S. Gulf-Japan (Based on corn)*6: Average TTM two months prior to the relevant period*7: Average crude oil price (WTI crude oil futures) two months prior to therelevant period*8: Average unit price calculated from value and quantity of imported goods inthe country of origin based on the actual monthly preliminary figures ofTrade Statistics of Japan disclosed two months prior to the relevant period

Change in exchange rate (yen/US$)FY2022

FY2023[Revised forecast announced on
November 11]
FY2023July–
September
results

October–
Decemberassumption

January–Marchassumption

133.27145.00145.00

102

108

108

108

104.4

110.6

124.7

124.7

LNG (yen/kg)

Change in crude oil (US$/barrel)

FY2022

FY2023

FY2022

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15

Earnings Forecast for FY2023
Downward revision will be made to the initial forecast due to continuous high pricerange of market price of grain raw material, and above level of expectation in yen’s
depreciation against the U.S. dollar and rise in energy costs.
Compared withinitial forecast

Earnings forecast
FY2022(Results)(0.1 billions of yen)

Net sales

Operating profit
Ordinary profit
Profit

2,876
55
65
40

FY2023(Initial forecast)*Announced on
August 5

3,380
73
82
46

FY2023(Revised
forecast)

Compared withFY2022 results

Amountof change

Percentage ofchangeAmountof change

Percentage ofchange

-

-

503

17.5%

▲33

▲45.2%▲15▲28.1%▲27▲32.9%▲10▲16.4%▲14▲30.4%▲8▲20.1%*Announced on
November 11

3,380
40
55
32

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16

Earnings Forecast by Segment for FY2023
Net sales by segment(0.1 billions of yen)

Operating profit by segment

FY2023(Initial forecast)

FY2023(Revised forecast)*Announced on
August 5*Announced on
November 11

Amount ofchange(0.1 billions of yen)

870

870

0

1,240

1,230

▲10

Starches andsweeteners

620

620

0

Animal feed

600

610

10

Other

50

50

0

Total

3,380

3,380

0

Flour milling
Vegetable oils andhousehold foods

FY2023(Initial forecast)

FY2023(Revised forecast)*Announced on
August 5*Announced on
November 11

Flour milling

35

32

▲3

Vegetable oils and household
foods

30

20

▲10

Starches and sweeteners

5

▲13

▲18

Animal feed

6

5

▲1

12

12

0

▲16

▲16

0

73

40

▲33

Other

2,876
48
528

3,380
50
600

3,380
50
610

Other

620

620

Animal feed

513
1,004
781
2022.3Results

1,240

870

1,230

870

2023.32023.3
Initial forecast Revised forecast

Starches andsweeteners
Vegetable oils
and household
foods

Amount ofchangeCompany-wide expenses, etc.
Total

55
4
5
10
35

73
6
5
30

35
-4

2022.3Results

40
5
20
32
-13
-4

Other, etc.
Animal feed
Starches andsweeteners
Vegetable oils andhousehold foods
Flour milling

2023.32023.3
Initial forecast Revised forecast
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17

Factors for Changes in Consolidated Operating Profit
By segment

By factor(0.1 billions of yen)(0.1 billions of yen)

9

Breakdown of raw material costs454

20 ▲431

Wheat

▲84

Soybean▲55

Rapeseed

▲90

Corn

▲33

Exchange rate

▲87

Other

▲82

55
▲3
▲19

0

40
▲3

*Wheat calculated on a yen basis▲32
55
FY2022

Sales
Unit priceSales
volumeRaw materials
costs

Utilitycosts▲3 ▲16
Distribution
costs

Selling,
general andadministrative
expensesothers▲6
Groupcompanies
and others

40
FY2023(Forecast)

FY2022

Flour milling

Vegetable Starches and Animal feedoils andsweeteners
household
foods

Other

FY2023(Forecast)

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18

By Segment: Flour Milling Business
Environmental awareness of flour milling business

Main Business
Wheat flour, premixes, bread,bran(0.1 billions of yen)2023.3(Forecast)

2022.3• Expectation of continuous difficult situation in the future due to rise in costs mainly in other raw
materials, utilities, and logistics, despite unchanged government resale price of wheat in October2022• Sluggish consumption due to COVID-19 pandemic is in a recovery trend• Change in demand structure due to the establishment of new lifestyles➡ Health and high-living oriented, take-out meals, frozen food, etc.

