Megmilk Snow Brand : 【Delayed】Consolidated Financial Results for the Year Ended March 31, 2021(Prepared pursuant to Japanese GAAP)

Consolidated Financial Results for the Year Ended March 31, 2021

(Prepared pursuant to Japanese GAAP)

	May 13, 2021
Company name:	MEGMILK SNOW BRAND Co., Ltd.
Stock exchange listing:	Tokyo Stock Exchange (First Section), Sapporo Securities Exchange
Stock code:	2270
URL:	https://www.meg-snow.com/english
Representative:	Keiji Nishio, Representative Director and President
Contact:	Kentaro Watanabe, General Manager, Public Relations & Investor
	Relations Department
Phone:	[phone]

Scheduled dates	June 23, 2021
Annual general meeting of shareholders:
Dividend payout:	June 3, 2021
Filing of fiscal year-end financial report:	June 23, 2021
Supplementary materials to fiscal year-end
financial results available:	Yes
Fiscal year-end earnings presentation held:	Yes (targeted at institutional investors and analysts)

(Amounts rounded down to the nearest million yen)

1. Consolidated Results for the Fiscal Year Ended March 31, 2021 (April 1, 2020 - March 31, 2021)

(1) Consolidated Operating Results				(Percentages indicate year-on-year changes)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Year ended	millions of yen		%	millions of yen	%	millions of yen	%	millions of yen	%
615,186		0.3	19,780	9.9	21,662	10.1	14,913	22.6
March 31, 2021
Year ended	613,405		1.7	17,998	4.5	19,680	3.5	12,165	13.1
March 31, 2020
Note: Comprehensive income: Year Ended March 31, 2021 : 23,265 million yen (89.6%)
	Year Ended March 31, 2020 : 12,271 million yen (-14.5%)

	Profit per share -	Profit per share -	Return on equity	Ratio of ordinary	Ratio of operating
	profit to		profit to
	basic		diluted			total assets		net sales
Year ended	yen		yen		%			%	%
220.64		－		8.1			5.6	3.2
March 31, 2021
Year ended	179.71		－		7.1			5.4	2.9
March 31, 2020
For reference: Equity in	earnings of affiliates: Year Ended March 31, 2021: 1,233 million yen
		Year Ended March 30, 2020: 1,085 million yen
(2) Consolidated Financial Position
	Total assets	Net assets	Equity ratio		Net asset
		per share
	millions of yen	millions of yen		%			yen
March 31, 2021	398,650	198,255		49.0			2,890.65
March 31, 2020	370,434	178,094		47.3			2,586.86

For reference: Equity: March 31, 2021 : 195,213 million yen

March 31, 2020 : 175,112 million yen

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(3) Consolidated Cash Flow Position

	Cash flow from	Cash flow from	Cash flow from	Cash and cash
	equivalent at
	operating activities	investing activities	financing activities
	end of period
Year ended	millions of yen	millions of yen	millions of yen	millions of yen
26,567	(27,076)	6,771	21,829
March 31, 2021
Year ended	24,322	(16,629)	(6,651)	15,524
March 31, 2020

2. Dividends

		Cash dividends per share		Total dividends	Payout ratio	Dividends to
Record date or	End-Q1	End-Q2	End-Q3	End-Q4	Total	paid	net assets
(consolidated)
period	(full year)	(consolidated)
Year ended	yen	yen	yen	yen	yen	millions of yen	%	%
－	－	－	40.00	40.00	2,707	22.3	1.6
March 31,2020
Year ended	－	－	－	40.00	40.00	2,707	18.1	1.5
March 31,2021
Year ending				50.00	50.00		27
March 31,2022	－	－	－
(forecast)

3. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2022 (April 1, 2021 - March 31, 2022)

(Percentages indicate year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Profit per
		owners of parent	share
	millions of yen		%	millions of yen	%	millions of yen	%	millions of yen	%	yen
Second quarter-	288,000		－	10,800	(2.6)	11,400	(4.8)	6,800	(5.5)	100.69
end (Cumulative)
Full Year	570,000		－	20,500	3.6	21,500	(0.8)	12,500	(16.2)	185.10

The forecast figures for net sales for the fiscal year ending March 31, 2022 have been calculated after

application of the "Accounting Standard for Revenue Recognition". For this reason, the percentages indicating year-on-year change from the net sales results for the fiscal year ended March 31, 2021 (recorded prior to application of the above accounting standard) are not presented.

The forecast figures for net sales for the fiscal year ending March 31, 2022, when calculated based on the same accounting standard as that used for the fiscal year ended March 31, 2021, are presented below together with the percentages indicating year-on-year change.

Six months ending September 30, 2021: 318,000 million yen (+1.3%)

Year ending March 31, 2022: 629,500 million yen (+2.3%)

Notes

1. Material reclassifications of subsidiaries during the period: None
2. Changes in accounting policy, changes in accounting estimates, and retrospective restatement

1. Changes in accordance with amendments to accounting standards, etc.: None

2) Changes other than noted in 1) above: None

1. Changes in accounting estimates: None
2. Retrospective restatement: None

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(3) Common stock issued

1) Issued shares as of period-end (including treasury stock)

	March 31, 2021	70,751,855 shares
	March 31, 2020	70,751,855 shares
2) Treasury stock as of period-end
	March 31, 2021	3,219,054 shares
	March 31, 2020	3,058,747 shares

3) Average number of shares (during the respective period)

Year ended March 31, 2021	67,594,981 shares
Year ended March 31, 2020	67,697,550 shares

*This summary of financial statements is not subject to audit by certified public accountant and auditing firm.

