Ajinomoto: financial results for H1-2016

Tokyo / JP. (aci) Ajinomoto Company Incorporated announced its consolidated financial results for the interim period April 01 to September 30, 2016 of the Fiscal Year ending March 31, 2017 (FY-2016).

(JPY billions unless otherwise noted; figures rounded down)	Net Sales	Operating Income	Ordinary Income	Profit Attributable to Owners of Parent
Interim Period of FY2016	522.5	39.1	42.4	25.0
Interim Period of FY2015	589.5	47.2	49.7	41.9
Change from Previous Interim Period	-11.4%	-17.1%	-14.7%	-40.3%

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In the interim period ended September 30, 2016, consolidated net sales decreased JPY 67.0 billion compared with the same period of the previous fiscal year to JPY 522.5 billion as a result of factors including a decline in sales of seasonings and processed foods (International) due to the negative effect of currency translation, the change in EA Pharma Company Limited from a consolidated subsidiary of Ajinomoto Co. to an affiliated company accounted for by the equity method due to the restructuring of the pharmaceuticals business, and a substantial decline in sales of animal nutrition. Operating income decreased JPY 8.0 billion to JPY 39.1 billion and ordinary income decreased JPY 7.3 billion to JPY 42.4 billion due to a substantial decline in income from animal nutrition and the negative effect of currency translation, among other factors. Profit attributable to owners of parent decreased JPY 16.9 billion to JPY 25.0 billion in the absence of factors including the effect of a gain on step acquisitions of shares of Ajinomoto General Foods Inc., which was recorded in the first quarter of the previous fiscal year.

An overview of consolidated results by business segment is as follows.

Ajinomoto Co. has changed the classification of its reportable segments as of the first quarter of FY2016. Figures below for the same period of the previous fiscal year have been reclassified to match the current segments.

(JPY billions unless otherwise noted; figures rounded down)	Net Sales	Year-on-Year Change	Year-on-Year Change (%)	Operating Income (Loss)	Year-on-Year Change	Year-on-Year Change (%)
Japan Food Products	188.9	-2.1	-1.1%	15.2	+3.3	+28.6%
International Food Products	202.7	-31.6	-13.5%	19.2	-3.9	-16.8%
Life Support	59.9	-14.5	-19.6%	1.6	-6.6	-79.9%
Healthcare	42.1	-2.5	-5.8%	3.3	+0.1	+5.1%
Other Business	28.8	-16.0	-35.8%	(0.4)	-1.0	?
Total	522.5	-67.0	-11.4%	39.1	-8.0	-17.1%

Note: Domestic and overseas sales of ACTIVA products to food processing manufacturers and savory seasonings are included in Japan Food Products. Domestic and overseas sales of AJI-NO-MOTO for food processing manufacturers, nucleotides and sweeteners are included in International Food Products.

Japan Food Products segment sales decreased, despite growth in sales of frozen foods (Japan), as sales declined in coffee products and seasonings and processed foods (Japan) due in part to the sale of shares of a subsidiary. Operating income increased due to the growth in sales of frozen foods (Japan), among other factors.

International Food Products segment sales decreased on a yen basis as sales of seasonings and processed foods (International) and umami seasonings for processed food manufacturers and sweeteners and frozen foods (International) declined, due in part to the negative effect of currency translation. Operating income decreased due to factors including the negative effect of currency translation.

Life Support segment sales decreased due to the substantial decline in animal nutrition sales, although results for specialty chemicals were on par with the same period of the previous year. Operating income decreased due to a substantial decline in income from animal nutrition, and a decline in income from specialty chemicals.

Healthcare segment sales decreased due to a decline in sales of amino acids for pharmaceuticals and foods and pharmaceutical custom manufacturing, due in part to the negative effect of currency translation. Operating income increased due to growth in income from pharmaceutical custom manufacturing and amino acids for pharmaceuticals and foods.

Revision to the Full-Year Consolidated Performance Forecast for FY2016

Based on recent trends in business performance and other factors, Ajinomoto Co. has revised its consolidated performance forecast for FY2016 (April 01, 2016 – March 31, 2017), which was announced on May 10, 2016, as follows.

Revision to the Consolidated Performance Forecast for FY2016

(April 01, 2016 – March 31, 2017)

(JPY billions unless otherwise noted; figures rounded down)	Net Sales	Operating Income	Ordinary Income	Profit Attributable to Owners of Parent	Net Income per Share (Yen)
Previous forecast (A)	1’186.0	91.0	91.6	51.0	89.08
Revised forecast (B)	1’095.0	81.5	83.7	44.5	77.83
Amount of change (B-A)	-91.0	-9.5	-7.9	-6.5	–
Percentage change (%)	-7.7%	-10.4%	-8.6%	-12.7%	–
[Reference] Results for the fiscal year ended March 31, 2016 (FY2015)	1’184.1	90.8	94.1	63.4	107.86

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2. Reasons for the Revision

Compared with the performance forecast announced on May 10, 2016, Ajinomoto Co. has revised net sales and each level of income from operating income to the bottom line.

The revisions of the net sales and operating income forecasts are mainly due to the negative effect of currency translation from the appreciation of the yen against major currencies and the downturn in profitability associated with the weakening market conditions in the animal nutrition business.

As a result of these factors, Ajinomoto Co. expects ordinary income and profit attributable to owners of parent to fall short of the previous forecast.

The assumed average exchange rate for the fiscal year is JPY 103.50 to USD 1.
Please note that the dividend forecast announced on May 10, 2016 has not been revised.

Note: The performance forecast above is based on information available to Ajinomoto Co. as of the date of this news release. Various factors could cause actual results to differ materially from the above forecast.