ChangeH2 measures

Net sales

781

870

88

Operating profit

35

32

▲3

(0.1 billions of yen)

Operating profit

4035(1) Implementation of cost price-reduction measures through integration of Group’s five companies andseven plants(2) Enhancing of proposal-based sales by utilizing comprehensive strengths of Solutions Sales Dept.
(3) Acquisition of new markets and new customers

Factors for changes in operating profit

32

86

30
20

(0.1 billions of yen)

10

17

10

35
▲85

▲4

0
2021.32022.32023.3(Forecast)

2022.3

Sales
Unit priceSales
volumeRaw materials
costs

Utility
costs

32
▲1
Distribution
costs

▲7

▲2

Selling, general
Group
and
companies andadministrative
othersexpenses andothers2023.3(Forecast)

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19

By Segment: Vegetable Oils and Household Foods Business
Environmental awareness of vegetable oils and household foods business•

Main Business
Edible oil, soybean protein,premixes, pasta, household foods,
frozen foods(0.1 billions of yen)

Net sales••••

2023.3(Forecast)

2022.3

ChangeHistorical surge in market price of grain raw material and prolonged continuance of yen’s depreciation
against the U.S. dollar
Decrease in demand for edible oil due to aging and decline of population in Japan ➡ Possibility of increasein demand for non-edible oil worldwide
Strengthening of take-out products in the food service market
Increase in awareness of health/convenience in home cooking and ready-made meal markets
Increase in awareness of health and sustainability ➡ Rapid expansion of plant-based meat and vegetable
protein markets

H2 measures

1,004

1,230

225

Operating profit

10

20

9

(0.1 billions of yen)

Operating profit(1) Strengthening of initiatives to acquire new markets (bakery, confectionery, semi-fluid foods, etc.)(2) Initiatives toward new soybean protein products and processed foods with soybean protein as
main ingredient(3) Sales expansion by implementing campaign for household products

Factors for changes in operating profit

40(0.1 billions of yen)

225

31
30

20

20

10

10

2021.32022.32023.3(Forecast)

2022.3

▲11

0

10

0

▲0

▲203
Sales
Unit priceSales
volumeRaw materials
costs

Utility
costs

Distribution
costs

▲2

1

Selling, general
Group
and
companies andadministrative
othersexpenses andothers202023.3(Forecast)

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20

By Segment: Starches and Sweeteners Business
Environmental awareness of starches and sweeteners business

Main Business• Increase in demand mainly in beverages from the recovery trend of sluggish consumption due to
COVID-19 pandemic• Expectation of continuous difficult situation in the future due to rise in costs from surging market prices ofraw materials and energy with continuing yen’s depreciation against the U.S. dollar• Surging energy costs in particular at an unprecedented level

Saccharified products,
cornstarch, processed starch

2023.3(Forecast)

2022.3(0.1 billions of yen)

Net sales

Change

513

620

106

Operating profit

5

▲13

▲19

(0.1 billions of yen)

Operating profit

20

H2 measures(1) Promotion of sales expansion of original product lineup such as Kona Ame (powdered corn syrup) andoligosaccharide acid(2) Improvement in productivity through strengthening of integrated management of Group’s three starches andsweeteners plants (Showa Sangyo, San-ei Sucrochemical, Shikishima Starch MFG)
(3) Reduction pf procurement costs through further promotion of diversification of raw corn material producing
areas(4) Further promotion of initiatives to demonstrate synergy with San-ei Sucrochemical

Factors for changes in operating profit(0.1 billions of yen)

