Ajinomoto Co Inc
TSE:2802
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Ajinomoto Co Inc
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Good morning, ladies and gentlemen. Thank you very much for taking time out of your busy schedule to attend our business results briefing for the second quarter ended September 30, 2022. My name is Kaji. I'll be the MC. I'm from IR Group. Let me first introduce our attendees for today. Representative Executive Officer, President and CEO, Fujie-san.
This is Fujie speaking. Good morning.
Representative Executive Officer, Executive Vice President and CIO, Shiragami-san.
Good morning.
Executive Officer, Senior Vice President, General Manager, Global Corporate Division and Corporate Service division, Sasaki.
Good morning. Nice to speak to you all.
This is Masai speaking. Nice to speak to you all.
Executive Officer and Vice President, General Manager AminoScience Division, Maeda-san.
This is Maeda speaking. Nice to meet you all.
Executive Officer, Vice President, Supervision of Frozen Foods, Kawana-San.
Executive Officer, Vice President, In Charge of Finance and Investor Relations, Nakano-san.
Nice to speak to you all.
Executive Officer, In Charge of Sustainability and Communications, Morishima-san.
Nice to speak to you all.
Corporate Executive, General Manager of Global Finance Department, Mizutani.
In addition to the 9 regular members, we are joined by 2 general managers. Corporate Executive General Manager of AminoScience Division, Michael Lish.
Hi. Good morning.
Corporate Executive General Manager, Quick Nourishment Development -- Department Mori-san.
This is Mori speaking. Nice to meet you.
Regarding the 2 businesses, we'd like to address, including those 2 personnels we just introduced and because we have English-speaking attendee, when Michael-san gives a presentation, simultaneous translation or interpretation will be provided. The entire session will be 90 minutes. Today's presentation materials are posted on IR website for you to have a look. Today's session is recorded, including the QA, and will be posted later at a later date on our IR website, please be advised.
Now we'd like to begin our program. We'd like to invite Fujie-san to present forecast for FY '22 and the initiative for enhancing corporate value. Fujie-san, the floor is yours.
Nice to speak to you all. Good morning, ladies and gentlemen. This is Fujie speaking. On a daily basis, thank you very much for your continued support to Ajinomoto, and thank you very much once again to take your time out of your busy schedule to attend our briefing, and I truly looked forward to this opportunity to dialogue with you.
Well, my presentation will be shortened, so that -- because we have a huge, large number of attendees. So through the dialogue, we'd like to introduce how we are to further enhance our corporate value, to solicity your advice, that is the purpose of today's meeting. And for that, we'd like to seek your support.
Next slide, please. And this is our agenda for today. I'd like to mainly raise 3 points.
And next slide, please. Well, I'd like to convey the following 5 points. First, during the first half, we achieved increase in both revenue and profit, and they were a record high on a 6-month basis.
Number two, seasonings and Foods as well as Frozen Foods faced cost increase. During the first half, through price increase, we were unable to actually offset the entire impact with price increase, slightly lowering profit. However, the Healthcare and Others continue to grow. And thanks to the weaker yen, we were able to achieve a profit increase.
And in terms of the full year forecast for FY '22, was revised upward for both sales and profit. And with that, we decided to increase dividend and buy back shares as part of enhancing shareholders' return.
Number four, there are 3 outstanding issues, especially with the domestic Frozen Foods -- excuse me, food sustainable growth and the -- as well as the profit structure of Frozen Foods as well as Seasonings and Foods segment profitability. We'd like to further clarify the issues to accelerate the speed of measures, so that we can continue achieving the further corporate value enhancement.
Number five. Through the dialogue with stakeholders and shareholders, we'd like to further evolve our mid-term ASV initiative towards achieving -- towards formulating 2030 road map.
Next slide, please. From now on, I'd like to introduce the finance -- summary of finance results for the first half and business forecast for FY '22.
Next slide, please. And this is the summary of financial results for the first half. Revenue was up and reached a record high level, and the major segments all increased sales. Business profit stood at JPY 74.3 billion and which was a record high for the first half year basis. Without the currency translation effect, versus last year, the ratio stood at 97.1%. But it's slightly up from the previous year's 96.2%, thanks to price increase and cost-cutting initiatives, which are generating results. So we'd like to further [indiscernible] activities.
