Hi, Matsuda , CEO. Thank you very much for taking the time to join us today, despite your busy schedule. I would also like to take this opportunity to express my sincere gratitude for your continued support. Today, I will begin by providing an overall summary. After that, CFO Hishinuma will explain the results for the first half and the outlook for the second half and the full year based on actual figures. First, regarding the summary of the first half, as already announced, consolidated operating profit reached JPY 40.9 billion, exceeding the planned JPY 39.5 billion. In particular, pharmaceuticals significantly exceeded the plan. Although food products fell just slightly short, overall, we view the results as solid. As you know, while domestic consumption has been slow to recover, we implemented price increases for many products in the first half as well.
Although we were concerned about the impact on volume, we were able to minimize the decline, at least for major products, by leveraging our past experience. Based on the results of the first half and the current business environment, we made a slight downward revision to the full-year sales forecast but kept the operating profit forecast unchanged. In the food segment, we expect growth driven by the new products such as Hemoglobin A1C Yogurt, the relaunch of NAMANOTOKI Series, and enhanced offerings in the nutrition category. In pharmaceuticals, full-scale expansion of the insomnia treatment drug will begin. Along with these initiatives, we will thoroughly manage costs to achieve the full-year plan.
Our company-wide structural reforms have just begun, but we made several decisions and executed actions in the first half, including the termination of production at Shikoku Meiji and the implementation of the Next Career Special Support Program for next career transitions. We are currently reviewing the multiple plans, some of which require careful decision-making. However, rather than spending time overthinking, we will promptly move forward with initiatives that show promise, optimizing them as we proceed and accelerating management decision-making. Now, I would like to share what I am currently thinking. The first point is something I have mentioned repeatedly as a key theme: pursuing business development that excites both society and our employees. What became clear through the town hall meetings held in preparation for the long-term vision is that our employees also strongly desire new initiatives leveraging our strengths in food and pharmaceuticals.
Under the current medium-term plan 26, we have identified future-oriented technology development domains and reevaluated our technological assets. Based on these, the Wellness Science Lab is now leading efforts to establish businesses capable of generating JPY 100 billion in global sales with a profit margin of 30%. The multiple candidates for commercialization all utilize not only food-related expertise but also technologies and knowledge cultivated in the pharmaceutical field. I believe that once these businesses are launched, they will embody Meiji's unique synergy between food and pharmaceuticals. The second point is, while taking on new challenges, we must also push forward transformation with a strong sense of speed.
As mentioned earlier, we acted with quick decision-making in the first half, but I do not believe this is sufficient yet. In particular, reviewing our overseas food strategy is one of the most critical issues. While exploring optimal scale of our Chinese business, we intend to allocate more management resources to the strong-performing confectionery business to drive growth. We will expand successful cases such as placing market-aligned products within winning sales channels and implementing marketing strategies utilizing local human resources across regions. Although there is a limit to what I can say today about either initiative, I hope you understand that this is the direction in which we are steering the company. This concludes my explanation. Thank you very much for your attention.
This is Hishinuma, the CFO. I will now continue with the explanation, starting with the results of the first half of fiscal year 2025. Consolidated net sales for the first half were JPY 574.8 billion, a 1.0% increase year-on-year. Operating profit was JPY 40.9 billion, a 7.8% decrease year-on-year. Compared with the initial plan, although net sales fell short, operating profit exceeded the plan by JPY 1.4 billion, as President Matsuda mentioned. Meanwhile, the net profit was JPY 21.4 billion, a 21.1% decrease year-on-year, mainly due to the absence of lower extraordinary income recorded in the same period last year, such as gains on sales of securities investment. Compared with the initial plan, net profit fell short by JPY 1 billion due to differences in estimated tax expenses and increased profits attributable to non-controlling interests. Next, the segment overview. Net sales in the food segment were JPY 458.4 billion, a 0.7% increase year-on-year. Operating profit increased 5.0% year-on-year to JPY 29 billion. Both domestic and overseas operations achieved profit growth. Looking at the breakdown, as shown in the graph, increase in raw material costs were a negative factor of JPY 10.2 billion.
Price revisions contributed to a positive impact of JPY 22.2 billion. Measures such as volume adjustment contributed to JPY 1.2 billion, even after subtracting the JPY 11.0 billion negative impact from volume decline and product mix. Positive effects were exceeded to increase costs. Logistics and marketing costs were a negative factor of JPY 1.0 billion. Changes in manufacturing overhead and other expenses were additional negative JPY 0.3 billion. Subsidiaries contributed to a positive JPY 0.4 billion. Although domestic subsidiaries saw profit decline, overseas subsidiaries posted profit growth thanks to improvement in Chinese subsidiary. Next, the pharmaceutical segment. Net sales were JPY 116.9 billion, a 2.7% increase year-on-year. Operating profit was JPY 14.3 billion, a 22.8% decrease year-on-year. As shown in the graph, changes in sales had a negative impact of JPY 1.1 billion. Although Rezurock launched in May last year performed strongly, major antibacterial drugs remained sluggish.