16

10

85

5

13

0
-10

▲13

-20
2021.32022.32023.3(Forecast)▲16

52022.3

▲0

▲90
Sales
Unit priceSales
volumeRaw materials
costs

Utility
costs

Distribution
costs

▲2

▲7

Selling, general
Group
and
companies andadministrative
othersexpenses andothers▲132023.3(Forecast)

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21

By Segment: Animal Feed Business
Environmental awareness of animal feed business
Main Business• Historical surge in market price of grain and prolonged continuance of yen’s depreciation against the U.S.
dollar• Maturation of domestic mixed animal feed market (steady in growth)• Continuous enlargement of customers in scale (producers) ➡ Trend of selection of small-scale producers

Mixed animal feed, eggs andprocessed egg products

H2 measures(0.1 billions of yen)

Net sales

2023.3(Forecast)

2022.3

Change

528

610

81

Operating profit

4

5

0

(0.1 billions of yen)

Operating profit(1) Strengthening of sales of mixed animal feed and eggs through cooperation with a Group
company (Showa Keiran)(2) Strengthening of adaptability to needs for heated animal feed (Kyushu Showa Sangyo)(3) Expansion of sales of high-value-added products, namely synthetic milk and oligosaccharide
mixed animal feed
(4) Enhancement of cost reduction through review of secondary ingredient mixture
Factors for changes in operating profit

15
10(0.1 billions of yen)

56
▲3

10
4

5

5

4

0
2021.32022.32023.3(Forecast)

2022.3

Sales
Unit priceSales
volume▲52

Raw materials
costs

0Distribution costs▲2

2

Selling, general Group companies
and administrativeand others
expenses andothers52023.3(Forecast)

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22

Change in Capital Investment and Depreciation(0.1 billions of yen)

Consolidated basis
140

125

133

124

120

96

100
80

85
74 73

73

75

76 79

78

85

81

88

98 99

105

51 50

60
40
20
0

2015.32016.32017.32018.3

Capital Investment

2019.32020.32021.32022.3

Depreciation

2023.3（予）[Capital Investment]
Construction of Funabashi Premix No. 2 Plant, renewal of Kashima Plant oil refinery, etc.
[Depreciation]
Operation of Funabashi Premix No. 2 Plant, etc.
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23

Change in R&D Expenditures
Consolidated basis(0.1 billions of yen)

35

30

28
26
24

25

22
20

21

22

22

19
14

15

10

5

0

2016.32017.32018.32019.32020.32021.32022.32023.3(Forecast)

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

24Return to Shareholders (Dividends)
Change of dividends per share and dividend payout ratio
Dividends

Dividends (yen)Dividend payout ratio (%)

Dividend payout ratio

70

62.7

60

70.0
60.0

49.7
50

60

40

32.3

30

25.7

20

50

26.1

50

60

30.0

50.0
40.0

30.9*

30.0

65

65

60
30

20.0

10

10.0

0

0.0

2017.32018.32019.32020.32021.32022.32023.3(Forecast)* Dividend payout ratio for FY2021 does not include effect of gain on bargain purchase. If included, the ratio will be 20.3%

Dividend payout
ratio

Medium-Term Management Plan 20-22 Target: Approx.30%
Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

25

Agenda1

Overview of financial results for 2Q of FY2023

2

Earnings forecast for FY2023

3

Progress of Medium-Term Management Plan 20-22

4

Topics5Reference Materials

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

26

Long-Term Vision
As an ideal image of FY2025 which marks the Company’s 90th founding anniversary, along -term vision “SHOWA Next Stage for 2025” (9 years from FY2017 to FY2025) has
been developed.

