To Our Shareholders and Stakeholders

I would like to take this opportunity to convey my heartfelt thanks to shareholders for their ongoing support.
We want to make a continuing contribution to the realization of an enriched society that inspires smiles everywhere.

Review of the Fiscal Year Ended March 2026

In accordance with the Medium-Term Business Plan 2025–2028, the Morinaga Milk Group is seeking to grow its earnings by concentrating management resources in areas where it can leverage the strengths of the Group to the greatest possible extent, such as yogurt, ice cream, bifidobacteria and other probiotics, and formula milk for overseas market. We are also working to improve productivity by rebuilding the organization with a focus on optimizing the value chain as a whole, and reorganizing production structures to increase production efficiency.
In the fiscal year under review, the Company was affected by increases in various operational costs, including raw materials and logistics, with domestic raw milk trade prices. As well as continuing to work on price revisions to address this, we were striving to expand high value-added products and promoting cost reviews for the Group as a whole, despite decline in sales volume versus initial targets associated with the challenging demand environment for food in general.
As a result of these initiatives the Group succeeded in growing consolidated net sales. In the domestic business, although we implemented price revisions, a decrease in overall sales volume led to lower revenue for the domestic business as a whole. Product lines contributing to higher revenue included ice cream, for which new production lines started operation, yogurt, with sales performance improving each quarter and commercial dairy products, where demand remains resilient. In the Global Business, MILEI GmbH took advantage of continued strength in whey market conditions to post a significant increase in revenue. Together with the steady expansion of sales and revenue in probiotics and formula milk for overseas markets, this led to growth in revenue overall. Consolidated operating profit recorded an increase. The domestic business saw a decline in profits due to rising costs and a decrease in sales volume. On the other hand, the Group as a whole recorded an increase in profit due to growth in the Global Business, driven primarily by MILEI GmbH.

Looking Ahead

While a gradual economic recovery is expected domestically, close attention must be paid to the impact of the situation in the Middle East. The Group will also continue to take steps to address rising costs. Overseas, for the fiscal year ended March 31, 2026, the Global Business recorded a significant increase in profit centered on MILEI GmbH, which increased sales volume by selling from inventory. For the fiscal year ending March 31, 2027, in addition to sales volumes falling in reaction to the strength of the previous fiscal year, we expect raw material and other costs to increase. On the other hand, we seek to continue the expansion in probiotics and formula milk that constitute the Growth areas of the Global Business.
As full-year consolidated earnings forecasts for the fiscal year ending March 31, 2027, we are projecting net sales of ¥580.0 billion (up 1.5% year on year), operating profit of ¥32.0 billion (down 7.2% year on year), and ordinary profit of ¥32.7 billion (down 11.9% year on year). For profit attributable to owners of parent, we expect a 11.5% decline year on year, to ¥20.0 billion. The impact of the situation in the Middle East has been reflected in the earnings forecast. Based on conditions as of early April 2026, the negative impact on operating profit through the end of September has been estimated at ¥4 billion and incorporated into the forecast. The annual dividend per share will be 25 yen. As announced on May 13, 2026, a stock split of 4 shares for 1 share of common stock is planned. Prior to the stock split the dividend per share will be 100 yen, for a payout ratio of 40.3%.
The Morinaga Milk Group 10-year Vision that sets out the vision of the Group for the next ten years was formulated in April 2019. The goal of the Medium-term Business Plan 2025–2028 for the four years to the fiscal year ending March 2029 is for the Company to realize the Morinaga Milk Group 10-year Vision, and to move forward with initiatives aimed one step into the future, at transforming itself into “A Clearly Differentiated and Highly Profitable Company.” In the Sustainability Medium- to Long-Term Plan 2030, KPIs have been set for the three themes of “Food and Wellness,” “Resources and the Environment,” and “People and Society,” and we aim to realize sustainable growth by linking this to the Medium-term Business Plan. Based on the vision and plan set out above, we will work to enhance corporate value further.
We sincerely ask all of our stakeholders, including our shareholders, for their continued support and understanding.