Nisshin Seifun Group Inc. TSE:2002

Nisshin Seifun : Consolidated Financial Results for the First Half of Fiscal 2025

Published November 15, 2024 at 8:27 a.m. UTC

Source: MarketScreener

Disclaimer: This document is a translation of the Japanese original. The Japanese original has been disclosed in Japan in accordance

with Japanese accounting standards and the Financial Instruments and Exchange Act. This document does not contain or constitute any guarantee and the Company will not compensate any losses and/or damage stemming from actions taken based on this document. In the case that there is any discrepancy between the Japanese original and this document, the Japanese original is assumed to be correct.

Summary of Consolidated Financial Results for the First Half of Fiscal 2025 [Japanese GAAP]

		October 30, 2024
Listed Company Name: Nisshin Seifun Group Inc.	Registered on Tokyo Stock Exchange
Code:	2002
URL:	https://www.nisshin.com
Representative:	Kenji Takihara, Representative Director and President
Contact:	Reiko Adachi, Executive Officer and General Manager, Public Communications Department
	(General Administration Division)
	Tel.: +81-3-5282-6650
Date to submit the Semi-annual Securities Report:	November 8, 2024
Date to start distributing dividends:	December 6, 2024
Supplementary materials for these consolidated financial results:	Yes
Results briefing for financial results:	Yes (for analysts and institutional investors)

(Figures shown are rounded down to the nearest million yen.)

1. Consolidated Financial Results for the First Half of Fiscal 2025 (April 1, 2024 to September 30, 2024)

Consolidated Business Results

(The percentages indicate the rates of increase or decrease compared with the same period of the previous fiscal year.)

	Net sales	Operating profit			Ordinary profit		Profit attributable to
				owners of parent

First six months of	Millions of yen		%	Millions of yen		%		Millions of yen		%	Millions of yen		%
429,513		0.6	26,010		2.0		27,076		2.1	20,363		10.4
Fiscal 2025

First six months of	426,881		9.8	25,511		60.3		26,511		53.9	18,446		-
Fiscal 2024

(Note) Comprehensive income: First six months of Fiscal 2025: ¥2,544 million (-95.2%)
	First six months of Fiscal 2024: ¥52,894 million (-%)

	Earnings per share	Fully diluted earnings
	per share

First six months of			Yen			Yen
	68.48			-
Fiscal 2025

First six months of		62.04			-
Fiscal 2024

(2) Consolidated Financial Position
	Total assets	Net assets			Equity ratio
	Millions of yen	Millions of yen				%
September 30, 2024		784,224	511,280				63.0
March 31, 2024		826,702	516,381				60.5

(Reference) Equity capital: September 30, 2024: ¥494,367 million March 31, 2024: ¥500,302 million

2. Dividends

			Dividend per share
	1Q End	2Q End	3Q End	Year-End	Annual
	Yen	Yen	Yen	Yen	Yen
Fiscal 2024	-	21.00	-	24.00	45.00
Fiscal 2025	-	25.00
Fiscal 2025 (forecast)			-	30.00	55.00

(Note) Revision to the latest forecast of dividends: Yes

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2025 (April 1, 2024 to March 31, 2025)

(The percentages indicate the rates of increase or decrease compared with the previous fiscal year.)

	Net sales	Operating profit		Ordinary profit		Profit attributable to	Earnings
			owners of parent	per share

	Millions of yen	%	Millions of yen		%	Millions of yen		%	Millions of yen	%	Yen
Full year	870,000	1.4	51,000		6.7	53,000		6.0	39,000	22.9	131.16

(Note) Revision to the latest forecast of financial results: Yes

* Notes

Significant changes in the scope of consolidation during the first six months of the fiscal year ending March 31, 2025

None

Adoption of special accounting treatment for preparing semi-annual consolidated financial statements: Yes

Note: For details, please refer to "2. Semi-annual Consolidated Financial Statements and Related Notes (4) Notes on Semi-annual Consolidated Financial Statements [Notes on Special Accounting Treatment for Preparing Semi-annual Consolidated Financial Statements]" on page 13 of the Attachment.