▶ Three year Medium-Term Management Plan rolled out in three stages

Long-term vision (Ideal image)

SHOWA Next Stage for 2025
“Grain Solution Company Next Stage” thatprovides satisfaction to all stakeholders

Medium-Term
Management Plan
17-19

Medium-Term
Management Plan
20-22

Medium-Term
Management Plan
23-25

Net sales

400.0 billion yen

Ordinary profit 20.0 billion yen[Establishment][Return][Securing of foothold]Medium-Term Management Plan 20-22 targets
Net sales

280.0 billion yen

Ordinary profit

13.0 billion yen

ROE

9.0% or more
Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

27

Review of 2nd Stage Medium-Term Management Plan 20-22(1) Basic strategies
Measures

Basic strategies
Strengthening ofcore businesses

2020
2021

•
•
•
•

Basic concept

Turning San-ei Sucrochemical into a subsidiary
Sales integration of Naigai Flour Milling Co., Ltd.
Structural reform of earnings in baked bread business
Operation of Funabashi Premix No. 2 Plant

Issues• Shift to a business structure less susceptible tochanges in external environment

SHOWA New Value Creation

Expansion ofbusinessdomains

Contribution tosolving social
problems

2022• Turning Boso Oil and Fat into a subsidiary
New
Value
Only
SHOWA
Can
Create• Turning
Taiwan flour
milling andegg business into anentity accounted
for by

2020

2021
2020
2021

•
•
•
•
•

2021

Rebuilding of
platform

Strengthening ofstakeholder
engagement

•
•

•
•
•

2020
2022

•
•
•

the equity method
Entry into agribusiness
Strengthening of development and sales of plant-based foods
Employment of persons with disabilities: Meeting statutory employment rate
Discontinuance of coal in Kashima Plant cogeneration facility
Announcement of support for recommendations of TCFD and disclosure insecurities report (Starches and Sweeteners Business)
Achievement of more than doubling the number of female managers
Establishment of Group’s new environmental targets• Expansion of overseas/frozen household foodbusiness• Improvement in processing technology of plantbased foods• Development of functional food ingredients• Continuous efforts toward achieving
environmental targets• Further promotion of diversity and inclusion

Introduction of new personnel system
Strengthening of customer problem-solving-based sales throughestablishment of Solution Sales Dept.
Introduction of Zero Trust security system• Transformation into a market-needsincorporated sales organization• Strengthening of business portfolio management• Utilization of intangible assets

Publication of an integrated report (annually thereafter)
Transition to Prime market
Strengthening of external communication capabilities through opening of
official SNS account• Promotion of IR Strategy based on equity
strategy• Increase in brand recognition• Active information dissemination andstrengthening of dialogue

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28

Review of 2nd Stage Medium-Term Management Plan 20-22(2) Fund allocation
Net cash provided (used) in the Medium-Term Management Plan 20-22 (results/estimate)

Cash flows fromoperatingactivities(154)

Straight bond
(180)

CP, etc.
(241)

Cash out▲575
Return toshareholders(▲63)

Growthinvestment(▲320)

Capitalinvestment(▲192)

Main investments

Growthinvestment

Cash in
575

Capitalinvestment(0.1 billions of yen)

M&A
•
•
•
•

Turning San-ei Sucrochemical into a subsidiaryTurning Boso Oil and Fat into a subsidiary
Investment in Kouchan Mill Co., Ltd. in Taiwan
Investment in Z.Y. Food Company Limited in Taiwan

Strategic investment••

Construction of Funabashi Premix No. 2 Plant
Construction of plant factories, etc.

Capital investment•••

Reinforcement of second extraction at Kashima oil refinery
Renewal of aging plant facilities
Secure and safe measures for quality

Environmental investment•

Discontinuance of coal due to fuel conversion work of
Kashima Plant cogeneration facility

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29

Direction of Medium-Term Management Plan 23-25
Organizational restructuring—To a sales structure that pursues maximum business synergy(1) Maximization of operational efficiency ▶ Transition to one-stop-type sales organization by customer(2) Strengthening of business portfolio management ▶ Establishment of a business control department independent fromsales departments
Current organization

After reorganization

Product-out-type sales organization by businessOne-stop-type sales organization by businesscategory and customer

Customer

Sales Division

Business Division

Customer(Business management)

