Ajinomoto Co Inc

Despite your busy schedule, thank you very much for your participation to the Ajinomoto Group's financial results for Q1 of FY 2020 for a conference call. This is Pac from IR Office. I am the moderator. In today's conference call, we have Mr. Kaji, Corporate Fellow, General Manager of IR Office with us. We scheduled 16 minutes for the conference. At the outset, based on the disclosed material, 20 minutes or so, Mr. Kaji is going to make the explanation, and then we will have Q&A. The material that is going to be used today is uploaded on the Aya Ajinomoto's website, and the content of today's conference will be recorded and will also be uploaded on our website. I would like to have your cooperation, so we would like to now start. So, Kaji-san, please.

Good afternoon, everyone. Once again, this is Kaji from the IR office of Ajinomoto. Now, without further ado, we would like to explain the first quarter results for fiscal 2023. If you can open page six. This is a summary of the first quarter. For the first quarter, we achieved an increase in both revenue and profit. Revenue, business profit, we achieved the record profit and sales for the first quarter. For business profit, If we exclude the impact of Forge acquisition, its business profit increased by 7% compared to the same period of 2023. In seasoning and food segment, salt and seasoning overseas remain very solid. In frozen food segment, we have continued brand investment in accordance with the plan from the start of the year, so this led to achieving growth in main products. In healthcare and other segment, revenue increased. and profit increased significantly. Functional materials, in particular, recorded a significant increase in both revenue and profit. While pharmaceutical services, CDMO services, including Forge, orders remained very strong. In the first quarter, shared company-wide expenses increased due to strategic investments made for the purpose of achieving the 2030 roadmap. For the full year, however, we will control these expenses to keep them within the level that we had forecast at the beginning of the year. Moving on to page three, this is the highlight of the numbers. Sales revenues came in at 365.5 billion yen, 107.7% of the same period of last fiscal year. If we exclude the impact of currency translation, it was 102.3% the level of last year. Business market came in at 43 billion yen, 100.5% level of last year. If you exclude the currency translation, it came in at 95% of the last year's level. If we exclude the impact of Forge acquisition, as I said earlier, on a Japanese yen basis, it was 107% year-on-year. And if we exclude the impact of both Forge and currency translation, it was 102% the level last fiscal year. So we achieved an increase in business profit in profit by all these calculations. Profit attributable to owners or parent remained at 88% of the last fiscal year because the transient increase in tax burden of withdrawing tax overseas associated with the profit returned from funds from overseas subsidiaries. However, this is only transient and the corporate tax credit is going to normalize towards the 27% level that we have anticipated in the forecast that we have given to you. for the full year. Page 4, this is the changes behind the business profits. The sales growth led to improvement of gross profits of $9.5 billion year-on-year gross profit margin. Although in the healthcare business, we recorded a positive increase. However, when it comes to umami seasoning for processing and other food businesses, we recorded a decline because of the unit price decline. So overall, it was comparable to last fiscal year. We are disclosing this at each earnings call. When it comes to south segmental sauce and seasonings and query nourishment, I would like to give you the breakdown of the numbers here. For domestic, seasoning and sauce and seasoning quick nourishment, unit price was 103%, volume was 96%. Overall, the sales was on par with the last fiscal year level. For overseas, unit price, 103%, and volume, 102%, the level of last fiscal year. Overall, 105% overall compared to last fiscal year for overseas. The domestic business was 98%, so slightly decreasing compared to last fiscal year, but we are continuing to increase the prices aggressively for coffee, and stick business was quite favorable, but the regular and instant coffee recorded a decline, so therefore, overall, there was a decline. However, when it comes to the sauce and seasoning subsegment in Japan, volume was increased by mid-single-digit percentage points. If you look at the gray portion, which is the SD&A, of course there was an impact of consolidation of forge, but in association with the 2030 roadmap strategy, we are continuing to expand the investment for in-time assets that is needed for sustainable growth in the future. Moving on to page five, here this is the difference from year on year of the business profit by segment in the first quarter of 2024. In the second half of the page, Just as a reference, we have given the analysis of the difference between the full-year forecast and last year's actuals. From page 6 onwards, I would like to give you the sales status of each different segment. First of all, if you can look at page 6 now, this is the sales of the three major segments. The first is the seasoning and food segment. Overall, one increased by 14.2 billion yen. If you look at the domestic sauce and seasoning, it was on par with last fiscal year overall. Coffee recorded a decline in volume. However, the seasoning increased because of the unit price increase and also the volume increase. For overseas, sauce and seasoning both achieved an increase in the unit price and volume, And on the local currency basis, it's achieved a high growth of upper single-digit percentage point, and this drove the overall growth of the field seasoning food segment. The second segment, frozen food. Overall, 6.3 billion yen increase in sales. Especially the overseas Gyoza and Asian core categories achieved a growth, which led to the overall growth