And regarding the net profit attributable to owners of parents, last year, we posted the divestment -- excuse me, the sales gain on sales of fixed assets last year, which is absent this year. So the result is up [indiscernible] 11.4%. And in terms of the changes behind the BP change, the sales increased JPY 42.1 billion, but the cost increase amounted to JPY 20.1 billion, and the SG&A had a negative JPY 17.3 billion. As a reference point, these are included in the chart.
Next is by segment. As you can see, and this will be explained later in detail, especially for the Frozen Foods.
Next slide, please. These are the factors behind the changes in main and secondary fermentation of raw materials. Currently, there's an upward pressure in terms of the prices of some of the main fermentation ingredients, which will be explained later in a subsequent slide.
And this shows cost increase as well as expense increase, and how to offset the impact. At the beginning of the fiscal year, I reported the following. Of the cost increase of JPY 40 billion, JPY 30 billion was offset at the beginning of the year. It was visible. But without certain remaining JPY 10 billion, we reported initial forecast of JPY 124 billion. That was our initial forecast. However, the cost increase, because of the weaker yen, will top JPY 50 billion instead of JPY 40 billion. On the other hand, the effect of measures to offset the impact will be increased from JPY 30 billion to JPY 45 billion. Therefore, at this stage in time, the net negative impact will be reduced from JPY 10 billion to JPY 5 billion.
And at the last portion of the impact of price increases, especially for Foods and Frozen Foods, we will further introduce price hikes after October. And regarding -- and through price hike as well as cost reduction exercises, we'd like to further recover, or ensure business profit is recovered from next year and onwards.
Next slide, please. This shows the full year forecast, which was revised upward, and we project to reach the sales of JPY 1.367 trillion and business profit of JPY 133 billion. This is the revised forecast. Even excluding the ForEx impact, we can surpass last year's results.
Next slide, please. This shows changes behind BP fluctuations, as you can see. Regarding the exchange rate, which will be further repeated at the end of this deck, but the exchange rate was revised from JPY 120 to the dollar to JPY 135 to the dollar.
Next slide, please. This shows the factors behind changes in BP by segment. For Frozen Foods, we have revised the forecast down by JPY 2.5 billion from the initial forecast, which will be explained later. Healthcare and Others was revised upward by JPY 8.2 billion.
Next slide, please. This is a list of core KPIs. In order to achieve the MTP targets, as you can see, we are making steady progress.
So the next slide is about the by segment forecast for the priority KPIs. As you can see, we are going forward towards achieving our targets.
Going to the next slide, please. So this is the progress of a structural reform. For this fiscal year, we will be reducing our asset and then conducting resource allocation, and selling our cross-shareholdings. So we have been progressing this. In this midterm business plan, we have been able to achieve our targets. By FY '25, this JPY 200 billion asset reduction, we would like to accelerate this as much as possible.
The next slide is about the progress of structural reform. This is about the structural reform about our noncore businesses, as you can see, is progressing.
Going to the next slide and onwards, this will be the initiatives for organic growth. As you can see, in Japan, for the at-home restaurant industrial-use products, each combined, we have been able to increase our sales. But the -- in Japan, the rice-related new products, which the price is stable. So we are seeing a recovery, and we are trying to transform that we could come back with new menus. Therefore, the restaurant industrial-use products, and for the eating out is recovering, and we think that inbound tourism is going to increase.
Well the next is about the Overseas, Seasonings and -- business, Seasonings and Foods business. Basically, we have a very strong brand, meaning that we are aggressively increasing the prices, and sales volume is being increased as well. So based on this market change, we have to accelerate our ratings and respond to that. And we think this is very important. I think we have become more and more capable of doing that.
So the next slide is the Umami seasonings and flavors seasonings are mainstream -- mainstay products. The headwind has been blowing towards these products. But even so, we have been able to grow these products. So by leveraging our strength, we think we'll be able to leverage our strength going forward.
But the next slide is about our Frozen Foods business. So this has been a source of concern to all of you. So in terms of progressing the structural reform, we have been impacted by COVID and inflation. The amount of BP has gone down. And the second half of last fiscal year, as you can see, it was a loss-making business. However, we have been steadily increasing the prices and improving our productivity. We are raising the portfolio and restructuring the productions. So we have been progressing these initiatives. So the first half of this fiscal year, we are in the midst of recovery.
