MizunoI believe there are three factors behind why ROE and profit margins are failing to progress as planned in recent years. First, we are making capital investments on a considerable scale for future growth, but the results have yet to materialize. Of course, we understand that, for a food company, investment is not something that immediately translates into higher sales. Second, the U.S. business, which we had expected to drive growth, has fallen into a difficult situation. Third, accelerating inflation at home and abroad has pushed up costs. On top of these factors, new risks such as the situation in the Middle East have recently emerged, so we are recommending that management defer any investment that can be postponed and focus resources only where they are truly needed.

SakurabaWhen the plan was formulated on the assumption that the pandemic-driven surge in demand would continue, we outside directors agreed with the logic. I recognize that we should have taken a more cautious view. For future investments, rather than building plans on the premise that growth will keep rising, we will place importance on carefully determining what should be done and at what scale.

SakurabaAs for capital investment, with construction costs continuing to soar, we recognize that improving productivity through measures such as plant consolidation is an urgent issue. Accordingly, we are devising ways to raise productivity while holding down investment. Regarding the Kanto Plant, which is in a high-risk location and increasingly aging, we have already acquired land for a new plant, but we need to determine the appropriate scale of investment in light of current business performance.

MizunoWe see the U.S. business’s difficulties as stemming not only from sales-side issues, such as insufficient shelf space, but also from management-side issues. Rather than the previous approach of leaving overseas businesses to local personnel, we have been discussing how essential it is for people with strong management capabilities to oversee operations, while also understanding regional differences. As a result, we established the Regional Headquarters of Americas (RHQ-Americas) to oversee the Americas, and moved to a structure in which Mr. Yokoyama, former CSO, manages the North and Central America region. We are currently backing him up from Japan as we monitor progress.

YamaguchiI feel that a large part of the U.S. business’s challenges came down to a shortage of human resources. Beginning to strengthen our talent by dispatching Mr. Yokoyama and sending marketing professionals who had been successful in Japan was a major change. The addition of CHRO Hamase, who has led global HR reform at major companies, has also had a significant impact, and I see things moving in a positive direction.

SakurabaWe saw a problem in the U.S. business where sales, market analysis, marketing, and development were all operating in a disjointed way. Since the establishment of RHQ-Americas, things have been moving at a fast pace.

YamaguchiWhile we are capable of analyzing our own operations, we struggle when trying to analyze the market, particularly the competitive environment. We see this as a challenge and one cause of the gap between guidance and results. Although our capabilities are improving compared with last year, I feel issues still remain.

ShimamotoSince I introduced an analysis team from a company where I previously worked, the volume of data used for market analysis has increased dramatically and data-driven marketing is being realized. By repeatedly checking the rapidly changing consumer preferences, we intend to raise the precision of our market analysis. Going forward, the question will be how quickly NISSIN FOODS HOLDINGS can deploy overseas the marketing capabilities it has cultivated in Japan. Results are already beginning to appear in Brazil, which I find encouraging.

SakurabaWith the domestic market shrinking due to the declining birthrate, we cannot move up to the next stage unless we raise the overseas ratio from the current 40% to 50% as quickly as possible, and eventually to 60–70%. To do that, we must craft strategies rooted in the characteristics of each country.

MizunoWe are currently focused on rebuilding the U.S. business, but we have not lost sight of other regions. China, Hong Kong, and Asia are likewise generating profits under an RHQ structure, while the Middle East and Europe are improving little by little without any drastic change in approach.

YamaguchiStrengthening our overseas business requires human resource development, above all. I have told CHRO Hamase that I want her to create a mechanism for developing people who can run businesses firmly rooted overseas. Specifically, we are working backward from our “to-be” organizational vision to build and implement succession plans region by region.

MizunoI see two sides to sustainability: the sustainability of the global environment and the sustainability of the business itself. On the environmental side, we are advancing various initiatives under our long-term environmental strategy, EARTH FOOD CHALLENGE 2030. On the business side, our thinking is to steadily enhance corporate value by generating stable earnings under management that takes a long-term perspective.

SakurabaAs an outside director, I have joined the Sustainability Advisory Board and report its findings to the Board of Directors. I recognize that ESG measures, even if they raise costs in the short term, will lead to cost reductions in the future. For example, the emissions trading market now becoming more popular requires reducing Scope 1 and 2 emissions and preparing data, which are steps that entail higher costs now but pay off later. In addition, in the post-SDGs era beginning in 2030, well-being is said to become a major pillar, and I expect the likelihood will rise that our KANZEN MEAL will come into full bloom.

MizunoCurrently, seven of our company’s ten directors are outside directors, and five of them are independent outside directors. The international perspective and insight that directors from trading companies bring are especially valuable, and I believe the Board is highly effective. At the same time, the point that the independent ratio does not reach a majority is a challenge we should take seriously, and we will examine Board makeup thoroughly at the Management Advisory Committee, which I chair.

SakurabaLooking back at the Board’s discussions so far, remarks by directors from trading companies have often been meaningful, and in some cases they even prompted us to hold off on a resolution. From that experience, I personally recognize that there is a difference between the form of independence and a substantive contribution to corporate value. That said, the point you raise about the equity market’s view has given me a renewed awareness of the issue.

Mizuno The founding family manages with a long-term perspective, but it is the outside directors’ duty to act as a brake, checking and correcting course if things go too far. At the Management Advisory Committee, we discuss important agenda items in depth, including executive remuneration and succession plans. The discussions are led primarily by independent outside directors, and I believe we are exercising a certain degree of oversight.

YamaguchiOur succession plans define the target posts and, for each post, establish a staged timing for promotion, for example, for candidates who are ready to take over immediately and those who could take over in the next term. This approach allows us to engage in more sophisticated, higher-level discussions.

MizunoWe also discuss succession plans at the Management Advisory Committee. We are strengthening talent measures under CHRO Hamase, so I expect steady improvement going forward.

MizunoThe secretariat that runs the Board handles things with great care, but we believe that using AI can further raise the quality and efficiency of discussion, which is why we want to adopt AI proactively.

SakurabaIn fact, the Board effectiveness evaluation included a comment that materials are too detailed, and that we may not need that level of detail. By having AI, which excels at summarizing, create focused summaries that are separate from the detailed materials, we could devote more time to discussing important agenda items.

ShimamotoIn the field of corporate operations, AI use has taken hold thanks to CIO Narita, who led the way early on, making us a leading case within Japan. Such on-the-ground knowledge should feed into the use of AI in future Board meetings as well.

MizunoWe recognize that the equity market has voiced various opinions about our business portfolio. We will continue to deepen our discussions on matters such as the parent-subsidiary listing with KOIKE-YA and the significance of maintaining the Non-Instant Noodles Business, as with NISSIN YORK, including from the perspective of how to demonstrate what makes NISSIN distinctive. For the Instant Noodles Business, too, synergies with MYOJO FOODS are being questioned. Rather than simply integrating the business, we must consider the perspective of how to leverage the brand value that MYOJO FOODS has built over many years. We recognize that optimizing the portfolio, including charting a path to profitability for KANZEN MEAL, remains an issue we should continue to discuss.

Today’s meeting included many candid opinions and was highly productive. We will take back to the Board a clear outside perspective on how the NISSIN FOODS Group is viewed in the equity market and what concerns investors have, using these outside perspectives to enhance corporate value.