of the revenue. And healthcare and other business. Overall, $5.9 billion sales increase. Functional materials achieved a significant sales increase because of the recovery of the semiconductor market and biopharma services and ingredients. Because there was an inventory adjustment impact last fiscal year, however, this has already subsided this fiscal year, has begun to subside this fiscal year. Moving on to page seven, this is a business profit for the three major subsegments. First, the seasoning and food segment. Overall, the segment achieved an increase of 1 billion yen in profit. For domestic business in Japan, the umami seasoning and mayonnaise and specific seasoning also achieved a revenue growth, but we were not able to absorb the negative impact from coffee. So overall, the domestic business achieved a slight decrease in profit. For coffee and menu-specific seasoning, as we have already announced, we are going to implement some price increases in the second half onwards in order to counter this trend. For the overseas markets, sauce and seasoning and quick nourishment achieved a growth in profit and covered offset the decline overall. So the overall segment of sauce and seasoning and food achieved a growth in profit. Growth in food, the second segment. Overall, a billion yen decrease in profit. Overseas, it was on par with last fiscal year. However, for the domestic Japanese business, because we have conducted proactive brand investment in the first quarter, we recorded a decrease in profit. Here, the unrealized profit of negative 0.5 billion yen is included here, but we believe we shall be able to achieve the planned numbers. for the full year. Healthcare and others, $1.7 billion in increase in business profit. Functional materials achieved a significant increase because of the mixed improvement in sales growth. And the amino acids for pharmaceuticals and food, because of the growth of the high value-added areas, we achieved an increase in profit. Biopharma services, CDL loan, because the orders are profitable, growing very steadily, but there was an increase, a decrease of, if you exclude the impact of 0.4 billion negative impact, we are steadily growing on par with the plan. For Europe and North America, the orders are growing steadily. However, so in the second quarter onwards, we are expecting a steady growth in this area. On the other hand, if you look at the very bottom there, This is the allocation of the shared company-wide expenses at the bottom here. We have increased the strategic investment in line with the 2030 roadmap, and we have increased this especially in the early part of the year. So if you compare with the first quarter of the fiscal year, the expenditures have been growing. On a four-year basis, however, we would like to control expenses in line with the projection that we have provided to you.

Moving on to page eight. From here. We would like to briefly talk about the topics for each segment. First is the domestic initiatives for seasonings and frozen foods. We discussed the evolution of our marketing efforts at the business briefing held on July 1st this year. As a second action of the oyster sauce communication strategy introduced on that day, we developed a real store of oyster sauce times soma noodle. As targeted, the product was exposed on TV and social media and achieved the expected advertising effect, which was quite high. In addition, the umami seasoning Ajinomoto, which is celebrating the 115th anniversary of its launch, we introduced a new package in collaboration with a popular cartoon, One Piece, and also a milk-type bottle of Garinomoto was launched. We are promoting to expand the users, centering on young generation. Also, the frozen home delivery meal, Ayete, which was introduced at the business briefing last December, has been launched with very favorable start. The number of meals sold is approaching 300,000 units, and key indicators are exceeding the plan. Furthermore, we launched a large volume package of gyoza, which we have regained the number one market share. We're aiming for a strong number one market share with cost-effective products. Moving on to page nine. These are overseas feelings and food and frozen foods initiatives. When you look at the top, we are pursuing... business strategies for overseas seasonings with an eye to the future. The mainstay umami seasonings and flavor seasonings are steadily increasing volume and unit price and supporting the foundation of our overseas seasonings business. We're expanding sales of high-value added categories like the menu-specific seasonings and liquid seasonings in each country. Also, the... Philippines, we launched a soup and canned coffee in Thailand that contributes to well-being with its sugar-free type. On the right bottom, you can see the frozen food. The new product, shumai dumpling, was launched in the Asian foods core category of frozen foods in North America with a basic recipe of the shumai in Japan. Moving on to page 10 is about functional materials. We achieved a significant increase in both sales and income as the semiconductor market recovered. As we have reported in May, PCs recovered due to replacement demand, and servers and networks are also showing signs of recovery. Although still a small percentage of the total, inquiries from generative AI are more robust than expected. On the right-hand side, business profit margins are also improving. in addition to mixed effect and higher factory utilization rates, a slight contribution from the yen's depreciation was also a factor in the higher profit margin. Moving on to page 11, CDMO. The market is in a gradual recovery trend and in all areas of our business environment for orders is improving. although sales of small molecules in Europe declined because we have transferred that to the nucleotide for some lines. The company expanded high-value-added areas and was able to keep profits decreased minimal due to the effect of an improved mix. Agiphase continued to grow steadily. Altea in North America We'll continue to implement