Ajinomoto Co., Inc. ($2802)

Good morning, everyone. Thank you very much for taking precious time out of your busy schedule to attend Ajinomoto's IR Day. We thank you very much indeed. I will be your moderator for today. My name [indiscernible] from the IR office. Let me introduce today's speakers. We have Representative Executive Officer and President, Mr. Nakamura; and Executive Officer in charge of Sustainability, Ms. Ono. In addition to the 2 speakers, we also have participants, other participants, including Representative Executive Officer and Executive Vice President, Mr. Shiragami, Executive Officer and Senior Vice President, General Manager of Corporate Division, Mr. Sasaki; Executive Officer and Vice President in charge of Finance and Investor Relations, Mr. Mizutani; and Corporate fellow and General Manager of IR office, Mr. Kaji. Today, we will begin with the opening remarks from Mr. Nakamura, followed by Ms. Ono's presentation on initiatives to maximize ASV by enhancing sustainability, followed by a Q&A session before we close. Materials to be used for today's session is already posted on Ajinomoto's Corporate Homepage IR information site under the IR data. So please take a look at them as necessary. Please also be advised that today's session will be recorded, including all the way to the Q&A session, and it will be posted on the IR information side of the company later on. Now without further ado, we would like to begin Mr. Nakamura, the floor is yours.

Good morning, everyone. Thank you very much for taking time out of your busy schedule to join us for our IR Day today. I am Shigeo Nakamura, Director and Representative Executive Officer, President CEO. I will focus on 3 main points today. First, the Ajinomoto Group view sustainability initiatives is the core of our ASV Initiatives. The work is won with our business strategy to create both social and economic value and accelerate business growth. Second, I will discuss our approach to maximizing ASV. We're advancing initiatives to reduce negative impacts and expand positive impacts, aiming to enhance the resilience of our business foundation and create opportunities for growth. Today, we'd like to explain these initiatives focusing particularly on the agri food systems where we can leverage the strengths of our AminoScience technology. Third, we are advancing initiatives in collaboration with a wide range of stakeholders, including governments, financial institutions and private companies to achieve sustainable corporate value enhancement. Last November, I participate in COP30 held in Brazil, where I shared our solutions for addressing social challenges with governments and private sector representatives from around the world. I also emphasize the need to expand funding for the agricultural sector to build a sustainable agri-food system as well as the importance of broad partnerships, thereby deepening our dialogue with the international community. Going forward, we will further expand these initiatives and achieve sustainable growth in corporate value world balanced an ability with business growth. Our aspiration or purpose is contributing to the well-being of all human beings, our society and our part with AminoScience and we're advancing initiatives aimed at achieving the outcomes of reducing environmental impact by 50% and extending healthy life expectancy for 1 billion people. To realize this purpose, we are promoting initiatives in that creating social and economic value under the banner of ASV Ajinomoto Group creating shared value, positioning sustainability at the core of this ASV management. As a road map towards maximizing ASV, we have first identified the 6 material themes being addressed by the Ajinomoto Group as shown on the left. Each of these themes we are implementing initiatives that take into account risks and opportunities to reduce negative impacts and expand positive impact so as to enhance the resilience of our business foundation and create opportunities for growth, thereby maximizing it. Regarding how we link sustainability to corporate value, we'll strive to enhance corporate value by increasing our cash flow generation, CAFD, reducing cost of capital work, raising our growth rate and achieving even more of speeding up and scaling up. Regarding the cash flow, by unifying sustainability with our business strategy through increased sales, reduced raw material and manufacturing costs achieved through stable procurement and management focused on ROIC, we will enhance resilience while refining both our growth potential and earning capabilities. Regarding the capital, by mitigating risks related to raw materials procurement and human rights compliance as well as through the utilization of sustainability finance will aim to reduce WACC. In terms of growth rate, we'll accelerate growth in our 4 key growth rates, evolve our portfolio and enhance customer loyalty and brand power. Furthermore, we will create a virtuous life cycle of corporate value enhancement through speed up and scale up achieved by rolling out our high-speed development system across the entire group and engaging in co-creation with stakeholders. I said we're working to mitigate negative impacts and expand positive impact, focusing on 6 material themes based on respective risks and opportunities. In advancing these initiatives, we're leveraging our proprietary AminoScience technology to develop a diverse range of products, services and solutions that contribute to solving social issues across a wide range of fields, and we're driving these efforts through partnerships that transcend the bio chain and co-creation of ecosystem. Today, we'll focus on the agrifood system, an area where we can particularly leverage our strengths and where the impact on the solving social issues is significant and explain our initiatives aimed at maximize ASV. For us, with about 70% of our raw material procurement consisting of agricultural livestock in products, building a sustainable agrifood system is one of the most critical themes for aiding ASV. The agrifood sector accounts for over 20% of global GHG emissions and has a significant impact on climate change, attracting international attention. Furthermore, the concerns about the impact of climate change on crop yields and supply, making the transformation of the agri system and urgent social issue. That is why we view this sector as an opportunity for value creation, where we can simultaneously generate significant social impact and economic value through problem-solving, and we'll continue to promote initiatives aimed at transforming the agrifood system. Interest in the agrifood system instead is steadily growing within the international community as well. In the Emirates declaration adopted at COP29, the establishment of sustainable agrifood systems was explicitly positioned as a key theme for the first time. And at COP30 detailed last year in Belém Brazil, tons on transforming the agrifood system progressed further. I participated in COP30 following COP29 and I was once again reminded that for companies like ours, which conduct business based on AminoScience, the agrifood system is precisely the field where we can demonstrate our strengths. I took the stage at the Japan Pavilion to convey to the international community the need to expand climate finance for the agricultural sector and importance of co-creation with stakeholders. I also introduced the potential of our solutions and strengthening relationship with our global partners, making the most of this opportunity. Regarding specific activities at COP30, Ms. Ono, our Executive Officer in charge of Sustainability, will provide further details later. But together with Ministry of Agricultural Forestries and Fisheries, we led the issuance of joint statement by 32 private companies, signed an MOU with Banco do Brasil to develop a new financial scheme, utilizing sustainable finance and strengthened our relationships with major global meat producers. We believe we have made steady progress and laid the foundation for further initiatives in the future. This concludes my presentation. Next, Ono will explain our initiatives to maximize ASV enhancing sustainability.

