Nisshin OilliO : Financial Results Briefing for the Second Quarter of FY2023

The Nisshin OilliO Group, Ltd.

Second Quarter of FY2023

Financial Results Briefing

November 16, 2023

Summary of Financial Results for Second Quarter of FY2023

3

Summary of Financial Results for Second Quarter of FY2023 and Earnings Forecast for FY2023

• Financial Results for Second Quarter of FY2023
• Consolidated net sales decreased year on year to ¥254.8 billion, whereas consolidated operating profit increased year on year to ¥11.5 billion.
• • Sales of domestic oil and fat decreased year on year mainly because of a decline in sales volume of meal, whereas profits increased year on year thanks to successfully establishing appropriate sales prices by focusing on expanding sales of value‐added products and reinforcing solution proposals, as well as improved margins resulting from the time lag between fluctuations in raw material market prices and their reflection in unit sales prices.
  • Overseas processed oil and fat posted lower sales and profits than a year ago due to lower sales prices resulting from a decline in palm oil market prices and a drop from backlash of the temporary high margins during the same period a year ago as well as a decrease in gain on mark‐to‐market valuation of palm oil transactions.
• Earnings Forecast for FY2023
• Consolidated net sales have been revised downward to ¥510.0 billion, whereas consolidated operating profit and profit attributable to owners of parent have been revised upward to ¥18.0 billion and ¥12.5 billion, respectively.
• • Consolidated net sales have been revised downward by ¥30.0 billion, considering the situation where the domestic and overseas sales prices are declining by reflecting the raw materials market, which appears to have eased off from its peak.
  • Consolidated operating profit has been revised upward by ¥2.0 billion, reflecting our current outlook, although profits for the second half are expected to decline compared to the first half due to lower domestic oil and fat margins than those for the first half, and the impact of rising costs of olive oil and sesame oil.
  • In Japan, profitability‐focused sales activities will be continued as well as strengthening of value proposition and solution proposals. Overseas, the focus will be on strengthening sales force with improved proposal capability and capturing new demand in sales of oils and fats for use in chocolate and cosmetic oils.

4

Overview of Financial Results for Second Quarter of FY2023

(Billion yen)

	Second Quarter of	Second Quarter of		YoY Change
	FY2023	FY2022	Amount		Percentage
Net sales	254.8	275.6		(20.7)	(7.5)%
Operating profit	11.5	9.4		+2.1	+22.4%
Operating profit margin	4.5%	3.4%		-	+1.1P
Ordinary profit	11.1	9.8		+1.2	+12.5%
Profit attributable to	7.9	7.7		+0.1	+2.5%
owners of parent

* Amounts of less than 0.1 billion yen are rounded down.

Results for Second Quarter of FY2023 by Business Segment (Net Sales and Operating Profit)

5

					(Billion yen)
		Second Quarter of	Second Quarter of	YoY Change
		FY2023	FY2022	Amount	Percentage
Net sales	254.8	275.6	(20.7)	(7.5)%
Oil and Fat	211.4	233.7	(22.2)	(9.5)%
	Oil and Meal	162.1	170.3	(8.2)	(4.8)%
	Processed Oil and Fat	49.3	63.4	(14.0)	(22.2)%
Processed Food and Materials	32.8	30.3	+2.4	+8.2%
Fine Chemical	9.3	10.2	(0.9)	(9.1)%
Other/Adjustments	1.2	1.3	(0.0)	(3.8)%
Operating profit	11.5	9.4	+2.1	+22.4%
Oil and Fat	11.0	8.8	+2.2	+25.3%
	Oil and Meal	8.8	4.1	+4.6	+111.0%
	Processed Oil and Fat	2.1	4.6	(2.4)	(52.5)%
Processed Food and Materials	0.1	0.0	+0.0	+114.5%
Fine Chemical	0.6	0.8	(0.2)	(26.7)%
Other/Adjustments	(0.2)	(0.2)	+0.0	-

* Amounts of less than 0.1 billion yen are rounded down.

Change in Second Quarter FY2023 Operating Profit by Business Segment

■ Oil and Meal

6

(Billion yen)

• Amid declining costs for raw materials, operating profit increased year on year thanks to continued sales at appropriate prices as well as improved margins resulting from the time lag between fluctuations in raw material market prices and their reflection in unit sales prices.

