Earnings Call: Q1 2022

Jul 30, 2021

Good evening. This is Nakano speaking. Thank you. Thank you very much for attending despite your busy schedule. From my side, based on the presentation that we have distributed, I will give you the outline for the first quarter results. First of all, going to the PowerPoint material, and this is on Page 2. This is the Q1 summary. For the Q1, overall, sales and business profit Both grew on top of digit compared to previous year. So we have been able to have a smooth start in line with our plan. The Q1 of last year was when the COVID-nineteen was spreading, and there was a dramatic contraction of the restaurant business. And especially in April, the consumers have stocked up on food. And due to these special factors In this presentation, we are showing a comparison where we can with fiscal year 2019. First of all, in terms of the sales for the Q1, as you can see here In our major segments, that is Seasoning and Foods, Frozen Food, Healthcare and Others, all the sales grew, specifically In the overseas seasoning at North American frozen food and the biopharma service and electronic material business, We saw an increase in sales. In terms of the business profit, The increase of profit was JPY 5,100,000,000. For the food and Fizzing and foods business, we have been conducting a strategic proactive marketing spend. And Last year, there was a decrease in our share, but we have been spending to increase our share. However, as you can see under reference on the lower right hand side, this is a comparison against the fiscal year 2019. As you can see here, in terms of SG and A, compared to 2019, It's only a JPY 500,000,000 increase of the SG and A expenses, and we have been able to control the increased SG and A, including the ratio against ourselves. So please go to the next slide. This is the sales and business profit by segment. As you can see, in terms of the sales For all the major segments, we have seen an increase of sales. For the business profit, in the frozen food business, In particular, for the North American market, there has been difficulty in securing the labor force And there has been a temporary decline in the utilization. And there has been a cost increase, including personnel costs. So it was we saw a decline in profit here, but I would like to refer to this later. But in terms of the countermeasures, We already have these in place. On the other hand, if you go to the Healthcare segment, We saw an increase in sales for the biopharma service and the functional materials. So overall, the business profit increased strongly. So if you go to Page 10, there is a comparison against 20 19 Team for both sales and business profit by each segment. Even compared to Page 19, sales and business profit for each of the businesses. So an increase. And then going back to where we were going to Page 4, that is one-three. This is the sales and business profit by region. So if you look at the chart on the lower part of the slide, in terms of the seasoning and food segment, In all the regions, we saw an increase of sales. Specifically, in Asia, we saw increase in sales and the Americas, we saw an increase in sales as well. In Japan, Soup continued to show strong sales. Well, some of the products that is Chinese flavors and Western flavor seasonings and many specific seasonings. They saw a reactionary decline from last year from last April because there have people have been stocking up back at that time. So for these type of products, the increase of sales was somewhat subdued. In Asia, so We have the Page 5 of the sorry, Page 3 in our digital portfolio results Q1 ended June 30, 2022. So we have the Dubai region. Obviously, sales growth rate for Thailand is plus 9% in growth. For Indonesia, it's plus 8%. For Vietnam and the Philippines, a double digit increase. So you can see that the Asian region has been growing very steadily. So for each of the countries, There has been a steady at home demand and there has some partial recovery in the restaurant related business and that led to an increase of sales. For the major countries, I would like to explain more in detail about the situation. And verbally, I would like to explain about this. On local currency value base, comparing to the previous year, I'll just give you the percentage of the changes for this Q1. First of all, for Thailand. Last year, for the restaurant related business, it was slow, it declined sharply. But at this year, the aginomotor business, So the high single digit increase of sales. For the flavor seasonings, the high single digit growth. So this is This is basically related to the parcel recovery for the restaurant business. And for Thailand Instant Noodles, last year, in the first half, there has been some challenges in the production, but now we see a double digit growth. For beverages, high single digit level growth has been seen. So for Thailand, Basically, the recovery has been in line with our expectations. Going to Indonesia. Again, this continues this country continues to be strong. Daiginamoto double digit growth for the flavor seasoning double digit growth. Many specific seasonings because last year was high, it was a high single digit decline due to this reactionary situation. For Vietnam, Majinomoto and the flavor seasoning both saw a double digit growth. And in terms of the volume, it's smaller. But going to the