Ajinomoto Co Inc

Thank you for joining Ajinomoto Group's conference call on the financial result for the first quarter of FY2025, despite your busy schedule. I'm Pac from IR, serving as moderator today. From Ajinomoto, we have Mr. Kaji, corporate fellow, GM IR office, is on the call. The meeting is scheduled for 60 minutes, and the first 20 minutes or so would be explanation using disclosed material by Mr. Kaji followed by Q&A session. Please refer to the material uploaded on Ajinomoto's IR website. We would like to record today's meeting and later upload them on our website. So we would like to have your understanding on this. So we would like to start the conference call. Kaji-san, please. Yes, thank you very much. for joining us today. First of all, could you turn to page two? This is a summary. The first quarter sales. Ajinomoto Altair sale had an impact, but excluding currency translation, the sales increased 103% year on year. Business profit grew by double digit year on year to 112% excluding currency translation. The business profit margin rose significantly to 13% plus 1.2% year-on-year thanks to the effect of price increase and strengthened business structure. Now by segment, source and seasonings plus quick nourishment led the food product business with double-digit growth in business profit. Frozen foods revenue and profit increased in North America, excluding currency in translation, but Japan's performance continued to be a challenge. Growth was strong in bio and fine chemical business with continued strong performance of functional materials, and the biopharma services and ingredients also achieved significant increase in profits Profit attributable to the owners of parent increased significantly due to the growth in business profits and improvement in valuation of foreign exchange gains. We would continue to challenge to achieve the FY25 forecast and realize FY2030 roadmap. Please move on to page three. As I have mentioned to you earlier, although sales with a strong yen and the sales of Altea through structural reforms, there was an impact, so sales remained at the same level as the previous year. Excluding the impact of currency translation and strong yen and sale of Altea through Altea, organic growth sales increased by around 3% and organic growth was mid-single digit percentage of sales increase. the currency translation excluded, business profit grew by 12.4%, double-digit increase. Profit attributable to owners of the parent row, 34.4%, significant increase. EPS was up 38.8%. We will continue to focus on bottom-line profit as well and aim to achieve our FY25 forecast. Now moving on to page four. This is the changes in business profit for the first quarter of FY 2025. I hope you would refer to this table, but this is shown on a yen basis, and we have some impact from currency translation. So if you could please turn to page 15, this is the changes of businesses in the first quarter, excluding currency translation. This is excluding currency translation and showing changes of business profit. We have achieved steady business profit growth of more than 5 billion yen by firmly increasing the GP amount and controlling SG&A through the effective revenue growth and improvement of GP margin. The GP margin improved in both the foods and biofarm chemicals businesses in the first quarter results, and the company as a whole improved by 1.2%. And moving back to page five, please. This is changes in business profit by disclosure segment. This is also a graph in Japanese yen basis, so please refer to the graph on page six, which is excluding currency translation. Here is an analysis of the changes in business profit by segment excluding currency in translation. Seasonings and foods business saw overall profit increase due to significant growth in overseas source and seasonings and quick nourishment. In healthcare and others, functional materials and biopharma services and ingredients also recorded a significant increase and led to overall increase. On the other hand, in frozen food business, Although profit increased in North America, profit decreased overall due to lower profit in Japan and upfront investment associated with expansion of overseas business development. Moving on to page 7. These are the key financial results by segment. Overseas business here are also explained by excluding currency translation. First, seasonings and foods. In Japan, April and September 24 and March 2025, we did price hikes for coffee, and that turned around to record both sales and profit increase. On the other hand, sauce and seasoning sales increased but profit decreased, and sales and income decreased in solution and ingredients for restaurants and industrial use. for total Japan therefore sales increased but profit decreased. Overseas sales for B2C foods unit price increased by 3% and the volume was up 1%. With the volume may not be at a satisfactory level in addition to a temporary decline in volume due to a reaction to price hikes in certain categories in some major countries, In also Nigeria, where business confidence has been severely affected by currency devaluation and inflation, we experienced a significant volume decline. The volume decline in Nigeria pushed down the overall volume of overseas seedlings and fruit products by about 1%. On the other hand, overseas business profit increased by double digit percentage. Next is frozen foods. In Japan, the