structural reform projects. In the first quarter, we recorded a bit of a profit decline. The business portfolio will be narrowed down to fill and finish, and the active ingredients business will be integrated to forge. We aim to improve profitability as soon as possible by carrying out this project which will also involve a reduction in personnel. Also, FORGE in North America has expanded the number of new customers. We have now 48 new customers. Both the number of orders and order amount are increasing steadily. CDMO business as a whole we will achieve profit growth from the second quarter onward and realize steady profit growth for the full year as well. Finally, page 12, please. This is the progress of midterm ASV indicators by segment. So that was a summary of the financial results for FY24 first quarter. While steadily growing our existing businesses, We continue to make investments in advance with an eye toward 2030. We would continuously would like to take the changes and countermeasures, and we will do our best to achieve the goal. Thank you very much.

Now we'd like to move on to the Q&A session. I would like to explain how to raise a question. If you have any questions, please press the star button on your phone followed by one. When your order arrives and your name is called by the MC, please begin your question. If you wish to cancel your question, please press star button followed by number two. In the interest of time, we would like to limit the number of questions to two questions per one time, per one person. We thank you very much for your cooperation in advance. If there are so many people who would like to raise a question, there is a possibility that we may not be able to nominate you. Your understanding is appreciated. Those of you participating from overseas, you are allowed to raise questions in English, and we would like to answer through a simultaneous translation service. Now we'd like to begin the Q&A session. Okay, the first question is from Mizuho Securities. Sajisan, please begin. Thank you very much for appointing me. I have a question relating to CDMO regarding sales of CDMO business. The 4G impact, if you exclude the 4G impact, the 7% increase of sales, That was what you presented on page three. So if that is the case, 2.2 billion yen or so impact was materialized, I believe. So CDMO sales decreased by 400 million yen. So if you include the forged impact, 2.5 billion yen or so revenue reduction must have achieved. So I just wanted to confirm whether these numbers are correct or not, first and foremost. And on slide number 11, the European and American markets, you said that the revenue decreased there, but you also mentioned that the orders are coming in favorably in the Western markets. So in reality, In the existing business of CDMO, the orders in Western markets, are they favorable? So can we expect the sales to improve in each region as well as profit from the next second quarter onwards so that you can achieve a profit increase for the full year? Are we expecting a gradual improvement from the second quarter onwards? Do you see signs of that? the orders received and also the guidance for the profit for the second quarter. If you can elaborate on that, that would be appreciated. Thank you very much, Sajisan, for the question. Forged sales, the level is comparable to what you have just analyzed. The existing business's revenue decrease was driven mainly by the small molecule European business. If you look at the results presentation document on page 3, in the EMEA Europe, minus 3.6 billion yen is the number that is shown there. And this is mainly due to the small molecule business in Europe, revenue reduction thereof. Last fiscal year, in the first half, we intentionally shifted some of the facilities to medium molecule. So that resulted in the increase of sales. So in reaction to that, it seemed as though that we had a decline, however. But the low small molecule performance is performing just as planned, as we have set in the beginning of the year forecast, because the facility has become smaller compared to before. And actually, this production is already started for the order received, and therefore, in terms of profit, we only had a slight decrease in profit. And this applies to Europe. And if I may continue, for the orders, the small molecule as well as out there was not really bad either. And for... Forge, in the recent business, the orders are also quite coming in at a favorable pace. And, of course, the timing at which this converts to actual sales, it's not that we are going to have this all in this fiscal year, so we will have to continue to practice on quarter one quarter, but I think that we can expect a gradual improvement in the coming quarters. As for profit, Just like as I said, if the sales increases, I think in association with that, the profit will continue to increase in tandem with the sales. For Forge and also Agiface for nucleotoids, in the first quarter, we had anticipated some of these sales, but there's a timing difference and some have been delayed into the order period. in August period in terms of shipment. So some of the delivery has been delayed somewhat, and that is the reason why we are seeing these numbers. Just one point that I wanted to confirm is that Agiface, you didn't really mention that at all, but in terms of sales, have you seen any impact? Agicap, sorry, Agicap 2. From a lot of global manufacturers, we are seeing a lot of inquiries And going forward, in order to acquire alliances, we are planning to conduct a lot of active measures. The ICAP is we are now promoting royalty-based business, so the sales impact is not going to be that sizable, but this will have a straight impact on the profit. That's how you should interpret it. I wasn't able to see this in the disclosed numbers, but have they made any contribution to your profits in the first quarter? The details are not disclosed on a quarterly basis, but in 2024, ASICAP revenue are expected to be generated this year as well. Thank you. Thank you very much for that.

