Ajinomoto Co Inc
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Ajinomoto Co Inc
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Hello. This is Nakano. Thank you very much for taking your precious time to attend this conference call. We thank you very much. Now without further ado, I would like to use the PowerPoint slide that you may have in front of you and begin my explanation.
First of all, if you can go to Page 3. Here, we have the forecast for the full year. So there are 4 bullet points. I will later explain this in more detail later on.
Now moving on to Page 5. On the bottom right, you see the digest of the first half results for fiscal 2022. And in the first half, we achieved an increase in both sales and profit. In all segments, we are expecting an increase -- sales increase for the full year. Third bullet point, the business profit was revised upwards to JPY 120 billion. ROIC is expected to be 7.6%, making a steady progress towards our medium-term target. Operating cash flow is expected to be more than JPY 400 billion in the 3-year period, and that is the progress that we are making so far. Lastly, for shareholder returns, we are expecting an increase in -- dividend increase from previously JPY 44, which was revised to JPY 48 now.
Now moving on to Page 6. Here, this is an overview or summary of the first half results. Compared against our initial projection, the recovery of the eating out business from COVID-19 has been slower than expected. And also, there was also higher than expected surge of the raw material and fuel prices. However, overseas Seasonings and Foods and overseas Frozen Food, Functional Materials, Bio-Pharma Services and Ingredients, these core businesses have achieved a solid organic growth. And therefore, we were able to achieve an increase in profits overall. If you compare with the numbers before COVID-19 in fiscal 2019 in the table below, I think you can see that we have been successfully controlling the SG&A at proper levels.
Next page, Page 7, please. This is the flow chart, the waterfall chart. As you can see there, including the unit price increase, we have been able to achieve an organic growth, and thereby, we were able to achieve a sales growth, which -- in the green box, and then that led to GP expansion. So if you look at the box on the top, the -- on a net basis, we were able to absorb the JPY 2.5 billion increase impact of the fuel charges and raw material cost. And also, there was a JPY 3 billion impact of logistics costs increase, we were able to successfully absorb them and achieve an increase in profit.
Next page, on Page 8. This is the results by segment. The Seasonings and Foods and Frozen Foods, they are still in the process of implementing countermeasures through price increases, and therefore, they recorded a decrease in profit. However, due to the growth of Health Care and Other business, we were able to achieve a profit growth overall.
Next page, on Page 9. These are the pressures -- expected pressure from cost increases and the countermeasures against them. Here, as for how we look at the future direction, the fuel and material cost increase, those high prices are expected to continue into fiscal 2022. That's how we view it. In this environment, we will take a proper price increases and counter measures in a very agile manner and also properly control our costs so that we can achieve and reinforce our business structure.
Next, on Page 10. If you look at Page 10. If I -- these are -- this chart explains what I just explained verbally. And in the last 10 years -- actually, if you look at the upper part, you'll see the weighted average of the main and sub-fermentation raw material prices. The graph is evident that the recent surge in the raw material prices and fuel prices is the highest level -- is the largest level in the last decade.
Temporarily, we are expecting to see an impact on the Seasonings and Foods business, as you can see from the bottom chart there. And if you look at the far right, at the curve there, the GP ratio -- the BP margin is expected to come down. The BP margin expected to come down for one -- for a short period of time. However, the absolute amount of BP will be secured at a certain level. And because we have been increasing prices in the major markets, so the direct impact will be minimized. And over the longer term -- over the medium term, if you look at the curve for the last 10 years, the BP margin we -- I think we'll be able to come back to the growth trajectory of the BP margin.
And then if you look at Page 11 on the next page, one of the factors that will be supporting this is the bulk business. We are contracting the size of this business and the MSG part there. This is one of the theme of our structural reform efforts. So the Umami seasoning for processed food external sales has been contracted over the years. So -- by doing so, I think we shall be able to establish structure that will allow us to adjust flexibly to the inflation.
