Ajinomoto Co., Inc. (2802) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. Thank you very much for taking time out of your busy schedule to attend the financial results briefing of Ajinomoto. My name is Kaji of the IR Group. I will MC the event. This session is attended by 8 executives, Mr. Nishii, President and CEO; Mr. Fukushi, Vice President and CEO. Mr. Kurashima, Senior Managing Executive Officer; Mr. Fujie, Senior Managing Executive Officer; Mr. Kurosaki, Managing Executive Officer, Mr. Bompas, Senior Executive Officer; Mr. Nakano, Managing Executive Officer; and Mr. Mizutani, Global Finance Manager. When Mr. Bompas gives his presentation, simultaneous interpretation will be performed. The briefing session will be followed by a Q&A and is scheduled to be approximately 90 minutes with a break in between. The material Foods today are posted on the IR information site of Ajinomoto Co., Inc. Please take a look. This session is being recorded. And together with the Q&A session to be followed, will be posted on the IR website at a later date. Please be advised. Now we'd like to begin our program. I'd like to invite Mr. Nishii, Mr. Fujie, Mr. Kurosaki, Mr. Bompas to present forecast for FY '21 and initiatives to enhance corporate value. Mr. Nishii, the floor is yours.

Good morning, ladies and gentlemen. Thank you for your time today despite your busy schedules. I'd like to get started and go straight into my presentation. But first of all, we are currently under another state of emergency, and I apologize that this briefing is being held online. So for myself, I will be following the agenda, which is on the next page. I'll be talking about the fiscal 2020 summary results and fiscal '21 forecast. I'd like to also talk about fiscal '21 initiatives to enhance corporate value; and from our divisional heads, they will be talking about initiatives to grow our businesses. So first, from myself, I'd like to talk about the summary results for fiscal '20 as well as the fiscal '21 forecast. Please turn to the next page. So first of all, in fiscal '20, despite a decline in revenue, the profits posted significant increase with business profits reaching record highs. Sales into Foods business were affected by a decline in demand for food services products. But excluding the impact of foreign exchange rates, mainly the Brazilian real, we were able to bring it back on par with the previous fiscal year. Business profit increased by 14% year-on-year due to increased revenue in specialty chemicals and increased revenue from home use products as well as improvement of product mix and lower SG&A. Net income attributable to owners of the parent company increased substantially year-over-year. Although structural reform expenses for the animal nutrition business and other items were recognized as planned, the sale of idle assets contributed to the increase. We also bought the noncontrolling shares of Thai Ajinomoto and parent stake has been increasing at the same time. Please turn to the next slide. I'd like to summarize the fourth quarter now. In each country, the spread of COVID-19 continued. On a local currency basis, quarterly basis sales turned positive for the first time. By resuming market activities that we were unable to implement last year, profits decreased due to an increase in SG&A expenses. Please turn to the next slide. For March '21 and the changes in business profit, the changes are shown here on this slide. GP increased and was able to offset the decline from sales and for approximately JPY 9 billion. This is due to the international consumer business and the higher ASPs, and we also had higher decrease in SG&A by JPY 7.8 billion. And we had losses of impairments last fiscal year. However, that dropped off and contributed to fiscal year 2020 earnings. Next, I'd like to talk about sales and profits by segment. Against the forecast, I'd like to make a few points for sales in the food business due to another spread of COVID-19, the foodservice products business in Q4 recovered weaker-than-expected. For health care, for specialty chemicals or electronic materials, they continue to perform well and exceeded our expectations. And from a business profit point of view, the Foods business continued to improve due to better product mix. And the health care and other business increased due to higher sales of specialty chemicals. Please turn to the next slide. Here is the explanation of business results or performance by region. Both sales and business profit were significantly affected by foreign exchange rates especially the Thai baht and Indonesia rupiah and Asia as well as the Brazilian real and U.S. dollar in the Americas. Overall, this is profit increased in all regions absorbing the impact of foreign exchange rates. So when you exclude the foreign exchange impact, Foods and Seasonings saw an increase in earnings. From here on, I would like to talk about the items that may impact our earnings forecast. We are not able to anticipate the end of COVID-19 yet in many countries, and its impact on the economies of respective countries remain uncertain. However, as you can see here, these factors were taken into consideration for the business environment in each of the countries we are in. We believe it's going to take approximately 6 months for the vaccine process to develop. And for the second half, we believe economic activity is going to recover gradually. And for the U.S. as well as Europe, we believe that COVID-19 will head to an end. For home-use cooking, we are expecting -- we are going to strengthen to strive growth in this part of the business. And for raw materials and fuels, cost is increasing, so we would like to ensure that we engage in cost reduction. And also mainly for fermentation ingredients for seasoning, we would like to respond promptly to price increases. Thirdly is impact from COVID. Mainly in emerging countries, currency depreciation is expected to continue. And we expect effects from currency translation and credit, and we will carefully monitor the situation. Please turn to the next slide. From here on, I would like to talk about specific numbers for the fiscal '21 earnings forecast. For sales, we are expecting 103%, business profit, 101%, and net income attributable to the parent company of 100% compared to previous year. For the structural reform of animal nutrition, health care is expected to decline in revenue. And for food and Seasonings as well as Frozen Foods, for specialty chemicals, we are expecting an increase in revenue. And we are expecting more home cooking, and we would like to capture the demand so that we could get higher ASPs and higher sales. And for food use -- the restaurant-use products, we believe that trend is going to come back, and we would like to ensure that we capture the opportunities. And for electronic materials, the market continues to be at risk, and we would like to ensure that our performance is sustainable and continues to be good. And for higher raw material prices, we will increase our prices to absorb it. And to go back to growth, we would like to create a new business model, and we'll be increasing investments for the creation of new business models in order to return to growth in fiscal '23 and beyond, but we will strive to increase profits overall. Structural reform charges are expected to be approximately JPY 10 billion, and we expect JPY 60 billion in net income attributable to owners of the parent company. Next slide, please. As I mentioned earlier, I'd like to show you this waterfall chart to describe the points made in the earlier slide. Of the 6% organic growth company-wide, we expect GP increase of more than JPY 23 billion by absorbing the impact of surging raw materials and fuel prices with the 2% unit price growth among international consumer Foods. And for the main brands in consumer Foods, their share went down during fiscal '20. Therefore, we would like to increase the amount of marketing investment, approximately JPY 11 billion to address the following share. And in addition, we will increase investment by approximately JPY 6 billion on new business and business model transformation to realize a return to growth after FY '23. In addition, on the slide of the SG&A, JPY 23.4 billion, the overall divestment as well as depreciation will increase. However, we are going to make savings in other components. Therefore, overall, there will be a cap to JPY 1.2 billion increase, but last year, this decreased significantly. And 2.5% SG&A across the board is the -- our overall target, and we are proceeding as planned. Next slide shows the sales and business forecast by segment. As you can see, basically, the -- apart from the animal nutrition structural reform, we will realize organic growth in the 6 core businesses. Next slide, please. This shows FY '21 sales forecast by region. Seasonings and Foods will increase revenue in all regions. As I mentioned earlier, I'd like to continue -- we'd like to continue growing menu-specific Seasonings whose market expanded during the pandemic and captured recovering food service demands. Frozen Foods will be impacted by SKU reduction, both in Japan and abroad. And sales in Japan will decrease. Meanwhile, with the production ramp-up, the U.S. will aim to return to growth, mainly through the Asian category. Health care and others in EMEA and Asia will be impacted by the absence of animal nutrition sales. Next slide, please. Priority KPIs improved more than expected in FY '20, thanks to the advancements of structural form. FY '21 projects had an improved profit, although the extent may be limited, therefore, we would like to preside over resource allocation as part of asset-light management. EPS, which once plunged because of significant impairment losses in recent years, recovered to the JPY 100 level. We will aim to raise this further in FY '21. Next slide, please. This shows FY '21 investment cash flow or cash flow as well as investment for growth. Operating cash flow in the current MTP is targeted at more than JPY 400 billion for FY '20 and '22. Based on the forecast in FY '21, operating cash flow year-to-date will top JPY 300 billion during the current MTP, both tangible and intangible assets, investments are proceeding as planned. Despite uncertainty posed by the pandemic would like to execute transformation as well as DX to further raise our ability to generate cash. Next slide, please. Regarding shareholder returns in FY '21, as you are aware, our policy is to enhance shareholder returns in a stable and long-term manner. And we'd like to raise the dividend payout ratio to 40%, which was achieved this year as well. And then we would like to realize a total shareholder return of more than 50%. That is our commitment. As mentioned earlier, yesterday, in terms of shareholder returns, we have increased the dividend by JPY 10 and then the buyback shares amounting to JPY 40 billion, as was announced yesterday. Because of this dividend increase, the dividend yield will be around 1.8% this year, and for FY '21 and onwards, we'd like to plan for further increase -- another increase dividend. Next slide, please. Next, I'd like to outline FY '21 initiatives to enhance corporate value. First, let me outline the company transformation during the current MTP. This slide shows the concept of ASV management and partially overlaps with the IRD presentation on March 25. As this chart indicates, this is the concept of ASV management. Our purpose is to become a problem-solving company for food and health issues by unearthing intangible assets, including human resources and creating a new ecosystem. This will be realized by digitally enabled transformation of our business operation. So DX is crux of our transformation. Next slide, please. During the 2025 MTP, 5 transformations, listed here, are underway. Renewed vision to be disseminated throughout the organization. Redefining the mechanism of enhancing corporate value to be disseminated throughout the group, in order to raise customer satisfaction to boost the corporate value. So this is the ideal cycle, and that's been refined like that. And the third point it pertains to the revenue related management policy and shift to the management focus on the organic growth as well as work. Fourth, organization management aim to invest to HR development and to enhance customer value. Fifth, decision-making and risk management to execute strategy. Next slide, please. This slide shows the mechanism of enhancing corporate value, in relation with the strategies and key priority KPIs that we've already announced. The mix of operation excellence are being used to visualize the PDCA cycle. Regarding the management transformation, I'd like to introduce one example. Last year, the midterm management plan started by the coincide with COVID-19. From the perspective of risk management, the business environment conditions and its impact on business performance was shared on a company-wide basis with a great sense of urgency that we had to act quickly. COVID-19 risk narrow meetings were held for 8 months from May through December, connecting the head office and overseas subsidiaries. In conjunction with this, we have renewed the way we do offsite meetings for all executive officers and directors to address business portfolio issues, create new business models and implement company-wide operational reforms to achieve ROIC of 13% and organic growth rates of 5% toward 2030. I would like to talk about this later. Through these management efforts, we have been able to share the challenges of managing the business under COVID-19, whilst being persistent with business performance. Ultimately, we were able to collaborate on a company-wide basis to strengthen our business structure. Please turn to the next slide. Another example I'd like to give is, I'd like to talk about what we did at the FY '20 executive offsite or Ajinomoto Group Executive Seminar. Here are some initiatives that were implemented for the first time in a decade. First of all, it used to be an offsite for executives only, but we decided to engage participation by managers and key personnel who will lead the next generation, also, all employees reflected on the failure to achieve the midterm plan for the past 10 years. And upon that -- based on this, we brushed up strategies for core businesses, new business models and company-wide operational reforms. And we reviewed the 2025 midterm plans for the business units already. Hence, we've been able to strengthen our fiscal '21 strategy and promote digital