Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ajinomoto Co Inc (AJINY, Financial) achieved record profit and sales for the first quarter of fiscal 2023.
- The Seasonings and Foods segment, particularly Sauce and Seasonings overseas, showed solid performance.
- The Frozen Foods segment saw growth in main products due to continued brand investment.
- The Healthcare and Other segment, especially Functional Materials, recorded significant increases in both revenue and profit.
- Strategic investments are being made to achieve the 2030 roadmap, indicating a long-term growth strategy.
Negative Points
- Profit attributable to owners of the parent remained at 88% of the last fiscal year due to a transient increase in tax burden.
- The Umami seasoning for processing and other Food businesses recorded a decline due to unit price decline.
- Domestic business in Japan saw a slight decrease in profit due to negative impacts from the coffee segment.
- The Frozen Foods segment recorded an overall JPY8 billion decrease in profit, particularly in the domestic Japanese market.
- Shared company-wide expenses increased significantly due to strategic investments, impacting overall profitability.
Q & A Highlights
Q: Can you confirm the impact of the Forge acquisition on CDMO sales and whether the orders in Western markets are favorable?
A: The Forge sales level is comparable to the analysis provided. The existing business revenue decrease was driven mainly by the small molecule European business. Orders in Western markets are coming in favorably, and we expect a gradual improvement in sales and profits from the second quarter onwards. (Masataka Kaji Kaji, General Manager, IR Office)
Q: Will the improved profitability in functional materials continue from the second quarter onwards?
A: Yes, the current environment is expected to continue, with no signs of stoppage in the recovery of the market, mix improvement effect, and higher factory utilization rates. (Masataka Kaji Kaji, General Manager, IR Office)
Q: What is the outlook for the seasonings and foods segment, given the lower profit start?
A: The first quarter profit was impacted by marketing expenses and a negative factor in the Coffee segment. We have announced price hikes for various products, which should improve sales and profits in the coming quarters. (Masataka Kaji Kaji, General Manager, IR Office)
Q: Can you provide an update on the amino acids for pharmaceuticals and foods segment?
A: The inventory adjustment has been completed for many customers, and the situation is improving. We expect a significant profit recovery on a full-year basis. (Masataka Kaji Kaji, General Manager, IR Office)
Q: How does the first quarter performance of the CDMO business compare to initial projections?
A: The first quarter performance is in line with our plan. Orders in Europe are recovering significantly, and structural reforms at Althea are progressing. We expect to deliver the results forecasted for the full year. (Masataka Kaji Kaji, General Manager, IR Office)
Q: What is the impact of the yen's appreciation on your business?
A: The current yen rate is still cheaper than our plan, so we do not anticipate a significant impact. However, we will closely monitor the situation and aim to reduce currency sensitivity in the future. (Masataka Kaji Kaji, General Manager, IR Office)
Q: Can you provide a breakdown of CDMO sales by modality and the outlook for profit growth?
A: Small molecule sales saw a slight decrease, while middle molecule sales increased. We aim to achieve profit growth from the second quarter onwards and deliver on the full-year forecast. (Masataka Kaji Kaji, General Manager, IR Office)
Q: Are there any changes in consumer trends in Japan and overseas?
A: In Japan, disposable income is increasing, but spending remains cautious. We are adapting our marketing strategy to appeal to value-added products. Overseas, the North American frozen food market is growing steadily, and we aim to maintain this trend. (Masataka Kaji Kaji, General Manager, IR Office)
Q: What are the risks or concerns for the future?
A: We are closely monitoring macroeconomic changes and the Japanese food market. Currently, there are no significant concerns, and our initiatives and measures are covering potential risks. (Masataka Kaji Kaji, General Manager, IR Office)
Q: How do you plan to control expenses for the full year?
A: We were aggressive in spending in the first quarter, especially on company-wide expenses and commercialization efforts. We plan to control expenses for the rest of the year to align with our initial plan. (Masataka Kaji Kaji, General Manager, IR Office)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