On Page 12. On Page 12, we have consolidated the profit margin, as it is shown on the line graph. On a longer-term perspective, the most important point to increase ROIC is the enhancement of profitability. As a whole, through the structural reform, and we have been reducing the bulk business so that we can make up for the impact coming from higher prices of raw materials and ingredients to the level of more than 10%. The BP ratio as a whole is coming up to that level. This fiscal year, we will see some decrease, but still we can keep double digit ratio.
Please look at Page 13. This is the forecast. In the second half, there will be an impact of the higher cost of raw material and fuel. So the operating environment remains very tough. But we will continue to offset that impact by increasing prices as well as the aggressive sales policies. And we are committed to achieve organic growth. And that will lead us to the further growth for the next fiscal year and onwards.
Next page, Page 14. It's by the factor and the cascading view of the chart. So the higher the price of raw material and fuel and food ingredients and the net impact is minus JPY 5.5 billion. But in the initial forecast, it was JPY 1.8 billion. And please look at the bottom, and that is the logistics cost increase JPY 8 billion partly due to increased sales. In the initial forecast, it was JPY 3 billion. So there were some changes, unexpected changes.
But we will be agile to respond to any changes. And we are -- we have been able to act that way so that we can continue organic growth. And as to increasing prices, it was JPY 7 billion in the initial forecast. And now it is at JPY 11 billion level. So this shows our commitment to increase the other prices so that we can increase profit this fiscal year.
Next page, as to Seasonings. S&I for Solution and Ingredients at the center, there will be some negative impact from the higher cost, especially the price negotiation for the next fiscal year with large wholesale customers that will happen. And we would like to utilize such occasions to raise prices. And as to Frozen Foods from the second half of the year, including retail products, we will raise the prices. And in February, we announced the price increase for the domestic retail products. So such continuous policies that will offset and make up for the impact coming from higher costs. And such initiative will fully contribute to the profit and growth in fiscal year 2022.
And next, the assets and liability. The total asset is on the increasing trend. in April, the acquisition of the animal nutrition business has been completed and also the control of the cash and deposit, that is in control, and we are making steady the progress to make our asset more efficiency.
And next, the cash generation, next page, on Page 17. Albeit some of the fluctuations year after year for fiscal year '21, it will be JPY 163 billion or so, the same level as last year's. That's the operational cash flow on a creation level. But because of some supply side issues, we are accumulating more of the inventory. So against -- but that will be some negative impact.
And as to the strategic investments, as to core business, we will focus our investment and also we are progressing shift in investment from tangible assets to intangible assets. And with that, we'd like to enhance our corporate value.
And today, I will not go into details, but the -- [indiscernible] Nishii-san that is going to explain about the second half of the presentation, namely the accelerated growth in electronic and the other devices. And we are accelerating the CapEx other initiatives, given the status of our customers.
And now Page 19, the KPIs. As the important management indicators, improving and ROIC at 7.6% without structural reform cost, it will -- it is likely to exceed 8%. So steady progress here as well. It is more than JPY 125, that is the level that we target at.
Next, shareholders' return. As to share buyback, it's in progress. As to dividend, we were scheduled to pay JPY 44 per share. But given the net income status and cash flow status and the other forecast for next fiscal year and onwards, we would like to raise it to JPY 48.
Next, I'd like to go into just one page, namely Page 22, which is on -- we've also touched upon next -- tomorrow, actually. So the results of the first half and the forecast for the second half. For 2022, KPI, especially ROIC, organic sales growth and unit price growth for the fiscal year '22, that we are strongly committed to these items as the management. So as to the second half of the presentation, where I would like to jump on to the other attachment.
Please go to Page 45. So I talked about the consolidated level, the profit and the profit trend over the 10 years. And this is by the business of Seasonings and Foods, there's some impact coming from higher cost as I mentioned earlier that we are increasing prices. So we can make up for that impact.