transformation. So this was unprecedented, but we had online discussions for 5 months. And I told our executives that they are psychologically in a safe environment, and we were able to have serious discussions as a result. And we were able to become one team that embraced transformation. And during this period of time, we were advised by experts throughout the process in the area of corporate culture transformation and corporate value enhancement as described here. In fiscal '21, in addition to strengthening core businesses, we'd like to develop a new business model worth JPY 100 billion. We are committed to realizing both greater social value and economic value from the perspective of sustainability, which is unique to our company. There will be a change of members. So in order to deepen the understanding around the expectations of the multi stakeholders, we will continue to work on purpose-driven management and Trinity or integrated management by manager employees and shareholders. Please turn to the next slide. This is how we are going to drive this effort. Please look at it later. Next slide, please. Here is a summary of management KPIs for fiscal 2020. ROIC was 6.9%. Organic growth, unfortunately, was minus 0.6%. The percentage of sales from core businesses were 66.6%. Unit price of international consumer food products improved by 2.8%. Overall, the improvement in profit structure is making good progress. Employee engagement score an indicator of intangible assets is 64%, which was up by 9% year-over-year. And here's a summary of management views of each KPIs. ROIC was 6.9% after factoring impairment due to structural reforms and is in line against the fiscal 2022 target. Organic growth was disappointing. As the negative impact of restaurant and industrial use food products and biopharma service, et cetera, in the U.S., couldn't be offset by strong sales of home-used food products due to COVID-19 and specialty chemicals. Although the percentage of sales from core businesses may appear to be at a standstill, the effect from the structural reform of the animal nutrition business will become apparent from fiscal year '21 onward. So we are on track. Unit price growth of overseas consumer Foods came in line with plan due to price hikes in major countries and product mix with growth of many specific products and the launch of reduced sodium-type products. Overall, profit structure improvement is making good progress. In addition, employee engagement, which is our view as a leading indicator of financial targets was 64%, an improvement from the previous year, but there is still room for improvement in absolute terms. However, the survey was conducted from July to September of last year in the midst of the spread of COVID-19, and we appreciate the fact that more than 90% of our employees responded. In addition, as you can see in blue, another leading indicator, which is corporate value, this recorded a 19% V-shape recovery, year-over-year, and I will talk about this later. On the next page, I'd like to report on the progress of structural reforms related to our business portfolio. In the animal nutrition business, structural reform has been completed. In addition to the downsizing of the North American business, the sale of the European business was concluded. Going forward, we will convert our specialty business, such as AjiPro-L to a customer solution providing business, which may be small but has a high ROIC. And measures are underway to downsize the external sales business of the MSG business, which is number two. Number three, with regard to the Frozen Foods business, the shift to the Asian category in North America progressed as planned. In addition, by navigating our business strategy to reduce the size of industrial use products that became unprofitable in Japan, we were able to improve ROIC. Please turn to the next slide. So this is the asset-light progress we are making under the midterm plan. Business portfolio-wise, we are working on structural reform, and we are working on resource allocation. And for strategic health sales, we were working on its sales. And in fiscal '20, total of JPY 54 billion of asset-light strategies were implemented; in fiscal '21, JPY 37 billion by reducing assets; and JPY 13 billion due to resource allocation is going to be realized, that adds up to JPY 50 billion. And we believe to exceed the expectations over the midterm in 2021. So in phase 2, the ideas that were considered, we are trying to figure out whether we could push that forward and accelerate the efforts in fiscal 2022. Next page, please. From here on, we talk about our vision. And we are trying to extend the lives of 1 billion people. And for Umami flavorings and flavor seasonings, these are the number of households and individuals who buy our products, and we call them touch points. And in fiscal 2020, from 700 million, it went up by 4.1% or 28 million (sic) [ 1 billion ] people, and this is not bad at all for touch point growth. Please turn to the next slide. The background to the increase in touch point is increased frequency of cooking at home and the increased awareness of nutrition-conscious dining. Both of these graphs are from a survey of Japanese consumers comparing September of last year with April of this year. Please turn to the next slide. This trend has also been confirmed in Thailand and Vietnam, where people eat out more frequently than in Japan, as you can see in the graph. Please turn to the next slide. This slide of cooperate hypothesis is that seasoning's [ enthus ] (00:23:28) are resistant to consumers' propensity to save money. The data suggests the detailed analysis of at-home cooking propensity in Japan. All charts are taking the values in pre-COVID January 2020 as 100%. The left chart shows the evolutions of overall household spending as well as food spending. It is evident that people are tightening their purse strings as the pandemic drags on. Food spending, which used to be relatively risk, started to decline sharply in recent months. The graph on the right shows that consumption of Frozen Foods, Seasonings and vegetables are rising significantly. So this indicates that consumers are saving the overall food spending and shifting to the diet that is based on Seasonings and Frozen Foods and vegetables. Next slide, please. This illustrates our basic strategy for organic growth in food business. With main Seasonings, we'll capture surging at-home dining opportunities to focus on -- focus our investments on key brands, namely Umami seasonings, flavored seasoning and menu-specific Seasonings to increase volumes and unit prices. Responding to consumers' health consciousness, ANPS, Ajinomoto Nutrition Profiling System, will serve as a basis to revise products in order to raise health scores higher than those of flavored seasonings. We have launched the salt reduction type products and enhancing our product lineup. Furthermore, in the form of 5 source markets, digitally enabled communication and purchasing channels are significantly rising, presenting us a new growth opportunity. We ed prioritize investments to enhance DX and nutrition literacy among our employees in order to support local strategies of the group, both in and outside Japan. Overall, Seasonings and Foods business is expected to grow 6% in FY '21. Next slide, please. This shows our strategy to enhance corporate ramp value that buttresses our organic growth. When we analyze the corporate brand strength, Ajinomoto is perceived as a secure brand, known for its quality deliciousness and easiness to use. However, we are rated relatively lower in terms of nutrition and health improvements and we are at par with average companies. In light of our purpose to resolve food and health-related issues, we'd like to address this matter. During FY '20, under the banner of Nutrition Without Compromise, which is a new concept, we launched a corporate brand communication strategy to generate synergy with our main state product brands. And now let me explain what it means by Nutrition Without Compromise. It implies our uncompromising pursuit to deliciousness, local food cultures and access to food to all consumers. We began incorporating this concept into our products, marketing and brand communication going forward in line with our basic concepts. Next slide, please. Let me side one consumer initiative, which -- where we promote salt reduction in our marketing activities under Smart Salt strategy. Last July, we launched a Smart Salt campaign to promote delicious salt reduction items for daily consumption. We are creating more touch points to showcase our health-related information products and services. In collaboration with local municipalities and other companies, we are also expanding the salt-reduction ecosystem. We promote more nutrition and healthy balanced meal by promoting protein intake and fruit and vegetable consumption in addition to promoting salt reduction in in-store promotion activities. For overseas, we would like to adopt this Japanese model horizontally to be expanded internationally. And we began actively launching salt-reduction products and promoting delicious salt reduction throughout our own media. And going forward, we'd like to increase proposals based on evidence generated by Big Data analysis of Hirosaki University COI. We will also provide solutions within an ecosystem where we work with other companies participating in Hirosaki COI. And for the ANPS, we will revise our products utilizing ANPS from the perspective of Nutrition. As a result, 500 SKUs were revised during FY '20. In the medium term, to apply ANPS from the customer's perspective, we are currently developing technology to visualize nutrition value of each menu, not just presenting a score but visualize the entire nutrition value of each menu. Next slide, please. As I mentioned earlier, this shows the evolution of our corporate brand value rated by interbrand and BSS, Brand Strength Scores. By integrating brands with the business strategies, the CSR has been around this figure shown on slide. And among the top 40, the industry average, our score was better, far better than the average. And based on the health priorities, we are enhancing and improving the -- some of the weaknesses identified in this score, and we are making progress. Now next is employee engagement. As was presented in the KPI progress during FY '20, employee engagement is rising. However, percentage of those considering ASV as their own initiative to enhance customer value remains at 64%. And also, health and productivity management remains high, is improving, which we regard as our strength. To further enhance employee engagement, we are sharing the best practices across the group. And the full -- and we are following the annual organizational management cycle, which combines entrepreneurial programs, individual capability development programs, dialogue with CEO and top management as well as personal goal presentation. Combining all these, we'd like to ensure that we follow this annual organization management cycle. And during FY '21, we'd like to raise the entire level by deepening dialogue at each tier by a peer group and as we disseminate this approach to the entire group. This shows digital transformation steps and numerical targets to enhance corporate value. On the IR day, we presented this material, and this summarizes the presentation for you to have a look. Next slide, please. Likewise, this is a repetition of the slide shared on the IR day in March, which shows the expected profit increase by business model transformation. By 2022, we would like to generate JPY 2.6 billion business profit -- JPY 60 billion business profit, and we'd like to exceed that target mentioned in the MTP. And then regarding our sustainability, we'd like to show you the summary of our plans. To extend healthy lifespan for 1 billion people, consumer touch points are steadily increasing and delicious salt-reduction efforts are underway, as I mentioned earlier. In addition, marketing will focus on protein intake. To encapsulate, we will take marketing measures, such as [Foreign Language] and enhance amino acid supplements and work with venture firms to develop plant protein businesses. Under the PR activities, we would like to conduct marketing activities at U.S. Food System Summit and Tokyo Nutrition for Growth Summit, where we work with external organizations, such as ANI, GAIN and CGF, to declare our engagement and nutrition without compromise. In addition to the Hirosaki COI, I mentioned earlier, we will participate in well-being foundation to visualize life -- healthy lifespan in order to raise our presence in the midterm -- long term. So this is reducing environmental impact by 50%. And what we would like to do around this area. So it's an area of climate change action, plastic waste reduction and food loss reduction. These are our challenges. We will be following this road map. Boiler and conversion of energy is something we've been engaging in. But in 2022, carbon pricing implementation is what we are preparing towards, and we will be excelling our efforts -- and for plastic waste reduction to 0 for 70,000 types of materials is being utilized right now, and currently, 30,000 tons can be recycled, including thermal recycling. For the remaining 40,000, we would like to strengthen our efforts around recycling, and we will be working on that going forward. So Scope 3 is what we will be striving for in all 3 categories by 2030. Please turn to the next slide. So this is an update on our company-wide risk assessment of greenhouse gases. From MSG, we expanded it to a group-wide basis. And as a result, the carbon tax risk of JPY 20 billion in 2030 and JPY 30 billion in 2040 was calculated, which is an increase from the carbon tax risk of JPY 8 billion in 2040 for the Umami seasonings for processing food manufacturers business on a stand-alone basis, which we have already explained in the past. From fiscal 2022, we would like to use internal carbon pricing to promote capital investment in greenhouse gas reduction and accelerate risk hedging by linking it together to individual business plans. Please turn to the next slide. Finally, we have summarized the forecast key KPIs for fiscal year 2021. Please refer to the numbers. Please turn to the next slide. This is a forecast of priority KPIs by segment. Please refer to this later as well. So from here on, I'd like to explain our growth initiatives in fiscal '21 by business. So I'd like to pass on to Mr. Fujie.