Hello, everyone. My name is Ono. Thank you very much for taking your time out of your busy schedule to attend our IR day. There are 3 key points that I would like to share with you today. First, sustainability is the cornerstone of ASV management. as a company-wide strategy. We will work together with our group companies and business units to accelerate business growth and contribute to the co-creation of social and economic value. Since our founding, Ajinomoto Group has worked with stakeholders to address various social issues from upstream to downstream in the value chain, thereby improving the resilience of our business foundation. To further maximize ASV, we will promote collaboration with stakeholders across the value chain, a framework for financial valuation, aiming to accelerate business growth and expand opportunities. Today, I will explain our initiatives including a report on our activities at COP30. As Nakamura-san, this is a pathway to maximize ASV. Through our business activities, we aim to reduce negative impact and expand positive impact, thereby improving the resilience of our business foundations, creating growth opportunities and ultimately maximizing economic and social value, which will, in turn, maximize ASV. We believe this is a unique approach that leverages the strength of our company, AminoScience. An overview of the specific initiatives will be explained on the following slide. Based on expectations of our share stakeholders and the value we should provide to society we have organized the challenges we should address towards 2030 as the 6 material themes that are linked to our materiality. For these 6 material themes, we analyze the risk and opportunities. We are steadily working to reduce the negative impacts of arising from such as greenhouse gases and human rights risks while also striving to create positive impact on society at large. Today, I will explain the initiatives that are creating a positive impact, particularly our initiatives in the agrifood sector. Among our various initiatives for a positive impact, I will first explain Ajinomoto Group's undertakings in the value chain. Here, we show the value chain in the agrifood. There are social challenges at each stage from upstream raw materials and procurement to midstream production sales and logistics and finally, to the consumers in the downstream. As a leading company in amino acids, we understand that amino acids are essential nutrients for all life from microorganisms to plants and animals and provide a variety of functions. Our strengths lie in amino acid production and utilization and our science-based approach. Ajinomoto AminoScience allows us to offer solutions to a wide range of social challenges across the entire value chain from the environmental health and in nutrition. Approximately -- first, let's take a look at example at the upstream currently around the world, water shortages, extreme temperatures and social soil degradation caused by climate case are affecting crop yields, making stable production procurement of raw materials and [indiscernible] tissue. This has resulted in a spread of diseases and lack of cultivation knowledge, which are affecting farmers' income. It is also linked to challenges such as an aging farming population and the shortage of [indiscernible] accordingly, it is necessary to strengthen farmers' management capabilities and to take measures to improve the sustainability of production and procurement. As Ajinomoto provides farmers with education opportunities, biostimulant products to improve product crop productivity and support for agricultural technologies, including disease-resistant varieties. For example, in Thailand, since 2020, we've been running the Thai Farmer Better Life partner project to support cassava farmers. As the raw material for MSG and amino acids, we use tapioca starts derived from cassava. And in fact, we are the #1 company in Thailand in terms of tapioca starch consumption. Cassava is extremely important to our company, but it is also the third-largest crop produced in Thailand and it considered an important crop on the national policy of Thailand. However, in Thailand and other parts of the Malaysia, cassava mosaic disease is currently swing, leading to reduced yields and income stability for the farmers. These are issues that are difficult for farmers to solve on their own. We established a private and public partnership to support farmers and in [indiscernible] province where Ajinomoto Thailand has a factory, we are providing education and trainees programs to more than 8,000 farmers operating in over 500 farms. We are also offering soil analysis and fertilizer optimization for more than 8,000 farms. As a result, the average productivity of cassava grown by the farmers who participate in the program has increased by more than 30%. This contributes to the development of the Thai regional economy and enhances the resilience of our business foundation, enabling sustainable and stable raw material procurement. We will aim to further expand the number of farmers participating in this program in the future. We have also launched a support program for cassava farmers in Vietnam as well. By providing farmers with the cassava cultivation package, we address challenges they face, such as unstable yields and income damaged from cassava mosaic disease and pest and resilience on chemical fertilizers that contribute to greenhouse gas emissions. Our program includes introducing new varieties resistant diseases and pests, switching from chemical fertilizers to coal product fertilizers, providing technical guidance on irrigation and offering a platform for exchanging technical information between farmers and experts using a smartphone application. As a result, the cassava productivity has approximately doubled at farms that have implemented our program. This initiative in Vietnam has also been selected for the Ministry of Economy, Trade and industries global sales future-oriented co-creation project subsidy. We will continue to expand our efforts with the aim of improving cassava productivity. Increasing farmers' income and reducing GHG emissions. We have made a press release on Friday on this issue. In Thailand and Vietnam, where these farmers initiatives are progressing, both the awareness score and favorability rating of our Ajinomoto brand have risen to nearly 90%, receiving high ratings that exceed the average of overseas operations. Furthermore, a strong correlation has been observed between the awareness of our initiatives and the favorability things, which suggests that our farmer support efforts are contributing to improving our ratings and brand value. Based on these evaluations, we believe that raising awareness of our farmer support initiatives to a wider audience and fostering empathy and support from them will lead to an improvement in our brand value and will have a positive impact on our B2C business. Upstream initiatives extend beyond Thailand and Vietnam, but leveraging our global network, we are expanding them to countries such as Japan, Indonesia and Brazil as well as to others crops. In various regions, the use of biostimulant products and regenerative agriculture is advancing and also as improved productivity and reduce GHG emissions are still spreading. We also believe that these results will lead to further trust in our global brand in the world. Next, I will discuss our midstream initiatives. In domestic logistics in Japan, we are advancing the F-LINE project, a joint transport initiative involving 6 food companies. By implementing joint transport in Hokkaido and Kyushu, as well as joint trunk transportation in Hokkaido, we are improving vehicle loading efficiency and aiming to reduce the number of vehicles to customers including those from other companies to alleviate the burden at the receiving end and to cut GHG emissions. We're also expanding our logistics efficiency initiative overseas. In the Philippines, for example, we are partnering with logistic providers to improve logistics efficiency and reduce costs while also utilizing electric vehicles to reduce our environmental impact. On this page, I will talk about our initiatives addressing health and nutrition issues for consumers