Megmilk Snow Brand : 【Delayed】Consolidated Financial Results for the Six Months Ended September 30, 2021(Prepared pursuant to Japanese GAAP)

Consolidated Financial Results for the Six Months Ended September 30, 2021

(Prepared pursuant to Japanese GAAP)

	November 9, 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:	Fumi Hatamoto, General Manager, Public Relations & Investor
	Relations Department
Phone:	[phone]
	(Amounts rounded down to the nearest million yen)

1. Consolidated Results for the First Six Months of the Fiscal Year Ending March 31, 2022 (April 1, 2021 - September 30, 2021)

(1) Consolidated Operating Results				(Percentages indicate year-on-year changes)
	Net sales	Operating profit	Ordinary profit	Profit attributable to
	owners of parent
Six months ended	millions of yen	%	millions of yen	%	millions of yen	%	millions of yen	%
286,904	－	12,210	10.1	13,277	10.8	8,575	19.2
September 30, 2021
Six months ended	314,035	0.8	11,088	4.2	11,980	2.1	7,193	(6.6)
September 30, 2020
Note: Comprehensive income: Six months ended September 30, 2021 : 8,355 million yen (-12.5%)
	Six months ended September 30, 2020 : 9,545 million yen (16.3%)
	Profit		Profit
	per share - basic	per share - diluted
		yen		yen
Six months ended		126.99		－
September 30, 2021
Six months ended		106.34		－
September 30, 2020

Note: The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. effective from the beginning of the first quarter of the fiscal year ending March 31, 2022. As a result, the Company has omitted year-on-year change in net sales for the first half of the previous fiscal

year, as this was prior to application of the above accounting standard.

Assuming, however, that the above accounting standard, etc. had been applied effective from the first quarter of the fiscal year ended March 31, 2021, the year-on year change would be 1.4%.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio	Net asset
	per share
	millions of yen	millions of yen	%	yen
September 30, 2021	405,389	202,759	49.4	2,962.87
March 31, 2021	398,650	198,255	49.0	2,890.65
For reference:

Equity: September 30, 2021: 200,096 million yen

March 31, 2021: 195,213 million yen

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2. Dividends

		Cash dividends per share
Record date or period	End-Q1	End-Q2	End-Q3	Year-end	Total
	yen	yen	yen	yen	yen
Year ended March 31, 2021	－	－	－	40.00	40.00
Year ending March 31, 2022	－	－
Year ending March 31, 2022			－	50.00	50.00
(forecast)

Note: Revisions from the latest release of dividend forecasts: None

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

Full Year

570,000

2.8

20,500

3.6

21,500

(0.8)

12,500

(16.2)

185.09

Note 1:

Revisions from the latest release of dividend forecasts: None

Note 2:

As the Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement

No. 29, March 31, 2020), etc. effective from the beginning of the first quarter of the fiscal year ending

March 31, 2022, the said accounting standard, etc. have been applied to the figures in the abovementioned

consolidated forecasts. Note that year-on-year change is calculated assuming that the above

accounting standard, etc. were applied effective from the fiscal year ended March 31, 2021.

Notes

(1) Material reclassifications of subsidiaries during the period: None

(2) Accounting methods specific to quarterly consolidated financial statements: None

(3) Changes in accounting policy, changes in accounting estimates, and retrospective restatement 1) Changes in accordance with amendments to accounting standards, etc.: Yes

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

3) Changes in accounting estimates: None

4) Retrospective restatement: None

Note: For further details, please refer to "(4) Notes to the Quarterly Consolidated Financial Statements (Changes in Accounting Policies)", under "2. Quarterly Consolidated Financial Statements and Key Notes" on page 14 of the Attachments.

(4) Common stock issued

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

	September 30, 2021	70,751,855 shares
	March 31, 2021	70,751,855 shares
2) Treasury stock as of period-end
	September 30, 2021	3,217,100 shares
	March 31, 2021	3,219,054 shares
3) Average number of shares (during the respective period)
	Six months ended September 30, 2021	67,533,293 shares
	Six months ended September 30, 2020	67,647,671 shares

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

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*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.

The Company is scheduled to hold an earnings presentation for analysts and institutional investors on Tuesday, November 9, 2021. Presentation materials to be used at the teleconference will be made available on the Company's website on the same day.

