Message from the CEO
September 2026
Review of FY2025 and Outlook for the External Environment
I assumed the role of President & CEO, effective April 2025, and was appointed Representative Director in June of the same year. Under the new management team, we strove to design and implement our growth strategies as well as to strengthen our business foundation, including expanding sales of high-value-added products, enhancing our business portfolio, and promoting human capital management centered on the Human Capital Committee, an advisory body to the Management Committee. Following the U.S. Environmental Protection Agency’s (EPA) announcement last June of plans to increase biofuel blending requirements, however, the cost environment for oils and fats business worsened significantly due to changes in the balance of values between vegetable oil and oilseed meal, which led to a decline in both net sales and profits year on year in FY2025.
Since the beginning of FY2026, the business environment has become even more challenging. In addition to the continued rise in oil value and decline in meal value, escalating tensions in the Middle East have pushed up crude oil prices, resulting in higher logistics, energy, packaging material, and other costs. Nevertheless, even when confronted with unexpected changes in the market environment, our mission as a publicly listed company is to overcome such challenges to achieve growth. The Group is, therefore, engaging in key near-term strategic imperatives, such as sales price increases, business process transformation through our digital transformation (DX) initiative, and expansion of high-value-added products. Although we expect to fall short of the financial targets in FY2026 under the Sixth Medium-Term Business Plan, we will devote our full efforts to restoring profitability promptly and establishing the growth path under the next Medium-Term Business Plan.
Focus Areas of the Next Medium-Term Business Plan
As the external environment changes dramatically, I believe my mission as CEO is to lead the Group in forging a path forward, assuming that things will change in the future. In FY2021 the Group set “Joy for Life—Bringing Joy to the Future by Food” as its vision for the future, but I have sought to articulate that vision more clearly since I assumed the position of CEO. This is because I wanted to clearly define what we aspire to be in the next five and ten years so that we can reflect that vision in our business strategies and the actions to be taken by each employee. Of course, the picture we define may change in response to future changes in the business environment, but I believe it is important to clearly define what we aspire to be and the direction we should take at this point in time, and to continue taking on challenges toward realizing that vision.
Over the past year, the management team has conducted an in-depth review of the Group’s strengths and growth opportunities so that we have set our key strategic directions, that is, maximizing profitability of our current core businesses and investing in three focus areas for future growth.
Based on this approach, we are currently formulating the next Medium-Term Business Plan, which will begin in FY2027.
Strengthening and Advancing Core Businesses
We position our current businesses, centered on oils and fats, as our “core businesses” and aim to transform them into a stable cash-flow generator by reforming business processes as part of digital transformation initiatives, reviewing our cost structure, and optimizing our human resources allocation.
Focus Area 1: Evolution into a Comprehensive Solution Designer
In addition to supplying food ingredients, such as oils and fats as well as starch products, we will combine these with other food ingredients and related business services to strengthen our ability to solve issues which our B-to-B customers face. We aim to engage in the process B-to-B customers use to manufacture food products and/or serve food at restaurants.
Focus Area 2: Addressing Unmet Consumer Needs
Given consumers’ increasing demand for products offering convenience, health benefits, and/or high quality, we will advance our efforts in research & development and enhancement of brand recognition of our products, including olive oils and supplement oils. We will demonstrate the value of our products to consumers so that we can not only increase sales volume but also enhance profitability.
Focus Area 3: Contributing to Sustainability
In addition to reducing environmental impact, we will strengthen the provision of products and services that help solve social issues such as labor shortages and heavy workloads. To date, the Group has worked to provide value in the form of “good taste, health, and low burden,” including long-lasting oils that help reduce customers’ workloads and oil products in paper cartons that help reduce plastic use. Going forward, we will further develop these strengths while also capturing new growth opportunities in biofuels, including raw materials for sustainable aviation fuel (SAF), thereby contributing to a sustainable society.
Through initiatives in these three focus areas, we will increase the value we provide to customers and society while improving profitability and market expectations for growth, thereby enhancing corporate value. In the next Medium-Term Business Plan, in addition to clearly defining these focus areas, I would like to present more specifically the connections between the management resources that support them—including financial, manufactured, intellectual, human, social and relationship, and natural capital—and the economic and social value generated from those resources as our value creation process.