*Appropriate Use of Earnings Forecasts and Other Important Information (Earnings Forecasts)

Business forecasts contained in this report are based on the assumptions of management in the light of information available as of the release of this report. MEGMILK SNOW BRAND makes no assurances as to the actual results, which may differ from forecasts due to various factors such as changes in the business environment.

(Supplementary materials and presentation handouts) Supplementary materials are attached to this report.

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Table of Contents for Attachments

1. Operating Results ……………………………………………………………………………………………………

1. Overview of Operating Results……………………………………………………………………………………
2. Analysis of Financial Condition …………………………………………………………………………………
3. Future Outlook………………………………………………………………………………………………………
4. Basic Policy on Profit Distribution and Cash Dividends for the Fiscal Year Ended March 31, 2021 and the Fiscal Year Ending March 31, 2022………………………………………………………………

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2. Basic Policy on the Selection of Accounting Standards……………………………………………………… 9

3. Consolidated Financial Statements and Key Notes ……………………………………………………………… 10

1. Consolidated Balance Sheets …………………………………………………………………………………… 10
2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income………… 12 Consolidated Statements of Income……………………………………………………………………………… 12 Consolidated Statements of Comprehensive Income………………………………………………………… 13
3. Consolidated Statements of Changes in Net Assets…………………………………………………………… 14
4. Consolidated Statements of Cash flows ………………………………………………………………………… 16
5. Notes to the Consolidated Financial Statements …………………………………………………………….… 18 (Notes on the assumption of a going-concern) ………………………………………………………………… 18 (Change in presentation)…………………………………………………………………………………………… 18 (Segment information) ……………………………………………………………………………………………… 19 ("Per share" data) …………………………………………………………………………………………………… 21 (Key subsequent events)…………………………………………………………………………………………… 21

(Supplementary Information)

Supplementary Information Year Ended March 31,2021

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1. Operating Results

(1) Overview of Operating Results

In the fiscal year ended March 31, 2021, despite differences among sectors, conditions in the Japanese economy were challenging overall due to the impacts of the novel coronavirus (COVID-19) pandemic. Although there were signs of recovery at times, COVID-19 infections have recently been increasing, and the future outlook remains uncertain.

In the food industry, demand for home-cooked meals increased while demand for eating out declined

significantly due to the government's request for people to refrain from going out and shortened operating hours at eating and drinking establishments following state of emergency declarations. Despite government economic stimulus measures contributing to a temporary earnings recovery in the restaurant industry,

the outlook is once again uncertain.

In this business environment, the MEGMILK SNOW BRAND Group is pursuing initiatives to "Establish earnings bases in four business sectors (Dairy Products; Beverage & Dessert; Nutrition; and Feedstuffs & Seed) in accordance with the Group Medium-term Management Plan 2022.

In the fiscal year ended March 31, 2021, the Group undertook: (1) strategic expansion and further product mix improvement of yogurt, cheese, and other mainstay products, with focus on functionality;

(2) simultaneous pursuit of scale expansion and profit generation through continuation of marketing investment in the nutrition business field; (3) strategic expansion and development of an earnings base in the seed products business; and (4) bolstering of the Group's overall strengths by making full use of the Group's management resources and by improving the productivity of the value chain.

Amid the spread of COVID-19, the Group also took steps to prevent COVID-19 infections among Group employees and endeavored to provide a stable supply of safe and reliable products to customers.

In addition, at a time of sharply decreased demand for milk and other products accompanying the

suspension of school meals and declining demand for eating out, the Group engaged in raw milk processing, including increasing production of butter and non-fat powdered milk, in order to avoid the disposal of raw milk, as the Group performed its role of adjusting supply and demand.

As a result, in the fiscal year ended March 31, 2021, consolidated net sales were ¥615,186 million

(up 0.3% YoY), operating profit was ¥19,780 million (up 9.9%), ordinary profit was ¥21,662 million (up 10.1%) and profit attributable to owners of parent was ¥14,913 million (up 22.6%).

As of March 31, 2021, the MEGMILK SNOW BRAND Group comprised the Company, 32 subsidiaries, and 14 affiliates.

Operating results by business segment for the fiscal year ended March 31, 2021, were as follows. Net sales by segment are sales to outside customers.

1) Dairy Products

This segment comprises the manufacture and sale of dairy products (cheese, butter, powdered milk), margarine, nutrition business products (functional foods and infant formula), and other products.

Net sales were ¥262,337 million (up 5.3% YoY), and operating profit was ¥13,675 million (up 18.3%).

The impact of COVID-19 on sales varied between sales channels. For instance, the increase in demand for home-cooked meals was a boon for household products, while on the other hand, the decline in demand for eating out created headwinds for commercial-use products.

In these circumstances, sales of butter were flat year on year due to continued efforts to ensure a stable supply. Sales of margarine declined due to the settling down of the dramatic increase in demand for home-cooked meals which started at the end of February 2020, despite proactive promotional activities. Sales of cheese increased slightly due to factors including the rise in demand for cheese as an at-home snack item, along with strong sales of natural cheeses such as Sakeru Cheese. Sales of functional food products grew owing to continued marketing investment in the e-commerce business which performed well amid the COVID-19 pandemic.

As a result of these developments, overall segment sales increased.

Operating profit increased due to factors including a decrease in fixed costs and higher sales volumes of household-use products.

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