Domestic oil and fat +4.70

		+1.80
				+0.00		8.8
+4.10
			(0.45)
				(0.75)
								(0.05)

4.1

Second	Cost factors	Unit sales price	Sales volume	SG&A expenses,	Subsidiaries	Consolidation	Second
quarter of	quarter of
	factors	factors	other		adjustments, other
FY2022							FY2023

	Breakdown of cost factors
Soybean	+1.50 [C&F +4.30, foreign exchange (4.15), meal sales +1.35]
Rapeseed	+12.25 [C&F +15.15, foreign exchange (3.45), meal sales +0.55]
Other products &	(9.65)
manufacturing costs

Breakdown of unit sales price factors

Commercial‐use+0.00 and processing‐use

Household‐use+1.80

Breakdown of sales volume factors

Commercial‐use	(0.15)
and processing‐use
Household‐use	(0.30)
YoY change in sales volume
Commercial‐use	(1.3)%
and processing‐use

Household‐use(0.4)%

Change in Second Quarter FY2023 Operating Profit by Business Segment

■ Processed Oil and Fat

7

(Billion yen)

• Although raw material costs fell, operating profit decreased due to a drop from backlash of the temporary high margins during the same period a year ago and a decrease in gain on mark‐to‐market valuation of palm oil transactions.

Overseas processed oil and fat (3.15)

ISF (Malaysia) (3.30)

+17.20

4.6

+0.05

+0.85

2.1

(18.25)

(0.10)

+0.15

(0.10)

(2.20)

Second

Cost factors

Unit sales price

Sales volume

SG&A

Mark‐to‐market

ISF Italy

Domestic

Consolidation

Second

quarter of

quarter of

factors

factors

expenses,

valuation on palm oil

ISF Shanghai

processed oil

adjustments,

FY2022

other

transactions

and fat

other

FY2023

Breakdown of cost factors

Raw materials costs	+17.45
Manufacturing costs,	(0.25)
other

Breakdown of unit sales price factors

Specialty fats	(3.65)
Other	(14.60)

Breakdown of sales volume factors

Specialty fats	(0.00)
Other	(0.10)

Breakdown of mark‐to‐market valuation

FY2022	+2.55
FY2023	+0.35

YoY change in sales volume of

specialty fats

(5)%

Change in Second Quarter FY2023 Operating Profit by Business Segment

■ Processed Food and Materials	■ Fine Chemical

8

(Billion yen)

• Operating profit increased year on year due to higher sales volume and increased gross profit per unit of chocolate.

• Operating profit decreased year on year mainly due to lower sales volumes of our European subsidiary.

0.8

+0.05

0.6

(0.15)

+0.50

(0.10)

(0.05)

+0.00

+0.00

0.1

0.0

(0.35)

Second

Chocolate Seasoning

Functional

Soybean

Consolidation

Second

Second

Fine

Environment

Consolidation

Second

quarter of

materials

materials

adjustments, quarter of

quarter of

chemical

and hygiene‐

adjustments,

quarter of

FY2022

and foods

and foods

other

FY2023

FY2022

products

related

other

FY2023

products

MCT net sales

Raw materials for cosmetics net sales

3.8 [+0.9 YoY]

4.6 [(0.3) YoY]

Consolidated Balance Sheets and Cash Flows

■ Consolidated Balance Sheets

9

(Billion yen)

Items	End of	End of	Change
September 2023	March 2023
Total assets	382.9	374.4	+8.5
Current assets	235.3	233.5	+1.7
Non‐current assets	147.5	140.8	+6.7
Total liabilities	199.7	203.0	(3.2)
Interest‐bearing liabilities	92.9	105.8	(12.8)
Other liabilities	106.8	97.2	+9.6
Total net assets	183.1	171.4	+11.7

Items	End of	End of
September 2023	March 2023
Equity ratio	45.4%	43.4%
Net D/E ratio	0.43	0.57

• Interest‐bearing liabilities decreased due to improved operating cash flows.
• Indicators for financial soundness improved due to an increase in profit and a decrease in interest‐bearing liabilities.

■ Cash Flows

Items	Second Quarter	Second Quarter	Change
of FY2023	of FY2022
Operating cash flows	+27.2	(12.7)	+39.9
Profit before income taxes	+11.9	+10.6	+1.2
Depreciation	+4.6	+4.6	(0.0)
Decrease (increase) in working capital	+12.2	(21.3)	+33.6
Investing cash flows	(6.7)	(3.2)	(3.5)
Financing cash flows	(16.0)	+14.9	(30.9)

• Working capital reduced due to a decrease in inventories caused by a drop in raw material costs and decrease in in‐stock volume.
• Operating cash flows turned substantially positive due to a decrease in working capital, let alone an increase in profit.
• • Amounts of less than 0.1 billion yen are rounded down.

FY2023 Forecast