Philippines, Saginamoto flavor seasoning, mini specific seasonings, Also double digit growth. And going to Latin America, Brazil overall grew 29%. So Brazil was strong and the major product that is for flavor seasoning, we saw a double digit growth. And going back to the going back to Page 4 where we have left off, going to the frozen through. In Japan, last year, as we have been explaining, Especially for the unprofitable restaurant oriented SKUs, to SKUs. We have been trying to reduce the number of SKUs because of this. For the restaurant business, for the key account business has declined sales has declined and we saw a decline both in sales and profit, but for the home use frozen food, we saw increase of sales. For North America, specifically, the demand for the restaurants has been recovering sharply And both restaurants and for at home use, we have seen a slight increase of sales. More specifically, for the restaurant business. It is high growth of double digit. Next, please go to Page 5. Now we'd like to look at the profit on different levels. As you can see on this page, in the Q1, Gross profit margin remains high at 39.3%. So it remains high. In 2019 fiscal year, although it is not shown on this page, the gross Profit margin was 36.8%. So it is better than that in 2019, and it has not come down so much from the level of fiscal year 2020 as a whole. As I mentioned earlier, as to SGA, please look at the SGA ratio against sales. It is well controlled. And under The business profit line, other Operational expenses. The in Europe, We sold the company of Animal Nutrition in April And that came with some expenses, which are reflected On this page, so the profit attributable to owners of the parent company, this line is showing Slight decline. But if we felt It is the one off sales of the Animal Nutrition Company, The profit attributable to owners of the parent company would have been positive. Please move on to Page 6. The items that impact the business results, namely from the 2nd quarter and on. Number 1, as described here, already in Western countries, There have been some developments eyeing the post COVID era. In other words, the restaurant business, it's showing strong recovery. And as to major countries, including Japan, As the vaccination progresses, The economic activities are expected to continue to be normalized And as happened in the U. S, the other temporarily the strong recovery of restaurant business, which is giving some reactionally decline to the home use related business. That possibility still remains And we assume that possibility. While in ASEAN countries and other Developing countries, the virus is still spreading and there are some Production side and sales side constraints, which would give some temporarily negative impact, But we experienced that last year and we could cope with the changing environment flexibly and adequately last year. So we believe that we can adapt 2, the changing markets going forward as well. Number 2, It's about pricing and especially the prices of the raw materials. More than we expected, some Raw materials, their prices have been increasing. That said, In Indonesia and Brazil, we have already raised prices for major seasonings. And as to frozen foods in North America, we are raising prices. And going forward, in each country, we have a plan, specific plan to deal with the situation in different countries through pricing. So basically, The cost increase, we believe, can be offset by The price increase. Earlier, I said that the Q1 saw decrease in the sales of the frozen booth. And there have been some HR cost Increased logistics cost increase and the operational slowdown, utilization slowdown due to staff shortage in North America, but we believe that we can offset the situation with price control. Through such activities. We remain committed to achieve Financial targets through rate price increase in organic growth and the achievement of budget. And the management has been in agreement to achieve the financial goals. And with that, I would like to conclude my presentation. And Nagano san, thank you very much. Now we plan to move on to Q and A. So this is from the first question, Fujiwara san from Nomura Securities. Hello. This is Fujiwara of Nomura speaking. Thank you for taking my question. So this was a wonderful financial results and I have a bit surprised. So one question. For the overseas major market growth, So it has been explained by product. And of course, in terms of the more established at home eating, that's understood, Good. But the growth seems to be quite strong. So in terms of your organic growth potential. I think that is the KPI that you're focused on. Does it mean that you have been able to enhance your organic growth capability? So from your point of view, What is your evaluation about this? Mr. Hiyawada, thank you very much for your question. To be frank, for Thailand, We were concerned about the situation. But relatively speaking, the infection is still continuing in Thailand. And there are some various constraints. The state of emergency is continuing in Thailand, and we were a bit concerned. However, We have started to see a recovery for the restaurants demand. That has been quite apparent. And on top of that, Well, for Thailand specifically, I think the biggest reason is the recovery of the restaurant demand. But for the other products, for the at