Strengthening Our Initiatives to Enhance Corporate Value
Although our current medium-term business plan, which concludes in FY2026, has been implemented amid changes in the external environment that have exceeded our original expectations, challenges remain in improving the profitability of the Oils and Fats Business and generating earnings from our new businesses and overseas operations. The stock market's assessment of our performance remains unfavorable, with our price-to-book ratio (PBR) remaining below 1.0. We take this situation seriously.
While our recent business performance has fallen short of expectations, FY2025 was also a year in which concrete initiatives to drive our next stage of growth began to take shape. As part of our growth strategy, we expanded our portfolio of high-value-added products and services, including solution-based proposals centered on “Oishisa Design (creating deliciousness),” and achieved steady growth in sales of household-use olive oil and Cho Toku, our long-lasting business-use oils. In North America, we established a collaborative framework with Ajinomoto Health & Nutrition North America, Inc. In addition to expanding sales of existing products, we are advancing initiatives to commercialize new oils and fats products and broaden our product lineup. We have also made steady progress in strengthening our growth foundation and improving capital efficiency through initiatives such as establishing a framework to promote overseas M&A, advancing structural reforms in the Specialty Food Products Business, shortening the cash conversion cycle (CCC), and reducing cross-shareholdings.
Going forward, to improve PBR, we will make improving profit margins and enhancing market expectations for the Group’s future growth our top priorities.
To improve profit margins, completing price revisions is important in the near term. However, this is not simply about maximizing profits. Rather, it means generating appropriate profits by solving issues faced by customers and society, an approach that also aligns with the Group’s vision for the future, “Joy for Life—Bringing Joy to the Future by Food.”
The Group maintains relationships with a broad range of customers through the sale of oils and fats. Combined with our ability to propose solutions that address a wide variety of customer issues by leveraging oils and fats together with our proprietary functional starches, this broad customer reach is one of the Group's key strengths, namely, “Oishisa Design.” Going forward, in addition to the experience and expertise we have accumulated, we will add scientific interpretation to the “good taste” that chefs have traditionally achieved through their skills and experience, thereby systematizing “Oishisa Design” and further advancing our proposal capabilities. By offering distinctive solutions to underlying issues customers themselves have not yet recognized, we will differentiate ourselves while building new business models that leverage this knowledge and expanding overseas, primarily in ASEAN and North America, to establish a distinctive position for the J-OIL MILLS Group.
Furthermore, through initiatives aligned with the focus areas of the next Medium-Term Business Plan now being formulated, we will expand high-value-added domains and enhance our business portfolio. In doing so, we will build on the stable foundation of our domestic oils and fats business while diversifying our business portfolio and expanding growth opportunities, thereby increasing corporate value. From the perspective of the capital asset pricing model (CAPM), which is used to calculate the cost of equity, we also believe this will help reduce the cost of equity by lowering the risk premium through the reduction of business risk.
We will also steadily advance ESG initiatives and continuously communicate their progress and results to external stakeholders, including shareholders and investors, thereby enhancing their understanding and assessment of the Group. We believe this will enhance confidence in the sustainability and growth potential of our businesses and, as a result, contribute to reducing the cost of equity. We will therefore continue to further strengthen dialogue with external stakeholders, including shareholders and investors.
We are also reviewing our medium- to long-term shareholder return policy. By shifting away from a highly volatile business structure centered on oils and fats and enhancing the quality of earnings, we will strengthen our ability to generate stable cash flows and aim to adopt a dividend policy that takes into account both the conventional dividend payout ratio and a DOE level of approximately 3%.
Sustainability Management and Human Capital for Strengthening the Management Foundation
The Group promotes sustainability management aimed at both resolving environmental and social issues and enhancing corporate value. As part of the framework for promoting these efforts, we have established the Sustainability Committee, chaired by the Director, Executive Officer, Executive Vice President & CTO, and are advancing initiatives on key issues such as the environment, human rights, procurement, and logistics through a companywide, cross-functional structure. We are making steady progress toward achieving our targets in addressing issues such as climate change and human rights. In FY2026, we established the Sustainability Policy Formulation Team within the committee, which serves as an intelligence function for identifying external trends and considering policies for Group initiatives. We are currently formulating a medium- to long-term sustainability policy while also considering future compliance with the SSBJ standards.