Cross-sellCompany A

Flour milling

Company B

Vegetable oils andhousehold foods

Company C

Company D

Starches andsweeteners

Sales Division (Sales)
One-stop
Company B

Vegetable oils andhousehold foods

Company C

Starches andsweeteners

Company D

Animal feed

Animal feed

Occurrence of overlapping sales activities andlost opportunity

Flour milling

Company A

Maximization of synergy between businesses
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30

Agenda1

Overview of financial results for 2Q of FY2023

2

Earnings forecast for FY2023

3

Progress of Medium-Term Management Plan 20-22

4

Topics5Reference Materials

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31

Topics (1) Business Tie-up with Tsuji Oil Mills
Strengthening of competitiveness in vegetable oils and household
foods/starches and sweeteners businesses

Showa Sangyo Group’s corn
oil production base(1) Strengthening of supply chain, improvement in production efficiency, andcost reduction in vegetable oils and household foods/starches andsweeteners businesses(2) Stable supply of saccharified products and corn oil products
Crude corn oil
production

Refined corn oil
production

Showa Sangyo
Kashima

Tokyo Yushi Kogyo

Showa Sangyo
Kashima

Shikishima Starch
MFG

MinaminihonkomeaburaCorn germ production

San-ei
Sucrochemical

Hokkaido

Germ production
Aomori

Crude corn oil production
Akita

Iwate

Refined corn oil production

Showa Sangyo Kobe
Yamagata Miyagi

Boso Oil and Fat
Fukushima

Niigata

Shikishima Starch
ToyamaIshikawa
MFG
Gifu
Hyogo Kyoto Shiga

Shimane

Okayama

Hiroshima
KagawaYamaguchi
Ehime

Fukuoka
Saga

Saitama

Ibaraki

Aichi

Chiba

Kanagawa
Shizuoka

Wakayama

Tokyo Yushi Kogyo
Showa Sangyo
Kashima
Showa Sangyo
Kashima

Osaka
Nara

Tokushima
Kochi

Tochigi

YamanashiTokyo

Tottori(Business tie-up)

Seamless production is possible within theGroup, from producing raw corn materialand corn germ to extracting and refining
corn oil

NaganoFukui

Tsuji Oil Mills

Gunma

San-ei
Sucrochemical

Boso Oil and Fat

Oita
Nagasaki Kumamoto
MiyazakiShowa Sangyo Kobe

Kagoshima

Minaminihonkomeabura

Tsuji Oil Mills (Business tie-up)
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32

Topics (2) Launch of Operation of Funabashi Premix No. 2 Plant
Enhancement of production and sales of premixes (operation launched in June 2022)(1) Specialization in small-package production, response to demand for household/commercial-use store spaces and efficient operational work(2) Realization of high productivity, manpower saving, and shorter production lead time through utilization of latest automation equipment and IoT(3) Improvement of customer satisfaction through plant design that thoroughly pursues food safety

Hokkaido

AomoriKobe Plant(35,000 t/year)

Akita

Itako Plant(37,000 t/year)

Iwate

YamagataMiyagi

Okumoto Flour Milling(28,000 t/year)

Niigata

Fukushima

TochigiToyamaIshikawa
Gunma
IbarakiNaganoSaitama
Fukui
Gifu
Yamanashi Tokyo Chiba
Tottori
Kanagawa
Shiga
ShimaneHyogo Kyoto
Aichi
Shizuoka
Okayama
Hiroshima
Osaka
Nara Mie
KagawaYamaguchi
Tokushima Wakayama
Ehime
Kochi
Fukuoka
Saga
Oita

NagasakiKumamoto
Miyazaki

Funabashi Food Plant(35,000 t/year)

Building

Control room

Funabashi Premix No. 2 Plant(28,000 t/year)

Nearly double thatof previous facility

Kagoshima

Secured 163,000 t/year production capacity Group-wide

Automated packaging line

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

33

Topics (3) Promotion of Sustainability (Environment)
Raising of “Environmental Consideration” as Group’s major mission and promoting related initiatives
as one of key management issues
Establishment of Showa Sangyo Groupenvironmental goals(1) Reduction of CO₂ emissions“Reduction of CO2 emissions by 46% or more by
FY2030”⁃ Target: Showa Sangyo Group companies⁃ Base year: FY2013

