Raising the the Presence of Each Business under Stress Presence of - - PowerPoint PPT Presentation

Raising Raising the the Presence of Each Business under Stress Presence of Each Business under Stress Producing Lasting Value Producing Lasting Value

Medium Medium-

• Term M

Term Management anagement P Plan for FY 201 lan for FY 2010 to FY 2012 0 to FY 2012

Results Briefing May 13, 2010

(Stock code: 2871) (Stock code: 2871)

Nichirei Corporation Nichirei Corporation

Tel: (+81 Tel: (+81-

• 3) 3248

3) 3248-

• 2235

2235 E E-

• mail:

mail: abemsh@nichirei.co.jp abemsh@nichirei.co.jp URL: http:// URL: http://www.nichirei.co.jp/english/ir www.nichirei.co.jp/english/ir/index.html /index.html

Notes: Figures shown in the graphs and charts in this presentation, unless otherwise specified, have been rounded off to the unit

• indicated. Certain figures have also been rounded up or down.

Table of Contents

Focus of the New Medium-Term Management Plan Target Values in the New Medium-Term Management Plan 1 Capital Spending to Peak and Ratio of Operating Income to Capital Employed to Resume Upturn 2 Business Strategy: Processed Foods Operating Income to Reach ¥6 billion with Expanded Chicken Products and Improved Efficiency in Other Categories 3 Nichirei's Processed Chicken Products to Enhance Presence in the Expanding Market 4 Earnings to Improve with Increased Dominance Following Integration and Enhancement of In-House Supply Capabilities 5 Productivity to Be Reviewed at Each Level to Develop More Robust Earnings Strength 6 First Year of Medium-Term Plan to Be a Year of Laying the Foundations for an Earnings Recovery 7 Business Strategy: Marine Products & Meat and Poultry Restructuring Business Resources as the Basis for Business Operation with High Earnings Stability 8 Stepping Up Marketing Closer to User Routes to Ensure Stability and Improve Profitability 9 Sales Systems to Be Renewed and Proportions of "Quality- Conscious Raw Materials and Processed Products" to Be Improved 10 Business Strategy: Logistics Expansion of Earnings Sources to Offset Increased Depreciation Cost and Enable Profit Growth in the Final Year 11 Contracts at TC to Remain Growth Driver for Sales of Logistics Network 12 Regional Storage to Expand Earnings Base with Series of Large Investment Completions 13 Stronger European Presence with Stable Operation of New Base in Poland and Acquisition of French Company 14 Reference Materials Segment Data 15

Focus of the New Medium-Term Management Plan

Target Values in the New Medium-Term Management Plan

Amounts less than 100 million yen are omitted

10/3 Actual 11/3 E 10/3 (Comparison) Goal for 13/3 10/3 (Comparison) Net Sales

4,381 4,497 103% 4,868 111%

Operating Income

168 165 98% 188 112%

Recurring Income

154 147 95% 171 111%

Net Income

90 79 87% 93 103% ROE 8% 7% 7% EPS 29 yen 25 yen 30 yen

• 1. For net sales, we aim at 11% growth of ¥48.7 billion for the three years under the plan, backed by growth in Logistics and especially the

Logistics Network, and recoveries in Processed Foods and the Meat and Poultry Business.

• 2. For operating income, we expect an overall increase of ¥2 billion, with increases of ¥3.4 billion in Processed Foods led by chicken

products, ¥0.3 billion in Marine Products and ¥0.2 billion in Meat and Poultry. We anticipate growth in Logistics to remain at ¥0.3 billion, given a higher depreciation cost. Lower earnings of ¥0.1 billion for Real Estate are expected compared to those as of the fiscal year ended March 2010 given contract renewals in commercial office space anticipated for the second year.