Good morning. I am in charge of the Foods business from April. My name is Fujie. Nice to speak to you all. For Foods -- Seasoning and Foods in fiscal 2020, there was an environmental change, and there are some initiatives that we have implemented, as you can see on this chart. Just to go through some highlights, stable supply was our utmost priority. And we were focusing on core products. And we wanted to strengthen business structure and promote initiatives, capturing consumer changes. As a result, the GP ratio on a year-over-year basis went up by 1.2%. If you move on to the next slide, this talks about fiscal '21 and highlights that we are considering. In fiscal '20, 10% to 11% was ROIC target. And towards this achievement, we would like to strengthen our business structure even further so that we can sustain our organic growth and also make our capital efficiency better. There are 2 important strategies. One is sustainable organic growth. We are striving this to be an increase of approximately 6% as well as to improve profitability. In fiscal '20, we have been able to focus on our core businesses, and we would like to focus even more in fiscal '21, so that we can go back on the growth trajectory. Also, we would like to promote digital transformation and transform the business model so that we can strengthen or expansion the touch points we have with our consumers. For example, Smart Salt or love veggie, which will promote vegetable intake, we would like to offer more value to our consumers. And also, we hope this will lead to higher ASPs. And for international consumer ASPs, on a year-over-year basis, it went up by -- the plan is to increase this by 2%. And for intangible assets, which is personnel, we'd like to strengthen our personnel so that we could have an atmosphere where people take on challenges and ensure that we are able to achieve sustainable organic growth. Secondly, we here talk about accelerating the increase in efficiency of capital. Through operational excellence and promotion of digital transformation, I would like to be thorough in visualizing data. And we would like to visualize the health of our business so that we can increase the efficiency and sophistication of our work. And we would like to also enhance the sophistication of SEM by reducing the inventory number of SKUs. For asset-light, which is our plan, we will promote this as well, and we'd like to also execute strategic investment plans at the same time. Furthermore, for budgets, forecast and results, we would like to improve the way we manage and control them, so that we could achieve a ROIC like target of approximately 13%. And and also for the reorganization of food production in Japan, we are expecting a positive impact from this. Amortization expenses in fiscal '21 is expected to be up by JPY 1 billion. However, the capacity is going to be up by approximately 20% from the first year. And with this, we will be striving for an improvement in DP margin. That is all from the Foods business. Thank you.

