Mizuno We think that the board has an adequate skill set and is balanced overall, as reflected in quite rigorous board meeting deliberations. On the other hand, I do not feel there is enough time for discussion compared to the amount of material we have to cover, and this is an issue.
Yamaguchi I get the feeling that issues that were not visible during the period of strong performance up until a few years ago are becoming more apparent these days. I also agree that there is not enough time for discussion. We should reserve time to encourage more extensive, in-depth discussions, as well as to encourage more rigorous deliberations.
Ogasawara I think board operations have improved in many aspects, even if the composition has remained largely the same. This improvement is the result of dialogue with stakeholders, and as an outside director, I will continue to speak up about areas needing improvement.

Yamaguchi While we do discuss the cost of capital versus return at board meetings, it is also true that we talk about returns over a long time horizon. Not only are investments larger than those of other companies in the industry, but such investments are not immediately profitable and involve a high degree of uncertainty. We must continue to monitor during the interim stages, including measuring the effectiveness of investments, and even stop investments when they are not worth the cost of capital.
Ogasawara Of course, monitoring is important, and we won’t deny that the investments themselves are for new businesses and other ways to create the new value of balanced health and deliciousness. Looking at the increase in investments over recent years, we understand that many plants were built originally in the 1970s and 1980s and now require renovation. We also believe that automated operations at the Kansai Plant, for example, represented a reasonable up-front investment as a means to cope with the coming labor shortages.

Yamaguchi We understand that some might say that TOPIX itself should be used as an indicator tied to consolidated performance. However, relative TSR compared with TOPIX Foods is currently below 1 times, and PER is also at a low level. The first order of business is to produce solid short-term results that signal growth, and we will provide management with direct feedback accordingly.

Mizuno We recognize that the biggest challenge in global marketing is the business in the Americas. Particularly problematic is the fact that profit margins are declining, mainly due to the fact that sales methods vary widely from region to region. The company must balance strengths and weaknesses in the U.S., among other countries, to counter competitors who are increasing their presence. We plan to name a general representative soon as part of establishing a more effective governance system.
Ogasawara As an external factor, the COVID-19 pandemic was a positive for the business in the Americas in the recent past. The board of directors is engaged in rigorous deliberations regarding how to fundamentally strengthen the system there. Speaking personally, I think we should consider adding non-Japanese personnel in key management positions to shorten the distance between the market and management. I think this should happen not just for the U.S., but also for managing the Overseas Business.
Yamaguchi The board is aware of investor concerns about the business in the Americas, and we are monitoring the performance of other companies in the same industry that have expanded into the region. I do not think the analysis of explanations from the company has been sufficient to make us comfortable with the current situation. Strategies based on an incorrect analysis will not succeed, so we will continue pointing out the need for a more accurate analysis.

Ogasawara Demand for instant noodles increased during the COVID-19 pandemic. Volume growth continued, even after price revisions, particularly in the U.S., resulting in higher sales and profits. At the same time, it is true that the company faced difficult times before that period. We must consider ways to make governance more effective not only in the U.S., but also for other overseas operating companies. This is true for human resources development, as well. We have a number of options, including hiring locally or dispatching people from Japan. The topic of the Overseas Business comes up at every board meeting, and these are always tough discussions.
Yamaguchi We must have more in-depth discussions, including an analysis of each market and the current state of the business in each. One challenge shared by the CEO and leadership is the lack of depth in the pool of human resources responsible for the Overseas Business, particularly at the management level. We expect this situation to improve gradually in the future.
Mizuno Human resources are essential to strengthen the governance of the Overseas Business. Of course, the business needs production plants, offices, and other facilities, but it is the people who actually do the work. Their qualities, abilities, and passion are what make things happen. We intend to discuss this situation in detail, including talks about how many employees should be placed in each region.