price hike in March 2025 had a negative impact on volume, mainly for household uses, and the increase in unit price was not enough to compensate for it, resulting in lower sales and profit. We are currently considering a fundamental review of our strategy. Overseas in North America, both sales and operating income increased by mid-single-digit percentages. Although overall overseas sales increased, business profit decreased due to upfront cost incurred in expanding expanded regional operations. Next is page eight. So this is the healthcare and others segment. Starting with the functional materials business, which is on the very top, as AI related demand continued to expand, as well as the firm trends for the PCs and servers, this business saw a substantial increase both in sales and profit. In the amino acids for pharmaceuticals and foods, inventory adjustments at the customers has mostly ended. Additionally, as the high margin amino acids for farmer use and cultural media was strong, both sales and profit increased. In the biopharma services, the CDMO business, each of the modalities in small molecules, medium molecules, and gene therapy has steadily grown. Sales has declined as we sold Althea for structural reform purposes, but excluding this impact, sales has increased substantially. We have been able to realize a large increase in business profits as each business area saw an increase in profit as well as a possibility impact coming from the sales of Althea. Next, please turn to page nine. From this slide onwards, please allow me to offer supplementary explanations about each segment, starting with the seasoning and food segment. On the left, in the sauce and seasonings quick nourishment business, the so-called B2C business in Japan, in total, sales has increased by 9%. Excluding the coffee business, in which volume declined due to the negative impact of multiple price increases, volume was 100% and unit prices unit price was 102% year-over-year. For instance, Ajinomoto sales declined, interaction against increased sales volume due to the one-piece bottle campaign conducted in the previous year, and Western sauce was slightly negative. However, many specific seasoning sales grew double-digit, reflecting the effect of new product launches. Going forward, we will continue to execute various initiatives, such as launching new products and renewal of products in the flavor seasoning category, such as Honda C and Ajinomoto KK consomme targeting volume growth. On the right, in the overseas business, we have been impacted by a one-off reactionary decline after raising prices in many specific season products in Indonesia and the Philippines. We were also impacted by the situation in Nigeria, which was mentioned earlier, so we saw a deceleration in volume growth. We will focus on introducing products and advancing market initiatives in the source and seasonings category in major markets and aim to achieve full-year forecast numbers, including volume targets. For your reference, this is not written on the slide. In the overseas B2C business, the major category, the local currency-based sales growth, I would like to mention about that. First, Ajinomoto product. local currency basis, please understand that the sales has increased by the low single-digit level. For the flavor seasoning, mid-single-digit, for the main specific ingredient, so the high single-digit level growth, and the drinks. So this is the canned coffee in business in Thailand, low single-digit decline. So the instant noodles, negative of the low single digit. For the powdered drinks, this is a double digit level growth. In the same category, in terms of the business profit for each of the local currencies, Ajinomoto, high single digit plus. For the flavor seasoning, double digit level plus. menu specific seasoning, double digit increase. But for the beverage, double digit decline. Also instant noodles, double digit increase of profit. Powdered beverage, a double digit level increase. So if you have not been able to write down all of the numbers, maybe you can check up later. Going to page 10, going to the frozen food business. As I said, some products in the North American market were impacted by tariffs. However, including the currency translation impact, we have been able to realize a mid-single-digit level of increase for both sales and profit. On the other hand, we consider the Japan business as a challenge and are conducting a drastic review of our strategy. We are preparing to explain specific actions when we announce our first half results. Against this backdrop, for our core products, gyoza, Chinese dumplings, we renewed the brand logo so that the connection to our corporate brand, Ajinomoto, can be strengthened. By enhancing the connection with our corporate brand, we will contribute to enhance our brand value. Furthermore, we launched new products such as koku umamiso gyoza, which goes well with rice, And the boiled gyoza dumplings are put in soups, which come in large packages and offers convenience. But the new cell will expand touch points with families, who are our main targets. By recently, the main product gyoza products and the new strategy that is currently under development will conduct challenges to recover growth and profitability in the frozen food business in Japan. Going to page 11, going to the healthcare and other segments, starting with the functional materials business. For