On the other hand, further cost increase, and in the U.S., the signs of the recession is being seen. So the volume has started to go down a bit, including this condition in terms of the outlook, we have made a downward revision for the outlook for this business. So in that sense, it means that a further structural reform may be necessary. This is some -- there has been some feedback, and I completely agree with that.
So as you can see on the right-hand side, from #1 to #4, these initiatives should be solidly carried out. On top of that, further structural reform is being considered. For instance, the growth categories, the [ Asian ] categories, not all of the products are growing. There are some low profitable -- low-profit products. We are considering withdrawing for those low-profit products. And in relation with that -- so the restructuring of the production should be accelerated. So this is what we are thinking.
Well the next slide is, temporarily, the growth has been slowing down, but the market in itself is growing. That will be the [ Asian ] category. But the core -- we will be focusing on these core categories and think that we can grow again in this business.
So the next slide, as you can see, in the North American consumption is becoming polarized, and we are taking initiatives against that as well with Gyoza. So it has a high potential. And I think I have talked about that, and -- which is growing strongly overseas.
Now if you look at the -- this fiscal year, so the overseas sales of Gyoza is expected to exceed the growth of Japan. So it's growing strongly. So the overseas Gyoza has the high unit price. In terms of nutritional balance, it is very good. So by the Gyoza sales increasing, it means that it can become a growth driver into the future.
So the next slide is about the Frozen Foods -- significance of the Frozen Foods business. So let me explain again. So this will be -- has a potential to become a growth driver into the future. And in terms of the ASV, the Ajinomoto group share value, I mean by solving social challenges, we will be generating economic value. For instance, for Gyoza, it's very easy to cook and you can consume [ carbons ], meat and vegetables, and it's easy to cook and easy to consume. It means that it will lead to solve food and health issues. And this will contribute to the corporate brand. Japan, North America, specifically, the Frozen Foods brand is contributing to the corporate brand overall.
Next slide, please. So next is about the electronic materials business. Well, the semiconductor business is slowing down, and a lot of concerns are voiced about Ajinomoto electronic materials business. But from our point of view -- so the PC market has been slowing down more than expected. But as I've said before, within our company, the exposure to PC is less than 30%. 70% of our exposure is to the server and the network business. So maybe temporarily, the growth momentum may slow down, there is a possibility of that happening. But going forward, in the midterm and continuously, this electronics material business will be a growth driver and strongly drive the Ajinomoto group's performance.
So in the next slide is about the 5G situation, the 5G market is continuously going to grow. At the same time, ABF, Ajinomoto Build-Up Film, the shipment volume in terms of the CAGR is -- it's going to grow by 18% as planned. And in terms of the future demand increase of ABF is going -- expected, we have been -- we will be increasing the capacity ahead of schedule, part of the capacity that is.
Next is about the assets and liabilities. So as you can see that it is shown as here on the graph, temporarily, a net debt-to-equity ratio has gone up temporarily, but we have controlled that and have started to go down.
And we go to the next slide, regarding cash generation. Fiscal year 2022 operating cash flow is revised to top JPY 112 billion. Because of the weaker yen, our account receivables as well as inventory was increased. Therefore, our working capital temporarily plans, but this was within our expectations. So we aim to further generate cash.
Next slide, please. This is a strategic investment. As we have reported earlier, we would like to shift towards our investment from tangible to intangible assets to make it 50-50 in order for us to accelerate growth in the future growth areas.
Next slide shows the core KPI, or priority KPIs trend. And things are moving ahead of MTP. Regarding EPS, this is expected to top JPY 150. That is our forecast.
Next slide describes 2020 to 2022 operating cash flow. On the left-hand side, this is likely to exceed JPY 400 billion.
The next slide. Based on the current situation -- well, regarding the growth strategy as well as shareholder return, we revised the business profit -- make the upward revision as well as the current cash flow, the dividend will be up by JPY 10 compared to last year, and JPY 4 from the initial forecast to top JPY 62 per share. In addition, we will buy back shares amounting to JPY 30 billion, or -- which is capped at JPY 30 billion, or 10 million stocks, and this is already decided that the buyback share will be later canceled. From now on, we'd like to introduce our initiatives towards growth strategy and how to further enhance our corporate value.