Next, Mr. Kurosaki, please give us your presentation. Excuse me, Kurosaki? Yes, on Frozen Food, please?

Good morning, ladies and gentlemen. My name is Kurosaki in charge of Frozen Foods. Thank you very much. To work towards ROIC 5% in FY '25, this is our commitment. And during FY '20, we have executed the initiatives listed here. In order to enhance our business structure, we took measures. And if you could take a look at the changing environment during fiscal 2020 is listed here. And during fiscal '20, there were main 3 initiatives in order to increase profitability by unit price growth as well as value-added products and expanding core domains. And second, we have reduced nonprofitable items reduction, SKUs, both in Japan and the U.S. As a result, GP margin went up and was up 1.5% year-on-year. At the same time, in tandem, another pillar was to increase asset efficiency through the promotion of asset-light management for you to have a look later. And the next slide describes our plans for FY '21. The basic principles stay the same, and we'd like to further our efforts during FY '21. And this will continue until fiscal 2022. And as was mentioned earlier, in order to increase our profitability, #1, in brackets, as Nishii-san presented earlier and retail expansion was conducted, so we'd like to increase this portion up to 15% year-on-year in the United States. And in Japan, we'd like to expand our core businesses -- core domains by shifting the business portfolio. And unit price growth is scheduled to be around 2% in both Japan and the U.S. SKU reduction for unprofitable items is listed here as well. And for the GP margin improvement, we'd like to increase that by 1.1% even further year-on-year. Speaking of asset efficiency improvement, globally, we'd like to take an asset-light approach. Depending on the situation, we'd like to be remaining flexible, but either in '22 or 2023, we'd like to reduce the number of plants to 15. And in Japan, we are to shift production strategy, and it's already announced in 2020, and this will be implemented in the next year -- next fiscal year. In order to fulfill the production capacity shortage, we'd like to also promote the asset-light policy by working with manufacturing contractors. And this is our basic strategy.

