Summary of Q&A for Results Briefing of the 1st Quarter of Fiscal Year 2026 held on August 6, 2026

The revised plan was formulated after carefully assessing the impact of the Middle East situation on Group companies, including those overseas. At this point, we believe the revised plan is achievable. However, given the remaining uncertainties in the external environment, we are not currently in a position to provide specific guidance on the potential upside to operating profit.

As of May, we had assumed the possibility of approximately ¥9.0 bn in additional costs, including the risk of plant shutdowns due to constraints on heavy fuel oil supply. In the revised plan, based on subsequent developments in energy prices, raw material prices, and other factors, we have incorporated approximately ¥5.0 bn in additional costs as a more realistic estimate of the impact.

While we expect factors such as higher fish meal prices and increased depreciation, we also believe FY2027 will be a period when the investments we have made to date begin to make a full-scale contribution to earnings. We intend to steadily ramp up investment projects, including the South American aquaculture business, in line with the plan and translate them into profit growth.

Although marine product prices remain at high levels, prices of other protein sources have also increased, and we do not expect demand for marine products alone to decline significantly. Over the medium to long term, we expect demand for marine-based protein to expand, supported by growing health consciousness and the expansion of middle-income populations in emerging markets.

In addition to the impact of changes in water temperatures on fishery and aquaculture operations, we anticipate higher prices and procurement-related impacts resulting from lower catches of fish used as raw materials for fish meal and fish oil. We are taking measures such as securing long-term inventories and diversifying procurement sources, and believe we can manage the impact if El Niño lasts for a normal duration.

Higher fish meal and fish oil prices are a factor that increases costs in the aquaculture business through higher feed prices. We expect the impact in the current fiscal year to be limited, but if prices continue to rise, this could lead to higher aquaculture costs from 2027 onward.

We will work to limit cost increases by optimizing feed formulations and raw material usage and improving productivity. At the same time, we will leverage know-how from our overseas aquaculture operations and implement price revisions as necessary, to maintain profitability over the medium to long term.

Salmon prices remain at high levels. Although there may be temporary adjustments, supply-demand conditions remain tight. We believe the current business environment allows us to secure profitability by addressing production-related challenges.

In the European market, we believe it is unlikely that Chilean salmon will significantly take market share from Norwegian salmon. In the U.S. market, however, there may be periods when the supply-demand balance loosens, such as when there is a temporary concentration of Chilean salmon supply, resulting in a price difference compared with Norwegian salmon. Globally, there is limited room to increase salmon production through marine aquaculture, and if demand continues to expand, we believe the price difference could narrow over the medium to long term.

SA's profit/loss on the business improved year on year, while the assessment gain/loss of the fish in stock was negative. At Yadran, both profit/loss on the business and the assessment gain/loss of the fish in stock were below plan. As a result, within the South American aquaculture business overall, the negative impact from Yadran was relatively larger.

Yadran is making progress in improving profitability, although the recovery is taking longer than initially planned. The timing for achieving profitability on a monthly basis, which had initially been expected from the second half, is now expected to be delayed by approximately three months. We are addressing production and environmental challenges, including fish disease and lower dissolved oxygen levels, and are targeting profitability from Q4 onward.

The delay in Yadran's earnings recovery is attributable to growth conditions in some fish cages and environmental factors, among other factors, and we do not believe that a serious issue is occurring across the entire region. At SA, survival rates and aquaculture performance are above the prior-year levels, and we have not identified similar impacts at this time.

At the time of due diligence, we assessed the condition of the fish to the extent possible. However, during the subsequent growth process, it became apparent that the fish were not developing as initially expected. In the aquaculture business, it is difficult to fully predict future fish growth in advance, and we have not identified a single cause at this time.

At SA, survival rates and aquaculture performance are above the prior-year levels, and profit/loss on the business is progressing broadly in line with the plan. Going forward, we plan to gradually increase production from 2027 through 2030 while optimizing the rotation of farming sites and the allocation of fish.

We will work to maintain the current level of profitability by managing fishing operations and fishing grounds in line with resource conditions. Although higher fuel prices are increasing costs, these increases are currently being absorbed to some extent by higher fish prices.

Trading businesses in Japan and overseas continue to perform solidly. On the other hand, we are taking a cautious view of the North American processing business from Q2 onward, and do not assume that the strong performance in Q1 will directly translate into an upside to full-year results.

In both North America and Europe, we are gradually moving into the investment payback phase. In North America, we have reached a stage where the business can generate profit while absorbing the burden of depreciation. Europe is also expected to enter the investment payback phase this year, and we expect these investments to contribute progressively to earnings going forward.

The new plant is currently operating at approximately 25% of its ultimate production capacity, although not all production lines have been installed at this stage. The lines already installed are operating at close to full capacity. We plan to add further lines progressively and aim to bring the entire facility to full operation by around 2028.

Price revisions are progressing broadly as expected, with individual negotiations being conducted with customers in response to higher raw material prices and other factors. Going forward, we will work to secure profitability while closely monitoring demand trends following the price revisions.

We expect it to have a positive impact on profit. However, because factors such as the reflection of the refund in selling prices also need to be considered, the final impact on profit has not yet been determined. We expect the impact to be reflected in results from Q2 onward.

In Q1, both net sales and profit progressed broadly in line with the plan. At this point, there is no reason to revise the full-year forecast, and we will continue to closely monitor developments in overseas markets and other factors.