Nisshin OilliO : Consolidated Financial Results for the Nine Months Ended December 31, 2022

Note: This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Nine Months Ended December 31, 2022

[Japanese GAAP]

February 9, 2023

Company name: The Nisshin OilliO Group, Ltd.

Stock exchange listing: Tokyo

Code number: 2602

URL: https://www.nisshin-oillio.com/english/

Representative: Takahisa Kuno, Representative Director and President

Contact: Osamu Kawabe, Executive Officer, General Manager of Financial Dept.

Phone: [phone]

Scheduled date of filing quarterly securities report: February 13, 2023

Scheduled date of commencing dividend payments: ―

Availability of supplementary briefing material on quarterly financial results: Yes

Quarterly financial results briefing session: Yes (for analysts and institutional investors)

				(Amounts of less than one million yen are rounded down)
1. Consolidated Financial Results for the Nine Months Ended December 31, 2022 (April 1, 2022 to December 31, 2022)
(1) Consolidated Operating Results				(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Nine months ended
Million yen	%	Million yen	%	Million yen	%	Million yen	%
December 31, 2022	425,092	35.5	14,701	58.8	14,755	43.7	10,972	49.7
December 31, 2021	313,634	24.7	9,254	(26.0)	10,266	(21.4)	7,331	(18.4)

(Note) Comprehensive income: Nine months ended December 31, 2022: ¥6,564 million [(37.3)%]

Nine months ended December 31, 2021: ¥10,475 million [1.1%]
Basic earnings per	Diluted earnings per
	share		share
Nine months ended	Yen		Yen
December 31, 2022	338.55		-
December 31, 2021	226.22		-
(2) Consolidated Financial Position
	Total assets		Net assets	Capital adequacy ratio
As of	Million yen		Million yen		%
December 31, 2022	395,348		168,023		40.3
March 31, 2022	344,506		164,314		45.3
(Reference) Equity: As of December 31, 2022: ¥159,354 million
As of March 31, 2022: ¥156,225 million
2. Dividends
			Annual dividends
	1st		2nd	3rd	Year-end	Total
	quarter-end	quarter-end	quarter-end
		Yen	Yen	Yen	Yen	Yen
Fiscal year ended March 31, 2022		-	45.00	-	45.00	90.00
Fiscal year ending March 31, 2023		-	45.00	-
Fiscal year ending March 31, 2023					45.00	90.00
(Forecast)

(Note) Revision to the dividend forecast announced most recently: No

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3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023)

				(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	550,000	27.1	14,700	26.0	15,000	18.6	9,800	14.0	302.37

(Note) Revision to the financial results forecast announced most recently: Yes

For consolidated financial results forecast, please refer to the "Announcement of Revision of Consolidated Earnings Forecast" made today (February 9, 2023).

• Notes:

1. Changes in significant subsidiaries during the nine months ended December 31, 2022 (changes in specified subsidiaries resulting in changes in scope of consolidation): No

New:	-	(Company name)
Exclusion:	-	(Company name)

(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes

(Note) For details, see p. 15 under "Application of special accounting methods in the preparation of quarterly consolidated financial statements."

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares): December 31, 2022: 33,716,257 shares
      March 31, 2022: 33,716,257 shares
   2. Total number of treasury shares at the end of the period:

December 31, 2022: 1,305,611 shares

March 31, 2022: 1,307,629 shares

3) Average number of shares during the period:

Nine months ended December 31, 2022: 32,409,763 shares

Nine months ended December 31, 2021: 32,407,192 shares

• • The Company's shares held by the Trust Account for Stock Delivery to Directors are included in treasury shares.
• The Quarterly Consolidated Financial Results are not subject to quarterly review by certified public accountants or audit firms.
• Explanation of the appropriate use of earnings forecasts and other notes: The forward-looking statements, including earnings forecasts, contained in this document are based on information currently available to the Company and certain assumptions deemed reasonable, and are not intended as a promise by the Company that they will be achieved. Actual results may differ materially due to a variety of factors. Please refer to "1. Qualitative Information on the Quarterly Consolidated Financial Results,
• 1. Explanation of the Forecast Data, including Consolidated Results Forecast" on page 9 for the conditions that form the assumptions for the forecast of financial results and cautions concerning the use of the forecast of financial results.

The Company will hold a financial results briefing for analysts and institutional investors via Web conference (audio only) on Thursday, February 9, 2023. Language used: Japanese.

Supplementary materials will be posted on the Company's website on the same day as the briefing.

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[Reference]
Table of Contents
1. Qualitative Information on the Quarterly Consolidated Financial Results	4
(1) Overview of Business Performance	4
(2)	Overview of Financial Position	9
(3)	Explanation of the Forecast Data, including Consolidated Results Forecast	9
2. Quarterly Consolidated Financial Statements and Related Notes	10
(1)	Quarterly Consolidated Balance Sheets	10
(2) Quarterly Consolidated Statements of Income and Comprehensive Income	12
(3)	Quarterly Consolidated Statements of Cash Flows	14
(4)	Notes to the Quarterly Consolidated Financial Statements	15
	Notes on going concern assumption	15
	Notes on any significant fluctuation in the amount of shareholders' equity	15
	Application of special accounting methods in the preparation of quarterly consolidated financial statements....	15
	Additional information	15
	Segment information	16
	Revenue recognition	18

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1. Qualitative Information on the Quarterly Consolidated Financial Results

Any forward-looking statement herein are based on management's judgment as of December 31, 2022.

