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Medium-term Business Plan

Under the Group’s Eighth Medium-Term Business Plan, launched in April 2024, in line with the theme “Striving to become a high quality company that provides “Healthy Life Through Foods” <Chapter 2> Striving for growth by building a global value chain”, the Group will build a value chain structure globally and lay foundations that will enable further growth in the future. At the same time, the Group will focus on developing a balance sheet mindset and improving management indicators, including introducing ROIC (Return on invested capital) for management that is conscious of the cost of capital.

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Overview of the Eighth Medium-term Business Plan For Customers For Society For Our Employees and Their Families Financial Capital Policy

Overview of the Eighth Medium-term Business Plan

Overall Picture

The Medium-term Business Plan has been formulated as an action plan (“To Do”) that will enable the Company to get closer to its Group philosophy (Vision, “To Be”). The Company has established “Striving to become a high quality company that provides "Healthy Life Through Foods" <Chapter 2> Striving for growth by building a global value chain*” as a major theme of the Eighth Medium-term Business Plan. Setting priority themes to address customers, society, employees and their families, respectively, the Company will push ahead to transform into a highquality company with a global presence.

Standing

The six years of the Eighth to Ninth Medium-term Business Plan are the stage for laying the foundations enabling further growth in the future.

Consolidated Numerical Targets

Consolidated Targets

Management Indicators

For Customers

We connect value chains to create new value and offer "Healthy Lives Through Foods" globally

Themes for Actions

KPI

For Society

Formulation of the House Foods Group Long-term Environmental Strategy 2050

In the Eighth Medium-term Business Plan we will focus on climate change action and the creation of a resource recycling-oriented society as priority challenges.

Themes for Actions

KPI

For Our Employees and Their Families

We will continue our efforts to turn diversity into a driving force for building a global VC.

Themes for Actions

KPI

Financial Capital Policy

We will work on "Introduction of ROIC management," "Clarification of resource allocation," "Strengthening of IR and SR activities, Mechanisms to enhance value sharing with shareholders" to realize management that is conscious of the cost of capital and share price.

(1) Introducing ROIC Management(The House Foods Group's Definition of ROIC)

  • Acknowledging our challenge with the low level of capital efficiency, we aim to break down company-wide ROIC into business ROIC and proportion of operating capital and make improvements to each indicator in order to enhance the Group's overall capital profitability.

The House Foods Group's Definition of ROIC

(1) Introducing ROIC Management(Projected Change in ROIC)

  • As we will continue to invest in growth areas under the Eighth Medium-term Business Plan, we will aim to significantly improve the proportion of operating capital and enhance company-wide ROIC by reducing non-operating capital, though improvements to business ROIC will be limited.
  • In the Ninth Medium-term Business Plan we will complete the cycle of investment in growth areas. By improving the capital profitability of our core business produced from investments (business ROIC), we will strive to further improve company-wide ROIC.

(2) Clarifying Resource Allocation

  • Following on from the Seventh Medium-term Business Plan, we will continue to prioritize the investment of resources in accelerating growth through the building of a global VC.
  • We will work to further reduce cross-shareholdings and enhance shareholder returns to improve capital efficiency.
  • For some growth investments we will utilize external funding through interest-bearing debt.

Eighth Medium-term Business Plan Resource Allocation (excluding Ichibanya)

(2) Clarifying Resource Allocation (New Profit Distribution Policy)

New Profit Distribution Policy

(3) Strengthening of IR and SR Activities, Mechanisms to Enhance Value Sharing with Shareholders

  • We will aim to reduce the cost of capital through better IR and SR activities, while enhancing mechanisms to improve value sharing with shareholders, leading to greater corporate value.

Improved IR and SR activities

  • Setting up various opportunities for dialogue (various briefings and on-site tours, etc.)
  • Strengthening dialogue from a medium-to long-term perspective through IR and SR activities
  • Enhancing information disclosures through the website and various disclosure documents
Tour of new production line at US business by analysts (September 2023)
Enhanced information disclosures
(example: improvements to supplementary materials for financial statements)

Mechanisms to Enhance Information Sharing with Shareholders

  • Ongoing in-Group financial results briefings(since 2021)
    • Appearances by the President Calling on employees to show an interest in business results and enhance their sense of ownership
  • Improvements to the employee stock ownership plan
  • Revisions to the officer remuneration system
    • Medium-to long-term incentives and improvements to the percentage of stock-based compensation
In-group financial results briefings