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Satoshi Masumura President and Chief Executive Officer

We would like to express our heartfelt thanks to shareholders and investors for their patronage.

Business Environment and Results for the Second Quarter of the Consolidated Fiscal Year 2018

During the second quarter of the consolidated fiscal year under review, consolidated net sales rose 7.5% year on year, to ¥76,912 million.

Looking at the business segment, net sales in the flavors business rose 8.6% year on year, to ¥46,441 million, due mainly to the sales increase of the vanilla related products in the German subsidiary. In the fragrances business, net sales rose 4.4% year on year, to ¥19,380 million, due mainly to the strong performance of various fragrance products in the French subsidiary. In the aroma ingredients business, net sales rose 22.3% year on year, to ¥6,880 million due to the strong performance of menthol, the mainstay product of this business segment, which was influenced by its tight supply and price increase in the market. In the fine chemical business, net sales decreased 9.6% year on year, to ¥3,489 million, due mainly to the timing of recording sales in of pharmaceutical intermediates. In the other business, the real estate business, net sales increase 0.1% year on year, to ¥721 million.

Business Forecasts

The Takasago Group has been implementing the new mid-term management plan "One-T" for the period from the fiscal year 2018 to 2020 with the aim to become a leading flavors and fragrances supplier in global markets under the basic business policy of Customer Satisfaction, Business Growth Strategy, Technological Innovation, Improvement of Profitability and Human Resources Development.

For the fiscal year 2020, we forecast net sales will amount to 170 billion yen and operating income ratio will be 5.2%.

We would appreciate your continued support.

Satoshi Masumura
President and Chief Executive Officer
November 2018