home, demand has been more or less stable. So for the coffee, the RTD, that has started to recover. So I think that we'll be able to maintain this momentum. However, that said, as I have explained, currently, the infection is widespread. And for Thailand, I don't think that there will be there's not a major strength on the daily activities, but for instance, Indonesia, Vietnam. For those countries, the terms of the factory's operation, there has been some constraints. For instance, the staff will have to stay in the factory or else will not be allowed to After our goods for the public market is closed in some areas or the operation hours are shortened. In some countries, we are seeing these constraints, but we've experienced that last year. And we think that we'll be able to respond to these type of situations. But in the Q2, there is a possibility that these situations will impacts our performance. So you have explained about the current situation. Thank you for that. But as you pointed out, Last year, you have experienced that, so there's no difference in the base. So in terms of the growth, I think it would be safe to say that the Songgofu continued. Can you respond to that? Yes. More specifically, if you look at Indonesia, under this environment, So we were able to increase our sales even under this environment. So The at home demand or the recovery of eating at home, we want to leverage that and then link that to our organic growth. So sorry, sorry, one follow-up. So the share of each of the markets, isn't that have been increasing. It seems that way. If you look at the numbers, it seems that way. And for some products, we have seen our share So if you just look at the numbers, some are stable market share. And the statistics themselves, So the data tends to be concentrated on the major cities, so it's not that accurate. So it's not a complete apple apple comparison, but as a feeling, I think we have been able to increase ourselves in a very stable manner. Understood. Thank you very much for your answer. Thank you, Mr. Fujiwara. Next question is from Mr. Yamaguchi, Goldman Sachs sorry, Ms. Yamaguchi from Goldman Sachs. About Healthcare Actual results and how you evaluate them, biopharma and the functional materials. As to biopharmaceutical, I think different quarters had different results. So do you think that the Q1 results were too good? How would it be sustainable? And probably about 50% of the full year, the increased sales has been realized more than 50% when it comes to profit. What are you looking at then? How are you looking at them? And Functional Materials, very strong progress. And the Healthcare, The full time full year results are likely to exceed your forecast? Well, as to the first quarter, That was better than our expectation. So if the trend continues for the full year, well, we do not think so. As to amino acid, as pharmaceutical usage, Demand is very steady or tends to go up. As to biopharma services, Last year, because of the pandemic, there were some cancellations or delays. And after that, demand is beginning to recover, we believe. Also, in Belgium, Low molecular part Production capacity, well, the utilization rate is rather high. And so the cost situation will continue to be very good. As to electronic materials, Servers, networks and games, gaming, for these uses, Demand is strong. The question is whether the current Trend will continue or not, and we will need to be watching the situation closely. In the Q1, biopharma services had some one off revenue. And so that will not continue. That part will not continue. But as long as the environment is concerned, We expect the continuous strong growth and demand. Thank you. Thank you. So the one off revenue, was it a big one or Is it something that we don't need to worry about the reactionary, the recoil? Maybe it was just a single digit. It's not something that we need to worry about the direction of the recoil. Next from Mifo Securities, Sohji san, please. Thank you. So you have these KPIs, this organic growth that you've announced in your midterm plan, Price increase, organic growth 4%, the 2% through price increases was your KPIs. So if you look at the financial results for the quarter, I think it's very difficult because COVID-nineteen has an impact. But in terms of the price unit price increase, what Is there an evaluation about that for this Q1? And in terms of the KPIs, what was the contribution? And for the low salt products, you said that you're going to launch these low salt products at once at each of the markets. So would you like to elaborate that as far as you can explain about those launches? Thank you very much for your question. So in terms of the unit price increase, of course, it is true that due to COVID-nineteen, things it's very difficult to compare that. At the Q1, we have not been able to disclose about that much. But One thing that I might say is that So the passing on the cost increase portion to the prices, I have been able to do that partially in the Q1, and that will continue to be conducted in the Q2 and onwards. And of course, this is a positive development. And if you look at the current situation, Because last year, because of COVID-nineteen, so the small large products has increase and the large volume Ajinomoto or the flavor seasonings, that's what the restaurant business has declined. So maybe that has shown some