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Table of Contents for Attachments

1. Operating Results …………………………………………………………………………………………………… 5

1. Overview of Operating Results………………………………………………………………………………… 5
2. Analysis of Financial Condition ………………………………………………………………………………… 7

(3) Explanation of Forward-Looking Statements, including the Forecast of Consolidated Results………… 7

2. Quarterly Consolidated Financial Statements and Key Notes ………………………………………………… 8

1. Quarterly Consolidated Balance Sheets ……………………………………………………………………… 8
2. Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income……………………………………………………………………………………………………………… 10 Quarterly Consolidated Statements of Income………………………………………………………………… 10 Quarterly Consolidated Statements of Comprehensive Income……………………………………………… 11
3. Quarterly Consolidated Statements of Cash Flows ………………………………………………………… 12
4. Notes to the Quarterly Consolidated Financial Statements ………………………………………………… 14 (Notes on the Assumption of a Going Concern) ……………………………………………………………… 14 (Notes Concerning Significant Changes in Shareholders' Equity (if any))…………………………………… 14 (Changes in Accounting Policies)………………………………………………………………………………… 14
   (Segment and Other Information) ……………………………………………………………………………… 15 (Revenue Recognition)…………………………………………………………………………………………… 15

(Supplementary Information)

Supplementary Information for the Six Months Ended September 30, 2021

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1. Operating Results

Forward-looking statements included in the following text are based on the judgments of the Group's management as of September 30, 2021.

The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. have been applied from the three months ended June 30, 2021.

With the application of this accounting standard, etc. net sales in the six months ended September 30, 2021 declined significantly compared to net sales in the six months ended June 30, 2020.

Therefore, in the explanations about operating results in the six months ended September 30, 2021,

year-on-year comparisons of net sales usually presented as percentages (% YoY), have been replaced with "(-- YoY)".

For further details please refer to "(Changes in Accounting Policies)" under (4) Notes to the Quarterly Consolidated Financial Statements" in "2. Quarterly Consolidated Financial Statements and Key Notes".

(1) Overview of Operating Results

In the six months ended September 30, 2021, while conditions in the Japanese economy remained challenging due to the impacts of the COVID-19 pandemic, there have been expectations for an economic pickup as a result of the promotion of countermeasures including the administration of COVID-19 vaccines. However, the future outlook remains uncertain due to the impacts of domestic and overseas developments with the COVID-19 pandemic as well as the impact on supply chains.

In the food industry, the increased demand for home-cooked meals in the previous fiscal year caused by the COVID-19 pandemic is settling down in the current fiscal year. While the situation with dining out demand remains adverse, some positive signs, including the lifting of the state of emergency, have emerged.

In this business environment, the MEGMILK SNOW BRAND Group pursued 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 six months ended September 30, 2021, the Group undertook: (1) strategic expansion and further product mix improvement of yogurt, cheese, and other mainstay products, centered 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 foodstuffs and seed business area; 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.

As a result, in the six months ended September 30, 2021, consolidated net sales were ¥286,904 million (-- YoY), operating profit was ¥12,210 million (up 10.1% YoY), ordinary profit was ¥13,277 million

(up 10.8%), and profit attributable to owners of parent was ¥8,575 million (up 19.2%).

Operating results by business segment for the six months ended September 30, 2021, were as follows. Net sales by segment are sales to outside customers. Comparisons of net sales with those of the six months ended September 30, 2020, are not shown, due to the fact that figures have been calculated assuming the application of the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020).

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 ¥117,806 million (-- YoY), and operating profit was ¥6,326 million (down 3.7%).

Sales of butter increased year on year due to ongoing efforts to ensure a stable supply. Sales of margarine declined year on year due to the settling down of the increased demand for home-cooked meals seen last year caused by the COVID-19 pandemic.

Sales of cheese declined year on year overall as the rise in demand for home-cooked meals in the prior fiscal year settled down this fiscal year, despite continued strong sales of Sakeru Cheese,

a mainstay product.

Sales of functional food products continued to grow, owing to continued strong sales in the subscription-basede-commerce business, proactive marketing investment, and increasing health-consciousness among consumers.

Operating profit decreased due to factors including the recoil decline in sales of household products and increased raw materials costs.

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