3392.T

• Company Overview and Mission • Purpose: "Change the future of vegetables. Change the future with vegetables." Mission: Contribute to the development of Japanese agriculture and the improvement of public health through the distribution of fruits and vegetables. Vision: Build a sustainable infrastructure that ensures future children can always access safe, delicious vegetables. • The group structure consists of Delica Foods Co., Ltd. (core fruit and vegetable processing/distribution), Delica Farm Co., Ltd. (established July 2025, agricultural operations), FS Logistics Co., Ltd. (logistics operations), Designer Foods Co., Ltd. (research and consulting), and Rakusai Co., Ltd. (BtoC business launched during COVID-19). • Currently operates 19 bases nationwide, delivers to approximately 30,800 stores across Japan. • Pre-COVID, 85% of revenue came from the food service industry. Post-COVID portfolio revision shifted sales to non-food service channels and focused on fast food with strong takeout/delivery resilience, resulting in approximately 50% of sales now coming from change-resilient channels including fast food.

• FS Model National Expansion Completion • The FS model, launched with the first center in Tokyo in 2010, completed full national expansion in 14 years by 2024 with the opening of the Osaka FS Center. All processes from processing to shipping are held at a constant 5°C to maintain freshness, which has greatly improved product quality and created a core competitive advantage. • Total investment in the national FS network is approximately 15 billion yen, with total area of 30,000 square meters. Early expansion locked in lower construction costs: the 2010 Tokyo center cost 1 million yen per tsubo, compared to an estimated 1.8 million yen per tsubo for an equivalent new facility today, creating a large barrier to entry for competitors.

• Logistics Business Development • FS Logistics was established in 2015, and has expanded to a fleet of 140 vehicles with 237 employees as of 2025. • Currently growing third-party (out-of-group) logistics sales, which is expected to improve profitability significantly. The combined base and logistics network enables delivery to 30,000 stores from Hokkaido to Kyushu.

• New Business Development • BtoC: Rakusai develops and manufactures meal kits, sold via e-commerce, retail/supermarkets in the Kanto region, and as an OEM for home delivery providers such as Pal System. This is expected to become a major future revenue pillar. • High-processed foods: Developing value-added products such as frozen lemon slices and burdock fries, focusing on the growing frozen food category. • Sustainability: The "Vegi Broad" product line uses non-standard vegetables and factory offcuts, with 30 tons of waste currently utilized annually. It is already used by Mos Food Services and Monogatari Corporation, with plans to expand to non-vegetarian food waste utilization such as fish trimmings for stock. • R&D: Designer Foods conducts ongoing analysis of vegetable nutrient content, flavor, and regional characteristics to create data-driven value propositions that go beyond appearance-based grading, highlighting flavor and nutritional value of produce. This creates opportunities to increase per capita vegetable consumption, which currently falls 70g short of the national 350g daily target.

• Fifth Mid-Term Management Plan Progress and Additions • The 2027 Fifth Mid-Term Management Plan is on track to be achieved 1 year ahead of schedule, with four new priorities added: entry into agricultural operations, domestic replacement of imported vegetables, long-term storage technology development, and construction of a new farming support platform. • Business transformation for commercial processing vegetables: The company focuses on eliminating labor-intensive sorting and packaging work for farmers, taking over these processes at its facilities to allow farmers to specialize in cultivation, expand production volume, and reduce burden. • The company entered agricultural operations in September 2025 by acquiring a tomato greenhouse in Kumamoto, conducting in-house cultivation to gain practical experience to develop profitable farming models, focusing on pot cultivation that allows rapid start-up on acquired abandoned farmland. • Partnering with commercial-use plant factories to develop zero foreign matter contamination products, extend shelf life, and reduce food waste at food service locations. Most plant factories currently focus on retail and operate at a loss; Delica Foods focuses on commercial processing to achieve profitability, and has already started partnerships with multiple facilities. Also runs projects to improve farmer income via double-cropping of rice and vegetables in partnership with Shinmei Holdings.

• New Infrastructure Development • The Tokai Mother Center is scheduled to open in Aichi Prefecture on March 5, 2026, to implement long-term storage technology developed with Maekawa Manufacturing, to build a new fruit and vegetable distribution system and implement cross-sector work sharing between farmers and Delica Foods. The center will also be used to explore entry into 3PL logistics for non-vegetable products.

• The original 2027 Fifth Mid-Term Management Plan will be achieved 1 year ahead of schedule, and the plan will be updated with additional stability and agricultural support targets. • The Saitama Satte Project (Kanto Mother Center) is scheduled to open between 2028 and 2029, which will integrate farmland, processing bases, and logistics hubs into a single integrated food distribution hub. • The company's long-term vision is to become a 100 billion yen revenue company by 2034, and management believes this target is achievable at the current pace, with an aim to reach it earlier than planned. • For the next mid-term management plan, the company plans total investment of approximately 10 billion yen, including investment in the Kanto Mother Center, an additional new base in the Chugoku-Shikoku region, and potential M&A to expand business. • Management expects that leveraging the existing national infrastructure to expand into the 10 trillion yen total ingredients market for the combined 32 trillion yen out-of-home food service and ready-to-eat market creates large growth potential, beyond the current 1.5 trillion yen commercial vegetable market where Delica Foods currently operates a 60 billion yen business.