downstream. In the health and nutrition sector, there are challenges corresponding to each phase, ranging from a healthy state field disease to pre-disease, disease, treatment and post-treatment. You have a wide range of solutions in this area, including foods that support daily meals, supplements that complement diet nutrition, the AminoIndex, which assesses disease risk based on the balance of asset concentrations in the blood, medical foods, amino acids for pharmaceuticals and foods and CDMO services, actively developing a broad portfolio of products and services and leveraging partnerships. On the other hand, regardless of the health status, excessive intake of salt, sugar and fat is considered a common nutritional challenge for all consumers and a factor that increases the risk of lifestyle-related diseases. While the [indiscernible] recommends measures to curve excessive intake, the fact that people often fail to meet recommended intake levels, coupled with the need to reduce health care costs has led to implementation of measures such as taxation and regulation in various countries, highlighting the growing global importance of this issue. In response to this issue of excessive sold sugar and fat intake, we have long pursued initiatives that do not compromise on deliciousness. Specifically, we utilize umami seasonings offer reduced sold products across 9 countries, 25 brands and 56 products and offer products that help reduce sugar and fat and regular products with reduced salt content, thereby providing a wide range of products and solutions in both B2B and B2C sectors that leverage our AminoScience technology. We offer solutions to enable consumers to reduce salt, sugar and fat intake while continuing their normal lifestyle, thereby simultaneously solving social issues and achieving business growth. In addition to the salt, sugar and fat reduction I just mentioned, we aim to achieve a comprehensively nutritionally balanced diet by promoting a profit intake of protein, vegetables and fruits under the strategy of nutrition without compromise. No compromise here applies to deliciousness, access to food, the dietary habits of communities and individuals. We believe that what matters most is that consumers can enjoy delicious food sustainably without strain. The outcome mentioned by Nakamura at the beginning help 1 billion people to extend the healthy life expectancy is based on this strategy. And by fiscal 2024, we had created touch points for deliciousness and health with 950 million consumers. Partnerships are also critical for achieving nutritionally balanced meals. As an example, I would like to introduce free nutritional meal program in Indonesia. In Indonesia, the double burden of nutrition where child malnutrition and obesity coexist and is becoming increasingly apparent. For example, it is reported that about 40% of young children suffer from anemia. Given this, the Indonesian government launched a free nutritional meal program in 2025, with the budget exceeding JPY 3 trillion, about 10% of the national budget. Leveraging our expertise from school lunch projects implemented in Vietnam, as well as our community-based sales experience in traditional local markets, we provide menu support the balances nutrition and cost using our products as ASVs. We also provide nutrition education programs for cooks at school meals centers students and their parents. And by leveraging our local network, we are working to facilitate understanding of health and nutrition while also enhancing awareness and trusting our product. These cumulative efforts are also contributing to local business growth. For the sales of cooking sauces in fiscal 2025 grew by double digits over 9 months from April to December. As another example of our partnership, I would like to share with you our approach to creating a dietary environment through the integration of medicine and food to support nutrition during and after treatment. While nutritional balanced meals are crucial both during and after treatment, many patients due to illness aging or the effects of treatments, face issues in eating such as being unable to eat enough or unable to enjoy meals as they once did. For family members, it can be difficult to determine appropriate meals and they may apparent significant anxiety and burden regarding meal preparation. If this persists, patients may not be able to assume sufficient nutrients, which could affect the continuation of treatment and lead to a decline in the patient's quality of life. And health care professionals such as doctors and registered dietitians provide professional dietary guidance. They face the issue of being unable to provide sufficient explanation tailored to individual situations due to the consultation time, heavy workloads and staff shortages. So we are contributing to the creation of dietary environment that enables healthy eating through the excelling nutritional experiences, our AI-powered recipe meal plan search system, ReTabell, adheres to guidelines from nutritional societies and provides optimal recommendations by taking into account physical conditions, appetite and chewing ability and dietary history, this helps issues faced by health care professional providing nutritional guidance while also expanding business opportunities. Now let me move on to introducing Ajinomoto's further value creation efforts beyond the value chain. As Nakamura mentioned earlier, the agrifood system accounts for more than 20% of the global GHG emissions. What has a significant impact on climate change, it is also a sector that is strongly affected by the climate change. Last year, COP30, the largest international conference on climate chain was held in Brazil and the transformation of agrifood system was discussed intensively as a priority issue alongside the energy sector. Improving efficiency of crude production even under drought, high temperature or other extreme conditions while simultaneously protecting and regenerating the global environment are agreed as a global agenda. We see this growing momentum as an opportunity to accelerate the demand for decarbonization solutions in the agrifood sector and to promote initiatives utilizing carbon pricing. We will contribute to emission reductions across our value chain and assist the adaptation to climate change and lead them to business opportunities that will create social value while simultaneously achieving financial returns. I will explain in more detail later, but our company offers innovative solutions such as AjiPro-L and to stimulant products, as shown on the right-hand side here. By integrating the ecosystem into our solutions, we will scale up and speed up implementation and expand opportunities for creating social value and growing our business. Here are 2 examples of our decarbonization solutions. First, I will explain AjiPro-L and the progress of our efforts in this space. AjiPro-L is an amino acid lysine product for dairy cows that efficiently supplements lysine, an essential amino acid that is often deficient in cattle. It strength lies in its ability to improve feed efficiency by balancing amino acids reducing GHG emissions and lower production costs. Brazil, where COP30 was held, is one of the world's leading livestock producing countries. We are officially invited to events hosted by the Development Bank and the former Brazilian Minister of Agriculture and actively engaged in discussions. In addition, we have made progress in discussions with the major Brazilian meat producer with whom we had a prior contact. And we are currently in the final negotiations toward concluding a contract with them. By the end of fiscal 2025, AjiPro-L had reached over 100,000 animals. Over the next year, we will further expand our reach and aim to deliver positive impact by reducing GHG emissions by some 100,000 tons through this initiative. Next, I will explain the progress of our efforts in biostimulants. Biostimulants are something like supplements for our plants, but our product utilizes AminoScience, and we confirm to promote the physiological functions and the growth of plants, improve nutrient utilization efficiency and stress resilience and the enhanced crop quality. These effects reduce the use of chemical