Changes in accounting policies, changes in accounting estimates and revisions restated
1) Changes in accounting policies associated with the revisions of accounting standards, etc.: None

2) Changes in accounting policies other than the above:	None
3) Changes in accounting estimates:	None
4) Revisions restated:	None
(4) Number of shares issued and outstanding (common stock)

Number of shares issued and outstanding (including treasury shares)
Number of treasury shares
Average number of shares outstanding

As of September	304,357,891	As of March 31,	304,357,891
30, 2024	2024
As of September	7,052,269	As of March 31,	6,931,745
30, 2024	2024
First six months	297,374,485	First six months	297,358,169
of Fiscal 2025	of Fiscal 2024

Semi-annualearnings reports are not subject to review by certified public accountants or independent account auditors.
Statement regarding the proper use of financial forecasts and other special remarks
1. The statements contained in this document are based on various assumptions and do not constitute any guarantee or definite promise that projections of future performance or related business policies will actually be realized. For details of assumptions for financial forecasts and other related matters, please refer to "1. Qualitative Information for the Period under Review (3) Forecast of Consolidated Financial Results and Other Forward- looking Information" on page 7 of the Attachment.
2. Supplementary materials for this report can be found on the Company's website.

Contents of the Attachment
1. Overview of Business Performance, etc	2
(1)	Overview of Business Performance for the Period under Review	2
(2)	Overview of Financial Position for the Period under Review	5
(3)	Forecast of Consolidated Financial Results and Other Forward-looking Information	7
2. Semi-annual Consolidated Financial Statements and Related Notes	8
(1)	Semi-annual Consolidated Balance Sheets	8
(2)	Semi-annual Consolidated Statements of Income and Comprehensive Income	10
	[Semi-annual Consolidated Statements of Income]	10
	[Semi-annual Consolidated Statements of Comprehensive Income]	11
(3)	Semi-annual Consolidated Statements of Cash Flows	12
(4)	Notes on Semi-annual Consolidated Financial Statements	13
	[Notes on the Premise of a Going Concern]	13
	[Notes on a Significant Change in Shareholders' Equity]	13
	[Notes on a Change in Scope of Consolidation or Scope of Application of the Equity Method]
	..........................................................................................................................................	13
	[Notes on Special Accounting Treatment for Preparing Semi-annual Consolidated Financial
	Statements]	13
	[Notes on Semi-annual Consolidated Statements of Income]	14
	[Notes on Segment Information, etc.]	15

1. Overview of Business Performance, etc.

(1) Overview of Business Performance for the Period under Review

During the first half of the fiscal year ending March 31, 2025, there were some bright spots emerge in the business environment surrounding the Nisshin Seifun Group, largely atop an increase in foot traffic, particularly due to inbound tourism. This trend came despite high prices for raw materials and energy, as well as rising logistics costs, as belt-tightening behavior continued amid high prices for goods, causing the turnaround in consumer spending to remain at a standstill.

Under these conditions, the Group strives to fulfill its corporate mission of ensuring a stable supply of foods involving wheat flour and the delivery of safe and reliable products in each business area. At the same time, in a push to achieve goals set out in "The Nisshin Seifun Group Medium- Term Management Plan 2026," set to conclude in the fiscal year ending March 31, 2027, the Group gave highest priority to efforts to stimulate its ability to grow by restructuring the business portfolio, promote measures to spur a performance recovery in the Australia flour milling business and the yeast business in India, realize tangible results from our R&D strategy, and showcase benefits from automation and labor-saving measures.

As part of efforts to stimulate the Group's ability to grow by restructuring the business portfolio, we are continuing construction at flour milling subsidiary Nisshin Flour Milling Inc. of the Mizushima Plant ahead of an operational start sometime in May 2025. This move is accompanied by the scheduled closure of the subsidiary's Okayama and Sakaide plants. Meanwhile, at U.S.-based subsidiary Miller Milling Company, LLC, expansion work continues at the Saginaw Plant, with an operational start set for early 2025. Additionally, Vietnam-based processed food business subsidiaries Vietnam Nisshin Seifun Co., Ltd. and Vietnam Nisshin Technomic Co., Ltd. launched the sale of household-use products in the country from July 2024. The Group will continue to aggressively enact measures to spur future growth.

