2114.T

Overall Macro Environment & Strategic Direction

• The first half of the fiscal year saw improving employment and wage trends, but persistent high living costs from inflation and exchange rate volatility kept personal consumer consumption growth mild. Ongoing geopolitical and financial market instability continues to create an uncertain business outlook.
• Management launched the mid-term business plan "CHANGE 2028" in April 2024, with five core priorities: 1) business expansion in Southeast Asia, 2) new business creation in the food science sector, 3) growth investment centered on M&A, 4) organizational strengthening to deliver on the company vision, 5) IR enhancement and shareholder returns. The company continues to advance these priorities steadily.
• Fuji Nihon has repositioned from a traditional sugar manufacturer to a food science company that addresses food and health challenges through science, aligned with its corporate purpose "Power the world by innovating food science!", and is focused on growing corporate value.

Financial Position

• Total assets reached 35.472 billion yen, up 5.1% year-over-year: current assets increased 0.6% to 17.806 billion yen (driven by higher cash, deposits, and finished goods inventory), and fixed assets increased 10.0% to 17.665 billion yen (driven by higher investment securities).
• Current liabilities decreased 5.5% to 5.474 billion yen (driven by lower short-term borrowings and unpaid consumption tax), while fixed liabilities increased 4.6% to 4.280 billion yen (driven by higher deferred tax liabilities).
• Net equity increased 7.7% to 25.717 billion yen, driven by higher retained earnings from interims net income attributable to parent shareholders and higher valuation difference on available-for-sale securities.
• Cash flow summary: Operating cash flow generated 1.613 billion yen in inflows; Investing cash flow recorded 423 million yen in outflows for purchase of investment securities; Financing cash flow recorded 779 million yen in outflows from debt repayment and dividend payments. Cash and cash equivalents at period-end increased 541 million yen year-over-year to 7.094 billion yen.

Recent Operational Highlights

• Sustainability: Continues to purchase sugarcane-derived green power certificates from Daito Sugar, powering the Tokyo headquarter and Shimizu plant 100% with biomass-based green electricity as part of decarbonization efforts. The company promotes company-wide energy conservation to reduce CO2 emissions.
• Brand PR: Produced a corporate PR video featured on Nikkei CNBC's documentary program "Monodzukuri no Chojin-tachi" (People Taking on Manufacturing Challenges), highlighting the company's transition from a sugar refiner to a food science company centered on its core inulin business, its development history, and inulin's health benefits.
• Sugar Consumption Promotion: Hosted "Macaron Collection 2025" in October 2025 in partnership with the All Japan Macaron Association, linked to Japan's Ministry of Agriculture, Forestry and Fisheries's "Arigatou Sugar Movement" to expand sugar demand. The event sold out of all macarons, and the company will continue strengthening relationships with pastry chefs and expanding into adjacent categories through this partnership.
• Strategic Alliance: Entered into an alliance agreement with Shiohamako Seito in October 2025 to strengthen the foundation of the sugar refining business and pursue synergies in the functional materials sector. The alliance will pursue efficiency and quality improvements via shared production operations, cost reduction and lower CO2 emissions via coordinated purchasing and logistics, and new product and material development combining Shiohamako's retail strengths with Fuji Nihon's B2B and overseas expertise. A joint project team will be formed to accelerate initiatives.
• New Product Launch: Launched crowdfunding for new functional labeling food "SAYUNOMI" (containing Fuji Nihon's inulin) on Makuake starting November 2025. The product is designed to fit existing daily habits (mixed into morning hot water) and provides clinically supported benefits for improved gut health and skin health, marking the company's first direct-to-consumer new product initiative.

• Full-year 2026 March fiscal year performance is tracking in line with the original guidance published on April 30, 2025, so no revisions to the full-year forecast have been made.
• The maintained full-year forecast is: 29.1 billion yen in consolidated revenue (3.1% increase year-over-year), 3.1 billion yen in operating profit (4.1% decrease year-over-year), 3.3 billion yen in ordinary profit (9.6% decrease year-over-year), and 2.3 billion yen in net income attributable to parent shareholders (19.2% decrease year-over-year).
• Dividend policy guidance: The company maintains a core policy of targeting a dividend on equity (DOE) of at least 3.5% and delivering stable, continuous dividends, while retaining sufficient internal capital for mid- to long-term capital expenditure and R&D. The interim dividend for the 2026 March fiscal year is set at 15 yen per share, with a projected full-year annual dividend of 34 yen per share.

1. Sugar Business: Achieved revenue growth year-over-year, driven by strong inbound demand from spring tourism and the Osaka Expo that boosted shipments for food service and souvenir confectionery. Despite efforts to stabilize raw material sourcing and cut costs amid rising raw material and logistics costs, operating profit decreased slightly year-over-year. No absolute segment revenue/operating profit figures or revenue contribution percentages were provided in the transcript. 2. Functional Materials Business: Achieved both revenue and profit growth year-over-year. In domestic inulin sales, health-focused sales performed strongly despite weak demand from processed food manufacturers. Overseas inulin sales, led by consolidated subsidiary Fuji Nihon Thai Inulin, recorded large profit growth year-over-year from increased sales to major customers across Thailand and Southeast Asia. Subsidiary Unitech Foods also contributed to profit growth from higher sales volume across its material portfolio and growth in its ODM and consulting businesses. No absolute segment revenue/operating profit figures or revenue contribution percentages were provided in the transcript. 3. Real Estate Business: Revenue decreased year-over-year due to the sale of 3 properties (located in Tokyo, Kanagawa, and Nagano) in February 2025 as part of a capital efficiency improvement initiative. Remaining income-producing properties continued stable operation, and operating profit recorded a slight increase year-over-year. No absolute segment revenue/operating profit figures or revenue contribution percentages were provided in the transcript.

• Persistent macro uncertainty: Volatility in global raw sugar prices driven by compound factors including irregular weather and international trade friction concerns; ongoing high inflation, exchange rate fluctuations, and geopolitical instability that keep consumer demand growth mild and the business outlook uncertain.
• Segmental risks: Rising raw material and logistics costs pressure margins for the sugar business; domestic inulin sales face weak demand from processed food customers.

No question and answer section was included in the provided transcript.