Thank you very much, Kadi-san. So, next question. Golden Sacks. Kadi-san, please. This is Miyazaki of Goldman Sachs. The first question is about the functional materials. The margin, the profitability has improved, you mentioned. After second quarter, you mentioned, can we guess, assume that this will continue onwards from second quarter as well? Well, in the initial stage, you did not assume a high level of profitability. What is the reason behind this high profitability? Thank you very much, Miyazaki-san, for your question. For functional materials, yes, when you look at page 10, I have mentioned a bit what we had assumed at the beginning. start of this physical, there was recovery in the market and we see also mixed improvement effect and also we had shipment as well and the utilization rate had improved as well. So from the second quarter and onward, There is nothing that we heard about stoppage of such movement. I think the current continuing environment, we will think that will continue. Thank you very much indeed. And another question is related to food. As for the seasonings and foods, I think this was a little bit of lower profit and you explained about it. But when you think about the trend so far, I think my personal impression is it's not enough. So, of course, the initial plan was that the segment outlook was the flat year on year. So I would like to confirm that this is within your expectation. And in the material handout, The local currency basis from Brazil to Thailand, you had shown the sales and profit. And is this the real figure? Or is there any special factor that is making this figure different from other quarters because it's the first quarter? So do we have to prepare to see other figures in the second quarter and onwards? Can you comment on that? Yes, thank you for the question. First, about the seasonings and foods profit. In the first quarter, in Japan, the coffee segment, well, you can calculate and find it out that there is about 900 million is here. This is, I think, the negative factor for whole seasonings and foods. And domestic source and seasonings in the first quarter, we are trying to create more values. So we are using and spending a lot for the marketing activities. So in the first quarter, profit-wise, this is becoming a bit of a negative. That's domestic. And for this, especially in Japan, August, we have already announced the unit sales price hike. And this is going to cover a wide range of products. And in addition to that, for coffee... We will also have a second round of price hike in September after April. So those would be all added, and I think will be shown in the figures. Fortunately, for domestic sauce and seasonings, We have a unit sales price increase, and volume is also in the mid-single-digit increase. So I think that is going to lead to the sales increase and profit increase as well for the coming years. For overseas market, especially in the major countries, you would ask about the question. This is the page three on the mid-segment question. You can see the major companies' local currency-based sales. You can see Thailand is a bit weak. Vietnam is flat. So those are the situations. But for Thailand, the birdie, the canned coffee in the first quarter, mid-single-digit negative. The end of March, we had seen the inventory, and from April, we had controlled the shipment. But May and June, it has normalized. And that effect has pulled down a bit of the Thailand figures. For Vietnam, in the fourth quarter of last year, they had VET, and we had the shipment increase. And I think that made... rebound in the first quarter. So in the first quarter, we had reduced the shipment. But after second quarter and onwards, I think for the annual outlook, we will be shipping normally. So I think there should be normal figures coming out. That's all. Thank you very much indeed. Thank you.