Additionally, early shipments of influenza vaccines and the start of shipments of the COVID-19 vaccine Kostaive worsened the product mix. Energy price revisions were a negative factor of JPY 1.4 billion, while cost reductions contributed a positive JPY 0.2 billion. On the cost side, increases in marketing expenses for new drugs, R&D expenses, and system-related costs collectively resulted in a negative impact of JPY 3.6 billion. Subsidiary profit contributed a positive JPY 1.7 billion, mainly due to improved vaccine production efficiency at KM Biologics. This concludes the key points of the first half results. Next, I will explain the outlook for the second half and full year of fiscal year 2025. Based on the progress made in the first half, full-year net sales are forecast at JPY 1.177 trillion. Both the food and pharmaceutical segments were revised downward.
Meanwhile, operating profit and net income attributable to owners of parent forecasts remain unchanged. For the second half alone, consolidated net sales are planned at JPY 602.1 billion, a 2.9% increase year-on-year. Operating profit is projected at JPY 50.0 billion, a 24.2% increase, with both food and pharmaceuticals expected to produce profit growth. Sales and profit by business have been revised to reflect actual conditions, which will be explained later. From here, I will discuss each segment, beginning with the food segment. Operating profit for the first half fell short of the plan by JPY 0.6 billion, mainly due to deterioration in the domestic product mix and struggles in the China frozen dessert business. In the second half, we aim to recover this JPY 0.6 billion, focusing on two main areas. The first is strengthening products and marketing.
Dairy products and chocolate products performed well in the first half, so we raised the second half forecast. Nutrition products underperformed earlier, but measures to strengthen mainstay items were originally scheduled to begin in the second half, so gradual recovery is expected. Specific initiatives will be explained later. The second point is structural reform. While ensuring necessary marketing investments, we will also work on reviewing costs and reducing fixed expenses. Additionally, the China ice cream business enters the off-season in the second half, so we do not expect variances like those seen in the first half. Slide 11 shows sales and profits by business. As mentioned earlier, the dairy and chocolate businesses have revised their full-year operating profit forecast upward. For the second half alone, the food solution business has also been revised upward, mainly due to expected benefits from price increase in the B2B segment.
Meanwhile, the nutrition business has been revised downward for the second half, but we plan to maintain the previous year's levels of sales and profit. Looking at the business environment for executing this plan, for the second half of the year, costs for raw materials, particularly cocoa beans, domestic raw milk, and imported dairy ingredients, are expected to rise. Although cocoa beans prices are currently falling, the use of inventory secured at a higher price range will continue for the time being, and therefore it will take some time for the benefits to materialize. Meanwhile, other factors such as FX and the rising labor and logistics costs remain significant risk factors. As shown at the top left, the cost increase highlighted in gray has been gradually growing since the first half of FY 2024.
With little improvement in consumers' sense of financial ease and the prospect of prolonged cost increases, we will maintain our ability to raise prices and also optimize our cost structure. Regarding specific initiatives to maintain the ability to raise prices, the first is promotion of brand value. The top left graph shows the sales volume trend for Bulgaria Yogurt 400 g . We had decided to increase prices in line with the milk price increase in August, therefore, we invested resources early on to enhance promotions. Despite a 5%-6% price increase in August, sales volume growth was maintained year-over-year. When promoting brand value, our unique strength lies in our ability to approach from various angles beyond just health benefits. Even within highly competitive product categories like staple items, we will continue to communicate value through distinct approaches, such as leveraging our heritage and character recognition.
Over recent years, having increased prices for almost all products, we have accumulated effective marketing expertise. We will deploy the best practices across our businesses. The second point is new products. We will continue to grow our unique products in the second half, similar to NAMANOTOKI Series' success in May and the functional food Hemoglobin A1C Yogurt. While increasing the success rate for new products is important, we will also firmly establish them in the market through post-launch communication. The third area we are strengthening right now is promotion of cost-friendliness. The slide shows the example of Chocolato Coca. After repeated price increases, the large bag size favored by regular customers was sold at more than JPY 100,000 at the point of sale. The perceived price point seemed to have a psychological impact, slowing the growth of this product. In September, a smaller bag was launched.
While the price per gram still is the same, the perceived price impact was reduced, and the sales across the entire brand are now trending upwards. This approach of offering more cost-friendly size options will also be used in our struggling nutrition business. It will be applied to Zava Sparter type and Cube type infant formula products, aiming for sales recovery. Next, I will explain our structural reforms. With production, we will steadily consolidate production lines, including factory closures. The Tohoku plant, which was scheduled to close as part of a consolidation to the new Kanagawa factory, ceased production in October, one month ahead of schedule. The cost savings impact will be additive to this fiscal year. We have also decided to cease production at two Shikoku Meiji factories. Future cost savings are expected through production consolidation and the product line adjustments.