Next slide, please. As I have reported earlier, through the organic growth of the existing businesses and the business model transformation as well as growth driven by 4 growth areas and integrating Food and AminoScience, in 2021, the profit generated by Food and profit generated by AminoScience used to stand a 2:1 ratio. But the food business grew 3% to 5% while AminoScience planted seeds, or is planting seeds, which are growing to bear fruits, and AminoScience will continue to -- continue its double-digit growth. So by 2030, we'd like to make the business profit ratio coming from food as well as AminoScience to 1:1, which will be a unique food company. And in 2022, the forecast -- once we achieve the forecast, then the profit generated by food will top 60%. The remaining 40% will come from AminoScience. So we are even one step closer to the 50-50 ratio.
Next slide describes the speed up and scale up portion. Under the new management system, this -- under this slogan of speed up and scale up, we made our progress. In the 100-day plan, starting from April, we increased -- even accelerated the speed of management, especially with the war in Ukraine and the weaker yen or exchange rate impact, we were able to flexibly deal with the situation and visualize the current situation in order to make us a speedy management decision. So we were able to change gears under the 100-day plan, and we were able to actually raise our capability to deal with a highly fluid situation.
In terms -- in addition to the speed up and scale up, in four growth areas, business model needs to be transformed. So that is the BMX transportation that we'd like to create as a template.
Next slide, please. This shows the BMX -- 4 areas of BMX, or 4 growth areas, namely Healthcare, Food and Wellness, ICT and Green. Those were identified as 4 areas of BMX. We try to find out how we can -- from a midterm perspective, and continually, we can take advantage of our strengths to enjoy tailwind. That is how we thoroughly debated this internally, and we identified these 4 areas of BMX.
Today, of the 4 areas, I'd like to introduce 2 business areas. One is Food and Wellness. Especially, we'd like to enhance our marketing activities in this domain. For example, for domestic soup as well as Thailand -- the sales trend in Thailand, we are creating new domains. And by accumulating these new initiatives, we were able to achieve growth. And we'd like to standardize this growth to further evolve the pattern so that we can ensure our organic growth.
And I'd like to cite one example. This is Cook Do [ stir ] sauce. The users who do not -- who never purchase oyster sauce, we delved into why they do not purchase oyster sauce. And then -- so may -- proposed that [ stir ] sauce as an alternative. And this initiative is already rolled out. In the last 5 years, in Japan food business, B2C, we were not able to create a big hit in terms of the new product and new category. And by reflecting that, Masai-san, who is the General Manager of Food Business, we appointed a marketing personnel to invite our cutting-edge external expert in marketing in order for us to actually further sophisticate this template of success.
Next slide describes Food and Wellness. By leveraging the marketing model in Food and Wellness, and this area falls under the Green of the 4 BMX areas, and plant-based protein hamburger mix is already launched in Brazil, and I already tasted the sample, and this is -- it was very delicious.
So from this slide onwards, this will be the presentation of Healthcare. So I would like to ask Mr. Michael Lish, the GM of the AminoScience Division. Mike, the floor is yours.
Before I start the slides, I would like to give a brief self-introduction. My name is Michael Lish. I started my Ajinomoto career in 1991. I've worked for Ajinomoto North America for the first 30 years, and for the last 1.5 years, I have been in Tokyo. Currently, I am General Manager in AminoScience Division, specifically my responsibilities are the pharmaceutical amino acids in food as well as the media business areas.
So with that said, these next few slides will discuss the BMX transformation in the dramatic expansion of Healthcare as well as our new partner in the cell culture media business.
Before going directly to the global partnership in the CCM market, let me touch base on the recent sales growth in our Healthcare business for the amino acids that are in the food, pharma and media markets. As shown, Ajinomoto has been manufacturing amino acids since the 1950s. We've been supplying amino acids for the food, pharma, wellness as well as entering the new media markets. The bottom graph clearly shows a very nice sales expansion within our Healthcare business from 2014 to 2021.
Next slide, please. I'd like to touch base just on the cell culture media market. In the bottom right, you can see the forecasted market growth through 2030. This is very significant growth that will require pharmaceutical amino acids and supplements, but more importantly, it will require high-performance cell culture media in order to meet the demand of our customers. This is a tremendous opportunity for us to meet this growing need and to expand our sales in the future.
