Steady Progress in Implementing Measures to Steady Progress in - PowerPoint PPT Presentation

Interim Results Briefing November 2, 2006 Steady Progress in Implementing Measures to Steady Progress in Implementing Measures to Improve Profits in Core Business Improve Profits in Core Business ~ Business S Strategy Progress Report for FY07/3 ~ trategy Progress Report for FY07/3 ~ ~ Business (Stock code: 2871) Nichirei Corporation Tel: (+81-3) 3248-2132 E-mail: takeshitas@nichirei.co.jp URL: http://www.nichirei.co.jp/ir/en/index.html

Table of Contents 1 Targets: Net Sales Revised Down, Operating Income on [Business Strategy: Logistics] Track Profit Target: Revised Up on Strong Performance of 9 [Business Strategy: Processed Foods] Logistics Network and Regional Storage Businesses Net Sales and Profits: Rise Offsetting Lower Revenues in 2 Logistics Network: Improving Profitability for Center 10 the Struggling Household Use Operation and Transport Operation 3 Commercial Use: Net Sales Continues Strong Growth Logistics Network: Accelerating Growth through 11 through Introduction of Carefully Targeted Product Lines Acquisition of Transport Business Know-How Household Use: Revision of Rebate Policy and Sales 4 Regional Storage: Further Cost Cutting Measures in the 12 Promotion Expenditures to Push Up Profitability Falling Utilization Rates Acerola Business: Advances to New Stage of 5 [Reference Materials] Development Segment Data 13 Production: Higher Profit through Continued 6 Improvement in Plant Utilization Rates and cost Reductions Direct Sales: Expand Customer Base with Aggressive 7 Advertising [Business Strategy: Marine Products] Revitalization Plan: Reduce Operating Losses beyond 8 Target Levels Note: Figures shown in graphs and tables have been rounded to the nearest unit where necessary, except where otherwise specified.

Targets: Net Sales Revised Down, Operating Income on Track Targets (Consolidated; amounts less than 06/3 Actual 07/3 Previous E 07/3 Targets Comparison (%) 100 million yen are omitted) Net Sales 4,694 4,790 4,735 101 Operating Income 160 181 181 113 Recurring Income 156 175 175 112 Net Income 62 111 111 176 Interest-Bearing Debt 862 less than 800 less than 750 87 Note: “FY 07/3 Previous E” was released on August 1, 2006. 1. Net sales are forecast to exceed FY06/3 results as all business segments are forecast to perform as planned except Processed Foods whose sales target was revised down due to slow sales in household use and Real Estate which lacks the land sale. 2. Operating income is forecast to post a big increase of 13% compared to FY06/3, on par with the previous target as business recovery in Marine Products and strong performance in Logistics are to offset the declines in Processed Foods which failed to meet the target in the first half, and Meat and Poultry Products which suffered a fall in demand for imported chicken. Operating Income by Segment Net Sales by Segment 100 million yen 100 million yen 250 6,000 Processed Foods Marine Products Processed Foods Marine Products Meat and Poultry Products Meat and Poultry Products Logistics Logistics Real Estate Other Real Estate Other Intercompany Eliminations Consolidated Net Sales Intercompany Eliminations Consolidated Operating Income 69 87 5,000 82 200 76 2 100 92 1 4,735 4,694 181 4,614 1,348 4,000 39 1,271 2 160 1,167 150 61 135 847 846 865 3,000 60 67 100 58 811 768 900 2,000 7 36 3 50 4 70 1,000 1,872 1,785 1,848 55 43 0 0 -10 -4 0 -17 -259 -263 -269 -1 0 FY 05/3 06/3 07/3E 05/3 06/3 07/3E FY 1 -50 -1,000

