First, we would like to convey our deepest sympathies to all those who have been affected by the Great East Japan Earthquake of March 11, 2011. We extend our sincere wishes for the swift recovery and restoration of the communities in the area.
Eight of our operating sites in the Tohoku and Kanto regions were also severely damaged in the earthquake. Thanks to successive reconstruction efforts, however, all facilities were restored to pre-earthquake condition by the end of August.
In fiscal 2010, the Japanese economy showed some signs of a turnaround, but consumer spending failed to realize a full-scale recovery as the employment situation remained difficult. Moreover, the aforementioned earthquake added to the uncertainty of the economy.
Faced with such circumstances, the Meiji Group pursued various initiatives under its “FY2009-2011 Medium-Term Business Plan.” These included strengthening the competitiveness of core businesses, creating new demand, and improving our earnings structure. We also actively prepared for the reorganization that was implemented in April 2011.
With respect to results, our three core businesses had been showing a steady business performance, with the Dairy Products segment continuing the firm performance trend that began in the previous year, the Pharmaceuticals segment maintaining a steady performance after absorbing the impact of pharmaceutical price modifications, and the Confectionery and Healthcare segment achieving a turnaround in the autumn of 2010 despite dampened market conditions. The earthquake, however, seriously affected our production and distribution capabilities in each business segment. This, together with the profound impact of subsequent rolling power outages, had a sudden braking effect on our business.
As a result, consolidated net sales for the year amounted to ¥1,114.0 billion, up 0.7% from the previous fiscal year. Operating income edged up 0.3%, to ¥28.8 billion, and ordinary income rose 7.5%, to ¥30.4 billion. Due to a loss related to the earthquake, however, net income declined 27.0%, to ¥9.5 billion.
In fiscal 2011, we have prepared conservative forecasts. We are targeting net sales of ¥1,093.0 billion (down 1.9% from fiscal 2010), operating income of ¥21.0 billion (down 27.3%), ordinary income of ¥22.0 billion (down 27.8%), and net income of ¥10.0 billion (up 4.7%). These forecasts take into account the ongoing impact of the earthquake on the dairy business since April, especially in the first half of the year.
Our priority is the stable and continuous payment of dividends. Therefore, in fiscal 2010, we made a dividend payment of ¥80.00 per share for the year, which includes a ¥40.00 interim dividend. Regarding the dividend for fiscal 2011, we plan to maintain annual dividends at ¥80.00 per share despite our forecast of a significant earnings decline.
In September 2010, we announced the Meiji Group 2020 Vision, which is a long-term business roadmap. It outlines the intended direction of the Group and sets out clear consolidated financial targets (numerical targets): net sales of ¥1,500 billion and an operating income ratio of 5% or higher. In fiscal 2011, meanwhile, we reorganized the operations of two Group companies–Meiji Seika Kaisha, Ltd. and Meiji Dairies Corporation–to form two new companies: Meiji Co., Ltd. (a food company) and Meiji Seika Pharma Co., Ltd. (a pharmaceutical company). The launch of this new management structure equates to “The Second Founding of the Meiji Group.”
In the “Food and Healthcare” domains, the Meiji Group will work relentlessly to help improve the lifestyles of customers across all generations, while targeting growth and advancement as a world-renowned corporate group.
We appreciate your understanding and unflagging support.
September 2011
Naotada Sato
President and Representative Director
Meiji Holdings Co., Ltd.
