Summary of Q&A for Results Briefing of the Fiscal Year 2022 held on May 17,2023

We expect to make profits even if the fish market fluctuates slightly as the demand for seafood has been growing in overseas markets since we have a high ratio of global sales. The earnings of the aquaculture business have stabilized. In the Food products business, price increases have been penetrated both in Japan and overseas. As for the Fine Chemical business, the business environment is expected to improve in FY 2024, while it will be challenging in FY 2023. We believe we can achieve the plan though we don't mean to be optimistic.

Although internal figures for ROIC by the business have been collected, we haven't reached the level of incorporating them into plans based on them. We'd like to make it to the level to put them into the plan by business in FY2023. We have been working on the discussions on restructuring the portfolio before introducing ROIC, but we'll raise the level of discussions based on ROIC figures.

We believe that it is necessary to invest in food manufacturing functions and resource access in North America and Europe. Although we secure 20 billion yen for M&A in FY2023, we believe that the return on investment is the most important. We would increase the investment amount if an investment would be effective, so we don't think about the scale first.

We do not intend to grow a particular business to reach 1x PBR. The Marine products business significantly increased and covered the struggling Food products business in FY2022. In 2023, we're planning to compensate for the down of the Marine products by an increase in the Food products business. We believe the growth of each business in balance will stabilize the business.

In the aquaculture business, we'd like to expand the production volume by 15% from 2022 to 2024. We will increase mainly in buri yellowtail and coho salmon aquacultures in Japan. For example, our complete aquaculture yellowtails have the advantage of being able to supply fish in summer, while other competitors are unable to do so. We believe refining differentiated products will stabilize profit not only strengthen its ability to withstand fluctuations. As for the trading/processing business, in addition to the solid demand for marine products overseas, thorough inventory management in Japan and overseas is also a factor in being more resilient to market fluctuations. We will strive to increase the ratio of high-value-added products by enhancing the manufacturing functions in addition to strengthening access to resources and result in reducing the volatility of its business performance due to market fluctuations.

We can improve the production volume by 15% with the existing fish cages from 2022 to 2024. We will expand the volume while maintaining friendly relationships with local fisheries cooperatives and local governments and consider M&A in Japan and overseas as an option for mid-to-long-term growth.

The situation differs depending on fish species, so it is difficult to make a general statement, but the overall impression is that the price will decrease. It is important to build a business structure that can withstand market fluctuations by thoroughly managing inventory, such as selling high-priced inventory early.

The main contributions of the profit increase are sales increase, penetration of price increase, reduction in unprofitable items, and business integration of the chilled vendor business. The price increase will compensate for cost increases in the previous year and absorb the cost increase that has been missed to fill in.

Once the necessary applications for export to Europe are completed, we believe we can export the EPA pharmaceutical raw material to the EU between the fourth quarter of FY2023 and the first quarter of FY2024. The export to North America has been suspended due to the customer inventory adjustment. However, we expect to resume its export around the second half of FY2024. Since the price of anchovy crude oil for raw materials in South America has increased, there is no sign of lowering the product price. We believe that the price and competitive environment remains unchanged as we haven't heard of any new capital investment by competitors.

We can't give you figures in detail for sales and profit for European shares considering the relationship with competitors. However, we expect we would be one of the suppliers as the buyer plans to narrow down their suppliers.