Net Sales by Segment

1,740 1,621 1,636 1,750 1,800 761 672 695 700 710 925 776 823 860 900 1,578

• 234
• 247
• 254

1,423 1,390 1,442 1,528 74 70 71 62 61 66 69 64 69 73

• 244
• 217

4,745 4,381 4,497 4,722 4,868

• 1,000

1,000 2,000 3,000 4,000 5,000 6,000 09/3 10/3 11/3E 12/3P 13/3P Financial year 100 million yen Intercompany elimination Other Real estate Logistics Meat and poultry Marine products Consolidated net sales

Operating Income by Segment

20 26 40 45 60 73 76 82 38 27 26 9 3 7 9 12 7 9 9 8 79 82 37 40 3 2 2 4 2

• 4
• 2
• 3

6 4

168 151 165 166 188

• 25

25 50 75 100 125 150 175 200 225 09/3 10/3 11/3E 12/3P 13/3P Financial year 100 million yen

1 Focus of the New Medium-Term Management Plan

(100 million yen)

Capital Spending to Peak and Ratio of Operating Income to Capital Employed to Resume Upturn

• 1. Capital spending focused on Processed Foods and

Logistics from the years under the previous medium-term plan will peak in the fiscal year ending March 2011, and subsequent investment levels are expected to be lower.

• 2. The employed capital turnover rate, which has

continued to rise, will temporarily fall in the aftermath, but will rise again in the fiscal year ending March 2013. The operating margin will also start to rise in the fiscal year ending March 2013 due to expanded business base. This will trigger a sharp rise in the ratio of operating income to capital employed starting in the fiscal year ending March 2013.

• 3. Free cash flow is expected to move into the black

in the second year and onward, and we will review the possibility of acquiring treasury stock representing about 5% of outstanding shares. We will maintain our dividend policy, with a dividend rate at 2.5% of stockholders' equity of and a dividend ratio of 25%.

• 4. To reduce future financial risk and maintain stable

employee benefits, we will consider restructuring the retirement benefit plan from the defined benefit-based system to the defined contribution- based system. (There was a total of ¥6 billion in actuarial differences and past service liabilities as of the end

• f March 2010.)

ROIC and ROE

2.3 2.3 2.5 2.7 2.9 2.7 2.5 2.5 2.5 2.6 2.8% 2.9% 3.4% 4.0% 3.8% 3.2% 3.8% 3.7% 3.5% 3.9% 6.4% 6.6% 8.4% 10.1% 10.0% 9.1% 10.3% 9.2% 8.7% 9.9%

• 2.0%

5.4% 6.4% 10.1% 8.5% 5.3% 7.9% 6.5% 5.9% 7.0%

• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P Operating Margin 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Turnover Rate Employed capital turnover rate Operating margin Employed capital operating margin Return on shareholders' equity

2

Change in Capital Spending

34 30 32 42 32 73 113 106 48 31 11 13 27 40 25 37 50 107 39 29 7 7 7 8 13 9 10 14 14 17

52 50 66 90 70 119 227 101

269 147 275 166 138

• 34

158

• 119

115

77 173

71

• 150
• 100
• 50

50 100 150 200 250 300 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3Ｅ 12/3Ｐ 13/3Ｐ Financial Year 100 million yen Capital Spending (Logistics) Capital Spending (Processed Foods) Capital Spending (Other) Free Cash Flow (Lease assets are shown after made off-balance)

Focus of the New Medium-Term Management Plan

Business Strategy: Processed Foods

Operating Income to Reach ¥6 billion with Expanded Chicken Products and Improved Efficiency in Other Categories

• 1. For net sales, we aim at total growth of 11%

for the three years under the plan, or 14% excluding the effect of the sale of the acerola beverage business. Both the household and commercial markets are expected to expand, backed by growth opportunities in the market for chicken products. For other categories, rice will be the main focus in the household market, while the commecial market should maintain the status quo with a focus on priority categories as competition among manufacturers remains fierce.

• 2. For operating income, we aim at a total

increase of ¥3.4 billion for the three years under the plan, driven by chicken products. Also, improvements in the earnings of other categories are anticipated given enhancements in factory productivity, especially that of internally manufactured products, and modifications to raw materials procurement strategies. We will also take steps to improve fixed costs.