Next, the Frozen Foods, as you can see on Page 46. So in the past, after the acquisition of the North American business, there are some production-related issues that the fiscal year 2016 to '18, the BP decreased. But by cutting the unprofitable items and focusing more on profitable products, right now we are seeing some gradual improvements. And this year, we will recover to the flattish level of BP. This is before deducting the shared cost, because shared cost could make things more complicated. So without that, it is much clearer that we are making improvements.
Next on Page 47, this is the business profit of the Foods and Seasonings business. And the balance between the first half and second half are presented here of the food product business. So I think you'll be able to see the comeback in the second half in the Food Product business this fiscal year. I think as for the Frozen Foods are concerned, because we have started to implement -- decided to implement price increases for Frozen Foods. And therefore, the negative impact in the first half will be offset in the second half. However, if you look at the pale blue part, this is mainly for consumers, the Seasonings and the Quick Nourishment food. And we haven't been able to -- we won't be able to successfully offset completely, but I think the negative factors will disappear more -- mostly.
[Foreign Language]
But for Solution and Ingredients, there's a huge loss in the first half. And for businesses, we will go start negotiation with them going forward. And through that effort, we would like to offset the decline.
[Foreign Language]
And we are also raising prices, as you can see, that is the bottom graph.
Next, please look at Page 48, is Health Care and Others. The electronic devices and the: Bio-Pharma services growth -- continuous growth are our target.
On Page 49, and that is the first half results, the business profit and lower items. So the structure reform, assumed at the beginning of the year, actually there's not much progress there. But the sale of the other dormant assets -- -- idle assets are shown here as well -- included here as well.
And as to segment, next page, Page 50.
[Foreign Language]
Frozen Foods, 107%, in Healthcare and others and Other 100%. So all these segments are achieving organic growth. And also lastly, by area, if you look at by area -- by region, on Page 51, here, I think you can see that for Seasoning and Foods, other than Japan, every region is achieving an increase in sales. And for Frozen Foods, other than Japan, Americas, EMEA, they have recorded an increase in sales. And for business profit, Seasonings Foods for Asia, they have come back to profitability or increase in profitability in the first half already.
And -- the last point, which is frequently asked. So there are 2 additional materials that I have attached there in the appendix. One is about the A4 side document, which shows the overview of the financial results. And if you look at Page 3, you'll see the segment information by region. And in the bottom, you'll see the overseas sales in the local currency basis.
Just important highlights here. As I just mentioned, Japan -- because in April last year, there was a significant increase due to COVID-19 and also in July last year, special sales was just resumed. So as a setback for that, Japan domestic sales has been recording a decrease year-on-year. But also this is 103% increase in revenue on a year-on-year basis. But for profits, in Japan, for the purpose of expanding market share, we have been aggressive in marketing expenses, and therefore, that resulted in a decrease in profit year-on-year of course. But for other markets other than Japan, Seasoning Foods, sales increase has been recorded in every other region other than Japan. Brazil recorded a decrease in sales. However, for Asia, EMEA, an increase in profit has been recorded.
By country, I won't go into detail. However, in the second quarter, July to September period, if you look at that Vietnam and Philippines, because of the COVID infection cases increasing, there was limitation in economic activities in these areas. So therefore, in the second quarter, these areas recorded a decrease in sales, especially, Vietnam, in August and September, the market was closed effectively or the operation hours were reduced and also there was a ration from the -- of food from the government. And also there was a law to prohibit operating factories unless the workers are staying overnight at those factories. So therefore, the operation rate was only -- utilization rate reduced to 50%.
Also for Brazil in the second quarter, negative sales was recorded because last year, during the pandemic, in Latin America, the performance was sluggish. But as a setback for that, because people purchased food, there was a setback from that in the second quarter. But if you look at the first 6 months' level, overseas overall, Ajinomoto Seasonings, menu seasoning, cooking source all these products, and all these categories achieved an increase in sales.
