Calbee : Financial Book for the Year Ended March, 2023 (770KB）

TSE code:2229

Financial Book 2023

Fiscal year ended March 31, 2023

Contents

1 11 -Year Summary

2 Managementʼs Discussion and Analysis

8 Business Risks

12 Consolidated Balance Sheets

14 Consolidated Statements of Income

15 Consolidated Statements of Comprehensive Income

16 Consolidated Statements of Changes in Net Assets

18 Consolidated Statements of Cash Flows

19 Notes to Consolidated Financial Statements

42 Independent Auditorʼs Report

11-Year Summary

													Thousands of
													U.S.dollars
											Millions of yen, rounded down	(Note1)
		2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2023
		US$
For the Year:(Note7)
	Net sales	279,315	245,419	266,745	255,938	248,655	251,575	252,420	246,129	222,150	199,941	179,411	2,091,781
	Operating profit	22,233	25,135	27,064	27,664	26,964	26,828	28,841	28,125	24,183	19,717	15,790	166,503
	Operating margin(%)	8.0	10.2	10.1	10.8	10.8	10.7	11.4	11.4	10.9	9.9	8.8	－
	Net income attributable to	14,772	18,053	17,682	17,539	19,429	17,330	18,605	16,799	14,114	12,086	9,440	110,628
	owners of parent
	Net income margin(%)	5.3	7.4	6.6	6.9	7.8	6.9	7.4	6.8	6.4	6.0	5.3	－
	ROE(%)	8.5	10.3	10.4	11.1	13.2	13.0	14.9	14.6	13.7	13.1	11.4	－

	Research and development	3,681	3,319	2,706	2,745	2,660	2,469	2,168	2,195	2,052	2,161	2,288
	costs
	Capital expenditures	26,716	13,515	11,341	9,004	9,945	11,009	9,763	21,229	15,290	6,392	7,298
	Depreciation and amortization	10,047	9,189	9,051	8,449	8,023	7,845	7,297	7,570	6,232	5,960	6,318
Per Share(/$):(Note2)
	Net income attributable to	115.16	136.25	132.30	131.22	145.39	129.72	139.24	125.88	105.82	91.46	72.18
	owners of parent

27,570

200,081

75,242

0.86

	Net assets	1,393.74	1,358.25	1,312.24	1,221.19	1,151.71	1,043.37	958.60	905.20	821.97	729.93	664.55	10.43
	Cash dividends	52.00	52.00	50.00	50.00	48.00	42.00	42.00	35.00	28.00	22.00	15.50	0.38
	Dividend payout ratio(%)	45.2	38.2	37.8	38.1	33.0	32.4	30.2	27.8	26.5	24.1	21.5	－
At Year-End:
	Total assets(Note3)	239,095	236,598	238,978	214,967	202,750	192,034	181,945	174,837	161,917	140,909	124,705	1,790,574
	Net assets	182,686	183,458	182,740	169,632	160,490	146,667	135,056	131,469	118,800	104,466	92,685	1,368,131
	Working capital(Note3,4)	53,307	72,912	80,892	83,066	77,815	68,950	58,214	54,832	52,672	47,458	33,607	399,216
	Interest-bearing debt(Note5)	1,855	2,005	6,604	1,363	1,274	1,511	1,596	555	563	186	302	13,899
	Equity ratio(%)(Note6)	72.8	74.1	73.4	75.9	75.9	72.6	70.4	69.2	67.7	69.1	70.2	－
	Debt to equity ratio(Times)	0	0	0	0	0	0	0	0	0	0	0	0
	Number of consolidated	24	23	24	24	26	27	27	24	22	22	21	－
	subsidiaries
	Number of employees	4,839	4,398	4,311	4,053	3,763	3,798	3,860	3,728	3,477	3,341	3,352	－
Cash Flows:
	Cash flows from operating	19,310	22,327	30,450	40,449	27,620	9,358	25,958	22,541	22,266	23,478	17,328	144,618
	activities
	Cash flows from investing	(20,329)	3,643	(32,069)	(13,462)	(28,347)	(6,258)	(13,404)	(14,270)	(9,422)	(17,041)	(12,999)	(152,249)
	activities
	Cash flows from financing	(20,004)	(25,168)	(7,635)	(6,278)	(6,227)	(5,450)	(14,711)	(2,859)	(2,878)	(383)	607	(149,816)
	activities
	Cash and cash equivalents	30,292	49,670	47,282	55,742	35,425	42,195	44,627	47,323	42,572	31,592	25,331	226,857
	at end of year

Note 1. U.S. dollar amounts are presented, for convenience only, at a conversion rate of ¥133.53= US$1, the approximate Tokyo foreign exchange market rate as of March 31, 2023.