Q1 of the fiscal year, we have been able to attain substantial growth in both sales and profit for six quarters in a row. Profitability declined slightly from the first quarter of the previous year to a little over 50%. The major reason for this was proactive investment in R&D and increased investment in human capital. With the continued expansion of AI application and steady growth of PC server business, we will continue to strive to achieve the full year target. Going to page 12. Next is the BioPharmacServices CDMO. In Europe, which is our largest site, we have been able to achieve a steady growth both in the small molecule and medium molecule business, where the more IT phase in Japan has performed well, as well as the impressive cells increase at Forge in North America. As a result, excluding the impact of cells on Athea, we were able to achieve a strong increase in cells. And business profit grew strongly in Japan. and for its potential improvement in profitability. In addition, as Europe's profit grew steadily with the effect of the sales of the infrastructure reform being reflected, it saw a strong increase in business profit. In the biopharma service, we will continue to be united globally to accelerate the growth of each modality focusing on technology so that this year's forecast can be achieved. Page 13, lastly, this is update of each segment ASV indicators. For the three months in Q1, organic growth was slightly smaller due to one of reasons in the food business, but we'll conduct measures mainly in the food business to achieve a full year plan. We were able to improve the EBITDA margin in each segment. We will execute various initiatives to enhance our capability to generate cash flow. Overall, although there is a risk of currency translation having an impact on sales, but we will put in our utmost efforts as a company so that each profit line can be achieved. As for your continued support, thank you very much for your attention. I'd like to go into Q&A session from this point. For those who have questions, I would like to explain how to ask questions. For those who have questions, please push the asterisk on your phone and then after that, press 1. When your turn comes and the moderator calls out your name, please ask your question. If you want to cancel your question after pressing asterisk, please press 2. For questions, we would like to limit it to two questions for one person for one term. We'll be asking for cooperation. Please understand that if there are a lot of questions, in some cases, we'll not be able to appoint you. So, for the people that are conducting practices overseas, you can answer your question in English. We will utilize the to answer your question. So, let's start the Q&A session. Yes, from Missouri Securities. Hello? Hello, good evening. I have a CDMO issue. Altair sales impact is $19 billion per year. five billion negative for the first quarter. That means CDMO sales is 20% up, but in each modality, the result was good. So I'm interested in AgiCap, and you mentioned the double-digit, the Okuian sales will be achieved. and you mentioned that each modality is having a good performance could you elaborate on the sustainability of that thank you so i will go one by one okay cdmo question first altea sales impact as Tadisa mentioned, yes, the figures you mentioned is the level that we have impact and excluding that, yes, as you mentioned, we will be having the result. Sustainability. Various countries, well, of course, we have U.S. tariff issues and its impact, but currently, We do not see any impact coming from that for this quarter. So in that sense, we have the momentum and with the strengths that we have, we have various initiatives and transactions with our customers, very active. So I think we will be able to and are looking forward to increasing and improving our business there. In the first quarter, Steady sales have been recorded for AgiCap, and we have various initiatives. So, we are looking forward to see its performance. Thank you. By the way, AgiCap double-digit 100 million, several million yen. So, you mentioned that it's more than expected. It's along with the plan. Yes, in line with the plan. Second is on page 11. It's the functional materials. Is the 11% increase in sales and 24% for the first quarter. Your start is very good. And in each of the area, there was so many good performances. And vis-a-vis plan, how do you feel? Of course, sales increase significant is continuing toward the second quarter to fourth quarter. I think, according to this plan, this is a bit of a slowdown. Basically, are you assuming that's a bit of a slowdown? So, could you elaborate on this point? Thank you very much. Second is about ABS. Visible plan, the first quarter plan. Well, internally we have, but we have not disclosed. So, when we compare with a full year plan, this is a very good start, and what we see, the visibility, is that for the time being, well, there is not a factor that would negatively impact this. So, continuously, of course, initially we have, showed you the plan, we have not changed for both sales and profit. I think we will be able to grow. Did this answer your question? Yes, thank you. And PC server networks, applications, what were the areas that was good vis-a-vis plan? All, all of them. Steadily, compared to what we had expected, I think, the demand is expanding in line with what we had planned. So