Kobe Bussan Co., Ltd.TSE: 3038

Supplementary Material for FY2024 Financial Results

Dec 13, 2024 at 10:18 AM UTC · Issued by Kobe Bussan Co., Ltd.

Supplementary Material for

FY2024 Financial Results

December 13, 2024

Securities code: 3038

◤◤ Contents

⚫	Consolidated Financial Highlights	2

⚫	Gyomu Super Business	5

⚫ Outline of Gyomu Super Franchise Agreement	6

⚫ Changes in Total Number of Gyomu Super Stores	7

⚫ Year-on-year Changes in Product Shipments to Gyomu Super Stores	8

⚫ Kobe Bussan’s Strengths: “Unique Products with Competitive Advantages”	9

⚫	Restaurant & Delicatessen Business	10

⚫ Eco Renewable Energy Business	14

⚫ Action to Implement Management that is Conscious of Cost of Capital and Stock Price	16

⚫	Shareholder Returns	17

⚫	Consolidated Financial Forecast	18

⚫	Medium-term Management Plan	20

⚫ Status of the Exercise of Stock Options	23

⚫ Status of Our Sustainability Initiatives	24

◤◤ Consolidated Financial Highlights

								(Millions of yen)

	FY23	FY24	Percentage	FY23	FY24	Percentage	FY24	Achievement rate to
	change	Aug.-Oct.	Aug.-Oct.	change	forecast	full-year forecast

Net sales	461,546	507,883	+10.0%	122,779	130,600	+6.4%	498,000	102.0%

Gross profit	52,719	58,413	+10.8%	13,610	14,319	+5.2%	－	－
(Gross margin)	(11.4%)	(11.5%)


SG&A expenses	22,002	24,062	+9.4%	6,171	6,609	+7.1%	－	－
(SG&A ratio)	(4.8%)	(4.7%)


Operating profit	30,717	34,350	+11.8%	7,438	7,710	+3.7%	31,000	110.8%
(Operating margin)	(6.7%)	(6.8%)


Ordinary profit	29,970	31,576	+5.4%	7,276	9,595	+31.9%	33,000	95.7%
(Ordinary margin)	(6.5%)	(6.2%)


Profit attributable to	20,560	21,443
owners of parent	+4.3%	4,969	6,595	+32.7%	21,500	99.7%
(4.5%)	(4.2%)
(Net margin)


[Financial Overview]

Net sales
Net sales increased by ¥46,337 million (10.0%) year on year with robust new store openings and continued strong product shipments to existing stores.
Gross profit
Gross profit increased by ¥5,693 million (10.8%) year on year due to the continued strong net sales despite the impact of the exchange rate fluctuations.
SG&A expenses
SG&A expenses increased by ¥2,060 million (9.4%) year on year due to increases in freight costs along with increased net sales of the Gyomu Super Business and personnel and rent expenses resulting from the opening of directly operated restaurants. On the other hand, the SG&A ratio decreased by 0.1 percentage point due to the sales growth.
Operating profit
As a result of the factors above, operating profit increased by ¥3,633 million (11.8%) year on year.
Ordinary profit
Ordinary profit increased by ¥1,605 million (5.4%) year on year due to improvement in the mark-to-market valuation of forward exchange contracts entered into to hedge risks of exchange rate fluctuations.
Profit attributable to owners of parent

As a result of the factors above, profit attributable to owners of parent increased by ¥883 million (4.3%) year on year.	2

◤◤ Consolidated Financial Highlights


		Net Sales

600,000

500,000

400,000
			461,546	507,883

300,000			406,813
	362,064

340,870

200,000
FY2020	FY2021	FY2022	FY2023	FY2024


				SG&A Expenses

40,000										8.0%
6.3%

30,000										6.0%

			4.4%	4.6%	4.8%	4.7%


20,000										4.0%


21,347							22,002	24,062
10,000							2.0%

			15,812	18,776


0										0.0%
FY2020	FY2021	FY2022		FY2023	FY2024

						SG&A Expenses			SG&A ratio


				Gross Profit

60,000																		16.0%
13.3%	11.9%						11.4%

50,000					11.5%		11.5%		12.0%



40,000																		8.0%

													52,719	58,413

										46,596
30,000	45,198	43,123										4.0%


20,000																		0.0%
FY2020	FY2021	FY2022	FY2023	FY2024

							Gross Profit				Gross margin





				Operating Profit

40,000					7.5%											8.0%
7.0%					6.8%			6.7%	6.8%
35,000							7.0%


30,000																	6.0%



25,000																	5.0%
													30,717	34,350

						27,311	27,820
20,000															4.0%
23,851

15,000																	3.0%
FY2020	FY2021	FY2022	FY2023	FY2024

						Operating Profit						Operating margin

Note: Fiscal year (FY) represents the one-year period from November 1 to October 31 of the following year.