1. A 4-for-1 share split was implemented on October 1, 2013. Per share figures were retroactively adjusted to reflect these stock splits.
2. Upon application of"Partial Amendments to Accounting Standard for Tax Effect Accounting"(ASBJ Statement No. 28, February 16, 2018 (hereinafter,"Statement No. 28")) from the beginning of the fiscal year ended March 31, 2019, the figures for the consolidated financial position are those after the said standards, are applied retroactively.
3. Working capital comprises current assets less current liabilities.
4. Interest-bearingdebt includes long-andshort-term debt, leasing obligations and other interest bearing debt.
5. Shareholders' equity as presented above consists of total net sets exclusive of subscription rights and non-controlling interests.
6. The Company applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29) from the beginning of the fiscal year ended March 31, 2022. Major consolidated management indicators, etc. for this fiscal year are indicators, etc. after applying such accounting standards.

1

Management's Discussion and Analysis

Operating results

1. Overview of business performance

(All comparisons are with the same period of the previous fiscal year, unless stated otherwise.)

During the fiscal year ended March 31, 2023, the global economic outlook remained challenging due to uncertainty. This was mainly due to soaring raw material and energy prices caused by factors including the Russian invasion of Ukraine, as well as turmoil in the Chinese market caused by the COVID-19 pandemic. The Japanese economy was also affected by the sharp rise in raw material and energy costs and the rapid depreciation of the yen, but showed signs of a moderate recovery amid progress in balancing COVID-19 controls with economic activity.

Against this backdrop, based on our long-term vision (Vision for 2030) and medium-term business plan (for the fiscal year ended March 31, 2020 to the fiscal year ending March 31, 2024), Calbee Group promoted business activities aimed at sustainable growth and the creation of social value, implemented flexible price and content revisions in response to soaring raw material prices and other factors to improve profitability, and worked to expand business overseas and in new food domains. In February 2023, we formulated and announced a new three-year growth strategy from the fiscal year ending March 31, 2024.

In the domestic business, in the first half of the fiscal year, we expanded sales of snacks not made with potatoes, such as corn and bean-based snacks, to minimize the impact of the raw material potato shortage. From autumn, when potato shortage concerns were resolved, the snack foods business as a whole resumed sales promotion activities and launched new products in an effort to raise demand. We also implemented price and content revisions in stages across all categories in response to rising costs.

In the overseas business, we focused on expansion in key regions including North America, and Greater China. In North America, under the holding company structure, we strengthened collaboration in sales, marketing and development, and improved management efficiency. In Greater China, we worked to raise Calbee brand awareness by strengthening promotional activities, and made progress in establishing a production base in China and neighboring countries to enhance our product lineup. We conducted price and content revisions in North America, the United Kingdom and elsewhere while assessing market characteristics and competitive conditions, and improved earnings while absorbing cost increases.

With regard to promotion of sustainable management, we promoted activities aimed at reducing total greenhouse gas emissions such as the effective use of renewable energy and smart energy network businesses at production facilities and participating in the Model Project for Supporting Achievement of the Decarbonization targets of the Entire Supply Chains, which is supported by Japan's Ministry of the Environment. In initiatives related to sustainable procurement, we have begun supplier assessments to encourage engagement with our suppliers. At the same time, following the completion of the switch to RSPO certified palm oil (mass balance method) at all Calbee Group domestic plants, in September 2022 we launched products with the RSPO Certification Mark. We also strengthened specific initiatives for BCP, with two domestic plants acquiring resilience certification. Finally, in light of changes in the external environment, we are reviewing our materiality and adding important topics such as human rights and biodiversity issues.

Consolidated net sales for the fiscal year ended March 31, 2023 were ¥279,315 million (up 13.8%). In the domestic business, sales rose due to strong demand for snack foods, even after price and content revisions, and a rebound in demand for gift snack items stemming from the relaxation of behavioral and immigration restrictions, despite the impact of restrained sales promotions due to a potato shortage in the first half of the fiscal year. Sales in the overseas business increased due to expanded sales of snack foods in North America, Greater China, the United Kingdom, Indonesia and other countries.

Operating profit was ¥22,233 million (down 11.5%) due to the sharp rise in raw material prices and energy costs, despite price and content revisions offsetting the negative impact of rising costs in the second half of the fiscal year. Operating margin was 8.0% (down 2.3 percentage points). Profit attributable to owners of parent was ¥14,772 million (down 18.2%).

2

Results by business are as follows.

Millions of yen, rounded down

FY ended

FY ended

March 31, 2022

March 31, 2023

Amount

Amount

Growth (%)

Domestic production and sale of snack

188,048

207,116

＋10.1

and other foods business

Domestic snack foods

176,888

194,031

＋9.7

Domestic cereals

24,696

24,210

(2.0)

Domestic, others

12,018

13,729

＋14.2

Deduction of rebates, etc.