Business Strategy: Processed Foods

Processed Foods Net Sales and Profits: Rise Offsetting Lower Revenues in the Struggling Household Use 1. Processed Foods is forecast to post an increase in sales due to the robust demand in the commercial-use sector, and a sharp rise in operating income of ¥1.5 billion, up 28% compared to FY06/3, although target for pre-cooked frozen foods for household use was revised down on slack demand in the first half of the year. 2. Pre-cooked frozen foods for commercial use: Sales are forecast to continue to grow by a solid 5% for FY07/3 thanks to the accelerated introduction cycle of new products such as processed chicken, cream croquettes and spring rolls. 3. Pre-cooked frozen foods for household use: Restoring profitability is the priority through such measures as promotion to increase shelf placements during the fall restocking period, and more aggressive pursuit of consignment contracts for private brands while continuing to implement new sales promotion methods and pricing review. 4. Measures to cut costs at the Group’s production plants in Japan continue on schedule during the second half, which contributes to further improve profitability. 5. Acerola business: 10% sales increase during the second half is targeted through new introduction of three new products, and the sales promotion for existing products. Factors Affecting Year-on-Year Gain (Loss) in Operating Income of Processed Foods Net Sales Operating Income Net Sales and Operating Income for Processed Foods 100 million yen 100 million yen 2,000 FY 06/3 5.5 R e s u lt s o f 1 s t H a lf Reduction in distribution costs for pre-cooked frozen food +0.4 1,913 1,872 80 Reduction in logistics costs +0.2 1,848 Reduction in fixed costs +0.3 1,785 1,800 72 Fall in gross profit margin in pre-cooked frozen food -0.4 70 Acerola -0.3 60 55 Ad expenses for products with health value -0.1 1,600 Effect of improved capacity utilization in pre-cooked frozen foods +0.2 F o r e c a s t f o r 2 n d H a lf 43 Production line cost reductions +0.1 Effect of overhaul of production system +0.1 40 1,400 Reduction in distribution costs for pre-cooked frozen foods +0.4 Reduction in logistics costs +0.2 Acerola +0.2 1,200 20 Reduction in fixed costs +0.4 FY 05/3 06/3 07/3E 07/3 Initial E Other -0.2 FY 07/3E 7.0 5.0 6.0 7.0 Billion yen 2

Processed Foods Commercial Use: Net Sales Continues Strong Growth through Introduction of Carefully Targeted Product Lines 1. Sales of pre-cooked frozen foods for commercial use for the first half continued to grow by 4%. There was a brief lull in sales growth during the second quarter, probably caused by pricing revisions for some of main chicken products. 2. During the second half, sales promotion for the restaurant and catering industries is enforced with our main chicken products, cream croquettes, and spring rolls, for which a new production line was added in February. 3. Annual sales are forecast to rise by 5% by speeding up introduction cycle of our new product. Performance of the New Category Strategy Rate of Growth in Net Sales of Pre-Cooked Frozen Foods for Commercial Use (Targeted market segments and product categories) (Compared to the same period in the previous FY) Billion yen 16.0% I n c l u d e s t h e r e b o u n d a f f e c t Category Business category 15.0% f r o m a v i a n i n f l u e n z a ( b i r d f l u ) Name Market size Pre-prepared Restaurant Catered meals ○◎ ○◎ ◎★ Chicken 86 12.0% ★ Hamburg 24 10.7% ★ Rice products 30 ◎ ★ Spring rolls 8 8.0% ○ ☆ Pork cutlets within the cutlets 15 Noodle products 51 5.9% 5.2% Deep-fried marine products 65 4.2% 4.0% ☆ ◎ Croquette 43 ☆ ○◎ Fried egg products 47 2.4% ○◎☆ Japanese dishes 8 0.6% ・ ・ ・ ・ ・ ・ ・ ・ 0.0% -1.2% 03/9 04/3 04/9 05/3 05/9 06/3 06/9 07/3E FY Note: Figures for market size are from the “Commercial Food Marketing Handbook 2006” (Fuji-Keizai) -4.0% Shaded cells ･･･ New categories in which we commenced development prior to the plan period ★・ ・ ・ New categories targeted in FY 05/3 ☆・ ・ ・ New categories targeted in FY 06/3 ○･･･ Successful new categories targeted in the 06/9 period. ◎・ ・ ・ New categories to be targeted in the second half of FY07/3. 3