Net Sales and Operating Income of Processed Foods

679 738 798 803 839 869 774 785 866 894 534 504 466 461 464 496 516 527 128 119 104 79 46 53 57 487 495 366 344 306 304 309 315 322 556 552 122 326 1700 1785 1848 1773 1750 1740 1621 1636 1750 1800 60 45 40 26 20 41 60 55 43 48 500 1000 1500 2000 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P Financial Year 100 million yen

• 10

10 30 50 70 90 Pre-coocked frozen foods for commercial use Pre-coocked frozen foods for househould use Health value Other Operating income 100 million yen

3

FY13/03 Operating Income 60 Rising raw material prices -6 Increased commercial distribution

• 2

Increased logistics cost -2 Improved earnings from domestic internal factory production 10 Increased revenues from frozen pre-cooded food excl. chicken products 7 Increased revenues from processed chiken products 16 Lower chicken procurement costs 4 Improved fixed costs 7 FY10/03 Operating Income 26 10 20 30 40 50 60 70 80 100 million yen Pre-coocked frozen foods

Business Strategy: Processed Foods

Factors Affected Operating Income in Processed Foods in FY13/3 Compared with FY10/3 (Period of the Medium-Term Management Plan)

Sales volume/amount of processed chicken products

47 54 61 64 66 60 60 76 78

313 362 393 425 452 427 421 521 533 10 20 30 40 50 60 70 80 90 100 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 Financial year Production volume Unit: 1000 ton 100 200 300 400 500 Sales amount 100 million yen Volume (1000 ton) Sales (100 million yen)

Nichirei‘s Processed Chicken Products to Enhance Presence in the Expanding Market

• 1. In the commercial market, processed chicken products are growing at a pace surpassing overall growth. This is a reflection
• f the following factors:

(i) Healthy, low price, high feed efficiency and other characteristics of chicken meat match current consumer needs. (ii) Characteristics of precooked frozen food, i.e., seasoned and fried and only final heating is required, meet demands for efficient operations at the point of sale. Use of precooked frozen food is expanding because the food can be cooked in large volumes with simple operation, and it has high preservability with little chance of dead stock. (iii) There is significant scope for shifting the focus to precooked frozen food from meat for processing, mainly imported chicken meat.

• 2. Sales of chicken products sold by Nichirei declined temporarily in the fiscal year ended March 2010 with the termination of

OEM procurement from Thailand. However, supply will be increased with the launch of the two new production facilities added in Thailand this summer.

Impact of OEM termination (year on year change) ・FY 09 -¥7.1 billion ・FY 10 -¥6.1 billion

4

Change in the size of the market for "fried chicken, etc. in commercial-use frozen delicatessen

780 834 876 891 911 923 100 107 112 114 117 118 100 103 104 104 105 102 200 400 600 800 1000 1200 2004 2005 2006 2007 2008 2009 (Projections) 100 million yen Market size Index (Reference) Index for commercial use frozen delicatessen (Prepared by Nichirei based on information from Fuji Keizai Co., Ltd)

Market size index (2004=100) Calendar year

Business Strategy: Processed Foods

25% 20% 0% 30% 25%

FY 2011 Production of highly value- added products with excellent processing characteristics OEM production mainly of lower priced products with value sensitivity Overseas production base run by Nichirei. Production of differentiated products benefiting from quality raw materials. Positioning

→ 30%

Domesti c

→ 15%

China

→ 30% → 25% → 0%

Thailand → FY 2008 Production Raw materials Poultry farmer In-house poultry OEM partner OEM partner In-house poultry

SUNIF Adding new lines in 2010 GFN (new company) Starting operation in 2010

GFPT

Change in Chicken Products Supply System

Circles with broken lines show transactions terminated. Circles with solid line s show

• perations run by Nichirei or

by a subsidiary

Percentage of in-house production

Japanese/Brazilian Chicken meat In-house/subsidiary factories

55% 80%

The breakdown is based

• n sales volume.