negative movements. So if you look at the Q1 only, It has not been developing to a large increase of the price unit price increase. However, that said, in terms of our organic growth targets. That's 6% for this year for the flavors and seasoning seasoning of foods for frozen foods, we want to do that. And so this is a target for the price increase. We are committed to achieve that. In terms of the loss of products, for the launch of those products, can you comment on that? So currently, in each of the markets, the sales have just started. So in terms of the situation, how much that is growing, we don't have the exact figures right now. But well, we are still under the influence of COVID-nineteen, but the health related demand, people are more becoming more aware about health and we want to leverage on that type of trend. So in terms of the price of these products excuse me, for the prices. So because of the competitive environment, for instance, Vietnam, we have been discounting prices. But because of the increase of the raw material, so I think but then you see said that we are not in an environment that the price will go down because of the higher raw material cost. Is that the situation right now? Well, we have not been able to Clearly, say that it is not we are not competing on the price because it depends on the market. For instance, in Japan, the price competition is becoming harsher. So we cannot say for sure that we are not competing on price anymore. But going forward, the issues about cost will not impact not only our company, but Our competitors are under the same environment. So the price increase, I think that is unavoidable. Understood. Thank you. Thank you very much. Next question, Takagi san from SMBC Securities Nikko Securities. Takagi, good evening. The raw material, the price, that there was a JPY 3,000,000,000 of Cost to increase and from the Q2 and onwards, am I right to understand that the price will go up even more? So that will amount to more than JPY 10,000,000,000 of cost increase for the full year. But listening to you, It seems that the you think that the you can offset it with the other price increase. But historically, When it comes to the cost increase, your action was delayed and that you missed out on some opportunities The demand came back. But this time, it seems that your Message or action is changing internally and the other you now believe that the other you can minimize The risks coming from the material cost increase, Well, it's not that we have not done it in the past. But here is how the management thinks, Well, they understand that the other cost is increasing very rapidly. So We deal with it with price increase. And there is the consensus among the management, among all the people at Hajinomoto. And then, for example, Arajinomoto itself is manufactured at 6 different locations. And of course, we export the products to other locations. And when we are going to raise the transfer price internally And in the countries where they import the adenomoto, they have to think about when they are going to raise The other prices, so this time, the corporate business department, Business Planning department has been coordinating with other players in the group, And that's very important. I see. So what about the demand after the price increase? The demand increase is now a tailwind for you. So we don't need to worry about demand trend going forward? Well, not necessarily so. We cannot be reassured, Not necessarily when we look at the economy, but Each country is being helped by It's government, and we understand that the such help will continue. And already in those countries where price increases happened, we are not seeing Big decrease in the other quantity of sales. So I think we think that we will be fine. Initial forecast, there will be some the negative impact of more than JPY 1,000,000,000 comparing the cost and the price. So you're saying that the actual Your numbers will not be so different from your initial forecast. JPY 1,800,000,000 is the other impact in the initial forecast, which remains unchanged at this moment. But some of the costs Increasing more than we had expected. The question is how We how much work we have to do for that part And the business planning department or the business headquarters should be Actually, it is in the discussion with different countries. So you're saying that you are communicating a lot. Yes. Tanaka san, thank you very much. Let's go to the next question From Mr. Miyake san, please. Thank you. This is Miyake from Morgan Stanley. So my question is a kind of a follow-up of Yamaguchi san's question. So this biopharma service, So the increase of profit, the level of increase is JPY 2,000,000,000 out of the JPY 400,000,000 you said is about a one off revenue. But even excluding that, I think basically you have seen a substantial increase in your profit. So if we look forward, So I think basically there will be some high utilization in your operations and I think each quarter Is it the image that the profit is going to increase quarter by quarter? So I do not have a clear understanding. So I would like to hear about what are one and what are not one offs. On top of that, for the Healthcare segment, we have others. So it is we've seen the increase of profit here and really you have exceeded your budget for the full year. So are there any other factors