So because of that, in Asia, we were able to achieve a profit increase year-on-year at the end of the day. But as far as Brazil is concerned, price increases already implemented, and therefore, I think the situation will continue to improve going forward.
Lastly, there's another page in the attachment document, which shows the revised forecast for -- by segment, which is colored by yellow and green there. Just a highlight there. If you compare the second half only, and you see the year-on-year changes between the second half of the years. As for Seasonings and Foods, if you look at it, I think you'll be able to understand, if you look at the far right column, JPY 23.9 billion increase of sales and the BP was minus JPY 4 billion.
And if you look at the breakdown of that, for Seasoning and -- Seasoning has achieved an increase, Sauce and Seasonings, but when it comes to Quick Nourishment and S&I, Solution and Ingredients, those have recorded a negative business profit. Because for nourish -- Quick Nourishment, there was an increase of raw material costs. And also the soup domestic factory was transferred, and there were costs associated with that. And due to these factors, there was a temporary, a negative impact.
And also with marketing for the purpose of market share expansion, we have made marketing outlays and therefore, minus negative JPY 1.3 billion was recorded for Quick Nourishment. For S&I, for eating out industry, MSG, those price negotiation will continue to start in full scale going forward. So with that, I think we shall be able to turn around the situation for S&I.
And the other thing, the negative factor, Bio-Pharma Service and Ingredients, if you look at that, minus -- plus 6.9% increase in sales for Bio-Pharma and Services & Ingredients, but BP was minus JPY 1.9 billion. And this was due to the amino acid medical supply. The logistic cost there was a risk factor factored in there. And especially the maritime fare, logistics fare, has increased significantly, and that impact is factored in, in this number.
That's all. Just briefly, that was my explanation. Thank you very much for your attention.
Thank you. Now we'll move on to Q&A session. The first question from Nomura Securities, Fujiwara-san please.
Good evening, my name is Fujiwara from Nomura. So as for the second quarter, I have a question about Healthcare. The profit margin is so high for the Bio-Pharma Services year-on-year, it is at 19%, up 10 percentage point, or 48% for the specialty -- the chemicals. And in the second half, the logistics costs were high, but what is the momentum? Could you please talk about the trigger and driver for the strength for the Specialty Chemicals may be because may be because of the inventory which paid some play in this -- the numbers. Could you please elaborate on that?
Thank you for your question. This is not really a perpetual trend. There were some seasonal factors behind it. That said, as to electronic devices, on the customer's side, electronic materials. And when we look at the demand of the customers, if you look at the presentation materials, from 2020 to 2024, the CAGR was about -- is 13%. Now it is going up to 15% level. Especially in the second quarter, the amino acids and the electronic materials, there were some supply chain issues.
So our customers tend to keep as much inventory as possible, will place orders earlier than usual. That's our understanding. That's what is happening. And that momentum, I don't expect that momentum continues through the third quarter -- fourth quarter. But when you look at the forecast for the second half and compare it with the previous year, I think it's visible that the growth will continue.
Just one thing as to Bio-Pharma services, I mean, assets CDMO and for the other pharmaceutical purpose as to sales, which are revised upward -- Could you please talk about why, talk about the background of that upward revision?
Well, for one thing, pharmaceutical and food use amino acids, the demand under the COVID environment continues to be strong. So the good shipments level, especially for pharmaceutical use, amino acids, for COVID and non-COVID included, for pharmaceutical-related shipping is very good. And as to Bio-Pharma services, there are some seasonalities when it comes to shipping trend.
Well, usually, it -- shipping increases second half of the year. But this year, we saw increase in shipping in the first half. And for the second half of this year and onwards, we are receiving orders steadily from our customers. So the good trend, we think, will continue.
The next question. This is from SMBC Nikko Securities, Mr. Takagi -- Ms. Takagi.