Next slide, please. On this slide, we show the history within the cell culture media pharma market for Ajinomoto. In 1987, we established our first media, ASF. However, in 2012, with a joint venture with Genexine, we established AGX. This joint venture was to manufacture the media itself versus just provide the ingredients. The location of this was in South Korea. In 2018, we established our second media, CELLiST. And in 2019, to support our customer base and their needs, we established a customer service center in South Korea to be able to provide solutions to our customers that are looking for more high-grade media.
We have 2 strengths in this area today. I think the speed of providing media and optimizing that product to meet our customer needs is one of the biggest strengths we have. The second one is the stable supply, not just of the pharmaceutical amino acid and supplement ingredients, but the media as well.
Next slide, please. And this -- those 3 sides lead me into this discussion with our global partnership. So I'd like to touch on the recent press release on the collaboration between JSR and Ajinomoto. We believe this collaboration will further our ability to expand into this growing cell culture media market by leveraging the strengths from both companies.
For Ajinomoto, adding JSR's high performance media to our portfolio as well as manufacturing this media at our site, AGX. This partnership allows future business growth globally. And second, also importantly, being able to utilize JSR sales channels within the U.S. and EU markets will help us expand into 2030.
Next slide, please. Before we start this, I'd like to show a video from Tim Lowery, General Manager of JSR Life Science Division, and I'd like to listen to his comments on this collaboration.
Hi. My name is Tim Lowery, President of JSR Life Sciences. We're excited about this collaboration with Ajinomoto. Their advanced technology, high-quality assurance systems and market reach, make them a great fit to commercialize the CELLiST BASAL CHO MX in Asia.
At JSR, we're also excited to bring this media to the North American and European markets because it will expand our ability to bring our expertise to our customers. Thank you.
Well, from my side, I would like to talk about the value creation story to human resources. So this will be the driver. The foundation will be the human resources. So at the September IR Day, I have talked about this intangible assets, specifically the human resources that will be the foundation, is very important. We have to enhance that.
So next, we have -- in our engagement survey, we have included ASV realization process. So the ASV realization process, by improving that, we would like to create output. So -- and by doing so, we will accelerate the cycle of the ASV management.
The next is the kind of the quick report, a preliminary report on the engagement survey. So as you can see, the various numbers out there, basically, they are going up and then good scores has been shown. Specifically, in terms of the 75% for the ASV realization process, among the global top companies, we have been able to see a good high scores. However, that said, the 75% from FY 2020, it has not grown. So we have to increase this and enhance this outcome, and we'd like to put in initiatives to do so.
Next is -- that's for your reference. At Forbes Japan, so the -- as an inclusive company ranking 100, we ranked #1 in the stakeholder capitalism ranking for Japan. Specifically, among the 5 indicators, evaluation points, employees and earth, we have been able to get high scores. On the other hand, the shareholders, client consumers, I think the score is not high enough. So we'll take -- put in countermeasures. And if we put in countermeasures, if you take initiatives, I think the numbers will speak for themselves after that.
So the third point is the midterm ASV initiative for the 2030 road map. So officially, at the end of February, and the 1st of March, the -- we will disclose this internally and externally. But currently, I would like to -- it's a kind of preliminary announcement, but I'd like to give you some taste -- flavor of what we are discussing right now.
So this is -- since after I took this position as the CEO, what I have gotten feedback from the investment and the analysts. So with the dialogue with various shareholders, I have been conducting multiple dialogues, so I have been able to get the very precious feedback, advice. So for the midterm ASV initiative, I will reflect that so that I hope that we will be able to sympathize or feel comfortable with what we are doing.
So the next slide is from the midterm management plan -- evolving from the midterm management plan to evolve to the medium-term ASV initiatives. So the Ajinomoto Group, we had a 3-year midterm plan. So from 2020 to 2022, this midterm plan, we think we'll be able to achieve the targets. But before that, the midterm plan, we were not able to achieve the midterm plan target.
So why this happened? Within the management, we have repeatedly conducted discussions and asking ourselves the reason. So our existing midterm plan, we were focused on very much on the detailed plan, and we would much focus on the sums up of the very detailed numbers. So I think the people got fatigued by the time the plan was compiled, and it tend to be just plans and not achieved. So it's a kind of a plan, plan, plan, plan, not -- so PPP, may be a midterm plan [indiscernible], so to speak.