My name is Gwin Bompas and I have responsibility for the AminoScience Division referred to, in front of you, as the health care and other sector. In 2020, we strove to improve our capital efficiency by focusing on our core businesses and also through the key initiatives of the structural reform of the animal nutrition business. We, of course, notice changes in the environment, particularly the acceleration on -- in the expansion of demand for electronic chemicals as well as the need for people to work at home and learn from home via the communication and supporting networks as well as the service required, we saw unprecedented growth in this sector. We also noticed an expansion with regards to products into infusions, antiseptics and vaccines. Remarkably, the sports industry and the sports nutrition experienced a great shrinkage as did the cosmetics market. And in the U.S., we also had some struggles with regards to securing adequate human resources. We majorly undertook a number of initiatives in 2020, including -- based on the environmental changes, the sales expansions and increasing our sales unit prices in the core businesses. We managed to complete the structural form of the animal nutrition business by integrating our North American assets,as well as by divesting our assets in Europe. And we also worked on strengthening our foundation for future growth, particularly in the CDMO business, our AminoIndex business, and through our medical food business through a small acquisition, Nualtra, at the beginning of this year, an Irish-based company. On the next slide, we actually, for FY '21 are focused on further advancing our stable organic growth and our capital efficiency to achieve our return on invested capital targets. The key strategies for this include accelerating the growth of our core businesses, and we want to continue with the high-growth of the electronic materials business. The background is still a robust and solid demand in the semiconductor industry. This will not be at the levels of the prior year but still a solid demand going forward, as PC sales slowed down,as well as the need for people to continue to work remotely. We also aim to grow the amino acids business, particularly in the pharmaceuticals and foods businesses, where we build off our competitive advantage of traceable, high-quality, pharmaceutical-grade products. And in the pharmaceuticals -- biopharmaceutical services business, we also will continue to build up our fundamental technologies, such as oligonucleotides. And in doing so, we plan to actually improve our base sales, our core sales, despite the reduction that we experienced with the structural reform in the animal nutrition business. We still need to finalize reorganization of the animal nutrition business. This is really becoming a specialty-focused business, focused on customized feed solutions, and this will be one of the strategies for this coming year. We also will continue transforming our business using digital transformations, particularly with new business models, in the health care businesses, medical food, biopharma services, AminoIndex and others. Human resources people are really our competitive advantage, and we will continue to develop with them solutions for our customers, help create a work environment where all our employees can thrive, and therefore, be more fully engaged in the business, and continue to work on their upskilling and education. And in this way, we will drive Ajinomoto shared value into the coming year.

Thank you very much. Now I'd like to conclude with my -- to convey my management commitment for FY '21. FY '21 will face the moment of truth for Phase 1 of our MTP structural reform. And we will execute remaining structural reform measures and set the stage for a return to growth in Phase 2. The pandemic revealed that our strength lies with business continuation enabled by employees, health and engagement. We will focus on core businesses to improve GP margin and generate capital, to invest -- to increase our core brand share, which has been an issue in FY '20 as well as to create a new business model to enhance shareholders' return. To address the protracted pandemic risks, we will accelerate digital transformation to raise further our ability to generate cash. To realize our purpose of transforming into a solution providing company for food and health issues, diversity and inclusion as well as next-generation participation hold the key. Together with the management and executives, we'd like to unite as one team to create the best opportunities. And that concludes our presentation. Thank you very much.

Thank you very much. Next, we'd like to move on to the Q&A session. [Operator Instructions] To those who are attending overseas -- from overseas, you can also ask questions in English and the answer of which will be provided via simultaneous translation. There will be some time lag between the question and answers. [Operator Instructions] So the first question is from Nomura Securities, Mr. Fujiwara, please.

I am Fujiwara from Nomura. So here's my first question. For organic growth, it was 6% in Foods this year. And this is something that was insufficient in the past. And if the growth potential increases, I think the value from the capital markets towards your stock price is going to be increased. And you'll be working on reduced cell products. And I think there are some initiatives that have already started. And wouldn't organic growth rates become strengthened this year compared to last? What are your thoughts? And where is your conviction in achieving the target? That is my first question. May I ask another one? My other question is regarding next fiscal year, which is going to be the final year of the current midterm plan. Originally, on a BP basis, you were expecting profitability to improve by approximately JPY 30 billion. And for this fiscal year, we're expecting earnings to increase by a bit. So which means that next year, you need your earnings to grow by approximately JPY 15 billion. So what will be the drivers in attaining this? That is all from myself.

Thank you, Mr. Fujiwara, for your question. So I'd like to elaborate in detail. So first of all, the conviction around our 6% target, especially for International Foods, a consumer as well as packaged products as well as Frozen Foods from a conviction point of view -- probability point of view, there are 2 aspects to this. First example, last year, sales wasn't able to achieve our targets due to a food service use decline, but there was a lot of missed opportunities at the same time. For example, in Japan, in Seasoning and Foods, over a certain period of time, we weren't able to supply the market because our almost priority was to bridge the market. So there were some periods when we were not able to sell during the first quarter and second quarter, which are the quarters that we've been impacted in. And we lost some share during this period of time. On the other hand, for Indonesia as well as Brazil, where these things did not happen, in these markets, it was able to capture the hike in demand. And for Frozen Foods, as you know, in North America, Asian category, we were able to grow the business. But compared to market growth, we were subordinate because we weren't able to produce due to capacity as well as employee infections of COVID. So we need -- we will be engaging in marketing investments this fiscal year so that home use products can grow even further, that is the first point. And in Indonesia and in Brazil, they were able to go through high-speed growth. So when you compare the reason why other markets weren't able to grow that much is due to the aforementioned reasons. So we'll get it back. And also, secondly speaking, we are seeing eating out or bottoming out, therefore, for overseas affiliates, Thailand was impacted the most because it has a high ratio of restaurant-use products and industrial products. And home use and restaurant use product gap is smaller. But in phases, we believe it's going to be a bottoming out prices. So it's not going to be as negative as last year. So this is something we would like to capture so that International Seasonings and Frozen Foods, we hope that we will be able to reach 6% organic growth. And secondly, to your point, Mr. Fujiwara, regarding drivers, after we go -- as we are still in a phase of with COVID as well as post-COVID, it's a matter of how we could go through organic growth in the Seasonings and Foods and Frozen Foods business. And also for Healthcare growth, I think it's right to say that the growth is going to happen in earnest. And with that, we would like to achieve JPY 30 billion improvement in profitability for BP. Just one thing I would like you to elaborate on. Since the second half of last fiscal year, by region, reduced salt products have been launched, I believe.

So what kind of response are you getting so far? And at what speed are you going to continue to launch new products? Can I get an image of that?

Thank you for that question. In last fiscal year, the affiliates that were able to realize this, apart from Japan, I'm talking about international, would be Brazil as well as Thailand. However, for Thailand, the launch was in March '21. Therefore, it's just nearly one on sales. So the results are yet to be realized. And for marketing initiatives, smart salt campaign. We are planning to have it in 5 affiliates overall, including the 2 I mentioned earlier. And we'll be doing the initiatives in fiscal '21.

We'd like to take next question. Mr. Yamaguchi from Goldman Sachs Securities.

I'd like to ask a question pertaining to structural reform details and the effects of it. Business-wise, for Frozen Foods, SKU is being reduced smoothly and sales potential is mentioned. And -- but at the same time, the sales grew this year, but profit will be stagnant for this fiscal year. Are you incorporating risks for the rather small profit increase? And from when this is likely to reach the 5% profit level point? Those were my questions regarding plan of metals. And for the structural reform cost amounting to JPY 10 billion this year, what is the breakdown of it? And is it likely to decrease from next year and onwards? So my entire questions are -- pertains to structural reform.

Thank you very much for your question. For the first question, Kurosaki-san will answer that portion. And then for the second question regarding the structural reform costs, Nakano-san will address. Kurosaki-san, could you please start?

