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Corporate Report 2020

President's Message

Takahisa Kuno: President and Representative Director

Aiming towards a flexible corporate group that delivers new values to address diverse needs

Added-value strategy initiatives—Taking a firm hold

The Nisshin OilliO Group utilizes the technologies that were cultivated since its founding to drive the market through the creation of new value and to tackle the globalization of business operations. To this end, we embarked on the strategic medium-term management plan, “OilliO Value Up 2020”(implementing since FY2017), by carrying on the conventional business structure reforms while shifting focus to an enhanced growth trajectory.

Looking back on FY2019, I believe a “taking hold” will become another key phrase for the Nisshin OilliO Group. In the household-use domain, sales overall are being driven by a strong expansion in the added-value category, which are also high-margin products. I believe this reflects proposals for new approaches to eating that addresses diverse needs, as epitomized by table-use oils, such as “oils for topping”, and fruition of measures, including our communication initiatives together with business partners to reach out to our consumers. The market for “oils for topping” is taking hold as a new market for edible oils.

In the commercial-use domain, sales are expanding for commercial-use functional oils, including stir-frying oil and “'Smart' oil suitable for take-out rice”. These products have a new added value that boosts workability in commercial kitchens. In a business-to-business (BtoB) field such as this, we are increasing the number of opportunities to contribute to customer problem-solving by strengthening the mechanisms and systems of the “sales method that focuses on cooperation to unearth user needs”, providing optimal solutions.

Profit* trends in the value-added category
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Move forward with global business development as we enter the next stage

We are steadily moving forward with measures to globalize our business operations. In the Processed Oil and Fat Business, we implemented capital expenditures to acquire an oil refinery in Europe and to increase production capacity at Group companies in Southeast Asia. In this way, we endeavor to carefully respond to the needs of our customers overseas.

In the Fine Chemicals Business as well, we are addressing demand in Japan and abroad by building a global production and sales system in collaboration with group companies in Europe and China. Going forward, to ensure a proper tie with earnings contribution, I believe it is necessary to powerfully promote the development of a global supply chain that is organically linked to each site, including the new fine chemical products plant within the Yokohama Isogo Plant*1, which is scheduled to be completed in FY2020.

In the Health Science Business, sales are expanding, mainly for Medium-Chain Triglycerides (MCT)*2, by actively implementing communication activities. The degree of recognition of MCT is improving to a certain extent. However, going forward, to take a firm hold as a new market, it is essential that we boost the rate of MCT recognition, not only for household use, but also in the BtoB domain, including commercial-use products. In FY2020, we plan to pour energies into broadening our focus towards a more versatile use of our MCTs.

As we continue to strengthen the foundations of the company, we must face urgent issues, such as chronic personnel shortage, in order to maintain sustainable production and distribution for the stable supply of our products. We plan to continue to undertake the establishment of a system for the stable supply in the production front and through development of infrastructure in the distribution front to achieve “100% delivery”.

Thus far, by steadily implementing strategies promoted in the medium-term management plan, in FY2019 we achieved our operating income goal one year earlier than scheduled. However, in FY2020, the final year of the medium-term management plan, we are directly confronting changes in the environment in which we operate our businesses in a global arena affected by the spread of COVID-19. Amid these harsh trends, we are coming together as one and undertaking measures to fulfill our social responsibilities, which is to continue to stably supply products that are essential to our daily lives and which support the infrastructure of the food industry. I believe that continually providing indispensable products is also an important mission that should be universally fulfilled by The Nisshin OilliO Group as well.
*1 New fine chemical products plant within Yokohama Isogo Plant
The plant will be responsible for the manufacturing of high value-added products, including ester for cosmetics and MCT. Accordingly, the production capacity will be 1.5-times previous levels.
*2 MCT (Medium-Chain Triglycerides)
The Nisshin OilliO Group has been undertaking research and development for many years into a 100% pure Medium-Chain Triglyceride oil.

MCT recognition rate (Nisshin OilliO survey)
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Management targets and FY2019 results
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Incorporate sustainability measures into management and business operations

In the medium-term management plan, we are undertaking the “implementation of ESG management”, as an essential theme. The Nisshin OilliO Group has continued to move ahead with measures to achieve a sustainable society, by becoming a signatory of the UN Global Compact*3 and supporting the SDGs. We are also substantially reducing CO2 emissions by operating an energy network, which utilizes a cogeneration system. In addition, we are undertaking the building of an environmentally-friendly and human-rights-conscious supply chain, by establishing a Palm Oil Sourcing Policy, boosting the ratio of use of certified sustainable palm oil, and strengthening traceability of processes up to the oil mill.

Sustainable initiatives are not limited to addressing social demands. It is also closely related to the sustainability of the Company’s businesses themselves. I believe this is also a business opportunity which should be actively undertaken.

This naturally applies to the development of environmentally-friendly products. Various measures are also possible even for production. Further out, we plan to expand these issues group-wide and set forth goals for problem-solving on a global scale. Moreover, we plan to actively incorporate these measures into the presentation of visions and commitments that express our will. What is important here is that this resonates with our stakeholders. I believe we should explore communication methods that create shared value without its ever becoming dogmatic.
*3 UN Global Compact
The Nisshin OilliO Group became a signatory in 2011. The Company aims to instill the philosophy of the UN Global Compact in employees through various study groups and training.

Create an organization that is worth working for

The Nisshin OilliO Group itself must become an organization that accepts diverse individualities and qualities to create distinct values and to quickly deal with the changing society. Our promotion of diversity, including supporting the advancement of women in the workplace, and the training of globally aspiring personnel are also in line with this concept. We are implementing measures, including work-style reforms and health management, so that every employee can work energetically.

Furthermore, in addition to enriching systems and programs, it is important to nurture employees to have a positive mind. Pushing forward with SDG-conscious management and conveying to society our commitment to this stance should help employees realize their connection to society. Given the creation of diverse values for society, we aim to build an environment that is conducive for all employees to ambitiously undertake their work duties.

Proceed with the establishment of a long-term vision based on our corporate statement

It is needless to say that with the global spread of COVID-19, the risks surrounding the company are becoming more multi-layered and complex. I believe that to achieve continuous growth in this age, in addition to the traditional medium-term management plan, it is important to adopt longer-term visions and to put together flexible strategies that correspond with conditions at any particular time. Consequently, we are establishing a long-term vision that embodies goals for 2030.

In establishing the long-term vision for the Nisshin OilliO Group, we have repeatedly conducted numerous discussions internally to sketch out an ideal vision for the group in 2030. Through these discussions, I have come to strongly believe in the universality of our corporate statement—“The Natural Power of Plants.” Society has changed drastically from the time we first established this corporate statement. However, when once again unraveling the meaning of this statement, I believe this statement is conscious of the conditions of the group and social roles that are applicable today. The long-term vision, which focuses on goals for 2030 and further development thereafter, is a starting point for the reconfirmation of the origins of the Nisshin OilliO Group and the advent of a new corporate image of being both pliable and stable.

T.Kuno

Takahisa Kuno
President and Representative Director
The Nisshin OilliO Group, Ltd.
July 2020

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Corporate Report 2020

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