House Foods : FY2023 Results Briefing

The original disclosure in Japanese was released on May 9, 2024 at 15:00

FY2023

Results Briefing

May 10, 2024

House Foods Group Inc.

Stock code: 2810

https://housefoods-group.com/

FY2023 Results

Full-Year Plan for FY2024

Supplementary Materials

1. Eighth Medium-term Business Plan
2. Business Overview

*1. We applied the Accounting Standard for Revenue Recognition, etc. from FY2021.

*2: Allocation of the purchase price (PPA) regarding the business combination with Keystone Natural Holdings, LLC effected September 30, 2022 was completed during FY2023.

Due to the completion of these accounting procedures, figures that reflect completion of the PPA are used.

2

FY2023 Results

Full-Year Plan for FY2024

Supplementary Materials

1. Eighth Medium-term Business Plan
2. Business Overview

3

Consolidated Results

FY2023 Results

• Net sales: Increased, reflecting price revisions at Group companies in Japan and overseas and inclusion of Keystone Natural in consolidated financial statements for the first time
• Operating profit: Increased, with other four business segments making up for struggling International Food Business

	FY2022	FY2023	FY2023	Year on year	Comparison with
Billion yen	revised plan
Results	Comparison	Revised plan	Comparison	Results	Comparison	Increase/	%	Increase/	%
	with net sales	with net sales	with net sales	Decrease	Decrease
Net sales	275.1	－	302.8	－	299.6		+24.5	+8.9%	-3.2	-1.1%
Operating profit	16.7	6.1%	20.0	6.6%	19.5	6.5%	+2.8	+16.7%	-0.5	-2.7%
EBITDA*	28.5	10.4%	33.5	11.1%	33.0	11.0%	+4.5	+15.8%	-0.5	-1.5%
Ordinary profit	18.3	6.7%	21.2	7.0%	21.1	7.0%	+2.8	+15.2%	-0.1	-0.5%
Profit attributable to	13.7	5.0%	18.0	5.9%	17.6	5.9%	+3.9	+28.6%	-0.4	-2.3%
owners of parent

* EBITDA: Operating profit (before amortization of goodwill) + Depreciation

Copyright (c) House Foods Group Inc. All rights reserved. 4

Results by Segment

		Net sales
			Comparison
	Results	Year on year
Billion yen	with revised
			plan

	Operating profit
		Comparison
Results	Year on year
with revised
		plan

FY2023 Results

ROS		EBITDA margin
Results Year on year		Results Year on year

	Consolidated	299.6	+24.5	+8.9%	-3.2
	Spice / Seasoning /	126.3	+6.5	+5.4%	-1.7
	Processed Food
	Business
	Health Food	16.9	+0.3	+2.1%	-0.3
	Business
	International Food	56.4	+7.5	+15.3%	-0.9
	Business
	Restaurant	55.1	+6.8	+14.0%	+0.0
	Business
	Other Food Related	55.0	+4.3	+8.6%	-0.6
	Business
	Adjustment	-10.1	-0.9	－	+0.3
	(elimination)

	19.5	+2.8	+16.7%	-0.5
	10.8	+2.9	+36.9%	+0.1
	2.5	+0.6	+29.2%	+0.4
	3.1	-2.4	-43.5%	-0.9
	3.4	+1.1	+49.7%	-0.2
	1.9	+0.7	+56.4%	+0.0
	-2.2	-0.2	－	+0.1

6.5% +0.4pt

8.6% +2.0pt

14.6% +3.1pt

5.4% -5.7pt

6.2% +1.5pt

3.5% +1.1pt

－－

11.0% +0.7pt

12.6% +1.7pt

17.0% +2.3pt

12.2% -3.3pt

11.7% +1.1pt

4.4% +1.0pt

－－

Copyright (c) House Foods Group Inc. All rights reserved. 5

Results by Segment (Spice / Seasoning / Processed Food Business)

FY2023 Results

[Gains in sales and profit] Some degree of recovery in earning capacity is underway thanks to price revisions and the implementation of measures to create demand.