Yes. Thank you very much for your question, Yamaguchi-san. Regarding the sales growth after structural reform, in Japan, structural reform is underway for industrial use or food service use. That is our main objective. And we are reducing SKUs, and we are to reduce sales. But for home-use products, they are booming and the sales will be increased. That is our objective. And BP, yes, the slide is very complicated, as you pointed out. But as you can see, this is a company wide -- this excludes the company-wide shared cost. So it -- well, some tables used to show an exponential figure, but we are directly managing the solid figures that we have at hand. So in terms of BP growth versus last year, 118% year-on-year is our solid figure and is in line with the plan. The growth is in line with the plan. However, BP, in terms of sales, stands at 4.3%. But in Japan, the figure is likely to exceed 7% or is exceeding 7%. And until fiscal -- by fiscal 2025, ROIC should reach 5%. That is our target. And by when you asked the question. By 2025, that is our commitment. And to do so, each year, fiscal year from now on, we need to make sure things need to be implemented for each particular year. And then another time scale is what happens after 2025. We need to plan ahead from that -- ahead from the schedule. So we need to start planning for the fiscal 2025 and beyond.

Regarding the cost -- structural cost -- reform costs of JPY 10 billion, if you could turn to Page 26. Currently, we have spent the initial 3 years. And then, as described on Page 26, noncore business structural reforms is underway. And this -- there are costs associated with it. And going forward, if you could turn one page to Page 27. In the -- up until 2022, it will -- the budget is more than JPY 100 billion. So if you could look at the gray part, it's likely to decrease over time. Depending on the timing, there may be some costs associated with it. However, in 2020, 2021 and 2022, partially, these structural reform costs are likely to be consumed with the completion of the structural reform.

So I'd like to ask each one another question. Regarding frozen food, the company-wide shared cost is quite significant. So 5% ROIC doesn't reflect this company-wide shared cost. Is that right? If not so, that's okay. But regarding this year's sales and profit balance, that's quite off the balance. And what is the story behind this?

Thank you very much. So in terms of the company-wide shared cost, well, it's not out of shape or out of balance. It's evenly distributed throughout the organization. And then to -- in answer to your second point, whether our sales and profit are off the balance, what point are you talking about? Could you please clarify?

For example, with frozen food, JPY 10 billion sales growth is projected. But the overall company-wide spending. If you exclude that, then the profit will only stand at JPY 300 million. So that includes talent development and reduction of SKUs. So sales is growing, but profit could go up even to the level -- compensate what the level of sales growth.

Well, finance person should answer to that question, I believe. But each affiliate -- well, we actually gather all data from affiliates and 113% BP growth versus last year is the solid figure we have at hand. That covers the entire affiliates overseas as well. So for the entire frozen food sales growth stands at 105.6%, and BP growth stands at 113%. So those are the basis for the figures that you have on the slides.

So what is obstructed from there then?

I'd like to appoint a person of -- finance person in charge to answer that question. Nakano-san, could you please supplement?

Yes. Regarding the company-wide shared cost allocation, well, sales and total assets need to be taken into account. And the sales is likely to jump and the allocation is likely to be weighed according to the sales growth. So the allocation given for the frozen food will increase. And regarding the calculation, we need to make sure whether our calculation captures the reality, and we are reviewing that process. And in the next 2 years and onwards, we'd like to make sure that there is some clarity added to this. It's still ambiguous in this portion.

So I'd like to know the details later.

Here's the next question from UBS Securities, Ms. Kawasaki.

I am Kawasaki from UBS. So because it's one question, here it is. Like Fujiwara-san asked, organic growth and the profitability of your guidance is a question I would like to ask from a different angle. This time around, in your guidance, you're saying ASP growth of 2% unit price growth. And last fiscal year, it was 2.8% due to improvement in channel mix. So maybe in reality, unit price growth is going to be about 3%. And for consumer, you are also planning for sales volume growth, I presume. So specifically speaking, especially in the consumer part of your business, Japan, Thailand, Indonesia, Vietnam, in the major markets for core brand investments as well as competitor -- initiatives against competitors, what kind of initiatives are you planning to implement? That is the base of achieving the 6% target you raise. Can you give us more detail about what kind of strategies you have for your core brands as well as against competition locally? How much are you prepared to compete against your peers? Can you elaborate a little bit more?

Thank you. Let me take your question. Basically, it's a combination of 3 aspects. First of all, is price increases. And another thing is mix improvement of products for basic seasonings as well as flavor seasonings as well as menu specific seasonings that are more expensive. So in cases -- so basic flavor and many specific seasonings, as the mix will be higher and what will support everything is deliciousness as well as quality improvement. So it's not just simply about raising prices. That's for Ajinomoto and Umami seasoning butter flavor and many specific seasonings. It's more about going after deliciousness and improving quality so as to increase prices. So we're going to make better products, and we will be spending marketing investments to drive sales. So that is how we would like to boost the business. Unfortunately, in fiscal '20, for quality improvement, because of COVID-19, we weren't able to do this that much. But in markets where we were able to do that, so just in Indonesia as well as markets where we were able to strengthen, reduce salt products, such as Brazil, we were able to see higher local currency based growth compared to other affiliates. But we would like to engage with these efforts in earnest in fiscal '21.

To that end, if that is the case, regarding your marketing strategy, specifically speaking, what kind of specific sales strategies or marketing strategies are you going to roll out?

So for that, Mr. Fujie will take your question.

Thank you, Ms. Kawasaki for your question. For example, in the case of Indonesia, leveraging digital and marketing efforts is what we're strengthening. We have created a foundation for that so that we can offer various types of values to the customers and also we can be utilizing social media so that we can explain about our products and services. So we are doing this in a proactive way. And as Mr. Nishii said, in Indonesia and Brazil, we have been doing updates of products. The significance of the product updates need to be communicated and that's why we're running TV commercials as well as digital advertisements. And we are planning to do this fiscal year as well. For competitors in Vietnam, they have been quite aggressive and Knorr has been making quite a lot of marketing investments. So our company, too, we have been doing product quality updates. And we have been working on trying to well communicate that. But for low-end flavor seasonings, a company called [ Tianzhu ] has been launching that into the market. So products that compete against that category has been offered in the market in a limited manner, however. We are thinking about doing that as well. So for marketing efforts and strategies, in each country and each business, they will be working together in strategizing. And in fiscal '21, we will be rolling out the strategies accordingly, and that will lead to organic growth in 2021 and beyond 2021.

I am very sorry. Briefly, I'd like to ask a follow-up question. I understood your comments very well, but for this fiscal year, for your basic plan and target, of course, it depends on sales as well as the competitive landscape. But organic growth of 6%, is this what you would like to definitely attain so that -- and you will spend marketing investments accordingly for that purpose? So it's about growing top line this fiscal year. Is that the key message that we should understand?

Yes. Under that notion, by combining a variety of measures, we would like to grow top line, and we are determined to do so.

We'd like to take a next question. Mr. Takagi from SMBC Nikko Securities.

Hello. Do you hear me?

Yes.