that is going to be impacting this other sector. For the others business, mainly Because we are going through structural reform for the animal nutrition business And we have some products that are remaining, some Valine, for instance. The price of these type of products is going up. And Another factor is that the unrealized elimination of unrealized gains, there are some or no factors here, but That has translated to some profit. So those are not recurring type of profits, kind of a one off factors. And in terms of the your question about the health care, there has been some questions about the health care business. And of course, it is true that it's doing well currently and the environment per se is not bad. But so for the biopharmaceuticals in terms of the Whether the orders are recovering, I think we have to observe the situation a bit more carefully. So whether this trend is really being connecting being connected to the real recovery or is it going to go down again? I think we have to observe the situation very carefully. So when we know about have a more clear understanding of the situation as early as possible, if necessary, we will conduct a review. The Q1, I think the orders that have been stopped or canceled and it came out Once, we saw a huge jump in the profit outperformance. And so maybe you want to understand situation more to give more clarity. Is that your thinking? Yes. Yes, that's what we are thinking. I think the business operation themselves are thinking in that way. So at the full year plan, at this point for the biopharma services for the full year plan, It seems that it's going on an upward trend, but for the full year, not so much of an upside, are you saying? Well, currently, Our target is to achieve our initial plan. And I think basically, we are trending so that we can achieve a full year plan. But if we have to do a review, we'll do that and review the situation. Thank you. Thank you very much. Next question, Morita san from Daiwa Securities. Here is Morita with Daiwa Securities. Hello. Well, there's something that I don't understand. In the Q1 on a consolidated basis, In line with the year plan, it seems that this has been more upside compared to the plan by segment. Could you please make short comment? And for the Q1 and then the 2nd quarter, There will be some other downward trend in the other profit after the big profit increase in the Q1. Segment by segment, well, better than that, I would like to talk about seasonings and foods first. From around June, in Indonesia and Vietnam and Thailand, There's more spread of the infection, so we need to look at The potential impact, there might be some impact. As to frozen foods, As I mentioned earlier, we will deployed price increase. It is challenging if we can do it completely, but our management is committed to it. So we would like to watch carefully. As to Healthcare, For pharmaceutical use, the value of pharma services, namely, As I mentioned earlier, whether the other medical related Demands will continue or come down. And as to biopharma services, Whether the increase in orders will continue or will stop, And we need to watch that carefully as well. As to functional materials, Unless there is a big event, maybe not exactly as the current trend, But the overall, the trend will not change so much. So we expect that it will grow. So in terms of sales, that's how we are looking at it. What about profit? In the Q1, the actual profit exceeded your plan or in line with it. We'll slightly topped the plan, but In more or less in line with our expectation. Understood. And you need to think about Risks, as you mentioned, yes. As I mentioned earlier, for example, Thailand, We assumed there's some risks, but now we are happy that we have seen recovery. I'm sorry. As to the Healthcare and the other pharmaceutical related business, So mainly the revenue increased in which part it decreased. And as a result, it's in line with the plan. I'm talking about profit. Well, as to health care, Historically, there have been some fluctuations year on year. So if you look at a certain quarter, you cannot grasp the trend. Through the communications with the business, we believe that it is in line with the plan. So all in all, it is in line with the plan, But there will be some deodorant fluctuations. I'm not saying that deodorant we are looking at it conservatively. Understood. But from the Q2 and on, there's a possibility that you will see more profit. Well, we will continue to watch carefully. Thank you very much. For Ishida san from JPMorgan Securities. Yoshida from JPMorgan. Thank you very much for taking my question. So for each of the reasons for the what I want to talk about the at home demand and the restaurant demand. You talked about the frozen food on the U. S. And Thailand. You saw a recovery the restaurants and then the at home demand is quite stable. So I think for the ASEAN region, there are some But in terms of the business use, it's going to be coming back for the pre COVID situation. Then what's going to happen at the Home use products, when the business use goes up, maybe the home use is going to go down. But in terms of the sales, Are you going to increase yourself by increasing the prices for the home use products? Or if we look at a 1 to 2 year span, what is your idea about these type of situation. So I would like to know your thinking. Well, again, this