fertilizers, a major cause of GHG emissions in agriculture and contribute to reducing the environmental burden. Brazil possesses the vast Amazon rain forest, which is often called the lungs of the world. However, a major challenge is that this forest is cut down and converted into farmland and pastures, which are then left to degrade. Aiming to restore the degraded pastures, the Japanese and Brazilian government established a corporation framework in 2025 March. Taking this opportunity, we joined the model demonstration project for the restoration of degraded pastures in Brazil. As a partner, at COP30, we presented the results of the verifications using biostimulants in actual farmland in Brazil. Consistent improvement effects were confirmed across multiple crops and the technical advantages were demonstrated. Therefore, we are collaborating with JICA and other organizations to scale up the project and name for social implementation. Just like AjiPro-L and biostimulants, these innovative solutions leveraging AminoScience cannot really create a significant impact on their own. We believe it is necessary to build an ecosystem. To scale up the solution, it is essential to address the challenges faced by the producers, i.e., the farmers, in collaboration with the financial institutions, government agencies and other relevant parties, this page shows the examples of implementation of AjiPro-L, farmers, the primary producers are emitters of GHG and face challenges such as GHG reduction and product improvement. AjiPro-L is an effective solution to these challenges, and there are economic and psychological hurdles to its implementation, such as concern about the initial cost and risks. Therefore, we will create a system that provides an incentive for adoption by converting the GHG emissions reduced by introducing AjiPro-L into credits and return a portion of them to the farmers, thereby expanding the adoption of our products and services. In addition, for working capital, we will establish a financial scheme that allows farmers to use loans at preferential interest rates to alleviate their cost burdens and risks. Now let me briefly explain the credit and financial schemes. First, let's take a look at the trends of carbon credits. While the market size forecasts vary significantly depending on the assumptions, the market is expected to through 2030 and 2050, driven by factors such as progress of the GHG emission trading scheme and the long-term large-scale credit purchases by major companies such as Microsoft and Apple. For example, Bloomberg's long-term credit supply outlook predicts that the market, which was approximately USD 2.4 billion in 2024 will expand to some USD 500 billion by 2050. In recent years, there has been a growing emphasis on the quality of credits that is on the effectiveness and reliability of GHG reductions and absorptions that have been materialized. In the agrifood sector, the conversion of GHG reductions into credit is still limited. So emission reductions and absorptions rooted in agriculture and food production sites are areas that can generate environmentally reliable, high-quality credits. Therefore, we believe this area is likely to expand in the future once we see progress in the development of the relevant frameworks. Based on this understanding, building an ecosystem in view of the development of the credit market will be an effective way to address the social challenge of reducing GHG emissions through the development plan of solutions. One of the international credit framework we are considering to use is the Joint Crediting Mechanism JCM, also known as bilateral credit, this mechanism is an international framework that allows Japan to implement its GHG reduction technologies and solutions in partner countries and utilize the resulting reductions and absorptions as credits. It is an important system for promoting overseas deployment of decarbonization technologies we accumulated in Japan. Currently, Japan has concluded bilateral credit mechanisms JCMs with 31 countries, and discussions are underway towards concluding a JCM with Brazil, the host country of COP30. Japanese government is actively supporting these efforts, and we are working in cooperation with the government to promote the overseas expansion of GHG emission reduction solutions in the agrifood sector. At COP30, as a concrete initiative, 32 private companies, including us, collaborated under the MIDORI INFINITY framework established by the Ministry of Agriculture Forest and Fisheries, which aims to expand GHG emission reduction technologies in the agriculture, forestry and fishery sectors overseas. Under this framework towards the transformation of agrifood systems, we will aim to attract climate finance and build ecosystems across the entire supply chain, while also deploying greenhouse gas reduction technologies overseas will lead to the conclusion of JCMs. At COP30, to demonstrate this direction to the international community, a joint statement from the public and private sectors was issued. Furthermore, we believe that this establishment of the financial schemes, i.e., the financial support and incentives will also be effective in promoting the adoption of such solutions within the ecosystem. As part of this initiative centered on AjiPro-L, we embarked on new initiatives such as establishing partnerships with financial institutions and building financial schemes. Specifically at COP30 to create a financial scheme to facilitate Citi emission reductions using AjiPro-L, we signed an MOU for a strategic partnership with a major Brazilian financial institution that plays a highly public role in the society. The diagram on this page illustrating the preferential loan mechanism is a simplified version created for today's IR Day event. By establishing a scheme in which the Bank of Brazil provides loans at preferential interest rates to the farmers using AjiPro-L, we believe it is possible to lower the economic and psychological hurdles of the farmers. This bank plays a central role in the agricultural lending in Brazil, and this collaboration is a highly significant initiative in accelerating the overseas expansion of our solutions. Finally, on this page, I will explain the prospects for converting GHG emission reductions into financial values using our solutions. Ajinomoto aims to realize financial value through a 3-phased approach. In Phase 1, we will push forward solution deployment, utilizing existing mechanisms such as J credits. to convert reduction using AjiPro-L and biostimulants into credits, thereby generating credit revenue for the company. Although the size is still limited, GHG reduction achieved by AjiPro-L is already beginning to translate into actual revenue for us. In Phase 2, we will leverage the insights gained in Phase 1 to expand our efforts in regions and markets where systems are still under development, such as the joint credit mechanism in Brazil. With a view to realize carbon credit trading in the future, by broadening the target region and schemes, we aim to gradually expand opportunities to monetize GHG reduction value and further expand the deployment of our solutions. Then phase 3. Phase 2 is different in nature from Phases 1 and 2, although there are many uncertainties, this is an initiative that offers the potential for a huge growth if it materializes. In the future, if large-scale policy and institutional changes similar to the U.S. inflation Reduction Act occur in specific countries or regions, our GHG reduction solutions may become eligible for government subsidies and tax incentives, potentially leading to creation of new economic value. We believe it is crucial to secure our position that allows us to flexibly seize opportunities by anticipating long-term institutional changes. In closing, we will further strengthen our strategic initiatives, leveraging the strength of AminoScience in collaboration with stakeholders across the entire value chain and even going beyond that. Furthermore, while steadily reducing negative impacts, we will continue to expand the creation of positive impacts and strive for sustainable and dramatic improvements in our corporate value. That's all myself, and thank you very much for your attention.

