Kewpie (2809): Management meeting: ROE , Americas growth confirmed (notes attached)

Research evidence excerpt

Kewpie (2809): Management meeting: ROE , Americas growth confirmed (notes attached)

Management meeting (July 10 at 13:30)

Q&A

【Current and next fiscal year earnings】

Q: 2H this fiscal year is guided to be a profit decline, and concerns remain about

next fiscal year’s earnings. We understand the cost increase from the Middle

East situation, but other companies are absorbing such impacts through various

measures and aiming for profit growth. In the 2H guidance, it is difficult to see

Kewpie’s intention to absorb the cost increase. Is this simply because the timing

of price revisions has been pushed back?

A: We incorporated a negative impact of ¥4.5bn from the Middle East situation into the

current guidance. Honestly, we believe there will be some time lag in recovering this

impact. There is no measure that can fully recover the ¥4.5bn during the current fiscal

year. However, we are implementing all short-term countermeasures. We will use

necessary materials, but are working to reduce usage volumes as much as possible and

control expenses. As a result, we have gained visibility on achieving at least full-year

operating profit of ¥38bn. The cost increase from the Middle East situation must be

recovered going forward. We are currently preparing medium- to long-term measures for

this, including portfolio reform, timely and appropriate pricing responses, and higher

value-added products. Some products can have prices raised immediately, while others

require careful timing. A time lag is unavoidable.

Q: Is Kewpie’s idea to absorb both the approximately ¥4bn cost increase this

fiscal year and the additional cost increase expected next fiscal year during next

fiscal year?

A: The cost increase next fiscal year has not yet been finalized, but unless we absorb