Thank you, Miyazaki-san, for the question. Now moving on to the next question. SMBC NICO Securities. Takagi-san, please begin your question. Hello, this is Takagi. Can you hear me okay? Yes, I hear you. Thank you. Oh, so I have the question relating to amino acid for pharmaceuticals and foods. My first question, I just wanted to have an update on the following. Sales, rather profit has increased only slightly. But in amino acids, you said that you have already run its course, the inventory adjustments, so I thought the profit will come in higher. So what's the reason behind this? Thank you very much for the question. The amino acids for pharmaceuticals and food, if you look at page 6 and 7, we have given you some analysis on those pages in the segment information paper. The inventory adjustment has been completed in many customers, but there are still some remaining items at some customers. But I think the situation is continuing to improve. That is the general direction. So as the quarter passes by, I think the situation will continue to improve going forward. That's how you should look at it and expect things to happen. Okay, but then on a four-year basis, the profit recovery... is expected to be quite significant, but compared to that, the progress in the first quarter is very slow, so that gives me a little bit of concern. What do you think? Well, we are expecting these things will continue to improve, but then several months ago, compared to your focus several months ago, are there any changes right now compared to several months ago? If any, please elaborate on them. Well, the current situation is that we are seeing brighter signs going forward. And in reality, in the first quarter, well, we have already bottomed out. And just slightly, though, however, we have achieved a slight increase in profit. So there's no intention for us to revise the forecast that we have given in the beginning of the year. All right. So the second question relating to the health care regarding CDMOs. On top of the previous question, I think the business profit was flat. How does this compare to initial projection? The first quarter plan number, we don't disclose that number, so it's very difficult for us to comment, therefore. But if you look at the details here, Europe, the orders have been recovering quite significantly. So compared to the initial plan, we are becoming more confident and towards the achievement, actually. For Altia, we gave you a lot of worries last fiscal year. However, structural reform is now progressing, so we are working to improve the profitability of this business, including that point as well. We believe we shall be able to deliver the results that we had given in the initial focus, but the first quarter performance appears to be weak. This is because agi phase in the first quarter, there was a timing difference, but it's not shifting that much. This is going to shift more in the second quarter onwards. Agi phase in the first quarter, a significant increase in revenue and profit was already achieved in the first quarter. There is an impact, even excluding that impact of timing difference, that is the case already, so we believe the things will continue to perform favorably in the second quarter onwards. The other thing is about the domestic business in seasoning foods and also frozen foods. In the first quarter, you have made strategic investments for the brand in the first quarter, marketing investments. You made those expenses, right? Yes. Yes, I understand. So if that is the case, then, of course, for seasoning food, the situation remains favorable, so it's okay. I'm sorry for the ambiguous question, but other than seasoned food and frozen food, in the first quarter the sales was not that favorable. So the market investment vis-a-vis the return, can you really generate the expected returns in the second quarter onwards? And what will be the result of the sales increase as a result of this investment? So at which timing can we expect those positive impacts to come around? as a result of your investment. So sorry for the concerns that we have given to you for seasoning and foods. I think things are turning to the better, and the performance in the first quarter was quite favorable. The price increases have already been implemented, and this has resulted in the improved sales. And the price hike will come in from August, so I think sooner or later you'll see those impacts kicking in. For frozen foods... the home use is growing quite steadily. But in the first quarter, the industrial use and restaurant use products was not really that favorable. Because of the cost increases, the profit was under downside pressure. However, for this, for the domestic frozen food for restaurant use and industrial products, we have already announced price hikes. So including those measures, we will start to implement additional measures so that we can turn around the performance. For the home use top line, the investment impact is already coming in. So do you foresee accelerated sales growth in the future? Yes, that is the plan. In reality, the mainstay Gilda product, for example, in the first quarter, achieved the double-digit percentage growth. So for those mainstay products, If we are able to achieve those performance, I think the profit will also improve accordingly. Okay, understood. Thank you very much.