Environmental consideration initiatives
 Change in CO₂ emissions

 Sale of biomass trash bags

(10 thousand t-CO2)

Contains non-food biomass derived
from grains handled by the Company(2) Reduction of food loss and waste“Reduction of food loss and waste generated by 30%
or more by FY2025”⁃ Target: Showa Sangyo and six Group companies withannual food loss and waste of 100 tons or more
⁃ Base year: FY2018(3) Reduction of water consumption“Reduction of water consumption per unit of productionby 12% or more by FY2030”⁃ Target: Showa Sangyo Group companies⁃ Base year: FY2019

FY2013(base year)

FY2019 FY2020 FY2021“Daichi No Mino-Re:”

FY2030 (target)* In calculating CO2 emissions, the latest adjusted emissions factors ofelectric power suppliers of each fiscal year are used for the emissions
factors of electricity purchased from power generators.
(Basic emissions factors for electric power suppliers of each fiscal year
are used for the calculation made in the Integrated Report FY2021.)* Total of 28 companies (Showa Sangyo, consolidated subsidiaries, andnon-consolidated subsidiaries (production only)) are subject tocalculation of CO2 emissions.
* Scope of aggregation is subject to change depending on
increase/decrease of Group companies. The scope of aggregation for
FY2021 is 26 consolidated subsidiaries and 1 non-consolidated
subsidiary with a manufacturing plant.



Approx. 20% reduction of usage of
petroleum-derived plastics
Approx. 20% reduction of CO₂ emissions
upon incineration
Approx. 10% reduction of CO₂ emissions inlife cycle

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34

Topics (3) Promotion of Sustainability (Society)

Initiatives toward realization of diversity management
Initiatives to create a workplace where each and every employee can fully demonstrate their own strength
Promotion of women’s participation and
Improvement in performance of work from homeadvancement
Goal: Double or more the percentage of womenWork from home aimed toward living
Achieved
assuming managerial positions
with/after COVID-19(compared with FY2016–FY2018 average; by March 31, 2023)
Change in work efficiency when work from home

SHOWA Diversity Forum 2022 was held

As of July 2020

As of November 2021

Increased

Decreased

26%

23%

Decreased

45%

46%

Panel discussion among female managers(Held on October 5)

Increased

Unchanged

Unchanged

29%

31%

Shift from infection countermeasure to “work from home to produce
a good outcome”
Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

35

Topics (4) Introduction of New Household Products

Launch of four premixes on September 1, 2022
Moagenai!! Yakitempura No Moto(coating mix for deep-fried fish andvegetables)
Only fry in a frying pan with about 3
tablespoons of oil to make crispy tempura(deep-fried fish and vegetables).
To clean up the oil, just wipe it off with a paper
towel. So easy to tidy and clean up the
kitchen!

Happy Turn's Aji Karaageko (flavoreddeep-fried chicken seasoning mix)
A deep-fried chicken seasoning mix made incollaboration with Kameda Seika Co., Ltd.’slong-selling product Happy Turn's andcommercialized after being selected in the
Company's New Product Development Idea
Contest.

Yakitate Fuinanshie Mikkusu(Freshly baked financier mix)
Easy three steps of “mix, mold, and bake” withthree ingredients.
Easy and time-saving sweets that can bemade in less than 30 minutes without leaving
the dough to mature.
Freshly baked financier (type of pastry) justright to eat can be enjoyed at home.