With respect to R&D, we are moving ahead with addressing the commercialization of research results. In the flour milling business, we are seeking to expand recognition of and develop the market for high-fiber wheat flour (Amuleia). We also decided to build in Yoga, a neighborhood in Tokyo's Setagaya Ward, a new development site based on an "Our 'kitchen' - where we co-create the future" concept, with construction scheduled to complete in the fiscal year ending March 31, 2027. In these ways, we aim to further highlight the Group's development capabilities, while also creating Group synergies.

With respect to performance, consolidated net sales for the first half of the fiscal year ending March 31, 2025, increased 0.6% year on year to ¥429,513 million. Factors driving growth included increased shipments and effects from foreign currency translation in the overseas flour milling business and sales growth in the yeast and biotechnology business. On the profit side, operating profit increased 2.0% year on year to ¥26,010 million, and ordinary profit rose 2.1% year on year to ¥27,076 million. Growth was spurred by firm performance from the overseas flour milling and mesh cloths businesses, which came amid continued rising costs for raw materials, transportation, and labor in all businesses. Profit attributable to owners of parent for the first half came to ¥20,363 million, up 10.4% year on year, primarily from posting of a gain on sale of investment securities.

(Year-on-year Comparison)

				(Millions of yen)
	First six months of	First six months of	Difference	Change
	Fiscal 2024	Fiscal 2025

Net sales	426,881	429,513	2,632	0.6%
Operating profit	25,511	26,010	498	2.0%
Ordinary profit	26,511	27,076	565	2.1%
Profit attributable to	18,446	20,363	1,916	10.4%
owners of parent

[Business Overview by Segment] 1) Flour Milling Segment

				(Millions of yen)
	First six months of	First six months of	Difference	Change
	Fiscal 2024	Fiscal 2025

Net sales	227,750	228,737	986	0.4%
Operating profit	14,731	15,478	747	5.1%

In the flour milling business in Japan, shipments were higher year on year, mainly reflecting a growth in demand for restaurant dining due to increased foot traffic, including from inbound tourism, in addition to benefits from sales expansion measures.

In July 2024, we implemented price revisions for commercial wheat flour in response to revised government prices for five classes of imported wheat. This move reflected that on average, the government's price for imported wheat declined 0.6% in April 2024, as well as rising transportation costs.

In the overseas flour milling business, sales were higher year on year, primarily reflecting firm shipments and the effects of foreign currency translation.

As a result, net sales of the Flour Milling Segment increased 0.4% year on year to ¥228,737 million. Operating profit climbed 5.1% to ¥15,478 million, lifted by firm performance from the overseas flour milling business, and despite lower profits year on year from the flour milling business in Japan due mainly to rising manufacturing costs.

2) Processed Food Segment

				(Millions of yen)

	First six months of	First six months of	Difference	Change
	Fiscal 2024	Fiscal 2025

Net sales	99,153	101,932	2,779	2.8%
Operating profit	4,692	3,927	(765)	(16.3)%

In the processed food business, while belt-tightening behavior among consumers in Japan continues, shipments of Ma•Ma Quick Cook Spaghetti and other pasta in household-use products held firm. Overseas, commercial-use prepared mix shipments were also higher, lifting sales higher year on year.

In the yeast and biotechnology business, sales were up year on year, reflecting increased shipments of cultivation medium in the biotechnology business and higher sales volume in the yeast business in India.

In the healthcare foods business, sales were lower year on year due to lower shipments of raw materials for pharmaceuticals and consumer products.

As a result, net sales of the Processed Food Segment increased 2.8% year on year to ¥101,932 million. Operating profit, however, declined 16.3% to ¥3,927 million, attributable mainly to higher costs, including for raw materials and transportation due to foreign currency translation effects in the processed food business, along with lower shipments in the healthcare foods business.

3) Prepared Dishes and Other Prepared Foods Segment

				(Millions of yen)
	First six months of	First six months of	Difference	Change
	Fiscal 2024	Fiscal 2025

Net sales	78,064	78,535	470	0.6%
Operating profit	3,397	3,398	1	0.1%

In the Prepared Dishes and Other Prepared Foods Segment, net sales increased 0.6% year on year to ¥78,535 million, mainly reflecting robust sales due to increased demand from inbound travel to Japan. Operating profit increased 0.1% to ¥3,398 million, largely atop sales growth and improved productivity, which offset rising costs for raw materials and labor.