Thank you very much, Nakamura-san and Ono-san. Now I'd like to go into a Q&A session. First of all, let me explain how to ask questions. [Operator Instructions] And there are so many questioners that might prohibit us to cover all the questions. So I'd like to ask for your kind understanding. Let me start the question-and-answer session. [Operator Instructions] From Goldman Sachs, Miyazaki-san.

I am Miyazaki from Goldman Sachs. There are two questions. The first question, there's advertising regulation that you mentioned. And in your company, because of that situation, you are working on reduced salt and reduced sugar as one of the solutions. But among your products, any products that are subject to such advertising regulation and then thereby making you accelerate your initiatives, anything? You talked about Asia mainly today, but there are frozen foods in regions other than Asia. Is there any examples where you address advertising regulations for your products? That's my first question. And second question is AjiPro-L. So those that are introducing AjiPro-L. So multiple clear benefits that you mentioned. But only those alone, the economics of farmers may not be insured. So you need to have some promotional activities. Is that the truth or the there is a shortage of working capital? So once you introduce that system, then farmers can immediately enjoy the benefit of introduction of AjiPro-L, which one is the case?

Thank you very much, Miyazaki-san, for your question. To answer your first question about advertising regulation in regions other than Asia. But in each of the countries, there are advertising regulations are different. So based on the country, we have to take a profit action. Sometimes, we can appeal on our products or maybe we may not advertise our products directly. So our priorities are different from country to country. And the second question, as for AjiPro-L, at the moment, the feed that is being used has to be reduced in cost and that is the economic benefits directly enjoyed by the farmers. But from the farmers' perspective, changing feed is a big psychological problem. And so there should be some economic value like science-based basis that has the data and this can lead to the credit through greenhouse gas reductions. So there should be some incentives to get them introduced products. So we are working with the finance sector and the governments to facilitate the usage of farmers. Ono-san, do you have anything extra to say?

Thank you for the question, Miyazaki-san. As Nakamura said, so to change the feed, especially the protein in the feed is to be reduced with the same benefit. That is going to be a huge cost reduction. But once you actually decide to do that or in order to get them decide to do that, there is some courage required and there's a huge leap that they have to overcome. So you need to provide a deep support for that. Thank you.

For that first question about advertising regulation, there's a follow-up question. So the regulations are different from country to country. So you're taking appropriate actions all the time or for the past year or 2, especially, has there been any big change that you've experienced and because of that in Asia, Europe or the U.S., you are forced to take some actions, which one is the case?

Well, in some countries, for excessive sold content, there's FOP package that is or labeling that is required in but with that labeling, if you ask me if there has been prominent changes in consumer behavior, no. But I don't know if I'm answering your question directly, but there's no particular increased advertising regulations and thereby address increased approach that we have to take.