◤◤ Consolidated Financial Highlights


				Ordinary Profit

35,000																10.0%
					8.0%	7.9%


30,000	6.9%														8.0%
25,000												6.5%	6.2%	6.0%



								32,125			31,576
20,000						29,087		29,970	4.0%
23,646
15,000														2.0%


10,000																0.0%
FY2020	FY2021	FY2022	FY2023	FY2024

							Ordinary Profit			Ordinary margin

			Profit Attributable to

								Owners of Parent
25,000										8.0%

					5.4%
20,000						5.1%					6.0%
4.4%					4.5%	4.2%


15,000													4.0%



					19,592	20,832	20,560	21,443


10,000	15,047											2.0%
5,000													0.0%

		FY2020	FY2021	FY2022	FY2023				FY2024
			Profit attributable to owners of parent				Net margin


		Total Assets

250,000

200,000

150,000
				211,891	233,392
100,000

		156,737	180,275
148,175

50,000

0
FY2020	FY2021	FY2022	FY2023	FY2024


					Net Assets

150,000							52.7%	52.7%	55.4%	60.0%
				48.8%
39.0%




100,000												40.0%
										114,451	132,773

50,000							97,220			20.0%
				78,218
59,268

0												0.0%
FY2020	FY2021	FY2022	FY2023	FY2024

						Net assets			Equity ratio



													4

◤◤ Gyomu Super Business

Gyomu Super is our core business. Operating results of this business segment reflect wholesale sales to, and royalty fee from, Gyomu Super franchisees earned by Kobe Bussan, a franchisor (franchising headquarters), as well as earnings of Kobe Bussan Group’s plants.

Gyomu Super stores have expanded nationwide with 1,084 stores as of October 31, 2024.
Net sales for FY2024 Q4 exceeded the planned amount due to strong performance of the existing stores.
We have achieved 100 stores in Kyushu.

Inside the Gyomu Super Yokohama Izumi Store

			Net Sales


500,000

400,000


300,000


							446,908	489,102

						396,296
					355,466
200,000		320,110


100,000
FY2020	FY2021	FY2022	FY2023	FY2024

	Operating Profit
40,000	8.7%				9.0%

8.3%		8.0%
		7.6%
30,000			7.6%	8.0%
20,000				37,350	7.0%
	31,035	31,612	34,139

26,449

10,000					6.0%
0					5.0%
FY2020	FY2021	FY2022	FY2023	FY2024
	Operating profit	Operating margin

Note: Due to a change in the reportable segment structure in FY2021, the figures for FY2020 are reclassified retrospectively to reflect the change.

◤◤ Outline of Gyomu Super Franchise Agreement

We operate Gyomu Super stores under a franchise system except 4 stores of our own.

Our franchise agreement has 2 types as follows:

General franchise contract, which allows a franchisee to open 1 store in our directly managed areas (*1).
Area franchise contract, which allows a franchisee to open multiple stores in a defined prefecture in our indirectly managed areas (*2).

Also, we own 4 stores in Hyogo, Osaka and Kanagawa prefectures under direct operations.

*1 Directly managed areas

Hokkaido area: Hokkaido prefecture

•	Kanto area:	Tokyo, Chiba, Kanagawa, and Saitama prefectures
•	Kansai area:	Osaka, Kyoto, Hyogo (excl. Awaji Island), Nara, Wakayama, and Shiga prefectures

Kyushu area: Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, and Kagoshima prefectures

*2 Indirectly managed areas

• Other areas:

Prefectures other than those listed above

Outline of Franchise Contract & Requirements

(as of October 31, 2024)

	Directly managed areas	Indirectly managed areas

Number of franchisees	91	14

		Multi-unit franchise
Type of franchise	Single-unit franchise	(An area franchisee has an
(A general franchisee can open	exclusive right to open multiple
agreement
1 store per contract.)	stores in a prefecture defined

		under the contract.)

Initial franchise fee	¥2,000,000	Population in the prefecture x ¥2
(excl. consumption taxes)


Franchise deposit	¥10,000,000	Population in the prefecture x ¥5

Royalty fee	1% of total purchase of goods	1% of purchase of defined goods

	It costs between ¥32 million and ¥38 million to construct racks for
	shelf-stable foods and refrigeration equipment (the above
Facility expenses	construction cost is a rough estimate and varies depending on
	properties). Equipment, construction work, POS registers, and other
	funds for start-up are required separately.

Distribution expenses	Principally paid by	Negotiable
franchise headquarters

Simulated Earnings

(Standard Store Franchisees)

P&L account	Monthly	Composition
amount


Net sales	¥43,500,000	100.0％

Gross profit	¥7,395,000	17.0％

SG&A expenses	¥6,499,000	14.9％

(Rent expenses)	¥1,300,000	3.0％

(Personnel expenses)	¥2,393,000	5.5％

Operating profit	¥896,000	2.1％

By purchasing items such as fresh food separately, many of franchisees operate more efficiently than the above simulation.

◤◤ Changes in Total Number of Gyomu Super Stores

Gyomu Super opened 56 stores and closed 20, resulting in a net increase of 36 stores during FY2024, and opened 15 stores and closed 2 store during FY2024 Q4 alone.

The above result exceeded the full-year target (a net increase of 35 stores) by one.