(1) Overview of Business Performance

During the first nine months of the fiscal year ending March 31, 2023, the Japanese economy showed signs of gradual recovery due to balanced promotion of the prevention of the spread of COVID-19 and economic activities. On the other hand, the pace of recovery remained sluggish, especially in the food service and tourism industries, as the number of newly infected persons increased at one time. Furthermore, there are concerns about deterioration in corporate earnings and weak consumer confidence due to rising prices caused by soaring prices of crude oil and other international commodities.

As for the global economy, the impact of COVID-19 has been limited, but there are concerns about the risk of recession due to significant monetary tightening to curb inflation against the backdrop of disruptions in supply chains caused by the Russian invasion of Ukraine and rising energy and raw material prices.

Within this environment, the Group continues to mobilize its core policy, "Transform ourselves into a corporate group that continuously creates diverse value through customer centricity," in advancing the "Value Up+" medium- term management plan (FY2021-FY2024). This includes accelerating the Group's growth route with the creation of shared values in six priority sectors as the drivers to growth, while leveraging the "Natural Power of Plants" as the basis for value creation. The aim is to sustain growth through cultivation of diverse values to be shared with society.

The consolidated financial results for the nine months of the fiscal year ending March 31, 2023, were as detailed below.

				(Million yen)
	Nine months ended	Nine months ended	Change	YoY (%)
	December 31, 2021	December 31, 2022
Net sales	313,634	425,092	+111,458	135.5%
Operating profit	9,254	14,701	+5,446	158.8%
Ordinary profit	10,266	14,755	+4,488	143.7%
Profit attributable to	7,331	10,972	+3,641	149.7%
owners of parent

Overview by Segment<< Oil and Fat >>

In the oil and fat segment, in addition to increasing demand for oils and fats due to global economic recovery from the COVID-19 pandemic, concerns over the supply of raw materials linked to Russia's invasion of Ukraine as well as the ongoing depreciation of the yen against the dollar caused by differences in monetary policy in Japan and the U.S., caused the raw materials prices to rise even further. Such conditions prompted thorough efforts to raise productivity and reduce costs, along with the formation of appropriate sales prices. In addition to expanding sales of value-added products, the Company focused on creating new markets and strengthening solution proposals. As a result, both net sales and operating profit increased over the same period of the previous year.

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◆ Oil and Meal				(Million yen)
	Nine months ended	Nine months ended	Change	YoY (%)
	December 31, 2021	December 31, 2022
Net sales	197,076	266,390	＋69,314	135.2%
Operating profit	3,616	7,969	＋4,353	220.4%

Procurement environment of raw materials

In procurement of raw materials, market prices for major raw materials rose over the same period of the previous fiscal year. In the dollar-yen market, the yen weakened against the dollar compared to the same period of the previous fiscal year. This led to broad increases in both soybean and rapeseed prices from the same period of the previous fiscal year.

Market prices of major raw materials

The market price for soybeans rose to a historical high of US$16-17 per bushel in June, due to uncertain supply in grain, fat and oil caused by Russia's invasion of Ukraine and a drop in soybeans production in South America caused by dry weather. It continued to remain significantly higher than in the same period of the previous year, due to the concern for reduced production of soybeans in the U.S. caused by high temperature and dry weather.

The market price for rapeseed also continued to chart an all-time high range due to tightening global supply and demand. Uncertainty over the supply of grain, fat and oil with Russia's invasion of Ukraine, as well as delays in planting new crops in Canada as a consequence of the unseasonable weather, prompted further such increases. In April, the price of rapeseed rose to a new record high of C$1,200 per metric ton and otherwise moved into an elevated pricing range. After July, the price dropped to the C$800 level due to expectations of a good harvest in Canada and Australia. The price, however, remained significantly higher than in the same period of the previous year.

Exchange rates

The dollar-yen exchange rate depreciated against the yen sharply from March onward due to the divergence between the monetary policies of Japan and the U.S. and other factors. The yen continued to weaken against the U.S. dollar to the 150-yen level in October due to continued monetary tightening in the U.S. and the expansion of Japan's trade deficit against the backdrop of soaring resource prices. From November, the yen appreciated against the dollar due to expectations for a change in U.S. monetary policy and the Bank of Japan's monetary policy revisions. However, the yen weakened significantly against the U.S. dollar compared to the same period of the previous year.

Sales of oil and fat

In commercial-use, initiatives were taken to revise sales price in the midst of further soaring raw materials prices. Also, continuous efforts were made to respond to changes in consumer behavior, labor shortages, and rising costs, and to enhance the quality of solution proposals to address customers' issues through sales initiatives, such as "collaborative-sales-to-identify-needs marketing."

Efforts were likewise made to expand sales through active proposals with value-added products as priority categories, such as "customer-solution-type frying oil" with long-lasting functions, Nisshin Oil for Steamed-Rice, and other functional oil and fat. Nevertheless, as demand for food services and tourism have yet to fully recover from the impact of COVID-19, sales volume decreased, but unit sales prices rose, resulting in higher net sales.

For food processing sector as well, net sales were raised with the efforts to advance sales at appropriate prices in view of costs, with the backdrop of further price hikes in raw materials.

Sales prices for household-use products were also revised. This was accompanied by ongoing efforts to

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