Summary of Q&A for Presentation on Medium-Term Management Plan GOOD FOODS Recipe2 held on April 9, 2025

With the expansion in South American aquaculture and the Fine Chemicals Business, we expect accelerated growth in the latter half of Recipe2. When the seafood market is low, we believe we can compensate for the decline in profits in the Marine Products Business by absorbing them into the food business. However, the FY2025 outlook remains uncertain.

We will invest significantly in domestic and overseas food businesses over the next three years. However, we will also seriously improve PBR and ROIC by reducing cross-shareholdings and selling vessels in South America.

We do not have specific figures available now, but we will consider disclosing them when appropriate.

We consider the baseline capital expenditure of approximately 120 billion yen under Recipe1, including growth investments. Recipe2 includes additional investments beyond that. Since the refurbishment of aging domestic food factories will not be completed under Recipe2, we expect to continue investing.

Based on 30 billion yen in operating profit and 40 to 45 billion yen in operating cash flow (including working capital), we have set a 140 billion yen assumption. Looking back at the previous medium-term management plan, cash flow was small in FY2022 due to increased inventories and concerns about transportation related to the COVID-19 pandemic. However, we expect around 40 billion yen in FY2024. While aquaculture increases working capital, improvements in Fine Chemicals inventory will offset this, so we do not foresee significant fluctuations.

Tariffs could raise costs by billions of yen, so we are considering countermeasures. Due to the 56% U.S. tariff on Vietnamese shrimp, we believe in changing shrimp suppliers. Chilean salmon exports to the U.S. may also be affected. The analysis is ongoing.

We forecast opportunities such as maximizing the benefits of U.S. domestic production and shifting products whose sales to North America declined to other markets using our global network.

Aquaculture involves high volatility due to fluctuations in production and market prices. We aim to reduce this volatility by strengthening our ability to manage risk through enhanced seedling production, expanding short-cycle farming of bluefin tuna in Japan to minimize risk and costs, and improving inventory management.

Our primary focus is exporting directly to Europe and Asia.

It is not included in the plan.

Increased volume raises risks and opportunities. South American salmon farming is volatile but a growth industry, so we mitigate risks by enhancing broodstock systems through improving hatchery centers and using Global Links for sales. We thoroughly hedge production and sales risks while pushing forward with business expansion.

About 20% of shipments go to the U.S.. We project this will increase to around 40% when the volume reaches 50,000 MT. However, if tariffs remain, we may shift our focus to the Brazilian market or sell value-added products in Europe and Asia. No definitive decisions have been made yet.

Yes, it is.

Yes, it is a potential competitive advantage. It also offers an opportunity to leverage our sales bases in different regions.

This is due to domestic capital investment, including reorganizing aging factories. Although depreciation will temporarily increase, we aim to improve the profit margin to around 5% by 2030. Overseas, we plan to increase profits by addressing limited production capacity through investments that will boost profitability.

We expect profit growth overseas even after accounting for depreciation while the domestic plan is under consideration.

We plan to improve ROIC through SKU reduction and implementing revenue and expenditure management on an item-by-item basis. Operating profit margin may temporarily decline until FY2027, but we aim to recover to 5% by 2030 and reignite growth thereafter.

We will invest in our factories to produce products with unique technologies superior to those of other companies, simplicity and health function that can gain the support of customers.

The frozen fried white-meat fish business is the primary contributor. Cultivating a second strategic pillar and developing markets in Asia and the Global South are still small in scale. Tapas in Europe, however, has grown to a notable size.

It includes pharmaceutical raw materials for new EPA formulations in the domestic market, pharmaceutical raw materials exports to Europe, and functional materials. We expect European pharmaceutical raw materials exports to continue contributing.

In Japan, we expect sales to expand as Mochida Pharmaceutical's sales of new EPA formulations are no longer limited.

Due to investment activities, The ROIC plan for the logistics business under Recipe2 falls below the company-wide average of 6%. However, the company is strongly affiliated with the Food and Marine Products Businesses. For this reason, we are planning investments in the logistics segment. Investment decisions are not made on a standalone basis but on the premise that the company will exceed the 6% ROIC benchmark.