could you comment comparing with the actual application? I think AI Server and these things are very good toward the performance. I think they're very strong. Thank you very much. Thank you. Mr. Sussi, thank you very much. Next. On Goldman Sachs securities, please. Excuse me, Miyazaki from Goldman Sachs. Hello. So I have two questions. The first question is about the seasonings and foods segment. If you look to page 9, when you were explaining about that, so something was 102%. I think something was 102%. I didn't get it. Can you repeat that? In the overseas, you have been proactively increasing prices, so the volume seems to be a bit weak. But in terms of the unit price, it has been increased 1 by 3%. From the second quarter, the impact of the price increase is going to be contributing . So, I understand the world's market situation, but in terms of the market, I'm interested. But this was planned in the first place. After the price increase temporarily, the volume will decline. In the first quarter, in terms of the volume, that is the reason why it was a bit weak. But going forward, we want to recover the volume growth. That is our plan. And basically, in the first quarter, because of this one of the situations, I think that is what we have seen as a result in the first quarter. So this is a confirmation. Even if we have increased the price, unit price increase of 3%. Is that in the first quarter? I was just wondering whether maybe the price should be higher. In Japan, coffee price increase, in fact, in the first quarter, I think basically it has been contributing to the profit. For the second quarter onwards, for the Japan business, can we expect more growth, or is this cost going to be a burden going forward? Thank you. Well, first of all, in terms of the unit price going forward, based on the situation of the raw material cost in each of the materials, if necessary, we want to flexibly conduct price increases, and that policy is unchanged. So this depends on including the currency situation of each of the markets. It depends on the raw material cost situation of each of the markets. And in terms of the Japan coffee business, So July, actually, we have increased the prices substantially. So going forward, how this will impact the volume, including that aspect, we are carefully looking at the situation that expenses have changed. So in that sense, for this fiscal year, the initial plan that we have announced, I guess that the first quarter, I think we have seen a positive performance. Thank you for that. Again, I want a recap on the second, this is the second question from my side. So the, when you announced the four-year results, in terms of the healthcare and other business, there was some timing differences, so that was the reason why the fourth quarter was a bit weak. Is, has that been able to, you have been able to see that in the first quarter, or are there existing other things that you have not been able to, see materialize, but basically have seen that kind of timing difference appear in the first quarter. I was just wondering if maybe the profits have been higher in the healthcare and others business. Well, initially, at the end of last fiscal year, the shipment timing has been shifted to this year's first quarter, and that will be the over-nuclear ties related So that has been ended in the first quarter. Well, this is something that happens every year. In the first quarter, including the small molecule business that we have anticipated will be shifting towards from the first quarter to the second quarter. That happens every year. So the overall CDMO business, the current situation is strong. I think that aspect is unchanged. Understood. Thank you very much. Thank you. Next question, SMBC Nico. Furuta-san, please. This is Furuta of SMBC Nico. Hello. I have also two questions. First, . increase profit and sales. Can I confirm on those points as you mentioned? Of course, there are some time differences and its impact. But other than that, is there any chance that you're having new customers? And compared to the traditional trend, what is the accelerating factor for this? Thank you. The first question was about . Yes, AgiPhase is so and including AgiCap and others as well continuously. We have new customers and we positively doing various activities and proposing to our customers and this is including AgiPhase and I think initiatives are moving in a good way. So this is how the business goes. Thank you. So first quarter, is there any specific factor? No. That means that you're having continuously good business performance. Yes, yes, Furuta-san, I've been talking to you from 2010 CDMO business depending on the shipment of the business by quota. There are some volume of shipment or not depending on quota. It's different and this trend will continue. So I'm very sorry. I would like to have a longer perspective on your side and look at this business. Thank you very much. And the second question is about the frozen food, Japan. the drastic strategy changes and you're coming up with a first to have. Can you provide us some more hints about the strategy? Thank you. Yes, for this. This is a management matter and various reforms and considerations are going on. If this is shaped and we have some format, our CEO, Mr. Nakamura, would like to make the announcement and then get your advice. So I'm very sorry to say we are not able, I'm not able to comment