Arenji Iroiro Hottokeki Mikkusu(pancake mix for various recipes)
Ingredients contained in the premix do notinclude eggs nor milk constituents wellrecognized as foodstuffs that cause foodallergies. Simply blended, and the types ofadditives are minimal.
Besides recipes for sweets, arranged recipesthat can be made for meals are also
introduced on the back of the package and on
the official website.
Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

36

Topics (5) Opening of Showa Sangyo’s official Twitter account

Enhanced communication with stakeholders (started on October 25)
 Showa Sangyo’s official Twitter accountShowa Sangyo [Official]URL: https://twitter.com/showasangyo_co Establishment and management of SNS Promotion
Project which includes six young employees Daily posting of corporate activities, productinformation, initiatives taken to ensure safety,
security, and stable supply of food, etc.
Edit Profile

Showa Sangyo [Official]This is the official account of Showa Sangyo Co., Ltd. well known for its
tempurako (flour for deep-fried fish and vegetables) and pancake mix.
Corporate activities, product information, initiatives taken to ensure safety,
security, and stable supply of food, etc. will be posted daily. Campaigns exclusive
to followers are also planned.
[Social Media Policy]

Showa Sangyo[Official][Ways to preserve vegetables so they will last a long time]
Vegetables try to grow even after being harvested
This energy is one reason why vegetables lose their freshness
Vegetables will last longer if they are stored in a similar
condition as when they were in the farm so that they will nothave to expend energy needlessly!

These are exquisite recipes made by using ingredients that have been
wasted in the past
They will also be posted on Twitter with #Mottainai Recipe, so everyone,please try them.

Homemade food loss challenge recipes

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

37

Topics (6) Publication of Showa Sangyo Group’s Integrated
Report FY2022

Publicized Showa Sangyo Group’s Integrated Report FY2022 on
October 1, 2022
Information such as value creation stories, strategies, and foundations that support sustainablecorporate growth are included to allow stakeholders to gain a deeper understanding
History of Value Creation

Showa Sangyo Group

Integrated Report
FY2022President’s Message
Continuous evolution of a “Grain Solution
Company”

Value Creation Process“Contributing to healthy, rich, and varied meals”

Showa Sangyo Co.,Ltd.

*URL: https://www.showa-sangyo.co.jp/ir/library/integrated_report/[Questionnaire here]
Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

38

Agenda1

Overview of financial results for 2Q of FY2023

2

Earnings forecast for FY2023

3

Progress of Medium-Term Management Plan 20-22

4

Topics5Reference Materials

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

39

Group’s Strengths—Source of Value Creation—
The source of the Group’s strength is its specialty in grain. As a Grain Solution Company that handles multiple grains
and knows thoroughly the unlimited potential food ingredients have, all issues and needs of customers about food will besolved.
SHOWA’s unique “Multiple Synergy Solution”

Unique business model that supports food infrastructure

Demonstrate inter-business synergies from upstream to downstream ofvalue chain
Create new value by combining food ingredients, technology and know-how

Stable grain procurement capacity & food supply
capacity in cooperation with trading companies
Kobe Plant

Largevariety ofgrainsFlour millingbusiness

Vegetable oils andhousehold foods
business

Starches andsweeteners business

Nagoya Futo Silo Co., Ltd.

Kashima Silo Co., Ltd.

Animal feedbusiness

Group having grain expertise thatwidely offers tastiness and healthIndustry’s No. 1 technological strengththat supports creation and sustainabilityof value
Sale of Tempurako“World first”

R&D

Food recycling rate

Value chain"99.9%"
Raw material
procurement

Kashima Plant
Production

Sales

Shibushi Silo Co.,Ltd.
Funabashi
Plant

Transaction volume of grainby food manufacturers"No.1"“Diverse product lineup” that
contributes widely to dietHomemade pancake mix“No. 1 domestic market share”
Crystalline glucose

Grain silo capacity (domestic)(for food and medical use)

"No.1"“No. 1 domestic market share”

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

40

Implementation of Price Revision
Commercial/household vegetable oil products

Commercial wheat flour

Revision date

Revision date

Price revision range(1)2021/3/1

Household general-purpose oil 30 yen/container, 18-liter can 500
yen/can, mini/single 30 yen/kg or more

(2)2021/6/1

Household edible oil 30 yen/container, 18-liter can 500 yen/can,mini/single 30 yen/kg or more

(3)2021/8/2

Household edible oil 50 yen/container, 18-liter can 800 yen/can,mini/single 50 yen/kg or more