Thank you very much, Takagi-san. Next question. Sumugi-san from Okasan Shoken. Thank you very much. Sumugi from Okasan Securities. Do you hear me? Hello? Yes. Thank you. Ayo Pharma Service, I'd like to ask about the forge. You had three consecutive business profit, but 500 million yen in the first quarter, consolidated impact. To your expectation, what is it? It seems to be larger. So what is your background? What is your thoughts about this? Well, as about Forge, the local currency basis negative is according to our expectation. And if it is translated with FX, it's a bit different. Because of FX impact, it turned out to be larger. But I think from our forecast, I think this is according to our forecast. As for Forge from here, this is in a growth stage, and also the environment seems to be very favorable for this company in case of order. So by quarter, there may be ups and downs, but to the initial plan, we think this is according to our expectation. And last year, In the fourth quarter, you were in red ink, and that is going to be increased. But second quarter, third quarter, you would have to have more profits in order to get better figures. So top line-wise, can you improve, make recoveries? Yes. If the top line grows, yes. Sales leverage will work, meaning that I think the sales will increase. You have new customers, and you mentioned there are 48 customers currently. So you can imagine that? Yes, we can assume that. By customer, the project and the shipment timing is different. So we may have ups and downs by quarter, but for the full year, I think we have a very steady project going out, and there seems to be a favorable situation. The second one is about the expenses. You mentioned that in the first quarter we have increased and you mentioned that for four years you're going to be controlling to the level of the initial plan. What is the environment? I think the market is different by product. What is going to be increased and decreased, and how are you going to control for the full year? Well, as for these expenses, when you look at the blue material, page 2, we have the common company-wide expenses, and when you look at them, well, it's $2.3 billion in increase. According to our initial plan, that was not so large, and it is $1.5 billion. That is the plan. So in the first quarter, I think we were quite aggressive in spending in the company-wide expenses. This is because, of course, this is shared company-wide expenses, but allocated to each segment. So these... there are some of the things that is not really linked to each business, but allocated to the segments, and that is included in the shared company-wide expenses. We have a full growth area, and we are positively spending in those areas, and for commercialization, spending has been done, and there was a big spending in that area in this first quarter. Can you provide us a hint, including the new businesses? Yes, in the first page of Onike newspaper, there was a bit of a comment, so including that. And then I think the paper article, I think within the end of this week or so, we can be more specific about that. So in the first quarter... That was the timing for increase of the expenses, but from second quarter onwards, there is a timing to reduce the spending, right? Yes. So, without the AES, we will control. We would like to control the expenses. Thank you very much.

Thank you very much for the question. Now, moving on to the next question. UBS Securities. Ihara-san, please begin your question. Thank you very much for the presentation. This is Mihara from AUBS. Okay, so although this may be difficult for you to comment, but then the first quarter business profit by and large was in line with your guidance. Was that the case? But if there's any differences by actual business segments, please let us know. That's my question. Thank you very much for the question. The first quarter vis-a-vis the target, actually this is very difficult for us to comment. Actually, but compared to the full year projection at the end of the first quarter, if you look at the performance in that regard, compared to the full year plan, I think the general direction is that we can expect some upsides, and we all are making good progress towards our achievement of that. That's how we look at it. But the macroeconomic environment is now... quite volatile, so we would like to absorb the situation. And depending on the changes in the environment, we might as well have to implement additional measures. So that is how we see the market at this point of time. So then at this point, compared to your four-year plan, there are some areas where the progress appears to be slow. You'll catch up on that, and functional materials will be adding up there so that you can achieve upsize. Is that how we should look at it? Well, I didn't comment that far. I didn't comment on those details. But if you look at the overall business, in the beginning of the fiscal year, the general direction that we had anticipated in the beginning turned out to be the case right now. And if you look at some overseas markets, shipment in the first half or first quarter was somewhat subdued. So including all these points, overall, we have got off to a very favorable start. of the year. Well, in that case, I have an additional comment. Right now, the macro environment is changing quite rapidly, and the yen is appreciating quite significantly in a very short period of time. Will that have an impact on your business short-term and also long-term? If you can also comment on that point. For that matter, actually, we had a lot of discussion inside the company today as well. Right now, the guidance or the forecast that we had given in that outset was 140 yen to the dollar for the Japanese yen versus the U.S. dollar. And today's currency rate is still cheaper in terms of yen compared to that currency level that we had in our plan. So at this point of time, we are not anticipating a significant upside or downside due to currency translation at this point of time. However, depending on how the yen's translation rate unfolds in the future. We cannot be so certain about that, so we have to keep a close eye on that. Of course, that is the case for this fiscal year, but what about the mid to longer term? For the medium term, as Mr. Fujii mentioned, our CEO mentioned at various occasions with you, we'll try as much as possible to be not really affected by those currency rate. That is the business structure that we aspire to achieve in the