Summary of Q&A for Results Briefing of the 1st Quarter of Fiscal Year 2025 held on August 5, 2025

Although we don't have exact quarterly plans, Marine Products and Food Products Businesses significantly exceed initial expectations.

Higher profit growth is anticipated mainly from the expansion of pharmaceutical raw materials in Fine Chemicals, growth in aquaculture, and price adjustments in the domestic Food Products Business.

Regarding raw material procurement costs, we anticipate coping by passing prices on to products. Additionally, we currently hold inventory procured before additional tariffs were imposed, meaning tariff impacts are not expected until FY2026 and beyond. Consequently, the tariff impact for the current fiscal year is anticipated to be less severe than initially forecast. However, from a sales perspective, price revisions may lead to weakened demand, resulting in an expected decrease in profits to some extent.

The aquaculture business recorded about ¥3.0 billion in operating profit for FY2024. The full-year target for FY2025 is nearly ¥5.0 billion, and we're currently seeing progress exceeding this target.

In FY2024, aquaculture performance deteriorated due to declining seedling quality and the impact of low oxygen levels. However, in FY2025, improvements have been observed through enhanced seedling quality. Additionally, sales prices have been rising in line with the recovery in market conditions.

While we're tracking structural reform benefits using various metrics, the impact involves complex factors like market conditions, making it difficult to quantify in monetary terms.

It's challenging to generalize as various factors intersect. For globally traded commodities like salmon, we don't foresee significant impacts.

Increased procurement costs weren't fully reflected in selling prices, and market prices for fish meals and fish oil declined. However, profit margins gradually improve from Q2 onward, supported by strategies focusing on improved product mixes. Additionally, fish produced domestically are sold within our trading business, improving overall profitability across the group's value chain. Further expansion in aquaculture will have a positive impact on the trading business.

Investments in fillet production lines have increased fillet ratios from the 40% range last year to over 50% this year. Additionally, stringent control over labor costs and other expenses, combined with recovering surimi and fillet market conditions, has boosted profitability.

Q1 showed excellent performance. While growth rates from Q2 onward may moderate compared to Q1, progress toward reducing the annual loss is proceeding as initially planned.

We're closely monitoring competing Russian products affecting Alaskan surimi and fillet and trends in fish oil and fish meal markets.

Growing interest in seafood due to its role in protein supply and increased investor understanding are positive developments, enhancing overall industry vitality. We don't anticipate any lost opportunities from major trading companies' activities.

In Europe, despite pricing pressure from declining white fish raw material costs, adjusting unit prices by weight supported solid demand, and profits exceeded expectations. In North America, food service struggled due to recessionary concerns reducing dining-out demand, but retail expanded market share and profits through new channel development ahead of new factory operations.

Japan has traditionally adjusted prices by weight. However, due to strong, stable demand from health-conscious consumers, Europe had not done so previously. Thus, Europe's recent adoption of weight-based pricing yielded results.

With the scheduled start of a new factory operation in September, further sales expansion is anticipated. Note that Q1 profits notably increased year-on-year due to timing shifts in Lent, which boosted demand for fish dishes compared to last year.

We believe achieving this growth has become more certain due to the sales strategies of our pharmaceutical company customers. Our raw material sales are expected to increase slightly ahead of the pharmaceutical companies' actual sales, thus growing from the second half of FY2025.

Mochida Pharmaceutical's mid-term plan has already been incorporated. The Amarin sales contract isn't yet included, but it is considered a positive factor that enhances certainty regarding our initial outlook.