Summary of Q&A for Results Briefing of the 3rd Quarter of Fiscal Year 2024 held on February 7, 2025

In domestic fisheries, we expect revenue to recover, supported by subsidies for purse seine operations overseas. In South American aquaculture, profitability is improving due to lower feed costs, and the assessment gain of the fish in stock is also significant. The North American processing segment is expected to decrease the losses in Q4 compared to last year's period. While there are concerns about declining fish meal and fish oil prices in the domestic trading segment, overseas trading is expected to remain strong.

The subsidies will continue for three years from 2024. Due to higher-than-expected fish landings compared to the initial plan, we anticipate an increase in subsidies beyond the initial projections.

We have fundamentally reviewed the business cost structure and decided to reduce the number of vessels. Although the costs associated with vessel reductions will impact FY2025, we anticipate a return to profitability in FY2026.

We aim to address this as a temporary issue through ocean environment analysis and improving the efficiency of the aquaculture site management. In the medium-to-long term, we will focus on breeding high-temperature-resistant fish and advancing aquaculture technologies such as underwater feeding systems.

Profitability is expected to improve from FY2025 due to the normalization of Japanese amberjack market prices and lower feed costs. Additionally, we plan to increase production, targeting three million fish landings by 2030.

Overseas trading profits have increased due to stringent cost and inventory management by each fish species. We plan to expand the fresh fish business in Europe and continue growth beyond FY2025. North American processing has been facing increased costs and decreased surimi and fillet market prices, leading to more significant losses. However, we will implement various measures in FY2025 to improve profitability.

While customers pressure us to reduce prices in Q4, we plan to maintain profit margins through strategic raw material procurement and enhanced processing. In FY2025, we will continue expanding sales areas in Europe and broadening distribution channels for the household market in North America. However, North American food service is expected to face challenges due to rising raw material costs, particularly shrimp.

While frozen fried white-meat fish dominates the European market, our group is recognized for its "chilled white-meat fish fillets." Leveraging our unique chilled processing technology, we are expanding sales areas into Spain, Italy, and beyond.

We expect continued robust performance in the chilled products business for Q4. Additionally, we have factored in the impact of price increases starting in March, which should help maintain current profit levels. Although raw material costs, especially rice, are expected to remain high in FY2025, the price increase will partially offset these costs.

Rising rice prices have a significant impact. If the price increase in March does not fully offset the cost surge, we will consider additional price hikes.

We aim to continue annual shipments and expect a certain level of exports in FY2025.

We do not consider the "30% or more payout ratio" set in our medium-term plan appropriate. However, we do not plan to lower the current level.

While an increase in raw material costs from China and other sources is expected, we have implemented a diversification strategy in sourcing, so we do not anticipate significant impacts.

In January 2024, we acquired an equity-method company, resulting in negative goodwill. Since this negative goodwill was fully amortized in Q3, the equity-method profit has increased accordingly.