Earnings to Improve with Increased Dominance Following Integration and Enhancement of In-House Supply Capabilities

• 1. The in-house production ratio will rise from 55% to

80% with the addition of facilities at the two factories.

• 2. In addition to increases in production earnings from

enhanced in-house production capacity, profitability in terms of costs and quality differentiation will be further improved through full integration. Total earnings growh of ¥2 billion in processed chicken products is anticipated for the three years under the medium-tern plan.

• 3. The new plant buildings at GFN have been designed to

adapt to future facility expansion, and we will consider capturing new demand with a view to the possibility of sales outside Japan.

Details of enhanced production capacity of the two in-house factories in Thailand

5

calculated at 1 Thai Baht =2.87 yen

Trends in year-on-year profit on processed chicken products

• 6

+1 +4 +16 09/3 10/3 11/3 12/3-13/3 Financial year There were large year-on- year fluctuations in exchange rates in FY2009. The figure includes exchange gains. 100 million yen

Surapon Nichirei Foods Co.,

• Ltd. (SUNIF)

Kabinburi Plant Newly added production lines GFPT Nichirei (GFN) New plant Location Kabinburi, Prachinburi Province Nongyai, Chonburi Province Invested amount ¥1.5 billion (Facility area: 8,500 square meters) ¥6.6 billion (Facility area: 42,000 square meters) Annual production capacity Newly added lines: 7,000 tons per year (25,000 tons per year for

• verall chicken products,

including existing lines) 18,000 tons per year (currently 2 lines, with room for additional 27,000 tons)

Business Strategy: Processed Foods

¥2 billion

96.0 96.5 97.0 97.5 98.0 98.5 99.0 08/3 09/3 10/3 11/3 12/3 13/3 %

Productivity to Be Reviewed at Each Level to Develop More Robust Earnings Strength

Through a continuous review of each level of production to achieve cost savings, we anticipate a total earnings improvement of ¥1 billion for the three years under the new medium-term plan.

• 1. Reduction of direct costs (improvement of plant

productivity) (i) Improved efficiency in product inspection operations through comprehensive application of raw material standards (ii) Cost cutting by standardizing operations (reviewing long non-working days, etc.) (iii)Optimization of costs with review of specifications to meet diverse needs.

• 2. Reduction of indirect costs (review of plant fixed costs)

(i) Review of duplicated operations at head office and factories (ii) Integration of internal procurement liaison (iii)Standardization of personnel expenses through the promotion of multi-skilled development

• 3. Improvement of production yield rates
• 4. Efficiency of raw material procurement/management

(i) Procurement of raw materials of consistent quality and cost cutting through integration of procurement sources, extended efforts and planned purchasing (ii) Integration of the number of raw material items (reduction of 10% from the total of approximately 1,800 items) (iii)Cost reduction through group purchasing of materials (iv)Reduction of raw material inventories

Estimated improvement in yield rates

6

Improvement of profitability for the period under the medium-term plan (cost to sales ratio)

+0.4% +0.4% +0.6% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% Reduction of direct costs Reduction of indirect costs Improvement of production yield rates 1 billion yen

Business Strategy: Processed Foods

70% 80% 90% 100% 110% 120% 130% 140% 09/3-Q1 09/3-Q2 09/3-Q3 09/3-Q4 10/3-Q1 10/3-Q2 10/3-Q3 10/3-Q4 11/3-Q1 11/3-Q2 Pre-coocked frozen foods for househould use Precooked frozen food (excluding chicken products) (Breakdown) Croquet for commecial use

First Year of Medium-Term Plan to Be a Year of Laying the Foundations for an Earnings Recovery

1. Household use (i) The operating environment surrounding the industry remained slightly weaker than it was before the outbreak of the tainted gyoza incident, with the recovery having run its course. Gradual growth is anticipated, benefiting from the trend of eating at home. (ii) Nichirei will aim at achieving a 7% increase in revenues, mainly from the sale of processed chicken products. 2. Commercial use (i) With respect to processed chiken products, the effect of the termination of OEM procurement from Thailand in the previous year will pressure revenue for the first half of the current term, but will contribute to an earnings increase of ¥0.4 billion thanks to improved procurement costs. (ii) Downward pressure on the store prices of delicatessen items that became evident in the first half of the previsou year is beginning to

• ease. Croquet, a core Nichirei product, has regained the level of a year ago, helped by the response to lower prices, such as the

introduction of moderately priced products. (iii) Strategies to respond to lower prices have been adopted in other categories too, with the launch of new spring products, and we aim at a recovery of 7% from the previous year in sales of products for the commercial market, excluding chicken products.

