Yakult Honsha Co Ltd

So I will start by explaining the consolidated results for the first quarter of the fiscal year ending March 2026 and our revised full year forecast. In terms of the details are based on the executive summary for the first quarter of the FY2025, which is available on our website under IR library and financial results. For detailed figures, please refer to the financial results and supplementary material also available on our website. First, on page 1, this will be the general outline of the consolidated results for the first quarter. Overall, consolidated sales and profit decreased. Following are the highlights by segment. In the domestic food and beverage segment, sales of dairy products decreased due to a decline in sales volume, resulting in lower sales and profit. In the overseas food and beverage segment, sales volume increased in all regions, but the strong yen had a significant impact, resulting in lower sales and profit. Next on page 2 is the consolidated financial results. Net sales decreased by 6 billion yen from the previous year to 116.5 billion yen. Operating profit decreased by 5.1 billion yen to 10.9 billion yen. Ordinary profit decreased by 5 billion yen to 17.1 billion yen. And net profit decreased by 2.4 billion yen to 11.5 billion yen. Additionally, the impact of foreign exchange rates, as indicated in blue, was negative due to depreciation of the yen. Please note that, as indicated by the asterisks, we have revised the forecast figures for the current fiscal year, which we announced in May. The revised figures for the first half are shown in the right-hand block on this page. But for details, please refer to page 5 of the financial results. Regarding the full year forecast, we will provide further details using slides later in the presentation. Next, please turn to page 3 for the consolidated income statement. Details regarding sales and operating income will be explained later by segment. but raw material costs in the first quarter increased by 300 million yen both domestically and internationally. Next, regarding the status of non-operating income and expenses and extraordinary gains and losses, as you can see, there was no significant changes compared to the previous year. Additionally, extraordinary income of 1.4 billion yen was recorded from the sale of investment securities, which resulted from the partial sale of policy-held shares by the headquarters. Next, page four, we have the consolidated financial results. Total assets decreased by 31.7 billion yen from the end of the previous fiscal year to 832.5 billion yen, and net assets decreased by 30.1 billion yen to 599.3 billion yen. As with the income statement, there was an impact coming from foreign exchange as yen appreciated, resulting in a negative impact of approximately 22 billion yen on total assets. Page 5 is a consolidated balance sheet. On the left, in assets, cash and deposits decreased by 31.4 billion yen to 237.5 billion yen. Total net assets also decreased by 30.1 billion yen. The main factors contributing to these decreases include share buybacks and dividend payments since we have conducted since April, as well as the impact of yen appreciation. Additionally, although it does not affect the increase or decrease in total net assets, approximately 10.1 million shares acquired between February and June were cancelled from the Treasury stock as of the end of June. For further details, please refer to page 10 of the financial results.

Let us move on to page 6 and 7. Here, we show year-on-year comparisons of net sales by segment. Page 6 presents them in a table. Page 7 visualizes them in graphs. As you can see, due in part to the impact of the stronger yen, overall sales decreased by 6 billion yen. Now, I will elaborate more by segment. first in food and beverages in japan the number of bottles sold per day or daily sales volume for dairy products decreased by about seven percent overall due mainly to a decline in the number of existing customers as for the yakult 1000 series following the launch of the low-carb or toasts of products for home delivery channel nationwide in january we started retail store sales in april However, we were not able to acquire as many new customers as planned, and with the loss of some existing customers, the sales volume of the series declined. As a result, net sales decreased by 2.9 billion yen to 59.6 billion yen. Next, overseas food and beverages. In the Americas, although daily sales volumes in each country matched or exceeded the previous year level and price hikes had a positive impact, the negative impact of foreign exchange was significant at 3.3 billion yen, resulting in a 1.9 billion yen decrease in the segment sales to 21.6 billion yen. Next, Asia and Oceania region. Here, too, the stronger yen had an impact, but daily sales volume in Vietnam grew by 13%, continuing double-digit growth. And China and Guangzhou also saw a year-near increase in daily sales volume. Overall, Asia saw a 2% increase in daily sales volume and a 100 million yen increase in net sales to 29.4 billion yen. In Europe, daily sales volume increased by 4.2% year-on-year, resulting in a slight increase to 3.2 billion yen in sales. Finally, other business. This segment includes pharmaceuticals, cosmetics, and the baseball team. In pharmaceuticals, we transferred cancer-related prescription drug sales to Takata Pharmaceutical in a previous period. But since the main product, Elplat, was transferred in mid-May, the segment's net sales decreased by ¥1.4 billion to ¥5.7 billion. So far, I've explained the segment breakdown of the net sales. Page 8 and 9 show year-on-year comparison of operating profit by segment. Page 8 presents the numbers in a table, and page 9 presents them in graphs. As you may see, consolidated operating profit decreased by 5.1 billion yen. Let me explain by segment. First, food and beverages in Japan. In addition to lower gross profit due to decreased sales, higher raw material costs and increased expenses such as labor costs resulted in a 3.8 billion yen decrease in operating profit to 8.7 billion yen. Up to the first quarter of the previous year, the performance of dairy products remained at a relatively high level, so in this first quarter, the year-near decline in net sales and operating profit became large. Next, overseas food and beverages. In the Americas, although price hikes improved gross profit, higher raw material costs, increased expenses, and an 800 million yen negative impact from foreign exchange resulted in an 800 million yen decrease in operating profit to 6.3 billion yen. In Asia and Oceania region, although gross profit increased due to higher sales volumes and cost decreased due to the closure of the Shanghai plant, promotional costs and other expenses increased, particularly in China, resulting in a 300 million yen decrease in this region's profit to 1.2 billion yen. Including Europe, the total overseas segment saw a 900 million yen decrease in operating profit to 7.6 billion yen. Finally, other business. While the pharmaceutical business saw a decrease in net sales, cost reductions prevented a decline in operating profit. However, the number of home games organized by the baseball team in the first quarter was lower. than the previous year, resulting in a 200 million yen decrease in this segment's operating profit. That concludes the segment breakdown of operating profit.

