Calbee : Financial Book for the Year Ended March, 2022 (1.3MB）

TSE

TSE code:2229

Financial Book 2022

Fiscal year ended March 31, 2022

Contents

1 Ten -Year Summary

2 Management's Discussion and Analysis

8 Business Risks

12 Consolidated Balance Sheets

14 Consolidated Statements of Income

15 Consolidated Statements of Comprehensive Income

16 Consolidated Statements of Changes in Net Assets

18 Consolidated Statements of Cash Flows

19 Notes to Consolidated Financial Statements

42 Independent Auditor's Report

Ten-Year Summary

												Thousands of
												U.S.dollars
										Millions of yen, round down	(Note1)
		2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2022
		US$
For the Year:(Note7)
	Net sales	245,419	266,745	255,938	248,655	251,575	252,420	246,129	222,150	199,941	179,411	2,005,222
	Operating profit	25,135	27,064	27,664	26,964	26,828	28,841	28,125	24,183	19,717	15,790	205,374
	Operating margin(%)	10.2	10.1	10.8	10.8	10.7	11.4	11.4	10.9	9.9	8.8	－
	Net income attributable to	18,053	17,682	17,539	19,429	17,330	18,605	16,799	14,114	12,086	9,440	147,506
	owners of parent
	Net income margin(%)	7.4	6.6	6.9	7.8	6.9	7.4	6.8	6.4	6.0	5.3	－
	ROE(%)	10.3	10.4	11.1	13.2	13.0	14.9	14.6	13.7	13.1	11.4	－
	Research and development	3,319	2,706	2,745	2,660	2,469	2,168	2,195	2,052	2,161	2,288	27,125
	costs
	Capital expenditures	13,515	11,341	9,004	9,945	11,009	9,763	21,229	15,290	6,392	7,298	110,431
	Depreciation and amortization	9,189	9,051	8,449	8,023	7,845	7,297	7,570	6,232	5,960	6,318	75,084
Per Share(/$):(Note2)
	Net income attributable to	136.25	132.30	131.22	145.39	129.72	139.24	125.88	105.82	91.46	72.18	1.11
	owners of parent
	Net assets	1,358.25	1,312.24	1,221.19	1,151.71	1,043.37	958.60	905.20	821.97	729.93	664.55	11.09
	Cash dividends	52.00	50.00	50.00	48.00	42.00	42.00	35.00	28.00	22.00	15.50	0.42
	Dividend payout ratio(%)	38.2	37.8	38.1	33.0	32.4	30.2	27.8	26.5	24.1	21.5	－
At Year-End:
	Total assets(Note3)	236,598	238,978	214,967	202,750	192,034	181,945	174,837	161,917	140,909	124,705	1,933,156
	Net assets	183,458	182,740	169,632	160,490	146,667	135,056	131,469	118,800	104,466	92,685	1,498,965
	Working capital(Note3,4)	72,912	80,892	83,066	77,815	68,950	58,214	54,832	52,672	47,458	33,607	595,737
	Interest-bearing debt(Note5)	2,005	6,604	1,363	1,274	1,511	1,596	555	563	186	302	16,385
	Equity ratio(%)(Note6)	74.1	73.4	75.9	75.9	72.6	70.4	69.2	67.7	69.1	70.2	－
	Debt to equity ratio(Times)	0	0	0	0	0	0	0	0	0	0	0
	Number of consolidated	23	24	24	26	27	27	24	22	22	21	－
	subsidiaries
	Number of employees	4,398	4,311	4,053	3,763	3,798	3,860	3,728	3,477	3,341	3,352	－
Cash Flows:
	Cash flows from operating	22,327	30,450	40,449	27,620	9,358	25,958	22,541	22,266	23,478	17,328	182,431
	activities
	Cash flows from investing	3,643	(32,069)	(13,462)	(28,347)	(6,258)	(13,404)	(14,270)	(9,422)	(17,041)	(12,999)	29,769
	activities
	Cash flows from financing	(25,168)	(7,635)	(6,278)	(6,227)	(5,450)	(14,711)	(2,859)	(2,878)	(383)	607	(205,643)
	activities
	Cash and cash equivalents	49,670	47,282	55,742	35,425	42,195	44,627	47,323	42,572	31,592	25,331	405,840
	at end of year

Note 1. U.S. dollar amounts are presented, for convenience only, at a conversion rate of ¥122.39 = US$1, the approximate Tokyo foreign exchange market rate as of March 31, 2022.

1. A 4-for-1 share split was implemented on October 1, 2013. Per share figures were retroactively adjusted to reflect these stock splits.
2. Upon application of"Partial Amendments to Accounting Standard for Tax Effect Accounting"(ASBJ Statement No. 28, February 16, 2018 (hereinafter,"Statement No. 28")) from the beginning of the fiscal year ended March 31, 2019, the figures for the consolidated financial position are those after the said standards, are applied retroactively.
3. Working capital comprises current assets less current liabilities.
4. Interest-bearingdebt includes long-andshort-term debt, leasing obligations and other interest bearing debt.
5. Shareholders' equity as presented above consists of total net sets exclusive of subscription rights and non-controlling interests.
6. The Company applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29) from the beginning of the fiscal year ended March 31, 2022. Major consolidated management indicators, etc. for this fiscal year are indicators, etc. after applying such accounting standards.