(25,553)

(24,854)

－

Overseas

production and sale of snack

57,370

72,198

＋25.8

and other foods business

Total, production and sale of snack and

245,419

279,315

＋13.8

other foods business

*

Sales of

"

Domestic snack foods

"

,

"

Domestic cereals

"

and

"

Domestic, others

"

are before deduction of rebates, etc.

Production and sale of snack and other foods business

Sales in the production and sale of snack and other foods business increased on growth in both the domestic and overseas businesses.

Domestic production and sale of snack and other foods business

・Domestic snack foods:

Domestic snack foods sales increased. Sales by product are as follows.

		Millions of yen, rounded down
	FY ended	FY ended
	March 31, 2022	March 31, 2023
	Amount	Amount	Growth (%)
Potato Chips	83,434	90,932	＋9.0
Jagarico	34,871	39,990	＋14.7
Snack food products with new value /	58,582	63,108	＋7.7
other snacks
Total, domestic snack foods	176,888	194,031	＋9.7

• Net sales by product are before deduction of rebates, etc.
• "Potato-basedsnacks (Jagabee / Jaga-Pokkuru)","Flour-based snacks", "Corn-andbean-based snacks" and "Other snacks", which had been presented separately until the previous fiscal year, have been included in "Snack food products with new value / other snacks" from this fiscal year. The figures for the previous fiscal year have also been reclassified accordingly.

• Sales of Potato Chips increased on price and content revisions as well as higher sales volume as the autumn Hokkaido potato harvest was in-line with the plan. Kataage Potato, which was renewed and promoted on the 30th anniversary of its launch, and the expansion of imported products in response to the potato shortage in the first half of the year, also contributed.
• Sales of Jagarico increased due to growth in sales at convenience stores against the backdrop of rising demand related to outings, as well as the success of TV commercials and package renewals.
• Sales of snack food products with new value / other snacks increased on strong sales of corn-based snacks and gift snack items. Sales of corn-based snacks rose as they were the focus of sales during the potato shortage and higher demand due to relative affordability. Sales of gift snack items such as Jaga- Pokkuru were also strong, reflecting a rebound in domestic travel demand and the resumption of foreign tourism.

・Domestic cereals:

Sales of domestic cereals were ¥24,210 million (down 2.0%) due to lower sales of core products, despite increased sales around the launch of Baked Oats.

・Domestic, others:

Sales in other domestic businesses were ¥13,729 million (up 14.2%) on growth in the sweet potato business.

3

Overseas production and sale of snack and other foods business

Sales increased in the overseas production and sale of snack and other foods business.

Sales by region are as follows.

			Millions of yen, rounded down
	FY ended		FY ended
	March 31, 2022		March 31, 2023
				Growth on
	Amount	Amount	Growth (%)	local currency
				basis (%)
North America	16,156	22,228	＋37.6	＋15.0
Greater China	19,590	23,405	＋19.5	＋6.0
Other regions	28,692	36,227	＋26.3	＋15.1
Deduction of rebates, etc.	(7,069)	(9,662)	－	－
Total, overseas production and
sale of snack and other foods	57,370	72,198	＋25.8	＋11.3
business

• Greater China: China and Hong Kong
• Other regions: United Kingdom, Indonesia, South Korea, Thailand, Singapore and Australia
• Net sales by region are before deduction of rebates, etc.
• The United Kingdom and Indonesia, which had been presented separately until the previous fiscal year, have been included in "Other regions" from this fiscal year. The figures for the previous fiscal year have been reclassified.

・In North America, sales of mainstay bean-based snack Harvest Snaps grew on the effect of price revisions, package renewals and expansion of the product lineup. Sales of products originating in Japan, such as Kappa-Ebisen, increased due to firm demand in ethnic foods areas and expansion of sales channels.

・In Greater China, sales increased due to a strengthened product lineup and expansion of sales channels, despite delays in product launch schedules and development in retail channels caused by the zero-COVID policy lockdowns. In snack foods, sales of Honey Butter Chip and products for the babies and kids segment, which was launched in the fiscal year ended March 31, 2023, contributed. In cereals, the launch of muesli, sales growth of Frugra Less Carbohydrates and entry into new e-commerce channels contributed to sales growth.

・In Other regions, sales increased due to growth in the UK and Indonesia and the consolidation of Greenday Global Co., Ltd. (which manufactures and sells snacks) in Thailand. In the UK, Potato Chips price revisions and sales growth of Harvest Snaps contributed. In Indonesia, all product categories, especially Potato Chips and flour-based snack KrisBee, etc., grew.

1. Financial Indices
   The status of indices useful for evaluating the progress of our group's management policies and strategies is as follows.

	FY ended	FY ended
	March 31, 2023	March 31, 2023
	results	(initial plan)
Net sales	¥279.3bn	¥268.0bn
Operating profit	¥22.2bn	¥25.5bn
Domestic operating margin	9.5%	10.9%
Overseas sales	¥72.2bn	¥68.5bn

4