is a very difficult situation that we are in Of course, what we are assuming is that for the restaurant related products, it will recover. However, in terms of the way of recovery will be slow. So Going completely going back to 2019 level, that will take more time to recover to the 2019 level. However, that said, as I said before, so temporarily, There'll be some because the higher vaccination rollout and temporarily there will be some kind of a one time jump in the recovery. That happened in North America actually. So if that is the case, there is a possibility that will happen in other markets as well. So this will be a one off factor, But the restaurant demand will go up and the home demand will go down as a possibility. Separately, there is a possibility that, that type of thing will happen. That's what we are assuming. However, From the mid- to long term perspective, through this COVID-nineteen situation, I think people have more heightened awareness about health. And specifically at home, well, eating together with at home, I think there are more and more occasions people are enjoying those type of opportunities. So it's not going completely back to the pre COVID days. I think this type of way of living will be more or less established. And we want to invest in those type of developments going forward. Thank you. So if the restaurant business is going to be going up, there will be temporary drop in the home use business. But overall, you'll be able to grow the business and the home use will drive demand. Yes, that's what we are thinking. Hi. Yes, thank you. Thank you very much. Next is from UBS Securities, Kawasaki san, please. Kawasaki from UBS. Thank you. So I would like to go to Page 2 and the Sales, GP, SG and A have given us a breakdown, and I would like to ask about this slide. First of all, So the last year's Q1 in terms of the GP has been contributing JPY7 1,000,000,000 of profit and SG and A has been by we closed by JPY 5,000,000,000. That was the basis. I guess this the Q1, the GP has gone down only JPY 500,000,000. So I think there's a biopharma business contributed. So in terms of the improvement of the GP has been able to be taken in, in terms of SG and A, So that has been spent for the organic growth. So the Q1 compared to Second half to the last fiscal year, strategic investment of marketing costs, Specifically, I think you have concentrated that investment in the Q4. So the strong sales on the April to June period Is that coming out from the contribution of the investment they conducted in the Q4. So the SG and A in the Q1, how much will that lead to the sales of the 2nd quarter onwards? How much is strategic investing? So the GP for the Q2 onwards, how should I think about that? Can you give us some color about that? Thank you for the question. Well, difficult to understand. So the last 4th quarter, From that quarter, as to that we have been investing for the SG and A. So the sales increased this time. For that increase, our investment paid off. It's not for all the products, but if you look at the other later page For the A four size documents, you will see the share. The Japanese flavor, the Dutch seasonings and the menu specific, the seasonings and soup For such products, the good trend, I think, is emerging. That said, It's not that we are the spending upfront. Well, for example, for the Southeast Asia And the impact of COVID there, we watch it carefully so that the other we can control SGA Anytime we want to. And That is what we have confirmed with the business side. So the first quarter There's the strategic marketing expenses as much as in the Q4. But As to SG and A, you will control it because the future is so uncertain You can use the level of SG and A to control. Yes. And when you compare the numbers with Those 2 years ago, you will see that the other our other marketing expenses are not that so high. So it is already well controlled. Thank you. Thank you. Next question. Mitsubishi Morgan Stanley, Tsunayama san, please. Thank you. Tanayama is here. Hello. One question about the frozen foods In North America, from the Q2 and on, you might increase prices. Could you please elaborate on that? How are you going to make recovery? Specific strategies and the other we need to increase the ROIC of the business. Do you see any problems which would impact your longer term strategy? Thank you. As I explained earlier, The sales is growing, but on the profit side, There is a challenge because of the cost. There is cost to increase, as I mentioned earlier. Due to COVID-nineteen, Of course, different locations have different situations, but in the U. S, there are some subsidies. And because of the subsidies, people tend to stay at home and that leads to the staff shortage On a chronic manner, chronically, there is a shortage of labor force and that is causing the lower utilization ratio. So in the North America, The HR cost, personnel cost is skyrocketing and which in return is Increasing logistics cost, that is the environment that we are looking at. And as to increased logistics cost that are already factored in our budget, But there are some increases in the cost to reach beyond our expectation and that happened in the Q1. So in terms of the countermeasures, basically, For the in terms of increase of the customer price index, we are going to increase our prices for the April, June July. Bit by