4) Others Segment

				(Millions of yen)

	First six months of	First six months of	Difference	Change
	Fiscal 2024	Fiscal 2025

Net sales	21,912	20,308	(1,604)	(7.3)%
Operating profit	2,581	3,247	666	25.8%

In the engineering business, sales were lower year on year, reflecting a decline in large-scale plant projects.

In the mesh cloths business, sales rose year on year atop the continuation of favorable shipments of screen printing materials for solar panels.

As a result, net sales of the Others Segment decreased 7.3% year on year to ¥20,308 million, with operating profit up 25.8% to ¥3,247 million. The rise in profit came mainly from growth in shipments in the mesh cloths business.

(2) Overview of Financial Position for the Period under Review

			(Millions of yen)
	As of March 31, 2024	As of September 30, 2024	Difference
Current assets	365,072	339,133	(25,939)
Non-current assets	461,629	445,091	(16,538)
Total assets	826,702	784,224	(42,477)
Current liabilities	163,571	131,728	(31,843)
Non-current liabilities	146,749	141,215	(5,533)
Total liabilities	310,321	272,944	(37,377)
Total net assets	516,381	511,280	(5,100)
Total liabilities and net assets	826,702	784,224	(42,477)

The status of assets, liabilities and net assets on a consolidated basis at the end of the first half of the fiscal year ending March 31, 2025 was as follows.

Current assets decreased ¥25,939 million from the previous fiscal year-end to ¥339,133 million, mainly accompanying a decrease in notes and accounts receivable - trade, and contract assets. Non- current assets decreased ¥16,538 million to ¥445,091 million, primarily accompanying a decrease in the market valuation of investment securities. As a result, total assets decreased ¥42,477 million from the previous fiscal year-end to ¥784,224 million.

Current liabilities decreased ¥31,843 million to ¥131,728 million, mainly accompanying a decrease in notes and accounts payable - trade. Non-current liabilities decreased ¥5,533 million to ¥141,215 million, accompanying a decrease in deferred tax liabilities. As a result, total liabilities decreased ¥37,377 million from the previous fiscal year-end to ¥272,944 million. Net assets decreased ¥5,100 million to ¥511,280 million, mainly reflecting an increase in retained earnings due to profit attributable to owners of parent for the first half, a decrease due to the payment of dividends, and a decrease in accumulated other comprehensive income.

The Company's consolidated cash flows for the first half of the fiscal year ending March 31, 2025 were as follows.

			(Millions of yen)

	First six months of	First six months of	Difference
	Fiscal 2024	Fiscal 2025

Net cash provided by (used in) operating activities	33,766	31,800	(1,966)
Net cash provided by (used in) investing activities	(13,815)	(14,668)	(852)
Net cash provided by (used in) financing activities	(14,953)	(19,573)	(4,619)
Effect of exchange rate change on cash and cash	1,742	(780)	(2,522)
equivalents

Net increase (decrease) in cash and cash	6,740	(3,222)	(9,962)
equivalents

Net increase (decrease) in cash and cash
equivalents due to changes in accounting period of	-	21	21
consolidated subsidiaries
Cash and cash equivalents at end of period	89,711	104,480	14,768

Net cash provided by (used in) operating activities

An increase in cash and cash equivalents mainly due to profit before income taxes of ¥31,011 million and decreases in depreciation and amortization (a non-cash item), notes and accounts receivable - trade, and contract assets exceeded a decrease in cash and cash equivalents from factors such as decreases in notes and accounts payable - trade, accounts payable - other, and accrued expenses, along with the payment of income taxes. This led to net cash provided by operating activities for the first half of ¥31,800 million, compared to ¥33,766 million in net cash provided by operating activities a year earlier.

Net cash provided by (used in) investing activities

¥20,062 million was used for the purchase of property, plant, and equipment and intangible assets. Consequently, net cash used in investing activities was ¥14,668 million, compared to ¥13,815 million a year earlier.