So we reflected on this situation. And based on this finding, and -- in a very -- in a situation that's very difficult to foresee what's going to happen, we should try not to come up with a very precise figures from the 3 years onwards. But I wish a backcast from the future from 2030. And then clearly set up the target and show the path to go about. So we would like to shift to a midterm ASV initiative and evolve.
And the next slide is that, what is the methodology, what is the concept of these indicators? So this is just preliminary. So in terms of ASV indicators, so as a commitment, so the single year performance forecast, of course, we will show you that. And we will realize that, and we will seriously focus on ASV, and create new values and then pursue business model transformation and challenge the ASV indicators. So that will be the midterm ASV management, and we will promote that.
So first of all, we would look at 2030, and management will uphold a challenging target, showing targets for the 2030 indicators and the management will think about how the path should be to reach there.
The next slide will be the last message from my side. As I've been saying to you before, so purpose multiplied by passion, purpose multiplied by operational excellence and speed up and scale up, it will be a focus. So the FY 2022, I think we have been able to get achievements, even in the first half of this fiscal year.
So going forward, towards the midterm ASV management is going to be -- the initiative of that, we will seriously focus on and challenging the ASV management. At the same time, globally, there are signs of resisting. So we should visualize and accelerate the speed of our management as much as possible, and leverage to strengthen the business portfolio so that we can sustainably enhance our corporate value.
Thank you very much for your attention.
Fujie-san, thank you very much -- thank you for presentation. Let's go to the Q&A session.
[Operator Instructions] First of all, we'd like to take questions from Saji-san, Mizuho Securities.
This is Saji speaking. I'd like to raise one question. In Japan, the weaker yen forcing foreign workers, actually do not [ worth ] their work. So hotels and food factories suffer from labor shortages because the income level is very low in Japan because of the weaker yen. That is the current situation. There are 2 aspects of this. There are issues faced by Ajinomoto, but solution and ingredients itself, how to offer values to users? Well, there is more opportunities for Ajinomoto to offer values to users of S&I. In terms of labor shortages, how does that impact to the manufacturing industry, especially consumables? And what is your perception about this? And are there any opportunities and risks associated with this one?
Saji-san, thank you for your question. So I'd like to Masai-san -- invite Masai-san to address this question.
Saji-san, thank you for your question. This is Masai speaking. To that question, I'd like to answer. First of all, in terms of labor shortages, yes, that is happening. At Ajinomoto, we have domestic production. Ajinomoto Food Company is integrating the production, and we are promoting automation at the factory floor. So in that sense, we are more -- we can withstand the labor shortage issues. And your point is taken, but we'd like to keep monitoring the situation closely.
And also, the situation is highly fluid, and solution and ingredients you mentioned. On our part, through this -- by promoting this area, we are collaborating with start-up firms. In terms of partnership and collaboration, we are pursuing that opportunity. And by doing so, we can see new businesses, or new solution model emerging out of this external partnership. So we can work on the next phase of road map.
And also, I'd like to expand on that. This is Fujie speaking. Especially for food services, labor-saving menu and long-lasting seasonings, those are the ones that receive a large number of inquiries. So by capturing this as an opportunity, we'd like to ensure we can increasing our business, or expanding our business. Thank you very much for the question.
Next question. SMBC Nikko Securities, Takagi-san, please.
This is Takagi. My first question is to Mr. Fujie. So the Ajinomoto's weakness, what is your take on that? A few years ago, the weakness of Ajinomoto was the responsiveness of the macro environment. That was the weakness, but you have been very resilient. And actually, maybe that's the strength right now. So from your point of view, what is the weakness of Ajinomoto? How are you going to improve that? And how you're going to reform that? What type of preparations do you have? First -- that's my first question. Should I ask my second question?
Well, first of all -- this is Fujie speaking. Maybe I should respond. Thank you very much for your question. So what we're trying to do is that with Nishii-san and the current management is debating about this. I think the biggest challenge is to scale up. We have to have the capability to scale up our business. So in terms of the AminoScience business, the format of scaling up the business, we have been able to have a definite way in terms of scaling up for the [ general ] materials, for biopharma services. And Mike has talked about amino related -- amino acid-related business. That has been driving the Ajinomoto group's business.
So in that sense, in terms of food for the Overseas, excluding the Overseas, Seasonings and Foods scaling up the business and the Ajinomoto Group overall must scale up. We have to come up with the format, and -- which is steadily, and evolve these initiatives and speed up our initiatives.
