Message from Management to Investors

To Our Shareholders and Stakeholders

We are sincerely grateful for the continued support of our shareholders.
We at Morinaga Milk Group aim to continue delivering our unique “health value” and “tastiness and delightfulness” to realize an affluent society with forever brighter smiles, and to balance resolution of social issues and improvement of sales growth and profitability so that we can continue to be the company of choice.

Yoichi Onuki

Yoichi Onuki

Sales increased and profits declined due to a severe operating environment, including changes in cost structure

The prolonged situation in Ukraine, tight monetary policy around the world, and other factors are having various impacts and causing dramatic changes to the environment surrounding our society. During the fiscal year ended March 2023 under review, while there were signs of economic recovery as the country shifted to living with COVID-19, the operating environment remained extremely severe throughout the year with rising prices visibly affecting households and businesses.
Under these circumstances, the Morinaga Milk Group pushed forward with various initiatives aimed at balancing resolution of societal issues and improvement of sales growth and profitability in accordance with the “Medium-Term Business Plan 2022–2024.” At the same time, our businesses were heavily impacted particularly by increases in raw material prices and energy costs, and sharp depreciation of the yen. In November 2022, the trade price of raw milk for beverage and fermented milk products was raised, further adding to the rise in costs. To counter this situation, efforts were made to absorb the costs through price revisions, product mix improvement, rationalization, streamlining, expansion of the Global Business, and other measures.
In the consolidated financial results for the fiscal year ended March 31, 2023, we recorded a 4.4% year-on-year increase in net sales to ¥525.6 billion, a 19.6% year-on-year decrease in operating profit to ¥23.9 billion, and a 19.0% year-on-year decrease in ordinary profit to ¥25.2 billion, while profit attributable to owners of parent decreased by 50.0% year on year to ¥16.9 billion. Although expansion of the B-to-B Business reflecting increased sales notably of commercial dairy products, and growth in the Global Business helped to achieve overall increase in net sales, the large cost increases could be not fully absorbed and profits decreased as a result.

Focused on strengthening our corporate structure and business while responding to the drastically changing environment, in accordance with the “Medium-Term Business Plan 2022–2024”  

In 2019, the Group established the “Morinaga Milk Group 10-year Vision,” setting out its vision for the next 10 years. Underpinned by the vision, we have established three basic policies for the “Medium-Term Business Plan 2022–2024,” which are “achieving sustainable growth by increasing the added value of our business,” “further strengthening our business base with an eye on the future,” and “financial strategies focused on efficiency,” and are driving them forward in conjunction with the “Sustainability Medium- to Long-Term Plan 2030,” which has also been formulated at the same time.
During the fiscal year ended March 2023 under review, which was the first year of the current Medium-Term Business Plan and an important year for the Group as it moves toward a new stage of growth, we focused our efforts on further strengthening our corporate structure and business while responding to today’s drastically changing environment and implementing various initiatives for the future. Key initiatives include providing products that meet the needs of customers, offering high-value-added products, and promoting the value of products; expanding products in the “five domains of wellness,” including yogurt and functional ingredients, that take into account various health issues; and expanding the Global Business. In the Global Business, in particular, which is the key to our growth, we carried out proactive M&A deals in tandem with our strategy to expand existing businesses, and pushed forward with portfolio transformation. In the fiscal year ended March 2023 under review, NutriCo Morinaga, which is engaged in the infant and toddler milk business in Pakistan, Turtle Island Foods, which manufactures and sells plant-based food mainly in the United States, and Morinaga Le May, which imports and sells infant and toddler milk in Vietnam, were made subsidiaries of the Group. In addition, Elovi in Vietnam started local manufacturing and sale of Morinaga Milk branded products. In an effort to promote sustainability management, we formulated the new “Sustainability Medium- to Long-Term Plan 2030” to accelerate the initiatives, and focused on promoting sustainability awareness throughout the Group. In October 2022, the Group issued its first green bonds (18th series of unsecured straight bonds).
With respect to shareholder returns, our policy as set out in the Medium-Term Business Plan is to raise the target payout ratio to 30% from the previous target of 20%. In the fiscal year ended March 2023 under review, we increased dividends to 90 yen per share for the seventh consecutive year of dividend increase. Also, in line with our policy to take measures that give due consideration to total payout ratio, we announced in May 2023 the decision to acquire and cancel up to 2,300,000 shares or 10 billion yen of treasury shares.
After the significant impact it continued to have on the society and the economy, COVID-19 has been reclassified to Class 5, raising expectations that social and economic activities would be returning to normal. Yet, the future still remains very much unclear. The operating environment surrounding the Group will also likely remain highly uncertain. By mobilizing its strengths, the Group will strongly push ahead with efforts to achieve its Medium-Term Business Plan and realize its 10-year vision. We kindly ask for the unwavering support of our shareholders.

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