KITOKU SHINRYO CO.,LTD. Q4 FY2024 earnings call

• Overall Financial Results • The company achieved record-high net profit for the 2024 December period, with both revenue and profit increasing year-over-year. • Total assets increased 8.063 billion yen to 40.169 billion yen, driven by higher inventory and receivable values from rising rice prices, plus increased fixed assets from capital investment at the Okegawa factory. Net assets increased 2.17 billion yen to 15.56 billion yen. The equity ratio fell 3.2pp to 37.3%, while net asset per share increased 1,097.38 yen to 9,135.2 yen. • Cash flow from operating activities was a 929 million yen outflow due to higher receivables and inventory; investment activities had a 985 million yen outflow for fixed asset purchases; financing activities generated 2.861 billion yen inflow from higher short-term borrowing.

• Mid-term Planning Status • The 2023-launched 3-year mid-term plan, focused on restructuring for business and geographic expansion, met most numerical targets ahead of schedule in its final year (2024). 2024 was positioned as a preparation period for the next 3-year mid-term plan.

• Rice Business Initiatives • Procurement: Expanding adoption of heat-tolerant, high-yield rice varieties, targeting 15,000 tons for the 2025 crop (Reiwa 7) from over 9,000 tons in 2024. Conducting joint industry-academia trials of ratoon cropping (regenerated second cropping), expanding trials from 2 hectares in 2024 to 4 hectares in 2025 to strengthen stable procurement bases. • Sales & Product: Rebranded its UMBP (ultra micro-bubble) processing method no-wash rice private brand to 'e-come' to boost brand recognition; targets increasing the share of UMBB-processed no-wash rice to over 75% of total no-wash production. • Overseas Business: Installed UMBP processing equipment at its Vietnamese consolidated subsidiary Angimex-Kitoku, the first overseas installation, to launch high-quality no-wash rice products in new markets; targets expanding total annual overseas business volume to over 50,000 tons in the next mid-term plan from the current ~32,000 tons.

• Related Business Growth • Feed Business: Pursues sustainable growth via expanding supplier and sales networks, and advancing circular economy collaboration with the rice and egg segments to utilize byproducts (rice bran, feed rice, chicken manure fertilizer). • Byproduct Valorization: Developing resource recycling for byproduct water (rice washing wastewater from UMBP processing), currently trialing agricultural fertilizer production from byproduct water in Hanamaki, Iwate, targeting expansion of domestic fertilizer raw material utilization. • Product Development: Expands product offerings beyond staple rice to highlight diversified value of rice and support consumer healthy lifestyles, and expands into new business areas via cross-segment collaboration to increase the share of non-rice revenue and optimize the business portfolio amid a shrinking domestic rice market.

• Corporate Foundation Building • Human Capital Management: Implements annual wage increases of over 4% (base increase + regular seniority raise), clarifies job classification definitions to support diverse talent development and work styles, introduced a restricted stock unit plan in 2024 to align employee incentives with shareholder and company performance goals, and will increase training budgets to expand employee development programs. • ESG and Social Contribution: Conducted emergency new rice donations to 400 children's cafeterias during the 2024 rice shortage, and completed a donation campaign in Okayama Prefecture that resulted in 5 tons of rice donated to 28 local children's cafeterias; will continue ongoing community support initiatives. • Capital and Share Price Focus: Recognizes that improving P/B ratio (currently below 1x despite recent share price gains) is a key priority, and will implement targeted measures to stabilize ROE (which has historically fluctuated with rice market conditions) and improve valuation.

1. Rice Grain Segment: Revenue was 96.566 billion yen, a 5.2% increase year-over-year, driven by rising unit prices of the 2023 crop (Reiwa 5). The segment saw increased operating profit from successful price pass-through amid strong demand and reduced promotional spending. Annual sales volume decreased from 385,500 tons to 358,300 tons due to lower minimum access rice imports, reduced inter-wholesaler brown rice sales, while polished rice sales remained flat year-over-year. This segment includes the company's overseas rice business, which currently totals 32,000 tons annually across all operations. 2. Egg Segment: The segment achieved significant operating profit growth after recovering from the previous year's avian influenza supply shortage. Gains came from diversified suppliers with renegotiated procurement terms, expanded cross-segment collaboration with the rice and feed businesses, and cost reductions from improved operational efficiency. 3. Feed Segment: No separate full year financial results were provided in the transcript; it is positioned as a growing rice-related business segment.

• For the 2025 December period, the company projects that all key financial metrics — total revenue, operating profit, ordinary profit, and net profit attributable to parent company shareholders — will increase year-over-year, and the company is targeting another year of growth in both revenue and profit.

• Domestic rice supply and demand volatility: Multiple factors (low 2023 crop output from extreme heat, quality reductions, strong demand from inbound tourism and emergency stockpiling after the Nankai Trough earthquake alert) led to severe tight supply, low inventory, and the 2024 'Reiwa rice shortage' that temporarily removed rice from store shelves. Even with average 2024 output, low collection volumes and intense high-price procurement competition have left the company struggling to secure sufficient raw material supplies, with large shortfalls relative to pre-contracted volumes. While the planned release of 210,000 tons of government reserve rice (150,000 tons first tranche) is expected to halt further price increases, the future supply-demand outlook remains highly uncertain. The tight market has also created higher working capital requirements, leading to increased short-term borrowing and a decline in the company's equity ratio.

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