today. Thank you, in that sense. So it is going to be rather drastic reform and in the first half you're going to be making announcement. Yes, we would like to do so. including the management, this is management focus at this point of time to come up with a drastic strategy. Thank you very much. Thank you. Thank you very much. Going to the next question, UBS security, please. This is from UPS Securities. Thank you for taking my question. I have two questions. One is a kind of a overlap with . So the first quarter business profit against the internal plan, how was the progress? I would like to confirm about that. So 13% for the first year, but increased for the first, 10% increase for the first quarter, CDMO, timing difference that's included. Maybe some people are thinking that the first quarter should have been a higher profit growth. In terms of the progress of the first situation of the first quarter, by businesses, how is the progress against your internal plan? Yes, as we have been talking, against the, we have, won't be commenting about a progress for the first quarter against their internal plan so maybe some qualitative comments will be welcome maybe whether it was good or bad um i have been utilizing the presentation materials to give you some information but basically that's all i can say at this point understood thank you my second question is Again, maybe this is a difficult question to answer. In the first quarter, for the biopharma service, 2.9 billion of profit increase. So the impact of selling Althea and the loss shrinking at Forge, and you look at the modality, each of the modalities, what will be the reason of this increased profit? Can you break it out? Thank you very much. So individually, we do not communicate about these numbers, but for each of the reasons, I think the first quarter, they have been contributing to the increase of the profit in a well-balanced manner. Okay, I understand. Thank you. So but FORGE, EBITDA has turned to the positive. I think that's your target for this fiscal year. What's the progress of that? For this fiscal year's plan, which will be bringing the EBITDA level to the black, the first quarter, the increase of the profit has been quite solid and powerful. So we want to maintain this momentum, and we want to achieve our targets. That is our stance right now. So, forage, basically, there's no, you know, negative impact situation right now. Yes, they are enjoying a very good and solid performance right now. So, last question from my side. So, in terms of . So, maybe I said that talking about maybe the timing difference, first quarter to second quarter, second quarter to third quarter, in terms of the end market demand, I am concerned that maybe data is weak, but you don't have to be concerned about that. Well, I think for the farming business, there will be some market situations, but we are focusing on each of the... Thank you.

Thank you.

supplementary says the Philippines seems to be increasing so by region or countries is there any area where price hike is well accepted or not as can you if on this point, and also can you tell us about how much we can expect? Yes, domestic is, Japan is different, but overseas, basically speaking, because of the rational reasons, if the price is done, then I think smoothly the market would accept it. It was so in the past as well. Price hike, if we do that, basically speaking, in any countries, whether it be overseas or Japan, when we announced that at that time, we have increase in demand. And after the price hike with a rebound, the volume should go down. Of course, these trends will continue. So this is not a special factor for this first quarter only. I would like to have that understanding from you. Yes, thank you. Thank you very much. Thank you. Thank you. So let's go to the English channel. There's some questions coming in English. Barstein 1, sound please.

Hi, it's Ian McLeish from Bernstein here. I was interested to see in your functional materials division that the operating profit growth was slower than the revenue growth. Can you help us understand what's driving the margin decline, please? Is this a one-off cost that was in or a factor that was in Q1, or is this relating to the new capacity that you brought online and more of a cost structure change that's going to continue going forward? Thanks very much.

Thank you very much for your question. I think we have been using slide 11, and I have referred to that using slide 11 for the first quarter. This is policy for this first quarter, for this fiscal year. There's a lot of initiatives that are going forward, so R&D, cost, we're going to spend more, and towards that, In terms of the human resources, we want to increase more capable people. So that is the reason why we want going to invest more in human capital. So this is in the first quarter. Actually, we have this type of investment. Because we took this initiative, compared to the first quarter last fiscal year, the profitability has gone down slightly. But the impact of these initiatives, actually this happened last fiscal year as well. When we say that we want to accelerate our business, if we want to take these initiatives, so we tend to do that in April and May. So in the first quarter, these type of initiatives tend to be more active. And I think that's the reason why we're seeing more of these impacts coming in the first quarter.

Okay. Thanks very much.