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Management's Discussion and Analysis

Operating results

(1) Overview of business performance

(All comparisons are with the same period of the previous fiscal year, unless stated otherwise.)

During the fiscal year ended March 31, 2022, the global economy experienced a sharp increase in uncertainty due to sluggish economic activities and subsequent supply chain disruptions caused by re- expansion of COVID-19, as well as soaring energy and raw material prices due to the Russian and Ukrainian situation toward the end of the fiscal year. The Japanese economy also faced extremely severe conditions, as social and economic activities were restricted by the COVID-19 variant expansion. The impact of geopolitical risks on the economy is unpredictable. In the snack foods and cereals foods market, where we operate, we saw rising demand for foods that are highly preservable and in-house meals due to restraints on going out and preparations for emergencies.

In this environment, we promoted business activities to achieve sustainable growth through innovation and challenges based on long-term vision (Vision for 2030) and the five-yearmedium-term business plan (from the fiscal year ended March 31, 2020 to the fiscal year ending March 31, 2024).

In the domestic business, we focused on create new value and realize high profit. Against lower yields of Hokkaido-produced potato due to the impact of hot and drought and soaring raw material prices, we implemented price and content revisions of Potato Chips and other snack foods, and rolled out products that meet diversifying needs due to the COVID-19, such as the bean-based snack miino and the stand- pouch-typeJagarico. In cereal foods, we worked to expand our lineup of products that meet demand for inter-meal and highlight health and functionality, as well as medium-sized products that are easy for customers to purchase. In new businesses, we leveraged our affinity with ability to procure potatoes, which is one of our Group's strengths, to develop business through new raw materials, such as expansion of the sweet potato business by Potato Kaitsuka Ltd. which is engaged in the wholesale business of sweet potato and the direct sales of baked sweet potatoes.

In the overseas business, we leveraged the strengths of processing technologies and product development capabilities of natural raw materials that we have cultivated in our domestic business to promote business activities in accordance with the characteristics of the market in the four key regions (North America, Greater China, the United Kingdom, and Indonesia). In North America, in April 2021, we integrated our previously dispersed R&D, sales and marketing functions into a holding company structure that enables comprehensive strategic planning. In Greater China, we sought to promote Calbee brand by strengthening our product lineup and promotional activities with the aim of becoming a sales channel expansion for retail channel. In the United Kingdom, under Seabrook brand, in addition to our mainstay Potato Chips, we worked to expand our corn-andbean-based snack foods, and in Indonesia, we developed snack foods of a four-tiered structure that apply domestic processing technologies and new flavor Potato Chips to cultivate new customer base. In addition, in response to rising raw material prices, we implemented price and content revisions for some snack foods in North America and the United Kingdom.

From the perspective of sustainable management, we promoted activities to effectively utilize renewable energy and reduce total greenhouse gas emissions. In addition, domestic plants began purchasing RSPO certified palm oil (mass balance method) in July 2021. We disclose the effect of climate change, a key issue for sustainable growth, after carefully examining risks and opportunities based on TCFD framework in our integrated report.

Effective from the beginning of the fiscal year ended March 31, 2022, our group adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29) and changed the method to deduct a portion of selling expenses (rebates, etc.) from sales, which was previously recorded in selling, general and administrative expenses. Net sales (by business, by product, and by region) and operating margin are compared and analyzed year-on-year, excluding the impact of the adoption of accounting standards. For more information on this change, please refer to "Changes in accounting policies" in "Notes to Consolidated Financial Statements".

Net sales for the fiscal year ended March 31, 2022 amounted to ¥245,419 million. Growth in overseas business resulted in a 4.2% increase excluding the impact of the adoption of the revenue recognition standard. In the domestic business, sales of products with new value, such as the bean-based snack miino, grew, but sales of Potato Chips declined due to the impact of lower raw material potato yield. As a result, sales were virtually unchanged. Sales of overseas business increased due to higher sales in all nations.

Operating profit was ¥25,135 million (down 7.1%) due to the inability to absorb the impact of soaring prices of raw materials such as food oil, despite the implementation of measures such as product prices

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and content revisions and cost reduction. Operating margin was 10.2%, a decrease of 1.1 percentage points, which excludes the impact of the adoption of the revenue recognition standard. Profit attributable to owners of the parent was ¥18,053 million (up 2.1%) due to foreign exchange gains and gains on forgiveness of debts (gain on forgiveness of payroll protection program loans in the U.S.).

Results by business are as follows.