• 3. The new Thai factory for chicken products will commence production this term and will require some time to achieve stable operation.

We expect a full profit contribution from the second year.

• 4. The revenue drop attributable to the transfer of the acerola beverage business will be ¥3.9 billion year on year, while sales of raw

materials are expected to contribute to profit growth.

Year-on-year Change in Sales of Precooked Frozen Food

7

FY11/03 Operating income: 40 Others: -1 Increases in logistics cost: -2 Improvement in profits of domestic in-house production: 3 Increases in revenues in precooked frozen food: 5 Declines in prices for procurement of chicken: 4 Improved fixed costs: 5 FY10/03 Operating income: 26 Allowance for doubtful accounts: -2 Increases in promotional expenses: -1 Decreases in revenues mainly of commercial use sectors: -17 Enhanced profitability due to improvements in product mix: 5 Declines in raw material prices (including prices for procurement of chicken from

• verseas) :15

Acerola :3 Agricultural produce: 1 Operating expense: 2 FY09/03 Operating income: 20

10 20 30 40 50 100 million yen

Year-on-Year Change in Operating Income in Processed Foods Business

Actual results for previous term Projections for this term Precooked Frozen Food Precooked Frozen Food

Business Strategy: Processed Foods

Business Strategy: Marine Products & Meat and Poultry

Restructuring Business Resources as the Basis for Business Operation with High Earnings Stability

• 1. Net sales of Marine Products are expected to rise a moderate 6% year on year in aggregate for the three years in the new

medium-term business plan. However, we plan to improve the operating margin to achieve 1.7% in the final year by giving more weight to business resources close to user routes than to general-purpose raw materials. We will do this with the development of operations with high earnings stability over the three years, by streamlining workforce requirements and shifting to wider area marketing systems.

• 2. We aim to raise net sales of Meat and Poultry business a total of 16% over the three years of the plan through expanded sales
• f "quality-conscious raw materials." This is an area where Nichirei has made considerable efforts in the past. "Quality-

conscious raw materials" are business resources with higher added-value than general business resources, and precisely target the sophisticated needs of users who are very health-consicous and seek good taste. They include FA chicken, which is given no feed additives during breeding, and Omega Balance Pork, that has a healthier fatty acid balance due to improved feed.

Sales/Operating Income of Marine Products/Meat and Poultry Business

7 9 12 8 9 9

• 14
• 10

9 3

• 5
• 4
• 17

3 6 8 4 6 7 910 695 700 710 823 860 900 672 761 747 747 811 900 776 925 839 809 847 759 846

• 20
• 10

10 20 30 04/1 05/2 06/2 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P Financial year Operating income : 100 million yen 100 200 300 400 500 600 700 800 900 1000 Sales: 100 million yen

Marine Products: operating income Meat and Poultry: operating income Marine Products: sales Meat and Poultry: sales

Operating margin/profit margin before fixed costs of Marine Products/Meat and Poultry Business

3.2% 3.3% 2.5% 3.5% 3.8% 3.7% 3.6% 0.8% 0.7% 0.0% 0.9% 1.0% 1.0% 1.0% 3.2% 3.3% 4.0% 5.6% 5.1% 5.2% 5.5% 1.7% 1.3% 1.0% 1.3% 0.4%

• 0.6%
• 0.5%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P

Financial year

Marine Products: profit margin before fixed costs Meat and Poultry: profit margin before fixed costs Marine Products: operating margin Meat and Poultry: operating margin

8 Business Strategy: Marine Products & Meat and Poultry

Stepping Up Marketing Closer to User Routes to Ensure Stability and Improve Profitability

• 1. In Marine Products, as a result of efforts to boost sales to user routes, such as restaurant business and

supermarkets, these routes now account for more than 50% of overall sales. This ratio has been raised more than 10% in the three years of the new medium-term plan.

