Kobe Bussan : Supplementary Material for FY2022 Financial Results

Supplementary Material for

FY2022 Financial Results

December 15, 2022

◤◤ Contents

⚫	Consolidated Financial Highlights	2
⚫	Gyomu Super Business	4
⚫ Outline of Gyomu Super Franchise Agreement	5
⚫ Changes in Total Number of Gyomu Super Stores	6
⚫ Year-on-year Changes in Product Shipments to Gyomu Super Stores	7
⚫ Kobe Bussan's Strengths: "Unique Products with Competitive Advantages"	8
⚫	Restaurant & Delicatessen Business	9
⚫ Eco Renewable Energy Business	13
⚫	Shareholder Returns	15
⚫	Consolidated Financial Forecast	16
⚫	Medium-term Management Plan	17

1

◤◤ Consolidated Financial Highlights

		Net Sales
400,000
360,000
320,000
					406,813
280,000				340,870	362,064
240,000			299,616
267,175
200,000
FY2018	FY2019	FY2020	FY2021	FY2022

							Gross Profit
50,000																								20.00%
14.9%		15.7%
								13.3%
45,000																					15.00%
															11.9%	11.5%
40,000																								10.00%
				47,130	45,198			43,123	46,596
35,000	39,773																5.00%
30,000																								0.00%
		FY2018	FY2019	FY2020	FY2021	FY2022
								Gross profit						Gross margin

					SG&A Expenses
30,000	9.0%		9.3%																10.0%
25,000																									8.0%
									6.3%
20,000
																								6.0%
														4.4%	4.6%
15,000
24,051	27,891	21,347											4.0%
10,000
														15,812	18,776
5,000																			2.0%
0																									0.0%
FY2018	FY2019	FY2020				FY2021	FY2022
								SG&A expenses						SG&A ratio

	Operating Profit
30,000						10.0%
26,000			7.0%	7.5%	6.8%	8.0%
	6.4%
	5.9%
22,000						6.0%
18,000			23,851	27,311	27,820	4.0%
14,000	15,722	19,239				2.0%
10,000						0.0%
	FY2018	FY2019	FY2020	FY2021	FY2022
		Operating profit	Operating margin

Note: Fiscal year (FY) represents the one-year period from November 1 to October 31 of the following year.

2

◤◤ Consolidated Financial Highlights
	Ordinary Profit				Profit Attributable to
					Owners of Parent
35,000						10.0%	25,000		8.0%
30,000				8.0%	7.9%
		6.9%			8.0%
25,000		6.5%			20,000			5.4%	5.1%	6.0%
5.9%
							4.4%
							4.0%
20,000						6.0%	3.9%
								4.0%
15,000					32,125		15,000
			29,087	4.0%				19,592	20,832
			23,646
10,000		19,434				10,000		15,047			2.0%
15,831				2.0%	12,056
5,000					10,363
0						0.0%	5,000					0.0%
					FY2018	FY2019	FY2020	FY2021	FY2022
	FY2018	FY2019	FY2020	FY2021	FY2022
		Ordinary profit	Ordinary margin			Profit attributable to owners of parent	Net margin

[Financial Overview] ⚫ Net sales

Net sales increased by ¥44,748 million (12.4%) year on year with a significant increase in the number of stores and continued strong product shipments to existing stores.

⚫ Gross profit

Gross profit increased by ¥3,472 million (8.1%) year on year despite a drop in the gross margin due to the rise in costs caused primarily by soaring prices of raw materials and the weakening of yen. To mitigate the impact of such high costs, we reduced production costs partly by adjusting the formulation of raw materials and increased the hedge ratio by entering into new forward exchange contracts.

⚫ SG&A expenses

SG&A expenses increased by ¥2,963 million (18.7%) year on year due to increases in freight costs for the Gyomu Super Business, and personnel expenses and rent expenses for the opening of our directly operated BBQ restaurants.

⚫ Operating profit

Despite a drop in the operating margin due to increases in cost of sales and SG&A expenses, operating profit increased by ¥508 million (1.9%) year on year thanks to the net sales growth.

⚫ Ordinary profit

We entered into new forward exchange contracts to mitigate the impact of the rise in costs caused by the weakening of yen. As a result of the further weakening of yen, ordinary profit increased by ¥3,037 million (10.4%) year on year by the recording of a gain on valuation of foreign exchange contracts.

⚫ Profit attributable to owners of parent
Profit attributable to owners of parent increased by ¥1,240 million (6.3%) year on year reaching over ¥20,000 million for the first time since our	3
foundation thanks to a continued strong sales and a successfully implemented strategy to deal with exchange rate fluctuations despite the

recording of an impairment loss.

◤◤ Gyomu Super Business

Gyomu Super is our core business. Operating results of this business segment reflect wholesale sales to, and royalty fee from, Gyomu Super franchisees earned by Kobe Bussan, a franchisor (franchising headquarters), as well as earnings of Kobe Bussan Group's plants.

• Gyomu Super stores have expanded nationwide with 1,007 stores as of October 31, 2022.
• We revised prices in phases to address cost rises caused primarily by the soaring prices of raw materials.
• Our strong business performance led to a revision of our profit/loss simulation per store.

Gyomu Super Hakodate Taya Store (Our 1000th store)

					Net Sales
400,000
360,000
320,000
														396,296
280,000
											355,466
240,000									320,110
					264,171
			236,624
200,000
FY2018	FY2019	FY2020	FY2021	FY2022

	Operating Profit
35,000				8.7%		10.0%
30,000			8.3%		9.0%
	8.0%		8.0%
25,000	7.3%					8.0%
20,000						7.0%
					6.0%
15,000				31,035	31,612
		26,449	5.0%
		21,038
10,000	17,185				4.0%
5,000						3.0%
0						2.0%
	FY2018	FY2019	FY2020	FY2021	FY2022
		Operating profit	Operating margin

Note: Due to a change in the reportable segment structure in FY2021, the figures for FY2020 are reclassified retrospectively to reflect the change.	4
Accordingly, the figures for these two years are not consistent with those for FY2019 or before.