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I understand that strengthening ASV management will require enhancing both economic and social value, but I was unable to get a good understanding of your commitment to the economic value aspects at the briefing for analysts. I got the impression that you were devoting more time to the explanation of social value on that day. Your past medium-term plans have always been well designed, but KPI goals mostly were not achieved. Therefore, I would like to know how much you are committed to economic value in the new FY2017–2019 medium-term management plan (hereafter, the new M-T plan).
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Your plan appears to target a ¥10.0 billion increase in business profit every year. Will you be making forward-looking capital investments at an early stage? The plan target a large ¥6.0 billion increase in Healthcare segment profit. Are you expecting to increase profits ¥2.0 billion a year or do you see a big jump in profits in the plan’s final year?
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One issue for Ajinomoto is its relatively low profit margin when compared with the global top 10 food companies. What are the reasons for your lower profitability and what measures are you taking to improve it?
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I would like to ask about your cash generation capabilities. At the meeting introducing the new M-T plan, it was explained that your expectations for growth in operating cash flow were conservative relative to the growth in business profit. What is the reason for the conservative assumption that the increase in working capital will match topline growth? Also, assuming you achieve the plan’s profit targets, how much upside do you see for operating cash flow?
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In Europe, you suffer from the negative image that Ajinomoto equals MSG. What kind of global public relations activities do you have in mind to eradicate this negative association?
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I would like to confirm your view on M&A. You continue to expand your regional portfolio through acquisitions such as Windsor, but can local management be successful in situations where they may not be able to understand past success stories? We have seen cases where other companies have expanded into a region through M&A but then had to withdraw because they weren’t able to do well.
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Your inclusion of raising corporate brand value as one of the KPIs in the new M-T plan is very interesting, but I find it difficult to understand how you will go about doing this, so I would like you to give me some specific examples. Also, looking at Interbrand’s brand value assessments, foreign companies' brand value tends to be about 30–40% of their total market cap and Japanese companies tend to have brand values of more than 10% their market cap. However, Ajinomoto's is only 5% of your market cap. What do you think are the factors in your brand value assessment?
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I have heard that companies’ US and European businesses are more heavily weighted in Interbrand’s brand value assessments. Isn’t it possible that your brand value assessment is lower than the assessment of your financial value because of your weak positions in the US and Europe? This makes me think that you need to communicate a clearer strategy for your US and European businesses. What is your strategy for expansion in the US and Europe?
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Please speak about the specific contents of the “UMAMI Project”.
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If you achieve your goal of being one of the Top 20 global brands from Japan or exceed plan and enter the Top 10, what kind of changes will this mean for Ajinomoto, internally and externally? I understand that increasing non-financial value will promote the synergistic improvement of financial value, but what kind of effects do you anticipate?
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What is the thinking behind a three representative director structure?
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Ajinomoto is aggressively seeking to change working styles, but do you have any system that will increase employee motivation? Also, does the new M-T plan included any changes to your human resources development structure?
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I’d like to hear your thoughts on work motivation. In the US, citizens can broadly be divided into two income groups and we are seeing an uprising. A similar flame has been lit in Europe. Japan has yet to see its citizens take to the streets, but if companies' efforts to reform work are misdirected and employees’ incomes fall in unison with their overtime hours, we could see some street demonstrations. Companies are sensing some danger if they do not create an environment that enriches their employees’ lives both economically and by ensuring they have enough time off to enjoy life. Ajinomoto is currently at the forefront of effort to reform work in Japan, but can will employees truly be happy after you have made this effort for 4-5 years?
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How will you convey this new M-T plan to the individual employee?
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The new M-T plan is so rich in content that I feel the stock market may not be able to have the full picture. I feel it may also raise questions about previous plans’ emphasis on numerical financial targets, such as profits and market cap. Please tell us the thinking behind including ESG targets among KPI.
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Please explain your thinking on non-financial targets.
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How will you measure the progress toward these non-financial targets and share that data within the group.
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Please share with us some details about your efforts to make the domestic value chain more efficient. Also, at the meeting introducing the new M-T plan you said that these efforts would not contribute to profits until FY2020 or later. Please give us an idea of the cost savings resulting from these efficiency measures and the related timing.
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Please give us an idea of the scale and timing of extraordinary losses you foresee at the Japan Food Products and animal nutrition businesses.
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You expect to improve profit margin at the Japan Food Products business by 1ppt during the period of the new M-T plan. Is this due to value chain efficiency improvements?
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Please tell us about your coffee business strategy.
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How’s the competitive environment for frozen foods? High-priced products in stores seem to be selling well. Do you expect strong sales of premium products going forward?
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I understand the International Food Products segment to be a crucial growth driver. The new M-T plan targets double-digit growth in sales of seasonings and processed foods on a local-currency basis. The main difference with past plans appears to be the emergence of the Rising Stars and inclusion of Ajinomoto Windsor. However, I am not clear about what other differences there may be. You are targeting 4% average annual growth in sales in Thailand, which still accounts for a large share of overseas sales, indicating a continued high dependence on the Thai business. I would like to know what new initiatives you are taking in the International Food Products business and if these new initiatives can drive double-digit growth in sales.
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Although it was explained that growth at Rising Stars will be promoted by taking equity stakes in local companies, I would like you to explain a bit more concretely about the increase of Rising Star revenues.
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It appears you have set a rather low business profit margin target for the International Food Products business in your new M-T plan. Is this a firm goal?
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I have a question about gross profit margins on international flavor seasonings and menu-specific seasonings. Will top-line growth be accompanied by improvements in the product mix in Thailand? There doesn’t appear to be much difference in the gross profit margins of these two categories. It seems that profits growth will be matched by an incremental growth in sales. Will there be any improvement in the gross profit margin?
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Looking ahead, do any other countries present the risk of a big change from their past growth trend, like we have seen with Thailand?
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What specifically are you referring to when you mention the launch of new categories in the Five Stars?
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To what extent do you plan to reduce in-house production of commodity animal nutrition products? Also, when will the business structure you are aiming for be firmly in place?
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Can we assume that the restructuring of animal nutrition business will, in the end, outsource some of commodity products?
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What is the timeframe for shifting lysine to OEM production?