This is Takagi. Thank you very much. I would like to hear about the overseas Food and Seasonings, especially, I do understand that there is a trend for demand. So I would like to ask about the marketing expenditures, which is quite aggressive. So your strategy -- the result of strategic marketing spend, will that become visible in this year? Or will that become visible next fiscal year? Can you talk about that as well?
Yes, certainly. I would like to talk about your question, demand after the price hike. Yes, for 2 straight years, we have raised the prices like in countries in Brazil. In these markets, because -- despite the significant price increases after August, the quantity has not come down significantly. That's what I heard.
And also for Southeast Asian markets, such as Indonesia, the Philippines, the mainstay product prices are now being raised. And as a result, I think you -- I think that will eventually will lead to sales increase for us. So I believe we are making a steady progress. For one thing, our marketing initiatives and activities have been implemented in parallel, and that's the reason why we have been able to manage this successfully.
And the effect of price increases -- therefore for this year, I don't think we will have a full year contribution from these price increases this year. But on the other hand, in the home, there are people cooking in home and people eating at home, those opportunities in the recent months have not seen any significant reaction in the recent months. Of course, the eating-out industry is gradually recovering. But the eat-at-home demand has not significantly plunged either. So therefore, I think a certain level of in-home dining will continue to be there.
So in that regard, this is a business opportunity for us. So we think we shall be able to achieve a proper organic growth. We have to achieve a proper organic growth. And therefore, that's the reason why we have been aggressive in making marketing outlays.
In the second half, you are projecting an increase. I think you can calculate that easily that we are expecting even higher marketing spend. But this will be adjusted and controlled, keeping an eye on the sales trend. But from our point of view, I think it is important that we make -- we achieve organic growth this time around and then so that we can reap the benefits of the price increases from next year onwards.
Regarding the price increase, you talked about that the price increase benefits will become more visible next year, and that will result in a profitability improvement. But next fiscal year, there might be some elements continuing for the cost increases. Isn't that the case?
Yes, certainly.
So can you comment on that?
Yes, certainly. We have to anticipate that there's no choice rather than anticipating that for the next year as well. Because for the cost -- if that results in a plunge in the economic conditions or the economic state of the economy, that will have an impact on the consumption. But at the current moment, we see -- we foresee that the fuel and the raw material costs will continue to plateau or even increase. So I think we have to implement the necessary price increases going forward. That is the view of the company internally at the point.
So in line with the cost increases, you are looking into continuous price increases?
Yes. This time around, I think you saw the graph earlier. The -- this is the highest price surge in the last decade, or the cost surge in the last decade for the fuel and raw materials. So we have to take proper measures at this point. Otherwise, we won't be able to improve our profitability.
Next question is from Saji-san with Mizuho Securities.
Healthcare and Others, I'd like to have a clarification about the sales and the profit. For sales, especially for Functional Materials, second quarter alone, the sales went up by 39%. And including that second half that there was an increase of 20%, including inventory, the CAGR is around 15% up until 2024. So a bit of a slowdown or maybe not so different from the traditional numbers.
What -- so on Page 37, there is some illustration, is there any particular factor for the big jump in the second quarter? Any element which continues into the second half? And for the profit, Bio-Pharma Services, the profit went up by JPY 2.5 billion and the revenue JPY 2 billion. So what is the relationship between this -- the growth between revenue or sales and profit?
Well, first of all, Bio-Pharma Services, the second quarter -- the profit margin went up. So this is due to the high value-added products, especially in Japan, the sales increased. Shipment increased, and that pushed up the margin.
As to Electronic Materials, especially Functional Materials, it's true that in the first half of the year, the shipment trend was strong. But this is because of the supply side problems, customers are becoming more prudent and that's why we had the more shipments. And partly, there are some shipments for PC are also going very well. That's another factor, I think.
Understood. So are you saying that the -- as to Bio-Pharma services in the second half, that the -- what will be the difference between the second quarter and the second half? The CD -- CTM was particularly strong in the second quarter. What is the difference between second quarter and the second half of the year?