I think one representative initiative will be the BMX. We have 4 growth domains, and we have decided on that. And I have talked about that already.
So in terms of the specific example, we are planning very thoroughly, and we are planting seeds to be able to achieve that. By the end of February to the beginning of March, I think I will be able to show you more specific examples. But even before than that, we -- a lot of initiatives are progressing. So Shiragami-san do you have any follow-up?
Thank you very much for your question. So as Fujie has said, from our point of view, leveraging our strength and by doing so, overcome our weakness and then change the weakness into strength. So through BMX business model transformation that is what we are doing. So for the AminoScience and Healthcare and electronic materials business, I think we have been quite successful. And we have this type of format in terms of how -- and in terms of the future growth, we're quite confident of the future growth. So by utilizing the format in the food business, in the Food and Wellness and Green, that would be the growth domains that we are focusing on. And we are -- so for the ASV indicators, for the midterm plan, we are focusing on how we're going to achieve that. So towards February to March, I think we'll be ready to talk more specifically about that. Thank you.
So for the food business, coming up with the kind of a format, I think it's a very, very challenging. So what is a challenging point within your company? Or conversely, what is the opportunities? Can you speak more on those points?
Masai-san, can you talk to that?
Thank you. So I would say that maybe a weakness -- well, this will be linked to our weakness. But going forward, we -- the younger generation is going to support this country in the future. We should focus on the younger generation, and I think that is very important. So the Food and Wellness domain, new momentum should be created. And I think that would be the key. So we have young excellent talented human resources, and the opinions of these younger generations, how are we going to affect them? How are we going to ride the wave of change will be the focus. This will be reflected in our next road map.
Understood. Well, my second question is that -- so I looked at the presentation material. Slide #50, solid performance outlook image. So next fiscal year, the profit is going to go up. And then next, going forward, it will just grow strongly. Can you comment on this way this graph looks?
This slide, Page 50, if you're referring to this slide, this blue line. I'm referring to the blue line. Well, this is the image. So I would like to -- maybe this has been a bit misleading. I apologize. So this is the image. So every year, performance -- rather than focusing on the single year performance outlook, the higher challenging 2023 ASV indicators are there. So I was just showing you the contrast.
So sometimes, the performance will be close to the ASV indicators, sometimes it's not. And if there's a gap, we will pursue ASV early and try to become closer to the ASV indicators. So just -- it's an image. Sorry, if I misled you.
So the blue line, the trajectory, is that the profit level that you want to pursue, it's different. Is that what you're saying?
In terms of the blue line, well, externally, though we are saying, we think -- it's a responsibility to say that this is our forecast. So for a single year -- single fiscal year, so we will be giving forecast. So that will be in -- basically these blue lines. But if you just focus on that as this challenging planting season and challenging objectives, and I'm showing the path towards 2030, we will not be able to do that. So we always have a challenging initiative. And at the same time, how are we going to achieve these challenging initiatives. We always have to consider that. So that is what this graph means.
Understood. So I shouldn't really try to pick this seriously -- well, pick this a reference. Well, currently no. But if you look at next fiscal year -- this year, so you have taken some counter initiatives. So FY '23, it may be in terms of the profit growth for your company. So latter half, a single digit, or maybe more than that. Towards 2030, I think that is the type of profit growth that you are expecting. So is that the type of [ garland ] that I should expect?
Well, first of all, for FY 2023 outlook, so the raw material cost situation, I think it is still -- be tough. Some will stay at a high level, some may go down. But in terms of the price increases, we will be accelerating our responses on that.
And in terms of the structural reform, I think that will be more and more necessary. So we will focus on contractual reform and improve our efficiency. And by doing so, including the contribution coming from the growth domains, for 2023, we will increase our profits. So we want to maintain the momentum till 2030. So the -- yes, the indicators of FY 2030, you want to become close to those indicators as much as possible.
We'd like to take next questions. Fujiwara-san from Nomura Securities.
This is Fujiwara speaking from Nomura Securities. Nice to speak to you all. Regarding structural reform, I'd like to raise several questions. First, in terms of financial results, that was very solid. But what was shocking was the U.S. frozen food. In 2014, since the acquisition, 8 years has passed, and we are yet to achieve a breakeven point, or lower the breakeven point. In terms of ROIC, 5%, or even more than 5%. In order to maintain or achieve that, what structural reform will be taking place? During the past 8 years, what was the reform? And how is it going to be different this time? That is my first question.