• 2. An improvement in profit margins will be sought by narrowing the handling of general-purpose raw

materials to those that generate stable earnings and by giving more weight to business resources closer to user routes, including sushi items and ingredients for restaurants. Using our dominance in quality control, we will achieve higher user loyalty through an improved ability to develop "quality-conscious raw materials."

Breakdown of sales of Marine Products by user route

43% 44% 50% 52% 54% 56% 14% 14% 12% 12% 11% 11% 43% 42% 38% 36% 35% 33% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 08/3 09/3 10/3 11/3Ｅ 12/3P 13/3P Financial year User route Processing route Market route

9 Business Strategy: Marine Products

Sales Systems to Be Renewed and Proportions of “Quality-Conscious Raw Materials and Processed Products" to Be Improved

• 1. In Meat and Poultry business, we aim at expanding sales by emphasizing the development and sales system of

"quality-conscious raw materials" and their "processed products," which can withstand market fluctuations. This is expected to lead to stable marketing to user routes and improve sales in this sector, which have been lackluster for the last several years, to achieve a total of 15% growth in the three years under the new medium- term plan.

• 2. In line with this goal, we separated the sales organization – which had also assumed the function of

merchandise procurement –in April this year, to strengthen relations with user routes. Approximately two thirds

• f the personnel were made full-time salespeople, to focus on approaching important customers.
• 3. Examples of "quality-conscious raw materials:" pure Japanese chicken, FA (free from antibiotics) chicken,

Shikidori (plant-derived feed), Omega Balance Pork (in Japan and abroad)

39% 41% 39% 41% 43% 45% 0% 10% 20% 30% 40% 50% 08/3 09/3 10/3 11/3Ｅ 12/3P 13/3P Financial year

10 Ratio of “quality-conscious raw materials and processed products" in the sales

• f Meat and Poultry

Business Strategy: Meat and Poultry

Business Strategy: Logistics

Expansion of Earnings Sources to Offset Increased Depreciation Cost and Enable Profit Growth in the Final Year

• 1. Net sales are expected to increase a total of 14%
• ver the three years under the new medium-term
• plan. Logistics Networks are set to achieve revenue

growth of 12% led by new contracts from the transfer centers (TC), while Regional Storage should post a 10% rise with strengthened facility capacity given completion of a number of large

• constructions. Overseas business is expected to

achive revenue growth of 32%, owing partly to the acquisition of a French logistics company in Europe.

• 2. Operating income is anticipated to show moderate

total growth of ¥0.3 billion over the three years. This reflects the fact that in Regional Storage the completion of large investment construction projects that began during the previous medium- term plan period will peak and depreciation costs will exert downward pressure on earnings in the first year of the new medium-term plan. However, earnings in all sectors, incuding Regional Storage, Logistics Network and overseas business, are expected to start to build again from the second year, thanks to the effect of the expanded earnings base, and in the final year should exceed those of the fiscal year ended March 2010.

Sales in Logistics

501 461 463 454 442 462 452 453 492 497 486 554 632 688 709 722 753 775 809 844 137 133 156 178 224 224 165 187 206 217 1,139 1,167 1,271 1,341 1,387 1,423 1,390 1,442 1,528 1,578 500 1000 1500 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P Financial year 100 million yen

Regional Storage Logistics Network Overseas Others/common business

Operating Income in Logistics

38 31 47 53 49 50 53 43 45 48 12 1 13 17 22 19 20 23 26 26 12 6 7 16 17

• 11
• 5
• 8
• 5
• 2
• 4
• 1
• 3
• 5
• 5

10 7 13 10 9 51 36 58 72 79 73 76 82 82 85

• 20

20 40 60 80 100 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P Financial year 100 million yen Regional Storage Logistics Network Overseas Others/common business Operating income

11 Business Strategy: Logistics

Contracts at TC to Remain Growth Driver for Sales of Logistics Network

• 1. Demand in transfer centers (TC) and co-operative distribution is expected to remain strong, given the integration of logistics

facilities and needs for efficiency. Nichirei will seek to capture new customers by setting up logistics hubs in large metropolitan areas.

