*Core operating profit of existing business = Operating profit – other income and expenses

Most recently, the NISSIN FOODS Group has achieved rapid growth with rising performance in the U.S. market. However, growth slowed in FY 3/2025, partly as a negative rebound in reaction to previous years. The negative factors included an increase in warehousing costs associated with expansion and other internal factors, not to mention an increasingly competitive environment that included products from Korea and other products. At the same time, we see this environment as a business opportunity stemming from growing needs for high-priced, high-value-added products and rising awareness of instant noodles as a category. We are also seeing a greater understanding of authentic noodle eating culture as more people travel to Japan.

To capture this growing potential in the U.S. market and achieve further profit growth, we plan to establish the Regional Headquarters of Americas (RHQ Americas) in FY 3/2026 to serve as a local base overseeing the entire Americas region. To date, we have pursued a policy of local production for local consumption. Our stance has been that U.S. affairs should be U.S.-led. However, few managers in the U.S., where the penetration of instant noodles is low, have knowledge and expertise in the instant noodles business. By investing resources developed across the group on a global basis in RHQ Americas, and locating headquarters functions in an area with no time differences from the local market, we expect to foster speedy decision-making and nimble management in step with operating companies, particularly in the areas of marketing and product development.

The NISSIN FOODS Group must expand the scope of our business not only in the U.S., but also in the broader overseas markets to achieve medium- to long-term growth.

A comparison of servings of instant noodles consumed per capita per year by region shows that Japan consumes about 50 servings. On the other hand, the U.S. consumes about 15 servings, and many regions in Europe report single-digit numbers. Considering the size and growth rate of the populations, we expect significant growth if we increase the penetration rate. On the other hand, in Asia, where instant noodles are already widely available, servings consumed exceed even Japan in some regions. However, the products in question are mainly in the low price range. We think we can increase our market share and revenue by offering products in the higher price range to meet the rising income levels associated with future economic growth. In this way, our growth potential lies in our ability to develop and offer products that match the popularity of instant noodles and economic development in each region. We already generate about 50% of profits from the Overseas Business, and we intend to increase this ratio further by leveraging these strengths.

Meanwhile, we must accelerate efforts in human resources and governance in response to the rapid expansion overseas of recent years. For us to realize our potential in overseas markets and continue to grow as a truly global company, we must develop a system from various perspectives that adapts to changes in the internal and external environment. We are currently preparing to put this system into place.

We also require further capital investment to meet growing demand. We plan to build new plants in three countries in the Americas between FY 3/2026 and FY 3/2027. We also plan to acquire sites in Europe with a view to building new plants there as well. In this way, we expect to capture the growth of the instant noodle market in each region. We are also planning investments to strengthen our production system in Japan, while investments in product development and new businesses as a stepping stone to the future will also be important. Overall, we invested 78.1 billion yen in FY 3/2025 and plan to invest another 100 billion yen in FY 3/2026. This level of investment represents a significant increase compared to the previous year’s 30 billion yen, but we expect to settle into cruising altitude after peaking in FY 3/2026.

The environment indicates that profit growth will slow in the short term due to the depreciation burden associated with growth investments and unavoidable increases in raw materials prices, logistics costs, and labor costs. Even in this environment, we expect to grow our top line and cash flow steadily, paving the way for mid-single-digit profit growth on average heading toward 2030.

To engage in management Conscious of Cost of Capital and Stock Price, the NISSIN FOODS Group uses ROE as a key performance indicator under Mid- to Long-Term Growth Strategy 2030. We set a target to increase this ratio to 15% by FY 3/2031, and to achieve this goal, we plan to maximize corporate value through strategic capital allocation.

In recent years, in particular, our ability to generate cash has strengthened amid revenue growth in our Overseas Business, while EBITDA has been stable at over 100 billion yen. This level is almost double that of FY 3/2019. Free cash flow was negative in FY 3/2025, mainly due to a decrease in operating cash flow compared to the previous year. We attribute this decrease in part to the fact that the last day of the previous year was a holiday. In FY 3/2026, we expect operating cash flow to return to normal levels. However, the same trend will likely continue as capital investment peaks. We expect free cash flow to turn positive and begin growing in FY 3/2027 onward, as large capital investments will likely run their course and we settle into a cruising altitude for this type of investment.

In FY 3/2025, we obtained an external credit rating of AA as we continue to diversify our funding options, and we raised a total of 50.0 billion yen in straight bonds. Going forward, we will maintain focus on utilizing leverage effectively to raise the level of our earnings base and expand shareholder returns.

Our plan for shareholder returns is to pay progressive dividends with a target payout ratio of 40%. We will consider opportunistic share buybacks while keeping a close eye on cash balances. Total return ratio for FY 3/2025 exceeded 100% for the first time due to share buybacks totaling 40 billion yen. We plan to conduct share buybacks amounting to a total of 20 billion yen in FY 3/2026.

Capital Allocation

We continue to step up our IR activities, including activities overseas, to ensure shareholders and investors understand the NISSIN FOODS Group medium- to long-term growth scenario. With the increasing presence of instant noodles on store shelves overseas, many overseas investors have shown interest in the product characteristics and growth potential of the Instant Noodle Business, and we are seeing a solid response to our efforts.

In FY 3/2025, we conducted over 400 IR-related interviews, more than 80% of which were with foreign investors. In addition to participating actively in conferences and other events sponsored by securities firms, we also hold distinctive IR events, including meetings with outside directors hosted by the Company and tours of our domestic and overseas business locations. In recognition of these proactive efforts, our ranking in the food category of the Awards for Excellence in Corporate Disclosure, published annually by the Securities Analysts Association of Japan, has risen from tenth to fourth over the past three years.

We will continue to bring visibility to and communicate the growth potential of the NISSIN FOODS Group in a clear manner, seeking solid profit growth to meet the expectations of our shareholders and investors.