Pertaining to Seasonings and Foods, under the pandemic, the relative competitiveness of Ajinomoto, how is it trending? How is it changing? Is it increasing or improving or staying the same? Or are you getting being outperformed by others? It may vary depending on the region or area. But where are your areas of improvement? And where are your core strengths? Please let me know. Regarding the organic growth, I'd like to know your qualitative aspects a little more. For example, this fiscal year, 5 starts, what is the top line target for each country divided by home use and industrial use? What is your top line figure? Would you please provide us some breakdown?

Thank you very much for your question. In terms of our relative competitive edge, where our strength lies and where are areas of improvement, it is hard to describe that in one word. Depending on our market position, the answer varies. And by area, there is each characteristics in each area. But our understanding is that compared to our competitors, our quality is our strength. And where we penetrate that message, we are formidable in such domains. In addition, and at-home dining opportunities or demands that is surging, for example, flavored seasoning, if you look at, application of menus are wide ranging. If that's the case, then those products are booming. But if it is just for limited menus, then such products were not faring very well. So we need to reflect that to discern our positioning under the pandemic for each business in order to respond better. So in terms of our relative competitive edge of Ajinomoto, that's a combination of marketing and sales activity, personnel sales capability at each market. And regarding the 5 starts and in Japan as well as the division between home use and industrial use, the growth figure for each category, IR Group is -- will present you with the detailed data later on.

I appreciate it. And regarding the seasonings, I know that is your core strengths. But my question pertains to each particular area or region where you need to improve or you are gaining strength, for example. For Processed Foods, I understand there is significant room for improvement. But if you could expand on this a little more?

I understand. In terms of our competition, we are seeing an intensifying competition in Vietnam, flavored seasonings. As Fujie-san presented earlier or answered earlier, in Indonesia, Masako flavored seasonings has a local competitor, Knorr or Lioco, and we are seeing intensifying competition there. So those are the 2 areas where we need to increase our formidableness. And then in Indonesia, quality revision of Masako took place and that is working quite well, and we are outperforming the local competitor. And then Indonesia, [ Tianzhu ] is a local brand. They are inexpensive product and we are taking additional measures or additional product enhancements to compete to outperform this cheap competitor product. So we are not over -- we do not have an overwhelming market in these 2 domains.

And then are there any businesses that you're trying to review from scratch or revamp?

No, there isn't any business that we are revamping or reviewing entirely.

The next question is from Mr. Saji from Mizuho Securities.

I have one large question. Post COVID-19, you talked about touch points and that an increase of 20 million touch points. And due to more home cooking trials are increasing, I think the environment is extremely positive. Eventually, on a macro standpoint, Asian, Brazil probably won't easily see an end to COVID-19. However, in phases, cooking at home is going to probably shift in transition to the industrial- or restaurant-use market. So competition may intensify. It's not about buying stables, but it's more about intensified competition in the restaurant use market. So that is one concern I have. But based off this, for this fiscal year, you have been able to capture a lot of trial customers. And your home-use products have been doing extremely well. So how -- what kind of initiatives are you going to implement so that you could sustain this performance going into next fiscal year? For frozen products, reducing SKUs in Japan and you're expecting increased revenue in North America. And even before or after common cost, your profitability is not increasing. GP margins are expected to improve by 1%. But having said that, profitability overall is not expected to increase in your guidance. So as a backdrop, last year, are there any cost items that they didn't use, but you're expecting to use more of that this fiscal year and you're accounting for that and that's the reason? Or an advanced basis for North America because industrial use is expected to come back slightly earlier, are you going to spend more expenses related to marketing and competitive reasons? Can you sort that out for me?

Thank you. So for profitability with-COVID and post-COVID and how the market is going to be, I think this year is going to be a patchy situation. It's going to be a mixture of various types of aspects. For North America and Europe, it's going to enter the stage of post-COVID, I believe. So for consumers and their buying patterns as well as mid-change in channels and how that's going to change, is probably going to be determined in these markets. And otherwise, for other markets like emerging markets and in Japan, I believe that we are not going to pull out of the COVID-19 environment, and it's probably going to last for another year. So for channels, we need to ensure that we are able to determine the trends that take root. As a leading indicator, we are looking at North American indicators. And when you look at online and reservations at restaurants and picking up the food there, the last year, restaurants had their physical stores, however, they will communicate through social media. And those are the venues that grew their business for food. Walmart grew more than Amazon actually. So that was -- that stood out. And there was a lot of consolidation in SKUs at the top of the ranks in the market. So it's a matter of how much more opportunity we're going to be seeing in the long tail part of the market, but it's not just going to be a one-mirror channel. But through social media, we'll be able to directly communicate with the consumers. And for channels that are likely to grow, we would like to determine what they are, so that we can strengthen our initiatives through those channels. And I think it all comes down to that. So that goes back to what Mr. Fujiwara mentioned. So consumer touch points. It's not only the number of households that buy our products, but through social media. It's a matter of touch point for direct communication. And we have been strengthening this quite a lot in Japan and in emerging markets as well as 5 start countries. So now we are able to capture more trends about the consumer due to social media. We have been able to strengthen our capabilities around this. Secondly, Mr. Kurosaki, can you take that question?

So this is Kurosaki speaking. I will take your question as well. I'm sorry that I wasn't easy to understand in some of my points. But simply speaking, as Mr. Nakano mentioned as well, before common expenses with regards to the management of our numbers, for Frozen Foods, BP ratio was 3.4% in 2019. In 2020, it was 4.3%, it went up. And in fiscal '21, it was 4.6%. We are striving to reach 4.6%. But you weren't able to pick that up from the materials. And I apologize for that. And I mentioned this earlier as well, but on the Frozen Foods business overall, on a local currency basis, sales organic growth is 105.6% and GP amount increase is expected to be 110.1%. And for the BP amount year-over-year, 113% is the increase we are anticipating. That is our plan. So with that as the backdrop in North America, special spending were something that undermines BP in North America is not going to happen. But for Japan, we are -- we don't want to undermine BP. However, there will be some expenses related to structural reform that is going to be incurred. And that boosts SG&A by a certain degree. So on a total basis, of course, there is overall adjustments being made, but for Japan, that is 1 item I wanted to mention. So I think I will stop there. So for America, that is proceeding. The channels are not going to come back that in a straight manner, but there will be an opportunity for us to identify that Ajinomoto has changed. And that will be a leading indicator.

We'd like to take our next question from Ms. Morita from Daiwa Securities.

This is Morita speaking. I'd like to ask a question. Regarding business profit, real capability, there were positive aspects and negative aspects. But at the end of the day, they impacted positively -- the pandemic impacted positively. And regarding the pandemic, there's still -- there will be some lingering impact. And the business profit target is written on the slide. And this shows your real capability. Is that true? Or are you reflecting the tailwind that you're enjoying? Could you clarify this point? And also, under the context Phase I MTP, you mentioned that this year, you're going to face a moment of truth, but could you clarify that? What is the moment of truth? Are you committed to a certain stage? Or could you clarify which areas specifically are you going to focus on in terms of the crux of this MTP this year?