Regarding structural reforms beyond production, in addition to the personnel-related measures outlined in Matsuda's explanation, we are examining the appropriate business portfolio within the discussions on the long-term vision. We intend to provide further explanation once these discussions have progressed. We have covered our domestic initiatives. Next, we turn to overseas businesses. The bottom row of the slide shows the overseas total. While full-year net sales has been revised downwards, operating profit is expected to be in line with the initial plan. China will be covered in detail in the next page. Asia is growing steadily, primarily driven by chocolate snacks and the infant formula. The U.S. is also growing steadily thanks to increased production capacity, enabling us to capture robust demand. Challenges in China. Sales and profit are broken down by business segment, as shown in the table on the left. The dairy business is steadily reducing its deficit.
The Oishii Gyun yu, launched in July, is gradually gaining adoption. A high-protein variant was also launched in October. We plan to expand the lineup further, aiming for broader shelf presence. The chocolate business is experiencing lower profit due to rising raw material costs and increased depreciation expenses, but chocolate buys strong, driving sales growth. We have been increasing prices since September to counter rising costs to improve profitability. For the current fiscal year, we anticipate a decline in profits due to upfront costs, but we remain optimistic given the robust sales momentum. The food solutions business has seen its B2B milk segment struggle, and with ice cream also performing poorly this season, the full-year plan was revised downward.
For B2B, we will focus on the strong cream, and for ice cream, we will strengthen initiatives in winning sales channels ahead of next season, similar to the success seen in confectionery. Next, the pharmaceutical segment. Operating profit for the first half exceeded the plan by JPY 2 billion. While factors positive for profit, such as cost reductions and production efficiency for influenza vaccines, will contribute throughout the year, our full-year plan is kept at JPY 26 billion due to many uncertain factors in the second half beyond our control, such as trends in the infectious disease market and the vaccination rates. I will explain the key points. First, human vaccines. QuintaVac drove the growth in the first half. By promoting the unique specification of the formulation, we expect to steadily increase its market share in the second half as well.
For this period, Kostaive has been reformulated into a two-dose vial, providing better convenience. We are promoting its long-lasting antibody titers to gain market share. Since the pandemic, a flood of information regarding vaccines has emerged, some advocating vaccination, while others urge caution. In order to promote uptake, we will strengthen awareness campaigns for vaccines as a whole, including flu vaccines, and strive to improve vaccination rates. For human vaccines overall, full-year net sales will increase, but this will be a downward revision from the initial plan. This is due to a lowered outlook for Kostaive reflecting the vaccination environment. Next, domestic and overseas businesses.
Regarding domestic business, growth in antibacterial drugs has slowed due to changes in the outbreak of bacterial infections, but growth in Rezurock and the fact that Meiji Seika Pharma is selling some of the KM Biologics blood plasma products is helping us to be ahead of the plan, and this should offset the slowdown. We are also focusing on promoting the insomnia treatment, Vorazi, joint-marketed with Taisho Pharmaceutical, to ensure it makes a substantial contribution to performance in the next fiscal year. Overseas business, like domestic, face uncertainty in sales of our own product due to changing infectious disease outbreaks. Therefore, we plan to drive growth primarily through our robust CMO and CDMO businesses. Next, we would like to explain new developments concerning generics. As announced on 7 October, we have succeeded in manufacturing and marketing approval for three authorized generic products previously licensed by Sanofi to Nichi-Ik o.
One of them is the authorized generic for the brand name Allegra. They will be marketed by ME Pharma from April 2026 and are expected to contribute to sales and profit. The consortium initiative aimed at ensuring the stable supply of generic medicines is progressing steadily. Discussions are currently underway with partner companies regarding 56 products comprising 22 compounds for the first stage of consolidation of production sites. Twenty-three items are subject to discontinue and substitute, where one product is discontinued and substituted by another. Thirty-three items currently manufactured by different companies will be consolidated into a single site. We will continue to pursue economies of scale and strive to enhance efficiency throughout the entire process from production to sales. Finally, regarding the outlook for cash allocation, as this is a topic that comes up during our meetings, we wish to explain our current thinking.
The diagram on the left shows the three-year policy presented at the time of the medium-term plan announcement. Operating cash flow has remained below the medium-term plan projections for both fiscal years 2024 and 2025 due to greater-than-anticipated cash allocations towards securing raw materials such as cocoa beans, building up inventories of antibacterial drugs upon government's request for stable supply, and the profit level. Investment is also expected to be lower than initial projections. Since the fiscal year 2024, progress and direction of businesses and investments based on ROIC has been discussed at business strategy review meetings, which led to reassessing priorities and scrutinizing cash outflows.
As explained, while swiftly considering and implementing structural reforms, we will steadily reduce assets and improve capital efficiency. As promised, we aim to maintain stable and continuous expansion of returns with a minimum total payout ratio of 50%. We will continue to be flexible with share buybacks in accordance with the investment opportunities and cash flow conditions. That concludes our outlook for the second half and full year of fiscal 2025.