As to Bio-Pharma services, the big driver for profit is Belgium, India, in other words, low molecular-related business. And the oligonucleotide business in Japan, especially for this Japanese business, once there is a shipment, the high profitability comes with it.
And in the second half, we do not expect such big shipment. And as to nucleotide, it seems that the pipeline is very good as well. So it's not realized yet. But once it is, then the profit will go upward. Well, we would like to grow this business steadily and there is some competition. So -- as to our production method, we'd like to have more understanding from our customers so that we can get more business. That is our goal.
So the second quarter I understand that you wanted to focus on some particular muscular problems. And would that continue or not?
Well, that is not disclosed.
The next question is from Goldman Sachs. Yamaguchi-san, please begin your question.
I am Yamaguchi from Goldman, hello. I have a question relating to your food business. The full year raw material forecast was JPY 5.5 billion. Therefore, I think the negative impact will likely increase compared to the first half of the year. If you look at Page 47, the price increase effect will kick in areas other than S&I. So how should I interpret this? That's the first question that I have.
Yes, certainly. For 1 thing -- it's for 1 thing. I talked about the material, which is highlighted in yellow and green, which is in part to revised forecast for by segment. If you look at the business profit column, Seasonings and Quick Nourishment and Solution S&I, you'll see those columns. And for Seasoning and Sauce, if you compare first half, first half, that's negative JPY 1.7 billion year-on-year between. So that's the fourth column from the right, year-on-year changes.
But then if you look at the year-on-year changes from between the second half, it's up JPY 1.4 billion. So this is -- so although we are not completely offsetting, but I think through the price increases, we are making a turnaround.
So I do understand how to read the numbers. But on Page 14 or Page 7, the raw material-related explanation, it seems like you are forecasting the trend to deteriorate in the second half. But the price increase effect will kick in, in the second half. So that's something that I wasn't able to understand.
Well, in the first half, we have started implementing the price increases. So the price increase is not so significant in the first half. But in the second half, all these price increases that have already been implemented will start to kick in. So we'll see those impacts for the 6-month period of the second half. Did I answer your question?
But the net impact, I think the net impact, I think, is subtracting the pricing -- price based impact. So that's something that I think that's difficult to understand here. But the net impact -- the net impact has not been able to cover it by the price increase. So that's after subtracting the pluses and minuses. So one factor behind it is that the sales increase. And also, the core business, which has higher profitability, higher -- higher profitability product mix are the levers that we are using to offset the decline.
So in the unit price, you are still in a negative territory, but you will be increasing the quantity and you are improving the product mix to cover up overall?
Yes.
Especially for frozen Food. In the second quarter, you're still having a year-on-year decrease in profit. So in the second half, are you still really able to achieve an increase of JPY 2.1 billion year-on-year. But so I think that presumption was to optimistic.
Yes, I'm sure that the plan is not easy, especially for frozen food, especially in North America, in all products. The major retail products have been increased in terms of the market price that was already announced in October. So with all these measures, I think we shall be able to make a come back there and offset the decline. Of course, in the first half of the year, we were able to achieve an increase in sales. But due to the price increases, weather can further increase the sales in the second half onwards is something that we have to work on as a challenge. But I think this is a critical moment for the frozen food business. So we would like to do our best.
On Page 47, the Frozen Food in -- in Americas, you said that this is was the April to September period. But in the October, you said you see the price increase?
The price increase in the first half was for businesses, for professionals. And in the second half, you are using -- you are going to raise the prices for the households. Yes, that's already announced in October.
So what is the range of the price increase? What is the percentage of price increases decline for this year?
That's something that we do not disclose. So sorry about that.
So Kawasaki-san from UBS Securities.
