Ajinomoto Records Net Income Despite Lower Sales

Operating income decreased 14%, or 5.7 billion yen, to 36.8 billion yen, and ordinary income decreased 11%, or 4.8 billion yen, to 39.2 billion yen. Net income, however, increased 59 percent, or 15.3 billion yen, to 41.1 billion yen due to an extraordinary gain of 27.7 billion yen on the return of the substitutional portion of the welfare pension fund.

6 Nov 2012 --- Ajinomoto Co., Inc. (Ajinomoto Co.) announced its consolidated financial results for the interim period (April 1 - September 30) of the fiscal year ending March 31, 2013.

In the food industry, the challenging environment continued as ingredient prices remained high amid mild deflation in the market. In these conditions, net sales for the interim period ended September 30, 2012 decreased 1%, or 5.2 billion yen, compared with the previous interim period to 598.8 billion yen. Operating income decreased 14%, or 5.7 billion yen, to 36.8 billion yen, and ordinary income decreased 11%, or 4.8 billion yen, to 39.2 billion yen. Net income, however, increased 59 percent, or 15.3 billion yen, to 41.1 billion yen due to an extraordinary gain of 27.7 billion yen on the return of the substitutional portion of the welfare pension fund.

In the domestic food products business, sales increased 2%, or 4.9 billion yen, to 226.5 billion yen, due to growth in sales of seasonings and processed foods, and frozen foods. Operating income decreased 6%, or 1.0 billion yen, to 17.2 billion yen. This decrease was partly a reflection of reduced selling expenses in the first quarter of the previous fiscal year due to a result of the impact of the March 2011 earthquake. Sales of frozen food products for household use were firm due to strong sales of Gyoza and naturally defrosting products for use in boxed lunches, as well as other factors including the resumption of sales of certain products that were temporarily suspended in the previous year after the earthquake.

In the overseas food products business, sales decreased 0.1% to 114.8 billion yen, remaining at the level of the previous interim period as growth in sales of seasonings and processed foods partly offset the negative effect of exchange rates. Operating income decreased 12%, or 1.3 billion yen, to 10.2 billion yen mainly due to the negative effect of exchange rates. Sales of seasonings were firm as sales of umami seasoning Ajinomoto and flavor seasonings expanded in Asia. In the Americas, sales were down slightly overall as sales of flavor seasonings in South America decreased compared with the previous interim period due to the negative effect of exchange rates. In processed foods, sales of Birdy 3 in 1 instant coffee mix powder, Birdy canned coffee and other beverages increased compared with the previous interim period, and sales of instant noodles grew steadily.

Regarding umami seasonings for the food processing industry, in Japan, sales of nucleotides increased steadily as sales volume recovered after dropping due to the earthquake in 2011. However, domestic sales of umami seasoning Ajinomoto for the food processing industry decreased due to lower sales volume despite an increase in selling prices. Overseas, sales volume of nucleotides grew, primarily in Asia, and sales rose substantially compared with the previous interim period. However, sales of umami seasoning Ajinomoto for the food processing industry decreased significantly, impacted by unfavorable exchange rates and a decline in sales volumes attributable to increases in exports by competitors.

Sales of bioscience products and fine chemicals decreased 2%, or 1.7 billion yen, to 96.9 billion yen. Operating income increased 15%, or 0.9 billion yen, to 7.2 billion yen. In the feed-use amino acids business, in addition to the negative effect of exchange rates, selling prices of Lysine, Threonine and Tryptophan declined compared with the previous interim period. However, overall sales increased slightly as a result of higher Lysine sales volume and a substantial increase in sales volume of Tryptophan.

In the pharmaceuticals business, sales decreased 14%, or 5.4 billion yen, to 35.9 billion yen, and operating income decreased 68%, or 3.6 billion yen, to 1.8 billion yen. The contribution of in-licensed products kept sales of self-distributed products at the level of the previous interim period despite the impact of National Health Insurance (NHI) drug price revisions. However, sales of products sold through business tie-ups were down substantially from the previous interim period due to factors including the NHI drug price revisions, the effect from competing products and reduced royalty revenues. As a result, pharmaceutical sales decreased overall. Operating income also decreased sharply from the previous interim period due to the decline in sales.