(Stores)	Total Number of Gyomu Supper Stores

1,200
	1,118

1,100		1,084
	1,048

1,007

1,000

950

900

800

FY2021	FY2022	FY2023	FY2024	FY2025
				Target

Number of Stores by Area

1,048 stores as of	Hokkaido 33
October 31, 2023
Kyushu 87

Kansai				Chiba
			57
266
Kanto	Saitama

		65	Kanagawa
	282
Other			77

380				Tokyo
(Incl. 6 stores in				83
Kagoshima)

1,084 stores as of
October 31, 2024 (+36)	Hokkaido 31 (-2)

		Kyushu 100 (+13)
		(Incl. 6 stores in Kagoshima)
Kansai			Chiba
274			61
		Saitama （+4）
（+8）	Kanto
	67	Kanagawa
	291
		（+2）
		77
	（+9）

Other	Tokyo	（±0）

388			86

（+8）（+3）

Directly managed areas: Hokkaido, Kanto, Kansai, and Kyushu

Indirectly managed areas: Other

Note: Effective April 1, 2024, the area category of Kagoshima prefecture was changed from indirectly managed areas to directly managed areas. 7

◤◤ Year-on-year Changes in Product Shipments to Gyomu Super Stores

Product shipments exceeded the previous year's level as customers became more thrifty and favored our relatively low prices compared to competitors.

							[Existing Stores in Directly Managed Areas]																	[All Stores Nationwide]
<YoY Change(%)>		Monthly Trends for Product Shipments									<YoY Change(%)>Monthly Trends for Product Shipments
112.0																						111.9			111.1				119.0	118.6

	110.2			110.6								110.5				110.3																						116.6			117.3


								107.9																					116.0																	115.3		115.3

109.0																																				114.4											113.4

				107.2					107.5																																	113.2		113.6
													105.6					109.0					113.1	112.5			112.8

	108.7			106.8				106.8													113.0					111.8						112.7			112.3

																			105.4																	111.2							110.2

106.0					106.9	103.9		105.3	105.4		105.0			105.1																110.3

																					111.6																					109.2
	105.6																105.5										110.0						112.0111.1

										104.9												110.5														110.3
103.0																					104.9	101.7								110.3	109.3					110.0			110.0
																																		108.6 108.3110.5
										103.2														102.2			107.0										108.3
							103.1				103.1				103.4
								102.9
																																				109.9									105.7
	102.4								103.1																															106.8	104.4


100.0										101.1										101.1								104.0




			Nov. Dec.	Jan. Feb. Mar.	Apr.	May	June July Aug. Sept. Oct.
				Nov.	Dec.		Jan. Feb. Mar. Apr. May	June July Aug. Sept.	Oct.

FY2022

FY2023

FY2024

FY2022

FY2023

FY2024

[Year-on-year % Changes in Product Shipments to Gyomu Super Stores]

								FY2024

		Nov.	Dec.	Jan.	Feb.	Mar.	Apr.	H1	May	June	July	Aug.	Sept.	Oct.	H2	Full

Directly	Existing	108.7	106.9	110.6	107.9	107.5	104.9	107.7	105.4	103.1	105.0	105.4	101.1	102.2	103.7	105.6
stores
Managed
All	112.7	110.2	113.8	111.7	111.0	109.1	111.3	109.8	107.4	109.7	109.5	105.1	105.7	107.8	109.5
areas
Stores

Nationwide	All	113.1	110.5	114.4	112.8	111.1	109.9	111.7	110.0	106.8	110.2	109.2	104.4	105.7	107.7	109.6
Stores

Note: “Nationwide” represents the product shipments to the stores in both directly and indirectly managed areas.

Products shipments to

existing stores in directly managed areas for each quarter alone

Q1: 108.6%

Q2: 106.7%

Q3: 104.5%

Q4: 102.9%

◤◤ Kobe Bussan’s Strengths:

“Unique Products with Competitive Advantages”

Enhancing Original Products

Ratio of Private Label Products
35.00%	34.82%
	34.75%
		34.74%
34.75%
34.47%	34.74%	34.68%	34.57%

34.50%
34.29%		34.51%	34.51%

34.25%	34.33%	Produced by our plants: 10.8%

34.23%			Imported: 23.7%
34.00%
Q1	Q2	Q3	Q4
FY2022	FY2023		FY2024

■Private label products

New Plant Started Operations

The new plant

increased Miyagi

Seifun’s production

capacity by

approx. 2.5 times.

Photo:

Exterior view of the

new plant

A new head factory of Miyagi Seifun in Watari-gun, Miyagi started its operations in April 2024.
With the factory added to the Group, we have come to own 26 domestic food plants.

■Products produced by the new plant of Miyagi Seifun

Brazilian chicken thigh	Organic extra	Chocolate
	virgin olive oil	Bavarian cream
¥1,056 (2kg)	¥1,077/¥1,274 (500ml)	¥332 (1kg)

Medium-spicy, large-	Tenderly braised pork	Milk daifuku
size curry for grown-ups
¥343 (220g x 4)	¥505 (550g)	¥321 (750g)

Note: All prices include tax.
Products and prices are different depending on stores and seasons.	9