My question is kind of a continuation of Yamaguchi-san's. So the net and the gross -- the impact of the other higher costs, that's my question. So in the first half, because we had a high cost, the total of JPY 7.9 billion increase on the cost. But the net impact was JPY 2.5 billion, so JPY 5.4 billion is offset by pricing and the product mix. And the unit price overseas was JPY 4.8 billion. Am I right to understand that way?
Yes, you are.
So the second half on a gross basis, JPY 8.6 billion, because JPY 5.5 billion is the full year net and the JPY 11 billion is for the unit price of the overseas. So the JPY 8 billion to JPY 9 billion cost increase. But the JPY 6 billion or so of the unit price can offset a little bit. But on a net basis, there is some -- the impact -- still impact coming from the increased cost.
You're right. Yes, the numbers are correct, too. So next year, from the middle of the second half of this year, you -- there is an impact of price increase. And if it is plateaued at a higher level, then in the next fiscal year, we can -- even with the similar level of the cost increase, the similar level as the second half of the year, the unit price effect will be larger, and there will be the better offset between profit and the other costs.
Yes, especially for the other businesses, S&I business, restaurant business, the price negotiations will start. And that will go into effect in January and afterwards, may be at April and afterwards. In any case, not this fiscal year. So the marketing cost will be reflected.
So for the profit increase of foods next year and onwards, you will work this fiscal year?
Yes. As you can see in the materials, last year, we could not do much marketing, and we lost some share for some products, both at home and abroad. So in the first half of this year, that's what we have been focused on to do by doing more marketing, to using more marketing budget. [Gyoza] and coffee being aside, we are recovering the share for other products. And the increase in the home eating -- eating at home will continue and will push up our profit.
Next, we'll take a question from JPMorgan, Yoshida-san.
My name is Yoshida from JPMorgan Securities. Thank you very much for nominating me. I also 's question relating to CDMO. Previously, it was mentioned that in the nucleotide pharmaceuticals, you had made a comment. But as far as the first half is concerned or maybe the second quarter, which has made a greater contribution to your business performance?
And in the previous IR session, in the beginning of the year, you had an IR day, and you mentioned that this could be a growth driver in the future and also that will generate pharmaceuticals, are they making progress as planned? That's my question.
For details, it's very difficult to disclose any detail further than that what I just mentioned earlier. And as far as the first half is concerned, in Japan, nucleotide pharmaceuticals, shipment made progress, and that resulted in an improvement of BP margin.
And for the future, especially the oligonucleotide business, of course, we are moving ahead with the negotiation with customers. And therefore, I think the performance is making progress in line with our expectation. As for the risks, the nucleo -- the U.S. antigen drug -- antibody drug, I think we have a very good confidence in terms of technology. But in the United States, the shipment has not recovered after COVID-19. It has not completely recovered to the pre-COVID-19 levels.
Therefore, including the impact of COVID-19 in the future, we have to keep a close eye on how it unfolds in the future.
I understood. So you are not expecting a huge amount of shipment in the second half because of that impact. Is that right -- correct?
Yes, that's one of the factors, and we took that into consideration and developed the projection for the second half of the year.
And then for the next year, I'm not sure if it goes up to the first half level, but I think you shall be able to achieve a good, strong sales, maybe higher than the second half of this year in the next fiscal year as well?
Well again, we are going to develop a plan for next fiscal year from now onwards. And -- on Page 23, I think this is quite rough. So I think it's very difficult for you to understand, but organic growth -- sales growth, especially in the health care area, we would love to achieve a double-digit growth next fiscal year onwards, and I think that's quite feasible.
Sorry, but time is running up. So the next question is the last question. Miura-san from Citi Securities.
My name is Miura. Today, I would like to be a bit kinder than usual. I just know some numbers. Overseas business, international business, the deli business, Ajinomoto and the flavor and the menu-specific seasonings and cooking sauce. So for each of these segments, could you please talk about the growth in deeper though.
Sure. In the first half?
Yes.
Ajinomoto international business, right?
Yes.