Net cash provided by (used in) financing activities

Net cash used in financing activities was ¥19,573 million for the first half of the fiscal year ending March 31, 2025, compared to ¥14,953 million a year earlier. This mainly reflected a net decrease in short-term borrowings and ¥7,140 million used for the payment of dividends as part of the return of profits to shareholders.

As a result, consolidated cash and cash equivalents at the end of the first half of the fiscal year ending March 31, 2025 decreased ¥3,201 million from the previous year-end to ¥104,480 million.

Forecast of Consolidated Financial Results and Other Forward-looking Information

Revision of Numerical Targets for "Medium-Term Management Plan 2026"

In terms of numerical targets for the fiscal year ending March 31, 2027, the final year of "Medium-Term Management Plan 2026," we have upwardly revised our targets to net sales of ¥950,000 million, operating profit of ¥57,000 million, earnings per share (EPS) of ¥140, and ROE of 8.0%.

In conjunction with this change, we revised our capital policy with respect to the return of profits to shareholders and cross-shareholdings. For the former, we raised the goal of a consolidated payout ratio of 40% or more to around 50% by the final year of "Medium-Term Management Plan 2026." For the latter, we set a target to curtail cross-shareholdings by ¥40,000 million or more over the next five years (fiscal years ending March 31, 2025 to 2029), or around ¥8,000 million per year, to shrink these even further. The aforementioned curtailment target is calculated based on the share price as of September 30, 2024.

2) Forecast of Consolidated Financial Results for the Year Ending March 31, 2025

With respect to the outlook for the fiscal year ending March 31, 2025, based on the aforementioned target for shrinking cross-shareholdings, we have revised upward our forecast for profit attributable to owners of parent to be 22.9% higher at ¥39,000 million. Forecasts for net sales, operating profit and ordinary profit are unchanged from those announced on July 31, 2024.

Revisions to Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2025 (April 1, 2024 to March 31, 2025)

			Profit	Earnings
Net sales	Operating profit	Ordinary profit	attributable to
per share
			owners of parent

Previous Forecast (A)	Millions of yen	Millions of yen	Millions of yen	Millions of yen	Yen
(Announced July 31,
870,000	51,000	53,000	38,000	127.76
2024)

Revised Forecast (B)	870,000	51,000	53,000	39,000	131.16
Difference (B-A)	-	-	-	1,000	-
Change (%)	-	-	-	2.6	-
(Reference) Previous
Results (Fiscal Year	858,248	47,791	49,992	31,743	106.74
Ended March 31, 2024)

3) Dividends for the Year Ending March 31, 2025

With respect to dividends for the fiscal year ending March 31, 2025, based on the aforementioned dividend policy, we are projecting a full-year dividend of ¥55 per share, increases of ¥5 from the latest forecast and ¥10 from the previous fiscal year. This is projected to result in actual dividend growth for a twelfth consecutive term. The payout ratio on a consolidated basis for the fiscal year under review is 41.9%, or 47.2% with the exclusion of gains or losses from non-recurring extraordinary factors.

2. Semi-annual Consolidated Financial Statements and Related Notes

(1) Semi-annual Consolidated Balance Sheets

(Millions of yen)

	Fiscal 2024	Fiscal 2025
	First Half
	(As of March 31,
	(As of September
	2024)
	30, 2024)


Assets
Current assets
Cash and deposits	109,470	103,955
Notes and accounts receivable - trade, and contract	114,536	105,663
assets

Securities	-	1,362
Inventories	124,878	116,974
Other	16,729	11,806
Allowance for doubtful accounts	(541)	(629)

Total current assets	365,072	339,133
Non-current assets

Property, plant and equipment
Buildings and structures, net	72,092	71,180
Machinery, equipment and vehicles, net	66,504	64,285
Land	53,393	53,182
Right-of-use assets, net	18,471	18,317
Other, net	25,354	31,614

Total property, plant and equipment	235,815	238,579
Intangible assets

Goodwill	6,212	5,609
Other	15,350	15,959

Total intangible assets	21,563	21,568
Investments and other assets

Investment securities	185,445	165,887
Other	19,014	19,248
Allowance for doubtful accounts	(208)	(192)
Total investments and other assets	204,250	184,942

Total non-current assets	461,629	445,091

Total assets	826,702	784,224