Thank you. Mr. Wong, thank you. Next question. Morita-san from Nomura Securities. This is Nomura Securities. Morita speaking. Hello. Hello. The first question is about the sales in Thailand. Can you elaborate on this point for raw material and instant noodles? It is decline. But compared to that, the flavor seasonings and Ajinomoto is better. So can you elaborate on the Thailand situation? As for Thailand, so to speak, product Ajinomoto flavor seasonings, single, low single to mid single digit growth is being seen. and menu-specific seasonings, its percentage is still low, but we have high growth there. As for beverages, yes, the raw material cost is increasing, so currently we cannot accelerate with our business, so that means that looking at our profits and balancing with our profit, we are not making a full price pass-through. But for instant noodles, the domestic demand is not decelerating, so this is rather issue of timing. That means that last year, By quarter, the instant noodle business in Thailand, depending on the shipping timing, we had negative growth or maybe double digit growth. So by quarter, it's different. So this is not a special thing. One confirmation about beverages. I think competitors are in trouble and you have the negative factor. Is it that the market itself is shrinking? Is it so? Well, last year, in the fourth quarter, we had accelerated nearly double-digit growth in shipment. So I think it depends on the timing of the shipment, I believe. So this is another question. Maybe we see some visibility of the Trump tariffs, and FX is also moving now. the market environment is changing a lot. From your perspective, Mr. Kaji, in looking at Ajinomoto's performance, is there any factor that we have to take in mind, think in macroeconomic factors? Earlier you mentioned about the African market being a bit tough, so any changes that you are taking care of and focusing on? Thank you. Well, the market and economic situation in various countries, now we have the tariffs fixed, and from here, how that will impact each economic market, we are focusing and carefully monitoring that. Well, of course, a product that is close to the people's life, even though there should be the economic changes, this was not impacted so much. So, therefore, we have no big concern. But, for example, the products for industries and so forth, I think we need to focus and pay attention to it. Thank you very much. Thank you. Thank you very much. Going to the next question. BOA securities. Hello. from BOA securities. So this is about the bioservice and ingredients. I would like to ask about that. This is a detailed question about the numbers at the beginning. has said some numbers, so including and currency translation, the organic business growth is a mid-single business growth. Is that quite understanding? For the biosurfacing, I don't think they have mentioned that number. It's overall, I think, yes, you talked about the overall situation, so the business, growth, total business growth, business profit growth, excluding currency translation, Althea, is mid-single digit. I understand. In terms of sales, we're talking about total sales. So total sales, excluding currency and Althea, the organic growth of sales was mid-single digit. That was what I said. Oh, excuse me. I understand. So in terms of profit, as Harrison said, we can't disclose, but it's solid. Are you talking about the CDMO? Yes, yes, CDMO. For the CDMO business, it's 3.9 billion in increase of the profit. We have discussed that number. Understood. So the sales of Althea, excuse me, it's 2.9 billion. So the increase, including the profit increase through the Althea sales is 2.9 billion. For the full-year profit, it's... I think 10.8 billion profit increase, so there'd be some timing differences, but basically it's in line. Well, this 10.8 billion increase is for the including the bio-pharma service and ingredients overall, including amino acids or amino acids for pharmaceutical foods. So that will be on page two on the lower hand side. including the food that will be $3.4 to $5 billion for this fiscal year. And I think it should reflect that towards the $3.4 billion, $3.5 billion growth. That is $10.8 billion for the full year. So that will be their life for life. The second question is the North American frozen foods. So I want to know about the top-line growth on the local currency basis. In terms of profit, on the local currency basis, it has increased, but the market for the instant, if you look at the instant noodles, I seem to hear that you're saying it's a tougher market. So maybe there's a future risk opportunities. Could you talk about that? But then also American frozen fruits. on the first quarter on local currency basis in sales and profits for the mid-single-digit level plus. If you look at the situation, the home use, so for instance, home use agent or the foods and for the rice-related foods, but if you look at the situation in the U.S., the eating out for people eating out, I think because it's the infrastructure, excuse me, inflation pressure, I think people are refraining a bit from eating out. So for that type of business, there's a slight decrease. But overall, the home use has a higher ratio, and we have been able to increase the home use. So the first quarter, without a reason why, we have been able to achieve these results. Understood. So Asian frozen food, which has a higher price point. I think in the past they have been impacted by the inflation, but currently we haven't seen that