Moving on to the next questioner. And this we farm UBS Securities. Ihara-san.

My name is Ihara from UBS Securities. All right, then I have two questions as well. My first question. In the agri food system, GHG gas reduction and the business opportunities. After listening to our presentation, AjiPro-L initiative and biostimulants, those initiatives sounded very interesting. And I thought they offer a great business opportunity. But in reality, to what extent do these have a financial or quantitative impact? Can you elaborate on that? Over the mid- to long term, when you announced the ASV management direction, you said that biostimulant impact will be about JPY 15 billion. At that time, but you said they're going to double that towards JPY 30 billion by 2030. And AjiPro-L sales was about only JPY 5 billion, but you wanted to increase this to JPY 20 billion towards 2030. That was the target you raised. But what is the progress you have been making so far? And are you moving ahead of the plan? What is the tailwind? If it's lagging behind the plan, what is the obstacle, if you can talk about that? That's my first question. And then my second question With the Trump administration now in office, what is the impact on GHG reduction? I'm sure GHG reduction is necessary over the mid- to longer term for the GHG reduction, the temperature differences, I think, is there. Has it changed after Mr. of Mr. Trump took office in the United States.

Thank you very much, Mr. Ihara for the question. Regarding the first question, regarding the business opportunities, the potential for growth, biostimulants, as we explained earlier, due to climate change, the crop yield is coming down. And that is going to offer us a big business opportunity. So in the green partnership between Japan and Brazil, this has been really well recognized. So going forward with the climate change, in order to maintain the crop yield of, I think, this will offer us great business potential. The business size, as Mr. Ihara mentioned, that is the current level. It's about double some tens of billions of yen. We are aiming to double this by 2030. So major growth is anticipated. When it comes to AjiPro-L, the economic value is already there. The feed cost can be reduced. So that's one of the attractiveness of this product. But in addition to that, with the environmental impact added to that, the incentive for introducing this product will further increase. So currently, it's about tens of billions -- billions of yen, single billions of yen, but we would like to increase this to tens of billions in 2030 in terms of the business size. The second question regarding the Trump administration's impact, Not only talking a lot about sustainability, it's not resonating well amongst the partners anymore. So we would like to talk about the economic value, something additional so that we can make environmental contribution to some extent. So over the mid- to longer term, towards the climate change, the urgent challenges, I think, is a common understanding across many countries. So the mid- to longer term trend remains unchanged according to our view. Ono-san, if you want to comment.

No, nothing for me to add in particular. Thank you.

Then GHG emission reduction initiatives. AjiPro-L part. If you -- I would like to ask some more questions. AjiPro-L ecosystem development and the carbon credit-related framework, you have to establish the framework for that. That sounds very interesting. But on the other hand, AjiPro-L in Japan, it's not proliferating. And maybe one of the obstacles is that [indiscernible] may be playing a role here according to my personal consideration. So in terms of your efforts with adeno, have you made any progress? Or for example, in Japan, maybe this is not spreading so much, this is because of those trade unions are in place. In the world globally, in order to build an ecosystem, other than the financial institutions, are there any bottlenecks that you need to address? Can you elaborate on that point as well?

Well, thank you very much for the question. As you rightly pointed out, in the with Kagoshima Prefecture, we have some joint efforts as well, which is producing good results. So the cattle adopting this product are increasing in Kagoshima as a result of that. Who is the decision-maker deciding on the feed? It will be the national government, it may be different depending on the country, it may be different peening on the company. So if you say directly operated form by the company. The company makes a decision. If it's a contract manufacturer, the suggestion comes in first. So the fertilizer or the feed advisers are there at the local level. So it is also important to incorporate those advisers. And also, it is also important for us to provide a science-backed data and so -- and received the certification of the administration. That's also a very important initiative. Ono-san, do you have anything to add?

Thank you very much for the comment. Ihara-san, in the world, other than the financial institutions, the farmers how they find this attractive is something very important because it is very important to raise the awareness of these initiatives in the first place because many of the farmers are not aware that these initiatives are available. That was something that we realized after at COP30. So the agrifood system emission level is so high and that is beginning to be recognized broadly right now. So how do we use the emission from the agrifood sector? Actually, the solutions themselves are not really broadly recognized. So we have to expand the recognition, first and foremost, and also expand the partnership with the financial institutions and the government agencies. And because of these factors, we have decided to visit and take part in the COP30 as a team. And so first, before the bottleneck, the recognition is the most important undertaking that you have to address right now.

Now next question, BofA Securities, Ms. Sumoge-san, please?

Sumoge-san from BofA. I also have a question, which is related to Ihara-san question on AjiPro-L for clarification. The sales is you said single-digit billions of yen and 2030 to double-digit billions of yen. So there is a potential that you're expecting from this product. But for this product, this product has been around since 15 years ago. And the businesses for animals. This was positioned as growth drivers, and this was rolled out or intention to be sold out in North America first. But since then, there has not been too much penetration, and I wanted the impression that this has made this very slow progress, but you have made contracts with food or meat manufacturers in Brazil, and also you have a partnership in Banco do Brasil. So there has been further progress made recently. So why is it now that you can expect more growth? Has it been because of wider recognition or you have established a scheme for the past 10 years so that you are now finally in a position to aim for growth? So why are you in a position to be able to expand? So can you explain more about the background, please?

