2915.T

• Mid-term Long-term Strategy: KENKO Vision 2035 • The plan is in its second year, progressing steadily despite a tough external environment. The corporate mission is "contribute to society through food", with a focus on protecting people's health, life, and the environment. Four core strategies are being implemented: growth strategy, smart automation/innovation, people investment, and sustainability/social responsibility.
  • Growth Strategy Progress • Consolidated ~200 SKUs in April 2025 to streamline production and cut costs; operational efficiency and yield improvement effects are already materializing. NB (national brand) product ratio reached ~45% in H1 FY2026, on track to hit the 50% 2027 target. New spout pouch dressing products were launched for EC to reduce shipping costs and food waste. Overseas sales are growing steadily, with the frozen Japanese side dish brand WABI-DELI winning the Japan Food Selection grand prix for one of its products. The company participated in Osaka-Kansai Expo to build brand awareness via salad cooking workshops.
  • Smart Automation and Innovation Progress • A DX vision was established to transform business processes and create new salad business models; targets 10% labor productivity improvement by 2027 vs 2024 via generative AI, RPA, collaborative robots, and sales support tools. Egg processing production from Aizuwakamatsu Factory will be consolidated to Shizuoka Fujiyama Factory, expecting 280 million yen annual cost savings. Yamanashi Factory will expand sauce capacity for small containers, and a new line will be added at West Japan Factory to create a two-site production system for stable supply and operation smoothing, expecting 250 million yen annual operating cash flow benefit from this 26 billion yen total investment.
  • People Investment Progress • Employee engagement score rose 4.3 points to 61.9 in 2025; the company will continue to improve engagement via targeted action plans, expanded training, and internal branding. Tokyo Head Office will move to Kojimachi, Chiyoda-ku in February 2026, and R&D/quality functions will move to Shin-Kiba, Koto-ku in October 2026 to expand customer touchpoints and upgrade R&D capabilities.
  • Sustainability and Social Responsibility Progress • Switching all PP bundling bands to 100% recycled material cut CO2 emissions by ~50%. Eggshell waste from factories is upcycled into planting pots, chopsticks, and display trays. Received a B score from CDP for climate action, targeting an A- score by 2027. Targeting certified Health & Productivity Management Outstanding Organization by 2027. Expanded IR outreach to individual investors via events and media. Phase 1 (2024-2027) cash allocation plans 39 billion yen total cash inflow and 29 billion yen total cash outflow for strategic investments, with 4.9 billion yen planned for 2025. Phase 1 financial targets are under review and will be announced once finalized.

• Full-year FY2026 (ending March 2026) consolidated guidance was revised downward from the initial forecast, due to delayed pass-through of cost increases to selling prices, persistently high egg prices, and reduced sales opportunities from SKU consolidation. Revised full-year guidance: 92.8 billion yen consolidated revenue, 3.8 billion yen consolidated operating profit, 3.95 billion yen consolidated ordinary profit, and 2.47 billion yen net income attributable to parent shareholders.
• Segment revenue guidance: Seasoning and Processed Food Business is expected to grow 2.5% year-over-year from April 2025 price revisions, despite lost sales opportunities from SKU consolidation; Delicatessen Related Business is expected to decline 3.2% year-over-year from high vegetable prices and customer in-house production; Other segment is expected to decline 12.1% year-over-year from the two Salad Cafe store closures.
• The 2026 full-year dividend is maintained at 47 yen per share, a 4 yen increase from the prior year, consistent with the company's stable dividend policy based on DOE targets and confidence in future profit recovery. The medium-term target is 1.5%+ DOE in Phase 1 and 2%+ DOE in Phase 2.
• The FY2026 profit target outlined in KENKO Vision 2035 Phase 1 is still expected to be achieved.

1. Seasoning and Processed Food Business (core Kenko Mayonnaise business): Revenue decreased 0.2% year-over-year. While large-format mayonnaise for bakery and food service, and sauces for food service and CVS grew, paste egg products, pasta salads, and fillings saw declines. Segment profit fell 47.4% year-over-year due to sales volume declines, lags in passing cost increases to prices, persistently high egg and vegetable prices, and rising logistics and labor costs. This segment contributes ~93% of total consolidated revenue. 2. Delicatessen Related Business (consolidated subsidiary): Revenue decreased 4.0% year-over-year, impacted by customer in-house production despite efforts to expand product categories and push high-value-added products. Segment profit increased 14.9% year-over-year from price revision effects and new category entry. This segment contributes ~6% of total consolidated revenue. 3. Other (includes Salad Cafe retail business): Revenue and profit declined year-over-year, impacted by the closure of 2 stores in August and September 2025 and surging vegetable prices. This segment contributes ~1% of total consolidated revenue.

• Persistently high raw material costs, particularly chicken egg prices that have remained at elevated levels, and surging vegetable prices, are putting significant pressure on profitability, with cost increases outpacing the timing of price pass-through to customers.
• Revenue is negatively impacted by reduced sales opportunities from SKU consolidation, with volume declines from customer switching to competitors exceeding initial forecasts.
• Rising labor, logistics, and fixed costs (including strategic investment costs for headquarters relocation and overseas expansion) are weighing on operating profit.
• Weakening demand for some food service and menu-specific products has reduced factory utilization rates, dragging down production efficiency.

Q: Can you share the breakdown of the 26 billion yen total investment for Yamanashi and West Japan Factory capacity expansions, completion timelines, expected capacity growth, and what products the small container expansion covers? / A: The total investment is 2.6 billion yen. West Japan Factory requires a new building and new equipment, so it accounts for a larger share of investment than Yamanashi Factory, which only upgrades existing equipment. West Japan Factory targets September 2026 startup, while Yamanashi Factory's upgrade targets June 2027 completion. Total capacity for the product line is expected to increase to ~1.5x current levels. The small container expansion covers sauce products (both mayonnaise-based and non-mayonnaise sauces), not mayonnaise or dressing.

Q: SKU consolidation has improved operational efficiency but hurt interim results via lost sales. Will you continue with the plan as scheduled in the second half? / A: SKU consolidation launched in April 2025 alongside price revisions, with customers asked to switch from discontinued SKUs to retained core products. While some switches were successful, customer switching to competitors and product substitution exceeded initial forecasts. The benefits of consolidation include higher per-SKU production volumes that improve efficiency, fewer production changeovers that reduce material waste and improve yield, and lower inventory/management costs from fewer SKUs. The company will continue consolidation to capture efficiency gains but will prioritize expanding sales of retained core products in the second half to offset volume losses.

Q: Current chicken egg prices are around 345 yen per kg, pressuring margins. What price level is sustainable for both Kenko and egg producers? / A: It is difficult to name an exact specific target price, but current market prices are clearly higher than sustainable levels, after being relatively low last year. Prices are currently being pushed up by multiple factors: high feed costs, reduced chicken flock sizes, heat stress from this summer's high temperatures, and cyclical demand spikes from seasonal tsukimi (moon-viewing) product demand from the food service industry. The company agrees that a moderately lower price level would be more sustainable for both parties.