future. Just recently compared to before, the currency sensitivity has become less sensitive compared to before. And that is what we like to achieve in the future as well. We would like to promote this direction. Okay, thank you very much. Then I have my second question. You mentioned that the CDMO sales by modality The changes in sales was already explained by you already, by modality. The low molecule, middle molecule, and high molecule, if you can give us some breakdown, that would be appreciated. Also, from the second quarter onwards, CDMO business growth, profit growth, was the plan for your company in the future. So, even if DeForge... consolidation will have a negative impact in profit, but still you are aiming for growth in the second quarter and beyond. Yes, for the last part of the question, let me comment on that one. Well, we have not given that detail for the second quarter yet. From now onwards, we would like to achieve growth in profits and then try to deliver on the four-year forecast. That is the direction that we are going to pursue. By segment, the low molecule, small molecule, slight profit decrease. For nucleotide and middle molecule, profit increase. And RTL, a slight decrease in profit. That is the overall picture that we are forecasting right now. Then, in your guidance, you have given us the healthcare by region, performance, hemia, a reduction of 400 million, and healthcare in North America, excluding Altia, a slight reduction in profit. Are these numbers progressing in line with your plan? Yes. For healthcare, within the healthcare, there are businesses other than CDMO, so those businesses may account for slight differences. But as far as the Americas is concerned, what you just mentioned, Ihara-san, is in line with the actual trend. So, I'm so sorry for being persistent here, but going into the second quarter, how things will trend into the second quarter and onwards. It's very difficult for me to comment on the second quarter performance. I cannot comment on that right now, but as a general direction, From here onwards, we would like to drive the growth of profit. That is the message that we can deliver to you right now, if you can appreciate that . So, for each modality, you'll try to achieve profit growth in each modality so that the forecast for the healthcare business that you had to anticipate in the beginning of the year can be delivered. Yes, that is correct. Thank you. Thank you very much for that. I understood.

Thank you very much for the question. Morita-san from Daiwa Securities, please. This is Morita of Daiwa Securities. Thank you. I have very one simple question. So far, we heard about the macroeconomic trend and FX impact. How about the consumer trend, Japan and overseas? Is there any changes, consumers' trend, compared to your initial forecast, if there are any changes? Yes, thank you very much. Well, the changes of the macroeconomy is drastically happening currently. So how this change is impacting the consumer, we don't know about it. But for Japan, gradually, I think the disposable income for the general people is increasing. But on the other hand, I think people have still tight wallet. The spending is not so favorable. But we would like to take the sign of the changes of the consumer trend and we would like to adapt our marketing strategy to it. And if that is possible, then... Within Japan, we will be able to appeal value-added product and hence grow our business. Those are the initiatives. So in the first quarter, I think we've been able to do that kind of activities and toward that direction. For overseas market, Morito-san, you may have been aware of the North American frozen food market. In the first quarter... We have so many inquiries, and we've been using some marketing spendings, but for the first quarter, the volume, overall volume, Italian assets had transferred. That was negative impact, but as a whole, I think we were able to increase the volume currently. So we would like to do that kind of initiative. steadily. And for the sauce and seasonings overseas, you're all aware that our seasonings are sort of a basis that is used at homes. And for the first quarter, we have seasonings increase in the upper single digits. So we would like to keep this trend steadily. Thank you very much. And the second question is a bit tricky. And to your communication, you were saying to be the first quarter is slow but very favorable, and full year you are heading increase and improvement. So if you are thinking about the risk for the future, if there are any risks or downside risks, is there any worries about it, about the risks? Yes, from here. When you look at the macroeconomic changes we have seen yesterday and today, what would be the changes we'll be facing for the future, we would have to be cautious and see, especially Japanese foods market. Yes, we would like to seriously and cautiously watch them closely. But currently, or at this point of time, There is not a big concern or worries. Is there any segment that worries us? No. At this point of time, we have a lot of initiatives and measures going on, and they have covered them all. Thank you very much. About CDMO towards the next quarter, there was nothing strange, right? The trend will continue? Yes, thanks to your efforts. Yes, when you look at the orders, numbers, They are quite favorable numbers. Thank you very much. Thank you.

Thank you, Monika-san, for your question. We are still taking questions. You are welcome to raise questions if you have any. We can also go for the second round of questions if you have any. Your questions are most welcome. Thank you. All right. It seems that we have exhausted all the questions, so we would now like to finish the Q&A session at this juncture. Finally, Mr. Kaji has one last message. Well, everyone, thank you very much for attending today's meeting. Although earlier than expected, We would like to finish here. We thank you very much for all your inputs. We would like to see them back in our business performance, business management, and there are some possibilities of changes in business environment, but we would like to flexibly respond to these changes by implementing necessary measures so that we can deliver on the results, and we look forward to your continued support and patronage going forward. With this, we would like to finish this conference call at this moment. We thank you very much indeed for your participation. The session finishes here. Thank you very much for your participation.