- Household use business: Implemented prices revisions for a second consecutive fiscal year. Focused on the deployment of sales backup measures and the development of value- added products such as X-BlendCurry

Recovery of sales volume is still a work in progress given the impact of a mild winter on stew roux products and struggling sales of retort pouched products in the mid-to-high range, despite sales of curry roux products in line with expectations

• Food Service Business: Began operating as House Gaban in April 2023 This business performed mostly in line with expectations, partly due to price revisions implemented in September 2023 and a rebound in demand associated with the resumption of economic activity.
• • Old accounting standard ■ ■ New accounting standard

■ ■ ■ Net sales (billion yen)

■ ■ ■ Operating profit (billion yen) / ROS

■ ■ EBITDA (billion yen) / EBITDA margin

150
	146.3
100	120.4	117.4	119.8	126.3
50
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

15	10.7%/13.0%
15.6
	10.8%		8.6%
10		12.6
		6.6%	10.8
5			7.9
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

20	16.3%	14.9%
	19.6				12.6%
15	17.4
	10.9%
		15.9
10				13.0
5
0
FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

	*1		added-value products>
					X-Blend Curry	Vermont Curry Chef's Arrange
	Curry roux	Stew roux	Spice	Total of retort
				pouched products*2
Net sales	38.2	12.2	22.3	20.7
(billion yen)
						Hot
Year-on-year							Launched in February 2024
+6.6%	-0.5%	+4.4%	+1.1%			Launched in
change					Mild/Medium		February 2024
*1 Reference value based on shipments
			Launched in August 2023	Copyright (c) House Foods Group Inc. All rights reserved. 6
*2 Total of retort pouched curry, retort pouched stew, retort pouched hashed beef sauce and retort pouched pasta sauce

Results by Segment (Health Food Business)

FY2023 Results

[Gains in sales and profit] Stepped up initiatives, with emphasis on core brands Generated higher profit through vitamin product price revisions and cost control

- Functional spice business: Sales of Ukon No Chikara exceeded the level a year earlier thanks to marketing activities that tapped into increased opportunities to drink alcohol post-

COVID

• Vitamin business: Focused on creating demand for C1000 bottle products after price revisions, and allocated marketing budget as a priority to Ichinichibun No Vitamin Jelly, with a view to retaining the broader customer base gained during the COVID pandemic. Vitamin business sales were mostly unchanged year on year, partly due to struggling sales of products launched the previous year.
• Lactobacillus business: Focused on sales for use in functional food ingredients out of newly established base in the United States

		■ Old accounting standard ■ ■ New accounting standard
■ ■ ■ Net sales (billion yen)	■ ■ ■ Operating profit (billion yen) / ROS	■ ■ EBITDA (billion yen) / EBITDA margin

25	20.1
20
15	15.3		16.5	16.9
	14.4
10
5
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

2						14.6%	1.2							17.0%		1.4
				11.5%		2.5
							14.7%		2.9
2							2
										2.4
1
				1.9			1
1
0									0	1.9%	3.7%
0		-0.4		-0.1					0.5
			-1.0%						0.3
-1	-2.1%/-2.6%
				-1
	FY2020	FY2021	FY2022	FY2023
		FY2020	FY2021	FY2022	FY2023
		Full year	Full year	Full year	Full year
				Full year	Full year	Full year	Full year

		*
				Creation of demand according to season>	Examples of use in food ingredients>
	Functional spice business	Vitamin products	Lactobacillus business
	business
Net sales	8.6	9.5	0.4
(billion yen)
Year-on-year	+8.2%	-0.1%	+7.6%
change
			Copyright (c) House Foods Group Inc. All rights reserved. 7
* Reference value based on shipments

Results by Segment (International Food Business)

FY2023 Results

[Gain in sales and decline in profit] Responded to changes in the market environment in each area of operation, looking for recovery path

• United States: Although sales increased partly due to the inclusion of Keystone in the scope of consolidation for the first time, profit fell in part due to higher depreciation and amortization costs at House Foods America Corporation, reflecting increased amortization of goodwill and intangible assets associated with the acquisition of Keystone and increased production capacity.
• China: Household use business: Sales and profit both fell, reflecting the absence of high demand for home-cooked meals during the COVID pandemic and slower movement of goods as consumers cut down on spending in response to the economic downturn.
  Food service business: Sales rose and profit fell, reflecting progress developing new customers centered on emerging chain restaurants that are performing strongly post-COVID on the one hand and higher costs as a result of the resumption of business activities on the other.
• Thailand: Full-year business results were significantly affected by struggling first-half sales; however, second-half were in line with the revised plan thanks to the deployment of new marketing strategies.