bit, we have been increasing our prices. And furthermore, going forward, we are discussing about more price increases in some products. So by leveraging price increases, We will elaborate on price increases. And on top of that, so taking this as an opportunity, Last year, we have actually reduced a lot of SKUs for unprofitable products. For this fiscal year, So we want to offset the cost increase by price increases and by we will further deliberate reducing the SKU AU of unprofitable products. And by doing so, for the target, we want to achieve our targets through these activities. Thank you. So I understand how you're going to react, I guess, the cost increase. How about the labor shortage? So under the macroeconomic situation, I think you'll have to Look at the situation carefully. Yes, we have already started to take some actions. One is that The allowance for retaining our labor force and For instance, we are asking people from other divisions, departments to support. And by doing so, the utilization rate has gradually started to recover. And I think we have been able to see a gradual recovery in this area. But on the other hand, in terms of the personnel costs, we have seen an increase because of these activities. And there is a necessity that we have to pass that on to the crisis. Understood. Thank you very much. Thank you very much for your question. So we have now the next question will be the last question. So, Miura san from Citigroup Securities. Hello. This is Miura from Citi Securities. Thank you very much. I have 2 questions. So I think you have more or less showing yourself to be a global company. And the global environment is recovering. I think what's important right now is that try to establish to position as the for the home use product. So in terms of the many specific analyses, that will be a very important product. But can you elaborate about that, please? Thank you for your question. So for the menu specific seasoning, it is There are some markets that are growing. So I would like to explain in detail about each of these market situations. First of all, going to Indonesia. For Indonesia, I talked a bit about, I guess, last year, the high single digit Local currency sales has gone down. So the reason behind this is that So we are focusing on the Fried chicken powder for the nasi goreng, so the local menu product is what we are focusing on. So last year's there was a laser reactionary decline compared to last year. So that's the reason why we saw a decline in Indonesia. So for the fried chicken powder, There's a lot of competition in these type of products, but that has been the case from before. So we would like to compete in this area. And going to In terms of the value, it isn't that much, but well, it's in a big market, but the Philippines. So the crispy fry, that is the number 1 fried chicken powder. That's the product that we have. And for the Q1 for the FY 'twenty one, we saw a double digit or higher double digit That will be more than 20% growth. And This level of growth has been continuing, so we will continue to maintain this number one share and further enhance our share in the business. And as to Thailand, It is yet to grow, It's almost on the same level as last year. The slight decrease, Something like ropi menu where the fried chicken powder accounts for not so much, But for the local menu, we are providing products. For this year, Well, because last year, the menu specific seasonings grew double digit. And this year, all in all, The mid single digit increase. But in some countries, There's some directionally the recall from the previous year. For short term profit, you are saving your marketing expenses. That's not the case, right? Not at all. In the past, we Decreased marketing expenses, prioritizing business profit, and that was not Good. So as to the areas where we want to grow, We invest and that's the one of The themes of the midterm plan, why didn't you change the initial forecast for in your midterm plan. Because the second quarter is visible and the third quarter and the fourth quarter, the Unless you make big efforts, you will not reach KRW 115,500,000,000, KRW 115,000,000,000. Well, maybe you are seeing big risks. If not, It will not be KRW 115,000,000,000. Well, as I explained earlier, The price increase, we are committed to the increased prices And there's an internal agreement on that. And The question is whether cost increase will stop or will Continue even further. It's totally invisible. So we need to watch more closely. And if we have to change it, we will do so. Depends on the FRBs, The rate, the policy, but basically CPI tends to go up and your pricing is based On the D. C. P. I. As benchmark, so I'm not I don't understand why you are afraid of. What you are afraid of? Being afraid of It's not well, we don't think that we are afraid of anything. Well, if that's the case, Maybe you can either adjust the information, change your information or either give some comments. Thank you. Thank you. We will do our best. Thank you. And with that, so we conclude the Q and A session. The final comments from Mr. Nakano. Thank you very much for your time. Let me repeat that There are some uncertainties, but we are committed to achieving our budget. And our management has confirmed that we will achieve the target. And there are some challenges that we will make that happen. Thank you.