The most important management foundation supporting the realization of sustainability management is our people and organizational culture, which will drive transformation and growth, and we position human capital management as one of our core themes. In addition to enhancing the expertise and job satisfaction of each employee, we will remain committed to building an organization in which diverse talent acts autonomously, anticipates changes in the external environment, and fosters co-creation. As technological innovation advances, it is becoming increasingly difficult to maintain competitive advantage through conventional ways of thinking and working. For the Group to continue being valued by society, it is important to develop people capable of taking on the challenge of creating new value. We therefore established the Human Capital Committee and are taking a more systematic approach to formulating and executing our human capital strategy. However, because the range of themes requiring attention is broad, we have carefully selected our priorities. Last fiscal year, we concentrated on establishing a foundation for developing next-generation management talent and began investing in talent development. In FY2026, we are working to further define the human capital portfolio linked to the business strategies of the next Medium-Term Business Plan and formulate plans for developing the necessary organizational structure.
We also place importance on two-way communication between management and employees in order to align the organization and foster a sense of unity. In FY2025, we held 44 dialogue sessions in Japan and overseas, sharing our aspirations for how we want to transform the Group and the direction of management before exchanging views. As a result, we confirmed an improvement in our employee engagement survey score. At the same time, challenges remain in embedding our strategies throughout the organization. In FY2026, after sharing our thinking on the direction and focus areas of the next Medium-Term Business Plan, we have been deepening dialogue by creating opportunities for employees to consider proposals regarding business strategies as well as initiatives they themselves and their workplaces can undertake. Through these initiatives, we are fostering an organizational culture in which employees think and act autonomously.
We are also focusing on business innovation through the promotion of dX. A key objective is to transform business processes that have traditionally depended on experience and intuition into ones based on objective data, thereby maximizing both efficiency and effectiveness. In sales and marketing, for example, we utilize systems that visualize the projected impact of price revisions and the return on investment of marketing initiatives, enabling us to select the most appropriate measures for each objective. In supply chain management, meanwhile, we are introducing companywide systems to build a framework in which pricing and sales policies reflecting cost fluctuations can be implemented consistently across the entire supply chain. We believe these business innovations will help each employee make fuller use of their capabilities and maximize the value of our human capital.
Furthermore, amid rapid changes in the external environment—including international affairs, market needs, and technological advances—we have established the Risk Management Committee, which I chair as Representative Director, President & CEO, in order to appropriately identify and respond to risks that could have a significant impact on management. In FY2026, we identified 15 key business risks and are working to reduce risk by monitoring the progress of countermeasures in light of both their potential impact and likelihood of occurrence.
With regard to “Strengthening Corporate Governance,” one of our materialities, we have worked to enhance discussions aimed at increasing corporate value over the medium to long term, based on the results of evaluations of the effectiveness of the Board of Directors. In FY2025, the evaluation found that the quality of discussions on strategy had improved. Going forward, we will continue to pursue the ideal form of a monitoring board for a company with an Audit & Supervisory Board while further advancing our governance.
To Our Stakeholders
The oils and fats industry is currently undergoing a major transformation. Advances in AI and changes in social structures are making it increasingly difficult to maintain competitive advantage through conventional approaches, and we therefore need to anticipate change. Against this backdrop, what is important is to identify the latent needs of customers and society and provide new value, thereby enhancing our relevance to society and achieving sustainable growth.
The Group has reached the milestone of 200 years since the founding of its predecessor companies. Returning to the fundamentals of business valued by those predecessor companies, we will advance our customer-oriented approach. By providing new value, we will contribute to people’s lives and continue taking on challenges toward realizing our vision for the future, “Joy for Life—Bringing Joy to the Future by Food.”I sincerely appreciate your continued support.