• 2. Four new TCs will be established in three years under the new medium-term plan. Net sales for TC are anticipated to

increase by a total of 21% for the three years because of volume increases achieved by drawing demand for procurement distribution (distribution for delivery to centers) at existing hubs.

• 3. The network business is expected to achieve net sales of ¥3.6 billion with the operation of new hubs (Fukuoka-Higashihama

and Higashi-Ogishima will be used in combination with Regional Storage) to respond to delivery needs in large metropolitan areas. In the local delivery business, joint distribution with frozen food and icecream producers is anticipated. Revenues from network business are expected to rise 18% for the three years under the plan.

12

8 11 12 14 19 21 24 24 25 23 24 26 27 5 10 15 20 25 30 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3E 12/3P 13/3P (Number of locations)

233 279 290 302 321 332 380 389 261 269 277 299 286 303 317 337 138 140 142 121 146 140 112 118 632 688 709 722 753 775 809 844 100 200 300 400 500 600 700 800 900 ０６/３ ０７/３ ０８/３ ０９/３ １０/３ １１/３E １２/３P １３/3P 100 million yen ＴＣ Logistics Other

Sales of Logistics Network by Segment Number of TC (Transfer Center) locations

Business Strategy: Logistics

Regional Storage to Expand Earnings Base with Series of Large Investment Completions

• 1. Net sales of Regional Storage are expected to grow 9% in the three years under the medium-term plan with the completion of

a new 75,000 ton cold storage in the fiscal year to March 2011 bolstering the capacity to 95,000 tons when aggregated with the facilities in operation in the fiscal year ended March 2010. Large investment in cold storage wil have peaked with this.

• 2. New capacity is concentrated in large metropolitan port areas with substantial cargo volumes. The facilities are designed to

better meet customer needs for efficient distribution by attaching distribution center functions to cold storage. The first year under the medium-term plan will see lower earnings due to depreciation cost, but the capacity will contribute to profit growth in the final year with an expanded earnings base.

• 3. Nichirei's cargo booking capability is rising each year with a widening spread in overall inventory turnover between Nichirei

and the industry, thanks to community-based marketing and a larger weighting of processed food in cargo handling after the localization of local cold storage facilities in April 2004.

Start of

• peration

Name and location

• f facility

Functions and features Cold storage capacity (tons) February 2010 Hokko DC Osaka-shi Good access to Osaka- shi and peripheral areas 20,000 Fiscal year ended March 2010 20,000 April 2010 Yamashita DC Yokohama-shi Strength in storing fruit juices and cheeses 12,144 August 2010 Fukuoka- Higashihama DC Fukuoka-shi Full delivery center functions 20,458 February 2011 Higashi-Ogishima DC Kawasaki-shi In addition to storage capacity, delivery center functions are emphasized, and trunk route transport capacity is strengthened. 42,258 Fiscal year ending March 2011 74,860

New Cold Storage in Operation

13

Source: Figures for the industry in large cities were prepared using data from the Japan Association of Refrigerated Warehouses.

