Meiji (2269) investor relations material

Impairment loss and China business restructuring

• Recorded a total impairment loss of JPY 19.4 billion on non-current assets in China, mainly in dairy, B2B, chocolate, and ice cream segments due to underperformance and increased costs.

• Despite cost reforms and leveraging brand strength, net sales and profitability fell short, impacted by local competition and post-COVID-19 consumer trends.

• Production at the Shanghai ice cream plant was suspended, contributing to cost reductions and a projected reduction in operating losses to JPY 0.8 billion by FY2026.

• Profitability improvement efforts included cost reforms, sales area reviews, and focus on high-margin products, especially in B2B and dairy.

• Future strategy emphasizes expanding B2B, focusing on differentiated products, and optimizing production and sales strategies in China.

Financial forecast revisions and management policy

• FY2025 net sales and operating profit forecasts remain unchanged, but ordinary profit is revised upward due to improved equity method results and FX gains.

• Profit attributable to owners is revised downward, reflecting impairment losses and restructuring costs.

• Structural reforms and strategic cash allocation are prioritized to restore growth and target an ROE of 10%.

• Commitment to sustainability is maintained, with ROE placed at the core of management indicators.

• Dividend policy remains steady, with a focus on increasing total payout ratio above the 2026 Medium-Term Business Plan level.

Business portfolio transformation and growth strategy

• Plans to expand in high-growth, high-profit domains by leveraging unique value propositions and open innovation.

• Management resources will be allocated to confectionery and global strategic pharmaceutical products.

• M&A and partnerships are actively pursued to accelerate commercialization and growth.

• Withdrawal from non-strategic domains is underway to enhance overall profitability.

• Targeting a 30% operating profit composition from overseas and new businesses by FY2035.