Next, going to page 10. This shows the breakdown of sales by segment in pie charts. There are no significant changes. Page 11 shows the actual daily average sales volume of dairy products by country. The consolidated total was 28.14 million bottles, 98.7% of the previous period. By region, overseas sales exceeded 100% in all three regions from the previous period. Most of the major business sites with sales of more than 1 million bottles also exceeded the previous year's figures. Page 12 shows the breakdown of operating income by segment in pie charts. So at the beverage and food domestic segment, we saw a relatively large decline in income, decreased its share, while overseas, mainly in the Americas, increased its share. Going to page 13. This summarizes the impact of foreign exchange rates on the consolidated income statement for the current period. The graph on the left compares the exchange rates for the previous period the average with those of the current period. It shows the rate of change based on the previous period's exchange rate set at 100. Most major business locations experienced yen appreciation, particularly in Mexico and Brazil, where yen appreciation exceeded double digits. For the impact on each segment, please refer to the table on the right. This has been the summary of the Consolidated Financial Results for the first quarter of FI 2025. Now, I will explain the revision of the consolidated results forecast for FI 2025. We are revising downward the performance forecast announced in May, primarily due to a revision of the daily sales volume plan for dairy products in the domestic food and beverage segment. The impact of rising prices has impacted consumer spending in a negative manner and has led to a sales performance of predatory products pulled short of the initial plan. On the other hand, overseas food and beverage businesses are progressing smoothly overall in line with the initial plan, but we have made exchange rate adjustments. Now, let me explain the details. First, on page 14, we have provided an overview of the consolidated earnings forecast compared to the initial forecast. Compared to the forecast announced in May, revenue has revised downwards by 11 billion yen to 495 billion, operating profit by 5 billion yen to 53.5 billion yen, ordinary profit by 5 billion yen to 69.5 billion yen, and net profit by 3.5 billion yen to 45.5 billion yen. The impact of foreign exchange rates is shown in blue, but details are provided on the next page, page 15. So page 15 shows the impact of the adjusted exchange rate on the P&L of the revised plan. When we announced our forecast in May, we used the average exchange rate for January to March 2025, but this time we used the average exchange rate for January to June 2025. The yen has appreciated further against many major currencies, and the impact on this segment is shown in the table on the right.

Page 16 shows the forecasted net sales by segment, and page 17 shows the forecasted operating profit by segment. Please refer to these pages together. First, food and beverages in Japan. In the May announcement, we had estimated the sales volume of the Yakult 1000 series for the year at 2.1 million bottles per day, but the actual volume up to June... was 1.91 million bottles per day. The Y1000 series for retail store sales also performed slightly below plan, so we have revised the daily sales volume assumptions for each. The revised daily sales volume for Yakult 1000 is 1.95 million bottles per day, and 1.1000 is 1.17 million bottles per day. That's a total of 3.12 million bottles per day for the series, which is a 3.7% year-on-year increase. For other dairy products, daily sales volume assumptions have been revised, with total dairy product sales now forecast at 9.43 million bottles per day, a decrease of 370,000 bottles. In line with the reduced sales, we have also revised operating profit downward by 4.5 billion yen. From the second quarter onward, we will strive to recover performance and carefully review expense usage to aim for increased profit. Next, overseas food and beverages. As mentioned earlier, due to the exchange rate revision, we have lowered sales by 2.5 billion yen and operating profit by 500 million yen. As mentioned earlier, since overseas operations have been progressing in line with the initial plan, we have made revisions only for the forex exchange rates for overseas business. Page 18 to 21 compare the revised forecast with the previous year. I will briefly explain these year-on-year comparisons. Page 18 is an overview of P&L. With this downward revision, net sales and all levels of profit are expected to decrease compared to the previous year. Page 19 shows the impact of exchange rates. The yen has strengthened against all major currencies, resulting in a significant negative effect of 14.6 billion yen on net sales and 3 billion yen on operating profit. Next, page 20 shows net sales by segment. Food and beverages in Japan are expected to see increased sales due to higher sales volumes of the 1,000 series. Overseas sales, however, are expected to decrease mainly due to the negative impact of exchange rates. Page 21 shows operating profit by segment. Food and beverages in Japan are expected to see decreased profit due to higher costs such as raw materials and labor. On the other hand, overseas food and beverages are expected to see increased profit as gross profit from higher daily sales volumes of dairy products is expected to offset increased expenses and the negative impact of exchange rates. This concludes the explanation of the consolidated financial results for the first quarter and the full year forecast for the fiscal year ending in March 2026.