Spread in overall inventory turnover between Nichirei and the industry

20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March FY2006 FY2007 FY2008 FY2009 Overall inventory turnover 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Spread Spread (Nichirei - Industry) Nishirei nationwide Industry: 12 large cities

Business Strategy: Logistics

Hamburg Radomsko Le Havre Antwerp

Areas strengthened by acquisition Existing core business base Areas strengthened by new bases

Existing distribution base Bases to be acquired Rotterdam Zunin Venlo Colombelles Carpique Munich Warsaw

• 1. In Poland where new facilities began operation last year, capacity utilization is expected to increase owing to slack season cargo

booking and the handling of logistics on behalf of large retailers. Operating income is set to move into the black in the final year

• f the medium-term plan, and we aim at quickly achieve growth with this base as the core of the Eastern European region.
• 2. The acquisition of Godfroy in France is expected to strengthen Nichirei's business presence in the Western European region and

contribute to revenue growth through improved transport efficiency between Nichirei and Thermotraffic. (i) There will be less one-way transport from Thermotraffic in Holland and Germany to locations in Europe and more shuttle cargo transport. (ii) More opportunities to capture customers with GODFROY's delivery capabilities from France to elsewhere in Europe.

Stronger European Presence with Stable Operation of New Base in Poland and Acquisition of French Company

Summary of GODFROY Group

• 1. Name: Holding GLB S.A. Holding TCG S.A.

Four other transport companies and cold storage companies

• 2. Performance (unit: thousand euro):

07/9 08/9 09/9 Sales 19,345 20,831 19,756 Recurring income 2,398 2,434 1,948 Total assets 10,751 11,697 11,927

• 3. Business establishment and cold storage capacity
• Carpiquet

14,720 tons Storage of cargo collected in western France and their delivery to elsewhere in France (70 vehicles)

• Le Havre

8,000 tons Storage of imported cargo at ports in Le Havre

• Colombelles

16,827 tons Storage of imported cargo at Rotterdam, Antwerp and Le Havre

14 Business Strategy: Logistics

Reference Materials

15

Segment Data

Sales and Operating Income by Segment

09/3 10/3 11/3 (E) 12/3 (P) 13/3 (P) (Net Sales) Processed Foods 1,740 1,621 1,636 1,750 1,800 Marine Products 761 672 695 700 710 Meat and Poultry Products 925 776 823 860 900 Logistics 1,423 1,390 1,442 1,528 1,578 Real Estate 74 70 71 62 61 Other 66 69 64 69 73 Intercompany Elimination

• 244
• 217
• 234
• 247
• 254

Total 4,745 4,381 4,497 4,722 4,868 (Operating Income) Processed Foods 20 26 40 45 60 Marine Products 3 9 7 9 12 Meat and Poultry Products 7 8 9 9 Logistics 82 79 73 76 82 Real Estate 40 37 38 27 26 Other 2 4 2 2 3 Intercompany Elimination 4 6

• 3
• 2
• 4

Total 151 168 165 166 188 (Amounts are rounded off to the nearest 100 million yen.)

Aside from historical facts, Nichirei's present plans, forecasts and strategies as outlined in this publication consist of forward- looking statements about future business performance. These forecasts of future business performance and explanations of future business activities may or may not include words such as "believe," "expect," "plan," "strategy," "estimate," "anticipate" or other similar expressions. These statements are based on the information available to Nichirei management at the time of publication. Actual results may differ significantly from these forecasts for a variety of reasons, and readers are therefore advised to refrain from making investment decisions based solely on these forward-looking statements. Nichirei will not necessarily revise its forward-looking statements in accordance with new information, future events, and other results. Risks and uncertainties that could affect Nichirei's actual business results include, but are not limited to: (1) Changes in the economic conditions and business environment that may affect the Nichirei Group's business activities. (2) Foreign exchange rate risks, especially as regards the US dollar and the euro. (3) Risks associated with the practicability of maintaining quality controls throughout the process from product development, procurement of raw materials, production, and sale. (4) Risks associated with the practicability of development of new products and services. (5) Risks associated with the practicability of growth strategies and implementation of low-cost systems. (6) Risks associated with the practicability of achieving benefits through alliances with outside companies. (7) Contingency risks. However, factors that may affect the performance of the Nichirei Group are not limited to those listed above. Further, risks and uncertainties include the possibility of future events that may have a serious and unpredictable impact on the Group. This publication is provided for the sole purpose of enhancing the reader's understanding of the Nichirei Group, and should not be taken as a recommendation regarding investment decisions.

Forward-Looking Statements