Kikkoman Corporation

First of all, I would like to express my heartfelt sadness for the lives lost as a result of the Great East Japan Earthquake that struck on March 11, 2011. My deepest sympathies go out to everyone who has been affected by the disaster.
   Whilst the Great East Japan Earthquake has affected our business results for the year under review, there has only been a slight impact on our business overall in terms of damage to production facilities. We have, however, booked an extraordinary loss of ¥2,352 million due mainly to the impact of the Nippon Del Monte Fukushima plant, which will be closed in September 2011, as was previously scheduled.

The Fiscal Year in Review

Given this environment, the Kikkoman Group in Japan saw net sales that overall were roughly the same as the previous fiscal year. Sales of soy sauce fell slightly year-on-year, while food products performed approximately the same as the previous year. In beverages, soy milk and Del Monte beverages performed strongly, offsetting the influence of the Great East Japan Earthquake. Overseas, year-on-year sales rose on a local-currency basis in the regions of North America, Europe, Asia and Oceania, despite the adverse impact of currency translation effects from the strong yen.
   On the other hand, operating income in Japan declined, partly due to the effects of changes in inventory accounting methods in the previous year. On the surface, overall operating income declined overseas due to the negative impact of currency translation effects from the strong yen. However, on a local-currency basis, the temporary drop in the operating income of the Foods-Wholesale Business due to the strong yen, which increased purchasing costs, was absorbed by the higher operating income of the Foods-Manufacturing and Sales. Thus, overall, overseas operating income rose on a local-currency basis.
   As a result, consolidated net sales decreased 0.8% to ¥283,463 million, while operating income fell 8.9% to ¥19,208 million. Net income decreased 9.7% to ¥7,770 million, due in part to the booking of an extraordinary loss resulting from the effects of the Great East Japan Earthquake.

Outlook for the Current Fiscal Year

Our overseas business will act as a driver for the future growth of the Kikkoman Group.
   In North America, we believe it is important to maintain stable growth in soy sauce. We will focus on increasing the opportunities for consumers to use soy sauce in existing markets by strengthening our development of recipes. Also, we aim to develop new markets by targeting consumers who have not used soy sauce. In addition, we will foster new business beyond the soy sauce segment by implementing initiatives in health food.
   In Europe, we are expanding the soy sauce market with the goal of maintaining double-digit growth. While cultivating existing key markets, we will also develop new markets in Central and Eastern Europe and Russia.
   In Asia, we will classify various areas of the ASEAN region according to market characteristics, and then develop sales strategies attuned to these areas.
   In the Foods-Wholesale business, we will continue to take advantage of the increasing interest in Japanese food overseas to achieve strong growth in every region. In Asia in particular, we are working to make significant advances into Singapore through the establishment of a base purchased in December last year, and we will actively develop other markets in the ASEAN region in the future.
   In the field of home-use soy sauce products in Japan, we will increase sales of high value-added products, such as Shiboritate-nama Shoyu (fresh raw soy sauce with filtration), and focus on providing a greater proportion of high value-added products. In the foodservice and industrial-use sectors, in addition to continuing to provide safe, high quality products, we will also further our efforts to leverage the company’s collective strengths by providing technical support and other services.
   In food products, we will strive to extend our market share by further expanding sales of tsuyu (soy sauce soup base) and tare (dipping and marinade sauces). In addition, we will work to expand the market for the Uchi-no-Gohan (a handy Japanese-style seasoning mix) as we continue to target strong growth.
   Within beverages, we will work to achieve growth centered on soy milk, the pillar of this business segment, and aim to expand sales by actively developing new beverages under the Del Monte brand.
   In our sake and wine business, we will focus on increasing market share in home-use mirin (sweet sake for cooking), while developing sales initiatives for high value-added wine products.
   In the biochemical business, we established Kikkoman Biochemifa Company in April 2011 to prepare a system for growth in the biochemical and health-related fields. We will work to expand sales of various products, including chemical products such as hyaluronic acid, clinical diagnostic reagents, and hygiene inspection agents.
   As a result of the Great East Japan Earthquake, companies are being required to reduce the amount of electric power they use this summer. We have taken adequate countermeasures to ensure there will be no interruption to the supply of our products.
   The Kikkoman Group is determined to make every effort to aggressively tackle these issues. Moving forward, we will work wholeheartedly to raise Kikkoman’s corporate value and increase our presence as a company.

August 2011