At a high single-digit growth. The flavor seasonings, low single digit. Menu-specific seasonings, high single-digit growth. Especially for Ajinomoto, last year, where the restaurant business was not doing well at all. And in many Asian countries, up until July and August, there were more animal infections. So the recovery is yet to come.
But it's not 0, while last year, it was almost 0. And you can at least take out some foods. And so we are seeing some recovery, so some increase for Ajinomoto.
What is the composition? I mean, the growth in cooking sauce?
Just a minute, please. For cooking sauce EBITDA declined. I mean I do not have details here, especially in the first half of last year. In the Philippines, the sales was so huge. So as a reaction to that, some decrease. So last year, it was -- the growth was 150%, or more than 150%. So as a reaction to that, there was some decrease.
And as to composition, hold on a minute, please. Just roughly speaking -- roughly speaking, Ajinomoto being 6 -- I mean Ajinomoto being 1, the flavor seasonings and menu-specific together equal the Ajinomoto.
So this year, it's okay. But the next fiscal year and year after that?
Because the COVID-19 will come to its end, sooner or later. And when that happens even when we add infection-wise, there's some headwind for Ajinomoto, you can grow the other flavor of the Ajinomoto and seasonings. Significantly, if you can do that, and that will contribute greatly to sustainable growth.
So I think it's a balancing act between the tailwind and the headwind. I think we are thinking about it. So next year and year after next, once the COVID-19, that is, subsides, then how are you going to react to that change.
Well, it's true some temporary reaction will happen. When the restaurant business recovers, the consumption at home will decline. At some point of time, we assume that will happen.
That said, I think Nishii-san will touch up on that tomorrow. According to some data, the health consciousness, reduced salt intake, for example, such health consciousness is getting higher, including EMs. So that means that this shift from restaurants to home eating will remain. It's not that everyone goes to restaurant and stop eating at home.
So to some extent, eat-at-home trend will stay, will remain, and that will be an addition to our performance. As Miura-san said, it is our strength, the flavor seasoning, so menu-specific seasonings should grow, we should grow these businesses. And that will be the shortcut for us to improve our profitability. And also the high value-added products and reduced salt intake-type products, we will heighten -- increase the share of such products gradually so that we will be more resistant -- resilient to upcoming changes once COVID subsides. And we are in the discussion with the business side people.
So in the first half of the year, the health consciousness, reduced salt intake were drivers and that will remain the drivers.
Can you -- could you please disclose the numbers for the second half and the next fiscal year, based on such the health consciousness trend?
Well, to be honest with you we are not watching all kinds of data. But we know that you are interested in information of that sort. So we will make our efforts to disclose that -- such information.
For the marketing, the cost or budget, what is the breakdown between the Japan and the international? For example, marketing on the international level, will it increase? Am I right to understand that the marketing budget for international business will increase?
Especially in recent 2 years, we could not make sufficient investment in the marketing in some countries. So we would like to do a better job to be more competitive. That said, as a whole, SG&A ratio against BP or sales unit price, using such metrics we would like to control the marketing budget. But yes, there will be a shift more towards international business.
But maybe JPY 120 billion in your plan is based on the marketing, the expenses that are rather huge?
Well, compared to the year before last, it is well controlled. But last year, it was kind of a special year. Thank you very much, but use your budget wisely.
Thank you very much, ladies and gentlemen. With this, we would like to finish the Q&A session. Finally, Mr. Nakano have final word to say.
This time around, especially up until last year, in the second quarter, we were not able to answer to the question what is going to happen next year. So this time around, internally, we started a discussion earlier to talk about the business plan for next fiscal year. So the division heads, we had discussions. We also had a discussion at the Executive Committee of the company. And as a result of these undertakings, the structural reform targets for the 3-year period, we have achieved the consensus that we have to definitely work on this.
So please expect for the future developments. That's all for me. With this, we would like to finish the conference call for today. Thank you very much for your participation. Goodbye. Thank you.