Thank you very much for your question. As you said, for AjiPro-L, there has been a long development history behind and in the past, we are focusing on North America livestock manufacturers to enhance economic value by reducing feed cost. That's how we have sold our products. But when you look at feed prices -- so that was the incentive to decide whether to introduce this. The soybean waste gas price would decide whether to use the feed or not. So there's a price base between soy and other contents, and there is a difference in prices that fluctuated and that has also fluctuated our business. And carbon credit business in the U.S. was making progress as well. But more recently, Danone and other meat producers, major meat producers are now looking at Scope 1 or other Scope 3 procurement to reduce greenhouse gas so they have set up their targets for this. So more larger companies are now paying more attention to this. And also from government officials, with Japanese technologies we are hoping to contribute to the reduction of GHG emission, and that has actually accelerated the introduction because of increased attention.

In terms of cost, like soybean waste, price has been increasing. So that's why AjiPro-L cost has attracted attention, is that correct?

Well, the demand is different from country to country. And yes, the soybeans have been exported to China but not anymore. So there is some surplus. So depending on the markets, it's different, but global companies in larger markets are now more focused on greenhouse gas emission reduction even in the livestock business. That is the most important factor.

So it's not just simply looking at the cost benefits that major meat manufacturers are focusing on, but rather, there is some sense of urgency because of global trends such as COP30. Is that true?

Well, there was some livestock negative campaign that was made once. So actually, livestock industry is a noble job to support the food for human beings, but now it has been there had been some bashing. So if you can reduce the economic cost and then contribute to environmental value, that will be really precious. Okay. Thank you.

Now moving on. We are still taking questions. We can take second model questions. [Operator Instructions] The second round of questions. This is from Goldman Sachs, Miyazaki-san.

This is Miyazaki again from Goldman Sachs. Sorry for the second of the question. So sorry that this may be ambiguous, a comprehensive question. Regarding COP30 in the discussion so far, we talked about the transition to the Trump administration, which led to slowing down of some initiatives of the recourse of some progress that has been made. In 2028, '29, 2030, COP28, 29, 2030, after following these initiative, have you really realized any changes or the difference is in the position by each country? And also, you mentioned during your presentation that the undertakings of each company may not be aligned with the government's direction in each country. So if you have noticed any atmosphere to your participation in COP30, if you can elaborate and share that with us, that we appreciate it.

Yes, Mr. Miyazaki. Thank you very much for the question. I attended both COP29 and 30, both of them. As I mentioned during my speech, the interest for agrifood system is rising. Mr. Trump's influence, especially in the energy sector and the coal sector, I think may be a headwind, but the agrifood importance and also given the climate change, the coffee and cacao prices are increasing, and they are still considered to be an urgent task that we have to address. And also the new climate that week was held in New York in September last year. And also in the -- I have also participated in the Global Compact of the United Nations, America, the United States is not really strongly promoting global sustainability, but as the activities is not really dampened, if you will. So that's what I feel as an atmosphere. Ms. Ono, do you have any additional comments?

Well, Mr. Miyazaki, thank you very much for the question. This is a question that we receive frequently from many other people. And also, we are engaged in the information exchange with other companies, but the litigation risk and due to other elements, at some companies, some companies do not officially talk this broadly in front of the public because of these issues. They maybe continued activities by changing expression to resilience in some cases. In Europe, it's not really receding. But they are rather focusing on areas where they can achieve a straighter balance with business growth. So that's happening both at the government level as well as the enterprise level. So the mode of expression may have changed. However, the things that we have to address over the mid- to long term remains unchanged, and it's done under the surface because they have to tackle this. in any event. That's the impression that I have. And also what is important and big is that, as you can see on the slide, 70% of our procurement comes from natural capital, i.e., the raw materials. And agrifood system is intertwined very closely with those natural capital. So there is a mounting momentum to address this issue because for one thing, Brazil, the host country of COP30 is a major producer in this area, and so they made a move to address this. So that was certain because in every pavilion, this discussion was taking place. So I thought that, that was a big tailwind for us.

And one more thing that I wanted to ask well-being that kind of expression, you started to utilize this expression from early on. Regarding well-being what's your view on the interest level of the society at large? Is this accelerating according to your understanding? Or do you think the momentum has somewhat dampened compared to before and -- but still expanding at the grassroot level? So what is your view on the recognition level of the expression well-being? If you can share your view with some examples, that would be appreciated.

Well, thank you. Well-being, for us, we are working together with the Oxford University working I mean, eating together with other people in order to raise the well-being, we have obtained some scientifical data to improve this. So food and we're eating together, those were the elements that we addressed this time around. But also, there are some other well-being-related solutions that we can demonstrate with AminoScience. So we would like to appeal this using science-based data going forward. The recognition for well-being around the world, the well-being index close something similar to GDP. There are some people suggesting that kind of index is going to be created. So I don't think the atmosphere or the momentum has decreased, but what's your view Ono-san, if you have anything to add?

I'm sorry, yes, well being itself, this expression itself. There's no clear global definition, and this could be quite subjective. So depending on the individual, the perception is different and therefore, the definition may be different, which is making it difficult to understand. But as Mr. Nakamura mentioned, on a global, I don't think the momentum has decreased. rather, the next target of STG with there is an activity to include well-being as part of the STG target. This is an effort spearheaded by the Japanese government. So that kind of discussion is now also emerging. And also in our case, we are trying to contribute to the well-being of society and earth through amino science. So people, society and the earth for broadly in these areas, we would like to make contribution to the well-being of all these elements. And we believe we can make a contribution to the well-being of society in the earth and sustained by AminoScience. that remains unchanged and it remains intact, but we thought that we have to make further efforts in order to have this recognized broadly by the society. So we have to communicate this better so that we can increase the stakeholders to reinforce these efforts together with us. So we have to the message the path we have to continue working on is to expand this message across.