• Cut Vegetables: 43.2% of total revenue, showing a steady year-over-year increasing trend. This is the company's core product segment. • Other segments (Logistics Business, Meal Kit Business, BtoC Business, High-processed Food Business, Sustainable Product Business): These are growing priority segments for the company, with no specific absolute revenue or percentage share provided beyond the aggregate remaining share of 56.8%. • Total prior period consolidated net sales: 58.7 billion yen.

• Japanese agriculture is facing severe structural risk: core agricultural workers have decreased by 880,000 in the last 15 years, with an average age of 68.4 years as of 2022. 80% of current workers will retire in coming years, leaving just 20% of workers to maintain production, requiring either a 5x increase in productivity or large-scale new farmer entry. Estimates project 30% agricultural labor (and thus vegetable production) reduction across most major producing regions by 2040, and a pessimistic scenario projects vegetable self-sufficiency falling from 80% to 40% by 2035. • Construction and raw material costs have risen sharply, making it impossible for new competitors to replicate Delica Foods' national FS center network at current cost levels, and also increases operating costs for the company. • The 2024 logistics industry working hour reform has created industry-wide tight conditions, but Delica Foods' early establishment of its own logistics business puts it in a better position than peers to manage this risk. • Consumption tax reduction policy creates uncertain impacts, with potential shifts between dine-in and takeout consumption, though management does not expect large overall changes in consumption volume. • Most existing plant factories operate at a loss, and the company's strategy to turn commercial-focused plant factories profitable is unproven at scale.

Q: In food distribution and processing, what added value does Delica Foods provide, and what is the core problem-solving point, compared to other companies? What is the strongest competitive advantage vs peers?

A: Added value changes with the times. When I joined, the core value was stable daily supply to support the rapid expansion of food service. Later, demand shifted to health-oriented menu development and producer transparency, and now the biggest demand is strict quality management to avoid contamination accidents, as well as overall cost reduction and rationalization including logistics, amid rising raw material and logistics costs. Delica Foods' strength is flexible response to food service industry challenges via customized proposals and sales. The biggest competitive advantage is owning manufacturing facilities nationwide: most vegetable distribution companies are regional-focused or go through wholesale markets, and very few have a nationwide network of facilities, bases and logistics. Delica Foods invested early in this network, so it is extremely difficult for competitors to replicate the same infrastructure today.

Q: What impact will consumption tax reduction have on the business?

A: The general consensus among food service industry CEOs is that there will not be a very large impact overall. The degree of impact is tied to customer dwell time: for quick service like gyudon restaurants, a 10% consumption tax difference may shift some customers from dine-in to takeout, but overall consumption volume is not expected to change. For longer dwell time businesses like izakaya and family restaurants, there may be some impact but it is not expected to be large. We will continue to monitor policy details and strengthen our portfolio transformation to respond to any outcome.

Q: What are your countermeasures to the decreasing number of farming successors?

A: The problem is not sufficiently communicated to the public; broader awareness of the scale of the issue would increase urgency. The core challenge is building a system where farmers can earn sufficient profit: as input costs rise, farmer incomes must also increase, which requires working with the government to establish systems that properly recognize the value of agricultural products, such as aligning vegetable price increases with wage growth. Our ongoing work to set appropriate vegetable prices and streamline operations with food service customers has already contributed to our current improved business results, and this work will remain core to our strategy for the next 5 to 10 years.

Q: What is the background behind the early achievement of the mid-term management plan and large profit improvement?

A: The completion of national FS model expansion with the 2024 Osaka center delivered larger and faster customer growth than we expected. The old Osaka facility had issues with short shelf life and difficulty guaranteeing hygiene, and once the national network was completed, many customers chose to shift their entire national vegetable supply to Delica Foods much faster than we projected. In addition, the logistics business has developed its own sales organization, and acquiring new logistics customers has also led to new vegetable supply business from those customers, creating positive synergy between the two segments. This combination of national base completion and logistics business growth delivered better results than we expected.

Q: What are your future investment plans for the next mid-term management plan?

A: Now that we have achieved the current mid-term plan, we are moving forward with the next mid-term plan. In addition to the Kanto Mother Center in Satte, Saitama, we plan to add one more base in the Chugoku-Shikoku region to further expand business. We plan total investment of approximately 10 billion yen in the next mid-term plan, including potential M&A to support further business expansion.

Q: Recent stock price increases have raised the barrier to qualify for shareholder benefits, will you consider lowering the shareholding requirement?

A: There are no current plans to lower the requirement, but we will continue to flexibly review the policy based on future stock price and shareholder structure trends.