impact appear. So the Asian frozen food for the first quarter on a local currency basis, the mid-single-digit level sales increase. That's what we have seen. Understood. Thank you. Thank you very much. Next question. Yes, Miyake-san from Morgan Stanley MEFJ. Thank you. This is Miyake from Morgan Stanley. Thank you, Miyake-san. I would like to ask about the Japanese frozen food, and I'm looking forward to see the drastic strategy that is coming up. The first quarter sales, It was minus 1% year on year. I would like to know by category what was good and what was bad. And another question is Gyoza is the major product. And I understand that you need recovery. But when you look at by category, Is that the source of the issue or is there any other issue in other categories? So what is the actual situation amongst different products? Yes, the current situation. In the first quarter, domestic frozen foods home use was high single-digit minus. Restaurant and industrial use was low single-digit plus. And to your question, Miyake-san, the home use, gyoza. I think a major product is gyoza, and we have value and high volume and The result for Gyoza was quite severe, so that has also impacted the whole frozen food home use products. Oh, thank you very much. So that means that the home use other products other than Gyoza compared to Gyoza, so they were not so trouble. Well, in the first quarter, it was mixed. That means that there were good product and there were some difficult product as well. Oh. So, for frozen food, you're trying to come up with drastic changes, right? Yes. Yes. Thank you. Yes. Thank you. Thank you, Miyake-san. Let's go to the next question. Deputy Morgan Securities, Fujiwara-san, please. Thank you for taking my question. So I'm going into details, but if you look at the outline of the presentation, so the raw material impact year over year, Japan food cost increase for raw material, so 4.2 billion increase impact for the first quarter. in the past five years we have seen the cost inflation but this seems to be large even compared to that level so what is the background of this and the cost increase outlook i would like to can you elaborate on that point well for the citizens of food the 4.2 billion increase of cost for the raw material the most of it is coming from raw material for coffee so for example the last area first half including that cost increase basically was marginal but you can see this acceleration of raw material is it the inventory situation the timing situation for last fiscal year the coffee raw material was going up but for the other raw material hasn't been going up so on a net net basis even if we have been able to offset more or less the coffee or raw material increase but for the first quarter For the other cause, it was the same year over year, but the raw material, coffee raw material has continued to increase. Okay, so the first quarter, the coffee business has received a profit. It has increased. You're going to do some additional price hikes, but in terms of the environment, it has to be resilient. Yes, yes, that's true. Understood. Another question about the healthcare and others business, and you have others. So decline of 4.3 billion in profit and 4.3 billion sales and 1.1 billion decline in profit. So there's a lot of businesses in here, but why? We have seen this huge decline in sales and profit. Can you comment on that? Thank you. In terms of profit, so this is the first quarter. that we do put in a lot of initiatives because we are investing the strategic cost, including businesses. We're spending a lot in the first quarter. That's the major reason. On the other hand, in terms of sales, although the size is small, the North America, we still have some manufacturing facilities for the emanations for feed. We have been conducting structural reform. And the first quarter, it has progressed. So the so-called, you know, stopped the production of this product and has been converting into amino acids for pharmaceuticals and foods. That has progressed a lot. And that has the impact reflected in the other subsequent. So basically, for the full year, in terms of the profit level, so there's a point a billion of the substantial increase for the other segment, sub-segment. But in terms of the progress, it's in line. So this is the first quarter. I think basically cost seems to come first, comes first in the first quarter. So in terms of the numbers, I think, yes, I do understand it's difficult to understand in the first quarter. But in terms of the progress, it's in line with your plan. Yes, understood then. Okay, thank you. Thank you very much, Fujiwara-san. Thank you for your questions. And I think everybody has finished with their questions. We would like to close at this point of time Q&A session. Lastly, but not least, Mr. Kaji would like to say a few words. Everyone, despite your busy schedule, thank you very much for joining the conference call. In the first quarter, we had some currency translations, but I think we were able to steadily grow our business, especially top line. We have the sales momentum, and we will be able to recover this, and there should be more measures and initiatives coming up. I would like to have your expectation toward this. and also your frank opinion and advice will be reflected and that will be shared with our management and that will be incorporated into our strategies. Thank you very much for your time today. This concludes the conference call. Thank you for your participation. Thank you.