Thank you very much. To reflect our -- whether the BP figure reflects our real capability or whether the tailwind is reflected, we exclude tailwind effects in terms of this target. But last year, we had a headwind, and we lost ground. And we are trying to recover the lost ground this year. Therefore, JPY 115 billion is -- shows our real capability to grow business profit. And then organic growth-wise, the baseline should be established by coming -- creating a new business model, which costs us JPY 6 billion. Regarding Personal, Nutrition & Health Care, business development that touches upon. So it involves costs, of course, to be reported. And these are the -- in advance -- investments we are already making. So in total, this figure or a number shows our real capability. And regarding to the second point of your question, one moment of truth we are facing. Speaking of structural reform, animal nutrition is complete. Then the second one, MSG, external sales, we need to move forward. With this, which is an issue in practice. And there will be some more issues to be overcome. And then as analysts repeatingly asking question. But regarding Frozen Foods, whether in 2025, we can reach 5% in ROIC? Is it satisfactory or not? That is a frequently asked question. Regarding structural reform, we need to make sure that we progress through this -- advance this structural reform. In that sense, we are facing a moment of truth during fiscal 2021. And then not just the structural reform, but going beyond the structural reform to lead to an organic growth, whether that be 2% unit price growth for Foods, which is already reflected in our guidelines because we need to grow beyond our current MTP. And for Health Care and Others, that will give us a company-wide overall impact. And it's growing into that level, not just electronic materials, but ammino acids business as well. And U.S. struggled with biopharma, but we need to make sure we recovered the ground in the U.S. So not a single measure will address all these, whether it be structural reform or organic growth foundation enhancements during fiscal '21, we'll face a moment of truth. And our real capability will be tested, and that is our commitment.

So things are moving positively, I think. That is my impression. But are there any issues emerging this year? Looking from outside, I think everything is rosy, but Nishii-san as the President and CEO of Ajinomoto, can you identify any challenges that you are facing?

Well, intensifying competition is one thing. Under the pandemic, the remaining field is very crowded, whether it be Healthcare and Others and Foods, especially with home-use products. The markets are relatively booming and -- but, of course, competition is intensifying as a result. So that is our major risk. That concludes my answer. Thank you very much.

We apologize, but we are reaching our ending time. So the next person will be the last question. Mr. Miura from Citi Securities.

Hello. Can you hear me?

Yes.

Your share prices. The market is plunging, but your stock prices are going straight up. So I think all 7 of you seem to have bright expansions on your faces, and you look like you are growing younger. That's my first point. Secondly, for ROIC management, ROIC-based management, you have completed 1 year so far after you've implemented ROIC-based management and your capabilities, including zero-based budgeting, I think it was a year where you were able to really understand yourselves well and learn about yourself in a renewed way. So after engaging in ROIC management, what kind of strength? And I'm sure you identified certain strengths and weaknesses of Ajinomoto and the strength you were able to identify led -- is leading to the sales price increases that you are implementing now. So upon implementing ROIC management with regards to strength and weeks and improvement speed, what kind of changes have you felt in your management?

Yes. Thank you for your question. For the first point you made, yes, actually, I'm not wearing any makeup, but I'm happy to hear that comment from you. Thank you. Secondly, as you've rightly said, short-term P&L focus, whether it be myself or the managers that are responsible for the business in the field, we were actually in that trap in the past. And we were able to reflect upon that in our executive off-site meetings. That was actually a very big point takeaway. We want to be a top line class in being a global specialty company. And the JPY 130 billion BP that we released as a target, we were just adding or subtracting, trying to reach that target, no matter what and we are being adamant about that. But we implemented our ROIC management. And we've started to think about asset management and working together with the asset owners, so that we -- I think we are now thinking about things over the medium term compared to before. And that's one big takeaway and change that we were able to go through. In fiscal -- as we proceed through '21 and fiscal 2022, I hope that we can reflect upon fiscal '20 and feel that it's been a turnaround year for Ajinomoto. And I feel that it has actually happened. For speed as well as strengths and weaknesses, from that angle, you really need to have your people understand in the field. And there is people who do understand and who don't understand at this point in time. So there is a gap at this point in time. So some people are very fast to react. And because ROIC is hard to manage, sometimes if you're too particular about the numbers, when you think about balance sheet control and then also managing profitability, there are some business units who are not yet used to doing this. And of course, this is something that happens. So for speed, I don't think we are at a full throttle yet. We are not at navigational speed. We are still facing opportunities for improvement.

So for price increases before this phase, the brand value that Ajinomoto has believing in them or it can be new products. But I guess, you're trying to justify the value that your products have by raising its prices. And what's most important there is R&D of your products, I guess. So for that, what kind of conviction do you have compared to the past menus, specific flavorings or seasonings were successful? But I think the mechanism of marketing has been changing quite a lot in the industry. So what are your thoughts around this?

Yes, it has been changing quite a lot in the past. Well, I shouldn't say this in one word in short. But digital communication, leveraging that and doing digital surveys when we are engaging in marketing surveys is something where we're able to pick up consumer insights. And we're also able to, with agility, capture changes in consumer trends, and we can reflect that into our product R&D as well as marketing methods. And I think we have been successful in doing so. For marketing ROI, just to give you one example, for advertising and communication spend in Japan and return on costs, we have been able to visualize that increasingly. And we have been -- we are trying to apply that to our 5 start affiliates. So effects are yet to be materialized. For R&D, on March 15, Shiragami-san, our CIO, explained this. But we would like to accelerate our R&D efforts. And you were asking about product development right now, but we would like to increase our development efforts by 1.5x to 2x. We are now well organized to do so. So these aspects will be combined together going forward so that we could see some positive impact come through. So this is -- these are the results of our engagements in digital transformation.

Finally, I'm sorry, I'm going to ask a short-term question. But for this fiscal year, at BP, can you talk about how you can beat or go below your BP targets?

For BP, the 7 executives are here today, and we also have our CIO and CXO, who's not here with us today. And we are all thinking about being persistent about generating good bottom line. So we've been communicating with you about our guidance today, but we would like to ensure that we well control it as we go through transformation and also strive for growth in the future and implement measures accordingly for this purpose. So from a risk standpoint, the COVID environment is not yet over. And the market, which is business as usual, has reached an end. So I think it's more about flexibly responding to market changes, which means that we may go up or we may go below. And that is the age we are in.

Understood. You're basically saying, believe in the southern of you.

Yes. Please believe in us. Thank you.

That concludes our Q&A session. And I would like to ask Nishii-san to give us the final remarks to conclude the session.

Thank you very much for taking time out of your schedule to attend the briefing and the Q&A session. Last year, during pandemic in 2022 -- during 2020, each quarter, we organized this IR event. And we had a dialogue -- did dialogues with you to improve our management through discussions with you. And we like to express our gratitude to your support and advice given during the last year. And of course, the situation remains -- we need to remain vigilant about this current situation as well. But we would like to keep talking with you and increase -- we'd like to increase the frequency of having a dialogue with you like this. So we -- there will be no significant gap between our understanding and your understanding. Thank you very much for your participation.

With that, we'd like to conclude our financial results briefing. Thank you very much for your participation once again. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]