Millions of yen, rounded down

		FY ended	FY ended
		March 31, 2021	March 31, 2022
		Amount	Amount	Growth (%)
Domestic production and sale of	213,639	213,602	(0.0)
snack and other foods business
	Domestic snack foods	175,675	176,888	+0.7
	Domestic cereals	27,722	24,696	(10.9)
	Domestic others	10,241	12,018	+17.3
Overseas production and sale of	53,106	64,439	+21.3
snack and other foods business
Subtotal	266,745	278,042	+4.2
Deduction of rebates, etc.	-	(32,623)	-
Production and sale of snack and	266,745	245,419	-
other foods business Total

1. Production and sale of snack and other foods business
   Sales of production and sale of snacks and other foods increased due to growth in overseas business.

1. Domestic production and sale of snack and other foods business

• Domestic snack foods:

Domestic snack foods sales increased.

Sales of domestic snack food by product are as follows,

Millions of yen, rounded down

		FY ended	FY ended
		March 31, 2021	March 31, 2022
		Amount	Amount		Growth (%)
Potato-based snacks	128,841	126,882		(1.5)
	Potato Chips	86,593	83,434		(3.6)
	Jagarico	34,539	34,871		+1.0
	Jagabee / Jaga Pokkuru	7,708	8,576		+11.3
Flour-based snacks	21,498	22,073		+2.7
Corn- and bean-based snacks	17,099	18,764		+9.7
Other snacks	8,235	9,167		+11.3
Domestic snack foods total	175,675	176,888		+0.7

• Sales of potato-based snacks decreased due to a smaller potato harvest.
• • Sales of Potato Chips declined as a result of restrained sales promotion activities and a readjustment of products launch plan due to a decrease in raw material potato yield.
  • In Jagarico as well, we were forced to curtail sales promotion activities and readjustment of product launch plan. However, sales of stand-pouch types, such as Jagarico Salad bits Omori (large-bag type), grew, resulting in an increase in sales.
  • In Jagabee / Jaga Pokkuru, although inbound tourists and domestic tourists remained sluggish, sales increased due to contributions in aggressive expansion into events and product exhibitions.
• In corn-andbean-based snacks, sales of the bean-based snack miino were favorable due to the impact of TV commercials and other promotional campaigns, resulting in an increase in sales.
• Sales of other snacks increased due to Potato Deluxe sales area expansion.

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• Domestic cereals:
  Domestic cereals were ¥24,696 million (10.9% down), mainly due to the transfer of export sales to China to an overseas subsidiary. Sales to domestic consumers declined in the first half due to the absence of previous year's nesting demand, but recovered from the second half due to the strengthening of the lineup of medium-sized products.
• Domestic others:
  In other domestic businesses, sales were strong in the sweet potato business via wholesale and company-owned shop, rising 17.3% to ¥12,018 million.

2. Overseas production and sale of snack and other foods business

Overseas production and sale of snack and other foods business sales increased.

Sales of overseas production and sale of snack and other foods business by region are as follows.

Millions of yen, rounded down

	FY ended		FY ended
	March 31, 2021		March 31, 2022
				Growth on local
	Amount	Amount	Growth (%)	currency basis
				(%)
North America	14,442	16,156	+11.9	+5.2
Greater China*	15,131	19,590	+29.5	+17.0
United Kingdom	6,507	8,025	+23.3	+11.1
Indonesia	4,055	6,160	+51.9	+40.4
Other regions**	12,970	14,507	+11.8	+5.5
Overseas production and sale of
snack and other foods business	53,106	64,439	+21.3	+12.1
total
*Greater China: China and Hong Kong

**Other regions: South Korea, Thailand, Singapore and Australia

1. • In North America, sales of the bean-based snack foods Harvest Snaps increased due to the strong performance of the delivery expansion of small bags for dollar store channels, etc.
   • In Greater China, sales of both snack foods and cereals grew. In snack foods, sales of Honey Butter Chip, Jagabee, and Jagarico were strong for both e-commerce and retail channel. Sales of the cereal food product Frugra expanded for retail channel.
   • In the U.K., sales of Seabrook branded Potato Chips and corn-based snacks Loaded Fries were strong, resulting in higher sales.
   • In Indonesia, in addition to contributions of the new Guribee, products of the existing Potato Chips and flour-based snacks Krisbee grew, resulting in an increase in sales.
   • Sales in other regions increased due to growth in Australia, Thailand, and South Korea.
2. Financial Indices
   The status of indicators useful for evaluating the progress of our group's management policies and strategies is as follows.

	FY ended	FY ended	FY ending
	March 31, 2022	March 31, 2022	March 31, 2024
	results	(initial plan)	(target)*
Net sales	¥245.4bn	¥240.0bn	¥310.0bn
Operating profit	¥25.1bn	¥28.0bn	¥40.0bn
ROE	10.3%	－	12%
Domestic operating margin	12.3%	13.2%	15%
Overseas sales	¥57.4bn	¥52.7bn	¥80.0bn

*As we applied the "Accounting standards on Revenue Recognition" (ASBJ Statement No. 29) from the beginning of the fiscal year ended March 31, 2022. The amount for the fiscal year ending March 31, 2024 excludes the impact of the application of the standard.

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