Let us move to the last question. Citi Group Securities, Watanabe, please?

I am Watanabe from Citigroup. There's one very fundamental rudimentary question. For AjiPro-L biostimulant business, in this business, what is the differentiating point and a competitive advantage as compared to chemical manufacturers. Also frozen gyoza and seasoning of many specific seasonings or B2C and a strong brand, you have also strong sales forces but in this biosimilars business, according to this presentation, the chemical and [indiscernible] have a larger share in my assumption in Japan as well as in overseas. So in the areas where chemical manufacturers tend to be strong, what is the differentiating factor and the competitive advantage that you can demonstrate as a background, if you can enlighten me, that would be appreciated?

Thank you very much for your question, Mr. Watanabe. So AjiPro-L and biostimulant, what is the source of competitive advantage for us? That's the question. As for AjiPro-L, of course, this we are one of the top AMINO acid manufacturers and lysine for Amino acid, [indiscernible] acid is produced. And then it has to be delivered more efficiently. And there is data that has been taken. And of course, there's competition, but our delivery efficiency to internal [indiscernible] and GI [indiscernible] is really the best. And there are various margins, and there is also a research and development to enhance efficiency from the current generation to the next generation. But of course, the recognition is not enough products. We have design based solutions, and that has to be recognized more. And by promoting that, we can establish an ecosystem and also, we could partner with chemical manufacturers in my view, so that we can appeal on the products. And as for biosimilar, there's a different positioning for us compared to chemical manufacturers. We are looking at the sugarcane and cassava and amino acid is produced from there. And then the fermentation liquid is used to produce plant supplements. So the way it works is different and the concept behind products are different. So the amino acid fermentation liquid is something that we have to take advantage of as biostimulants, and we would like to improve our recognition of our products. So the characterization from the amino asset or derived from an asset is taken advantage of, that's my understanding.

[Operator Instructions] Are there any questions? Asset Management on Jansen.

Asset Management. My name is [indiscernible]. I am an ESG analyst by the way. And after Mr. Trump took office as President, finance and nonfinancial initiatives impact on financial performance is something that people are paying a lot of attention to and investors like ourselves also believe that is necessary because otherwise, the good undertaking your companies may not last for such a long time. So given that, have to Mr. Nakamura, after you became CEO or even before you became CEO, speed up and scale up, you have been quite aware of this in your corporate management. I'm so sorry for my lengthy comment. So ESG undertaking at Ajinomoto is quite extensive, and you have a very resilient supply chain that you aspire to create. And in order to create that kind of supply chain, you are undertaking many efforts, so speed up and the business portfolio transformation. For these things, are there anything that you would like to change compared to the conventional approach? Because, for example, there could be good initiatives. But if that if the continuation of such initiatives will be an obstacle for you to do some speedups? I thought that such case may apply because you have so many initiatives that is being promoted by the company. So if you can comment on that, that will be appreciated.

Yano-san, thank you very much for the question. The sustainability framework is ESG, and we have a lot of ESG-related initiatives including financial and nonfinancial initiatives and we have been communicating this whether this is related to our business portfolio, whether this results in speed up. As far as the business portfolio is concerned, there are many valuation yardsticks such as the strength of our company and also comparing with the speed of the market, whether we can offer unique products to the market, we will consider the business portfolio from those aspects. So sustainability-related initiatives that we have introduced today AjiPro-L and biostimulants, those are also positioned as growth areas for the company, and this will allow us to leverage our strength. So this is also aligned with our business portfolio the business strategy, sustainability strategy will be aligned together and achieve speed up and scale up at the same time. So that remains intact. But also the negative impact reduction for those efforts, cost reduction and also impact reduction will have to be done at the same time. That's the priority area that we are focusing on such as reducing the electricity charges by replacement to renewable energies also in order to reduce our plastics, we are using thin package materials in order to reduce the plastic emissions. Those are the things that we define as a priority, and we're working on them. And we are looking in to speed up the scale up at the same time as we address these issues.

So as part of those efforts, have there been any changes after you became CEO? Have you changed anything compared to the conventional method?

Well, my predecessor was quite aware of sustainability that the cornerstone of ASV management. Mr. Fuji has also had that kind of mindset, so there's nothing new after I took office. But I'm trying to accelerate the speed up and scale up because the quick development system is my motto. So in order to expedite the speed of scale up and speed up, we are looking into many different initiatives, including the cooperation with the financial institutions and government agencies. So with the bank of Brazil, I met with them and had a lot of discussions with them and also I met with the CEO of this very big meat producer, so I'm trying to scale up and scale up of whatever I can do.

Yes, certainly, we talked about you are now increasing the touch points, not only in North America but also other touch points around the world. So that's an area that you are intentionally working on.

Yes, listening to people in the field is something that I value so that we can listen to the direct voices of the customers.

[Operator Instructions] No more questions if there is none. We are still early, but we'd like to conclude Q&A session. Thank you very much. Last but not least, I'd like to ask Mr. Nakamura to say a few words.

Well, as we mentioned today, in Ajinomoto Group, we are pursuing sustainability initiative, a score of ASV initiative, and we co-create social and economic value with the integration of business strategy and accelerate business growth to achieve sustainable corporate value. So I'd like to ask for kind of continued operation and support. Thank you for your attendance today.

With that, we'd like to conclude today's meeting. Thank you for your attendance once again. This is the end of the session. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]