■ ■ ■ Net sales (billion yen)	■ ■ ■ Operating profit (billion yen) / ROS	■ Old accounting standard ■ ■ New accounting standard
■ ■ EBITDA (billion yen) / EBITDA margin

55
50				56.4
45			48.9
40	35.5
35	39.1
30	34.1
25
20	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

6		13.4%	11.1%
5	12.9%/13.5%
5.2	5.4
4	4.6
3				5.4%
			3.1
2
1
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

8			15.6%	12.2%
6	17.7%	17.2%		7.6
			6.9
6.7
6.0
4
2
0
FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

Net sales by business		Business in the United States		Business in China			Businesses in Southeast Asia
		Tofu business of					Functional drinks business
	Overall	House Foods America		Overall		Overall
			in Thailand
		Corporation
Net sales (billion yen)	31.6	21.2	11.0	8.7	7.9
Year-on-year change	+49.1%	+18.7%	+3.5%	-28.3%	-31.4%
Local currency basis	+39.5%	+11.0%	+1.6%		－	-36.8%

Copyright (c) House Foods Group Inc. All rights reserved. 8

Results by Segment (Restaurant Business)

FY2023 Results

[Gains in sales and profit] Made progress strengthening new business formats in addition to restoring profitability in Japan and overseas

Japan:

Overseas:

• At Ichibanya, the net sales, number of customers and average sales per customer of existing stores all exceeded levels a year earlier thanks to promotional activities and menu measures in addition to the recovery of demand for eating out.
• Made progress strengthening new business formats through domestic subsidiary store openings (Daikokuya: Lamb BBQ) and acquisitions (Takei: noodles, Maedaya: motsunabe)

Sales of existing stores increased, reflecting economic recovery in most areas of operation. Worked to rebuild business in China, with the closure of unprofitable stores

		■ Old accounting standard ■ ■ New accounting standard
■ ■ ■ Net sales (billion yen)	■ ■ ■ Operating profit (billion yen) / ROS	■ ■ EBITDA (billion yen) / EBITDA margin

60
50				55.1
40	44.7	45.4	48.4
30
20
10
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

4						6.2%								11.7%
					6
											6.5
3							3.4			10.6%
				4.7%		5
							9.5%
						8.6%		5.2
2				3.3%	2.3			4
						4.3
						3.8
1				1.5				3
								2
-1
	-0.7						1
	-1.5%/-1.5%
-2					0
	FY2020	FY2021	FY2022	FY2023	FY2020	FY2021	FY2022	FY2023
		Full year	Full year	Full year	Full year			Full year	Full year	Full year	Full year

	All		Existing restaurants		Number of stores
	restaurants
					Average		All business	Increase/
Year-on-year	Net sales		Net sales	Number of		decrease
	sales per
change		customers		categories	from end of
			customer
							FY2022

Noodle shop Takei

Motsunabe Maedaya

Japan*1	+11.3%	+12.1%	+3.8%	+8.1%	1,245	-2
Overseas*2	+17.6%	+9.5%	－	－	212	+4

*1	Change in net sales is based on CURRY HOUSE CoCo ICHIBANYA stores. Change in number of stores includes domestic subsidiaries.
*2	Excluding impact of exchange rates	Copyright (c) House Foods Group Inc. All rights reserved. 9

Results by Segment (Other Food Related Business/Adjustment (Elimination))

FY2023 Results

Delica Chef Corporation:	Secured net sales mostly unchanged year on year due to solid sales of prepared dishes and baked bread. Profit rose thanks to initiatives to improve
productivity.
Vox Trading Co., Ltd.:	Posted gains in both sales and profit due to progress in price pass on and a focus on the sale of highly profitable goods.

Other Food Related Business		■ Old accounting standard ■ ■ New accounting standard
■ ■ ■ Net sales (billion yen)	■ ■ ■ Operating profit (billion yen) / ROS	■ ■ EBITDA (billion yen) / EBITDA margin

					55.0
50				50.7	55.0
40	45.5		45.6
43.9
30
20
10
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

2	3.9%/4.0%			3.5%
			1.9
2	1.8	3.2%
2.4%
		1.5
1			1.2
1
0	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

3
3	5.1%					4.4%
2	4.3%					2.4
2.2	3.4%
	2.0
2
		1.7
1
1
0
FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

	Delica Chef	Vox Trading Co., Ltd.
	Corporation	(consolidated)
Net sales	19.4	33.8
(billion
yen)

■ ■ ■ Net sales (billion yen)

0
-5
-8.3	-8.6	-9.2	-10.1
-10

-15	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

■ ■ ■ Operating profit (billion yen) / ROS

0
-1
-1	-1.5	-1.5
-2
-2			-2.1	-2.2
-3	FY2020	FY2021	FY2022	FY2023
	Full year	Full year	Full year	Full year

Year-on-
year	+0.7%	+13.9%
change

Head office costs: Costs increased, mainly reflecting expansion of personnel for development of value chains.

Copyright (c) House Foods Group Inc. All rights reserved. 10