(4)2021/11/1

Household edible oil 30 yen/container, 18-liter can 500 yen/can,mini/single 30 yen/kg or more

(5)2022/3/1

Household edible oil 40 yen/container, 18-liter can 700 yen/can,mini/single 40 yen/kg or more

(6)2022/7/1

General-purpose oil 60 yen/kg, olive oil 160 yen/kg, rice bran oil 90
yen/kg, sunflower oil 90 yen/kg or more

Total

General-purpose oil 240 yen/kg or more

Commercial soybean protein products
Revision date

Price revision range(1)2021/6/19

Strong 110 yen/25 kg, Medium-strength/weak 80 yen/25 kg(2)2021/12/20

Strong 315 yen/25 kg, Medium-strength/weak 345 yen/25 kg(3)2022/6/20

Strong 370 yen/25 kg, Medium-strength/weak 325 yen/25 kg

Total

Strong 795 yen/25 kg, Medium-strength/weak 750 yen/25 kg

Household wheat flour, premixes, pasta
Revision date

Price revision range(1)2021/7/1

Wheat flour approx. 2–3%, premix approx. 2–4%, pasta approx. 2–3%

(2)2022/1/4

Wheat flour approx. 4–9%, premix approx. 4–6%, pasta approx. 5–9%

(3)2022/7/1
2022/8/1

Wheat flour/premix approx. 2–7%
Pasta approx. 3–7%

(4)2023/1/4

Premix approx. 2–15%

Total

Wheat flour approx. 8–19%, premix approx. 10–32%, pasta approx.
10–19%

Price revision range(1)2021/7/1

Soybean protein products 30 yen/kg or more

Commercial cornstarch and saccharified products(2)2022/4/1

Soybean protein products 30 yen/kg or more

Revision date(3)2022/10/1

Granulated soybean protein products 50 yen/kg or more, powderedsoybean protein products 200 yen/kg or more

*Price revision implemented in April and September 2021 (no press releaseannouncement)

Total

Soybean protein products 110 yen/kg or more

(1)2022/4/1

Cornstarch products 15 yen/kg, saccharified products 10 yen/kg(2)2022/7/1

Cornstarch products 15 yen/kg, saccharified products 10–30 yen/kg

Price revision range

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

41

Change in Quarterly Net Sales and Operating Profit
1Q(millions of yen)

Flour milling

Net sales

2023.3

Amount of change

2022.32023.3

Amount of change

20,15021,362

1,212

18,742

21,582

2,839

23,841

29,176

5,334

24,39728,476

4,078

11,76315,157

3,393

12,931

15,876

2,945

Animal feed

11,88013,781

1,901

13,713

15,447

1,733

Other

1,239

1,210

▲29

1,252

1,339

87

Total

68,87580,688

11,812

71,03882,722

11,684

762

1,028

265

805

1,143

337

▲176

1,059

1,236

▲8

▲549

▲541

224

▲136

▲361

301

▲375

▲677

Animal feed

219

▲111

▲330

252

254

2

Other

403

336

▲67

397

421

24

Company-wide
expenses and others

▲391

▲360

30

▲385

▲392

▲7

Total

1,042

1,815

772

1,363

502

▲861

Vegetable oils andhousehold foods
Starches andsweeteners

Flour milling
Vegetable oils andhousehold foods
Starches andsweeteners

Operatingprofit2022.32Q

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Cautionary notes regarding forward-looking statements
The figures included in this material are formulated based on information currently available and certain assumptions judged to be reasonable. As this material
contains potential risks and uncertainties, we do not guarantee its achievement or future performance.
Furthermore, as actual results, etc. may also significantly differ from the forward-looking statements included in this material, you should refrain from making
investment decisions based solely on this material.
Showa Sangyo Group will not necessarily review the Medium-Term Management Plan nor assume any obligation to do so, regardless of future information, events
or consequences caused by them.

Copyrightⓒ2022 SHOWA SANGYO Co., Ltd All Rights Reserved.

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