Next, regarding Seasonings and Foods. Well, Seasonings, the brand equity as well as share is very robust. So it is very resistant towards inflation. But not only Seasonings are included, powdered beverage as well as instant noodles are included, and powdered beverage struggled this year. So in Seasonings and Foods, will you accelerate selection and concentration down the road? Those are my 2 questions.
I'd like to appoint Kawano-san to address the first question. And for the second one, Mori-san and myself will deal with the question.
This is Kawano speaking, I am responsible for frozen food. Nice to speak to you all. Regarding U.S. frozen food, currently -- well, 8 years have passed, and what we have been doing, that was your question. In the first 5 years since the acquisition, we were unable to perfectly fit the business. The former vendors of the company, with low profitability business were not as flexibly or swiftly terminated. And afterwards, nonprofit profitable businesses underwent structural reform to shift towards more profitable and growing businesses, and we are still in the process of that. And -- but the inflation kicked in.
Originally -- well, structural reform is underway, and Italian or appetizer, which were all low profitable, are scaled down and reduced in size. And the extra space is to be utilized for Asian products, and we are still in process of that. However, inevitably, low profitable businesses actually can generate marginal profit. That means fixed costs were able to be observed -- absorbed. And if we are to terminate this low profitable businesses and increase the production capacity of Asian products, then the marginal profit was down, and then investment had to be made. So there's a time line for us to generate positive impacts.
So in terms of the business profit, there is a [ debt value ] -- that we had to face. Ideally, this used to happen. This used to bottom out in -- this was scheduled to bottom out in the first half of '21, but the [ value ] of -- [ debt value ] is even deepened because of the inflation, and the consumption was down. And Asian foods are yet to offset the negative impact. So in terms of overcoming the [ debt value ] the timing is delayed, and the [ value ] is even deeper.
So if you could look at Page 20 of the material, in '21, for second half, that the [ value ] was bottom out. And in 2022, first half, we are in the recovery phase. That is the real situation. And going forward, we project a recovery trend.
We are formulating our road map towards 2030, and Plan B and Plan C are being formulated as well. So if we said a certain hurdle, for example, further recession may happen, or unexpected turn of events, then we have to execute plan B or C.
Let me expand on that. For the Ajinomoto Group, we are conducting businesses worldwide, and there are regions and areas or businesses that struggle. That is the inevitability for a global company like Ajinomoto. And to address that, we are furthering our ability to address those situations. And that's important, midterm. And that is the management -- what management is discussing.
So the situation is very grave for some parts of the world but we need to -- well, we deployed a bad news first approach to detect early signs of bad things. At the management committee, there are 10 priority items. Of that 10 items, bad news first is something we make sure at each and every committee meeting. And then once we -- early detect those bad news, then the local subsidiary takes responsibility of addressing that matter. If it is above their capability, then the regional headquarters will come in to take in charge or take initiative to deal with the situation and supported by global divisions. If not, then it's escalated to the management level. And then from a management perspective, we grasp the situation to make sure we take necessary measures, or we may add additional resources to deal with the situation.
So those are the 3 tier to address those struggles, or difficulties to support local entities that face hardships. And that is how we ensure healthy expansion of businesses around the world. So I hope that answers your first question.
Yes.
And then we'd like to move on to the second question. As you rightly pointed out, Overseas Seasonings business, especially in Japan -- excuse me, in Japan, we became a highly resistant business. But apart from that, we'd like to further enhance our resilience in other parts of businesses as well.
So at the management level, there are core businesses. We are discussing how to reform core businesses. And during the executive meeting, or training this year, we visualize this. The current level of potential -- of growth potential as well as the efficiency, and what social values they bring, we plotted that on a map. And if there is any category that struggles then we can accelerate the speed of reducing more or stopping more or undergo structural reform to transform the business. We'd like to accelerate the speed of transformation.
There are specific examples that I can share. And Mori-san. I'd like to ask Mori-san to share specific examples.
This is Mori speaking. Regarding powdered beverage, in AGF, coffee roll materials, green bean, the price is a big fluctuating factor. And also we have a large share in instant coffee. The usage of green beans is relatively low. Therefore, it can withstand the rising raw material costs or prices. So that means product portfolio needs to be strengthened, in order to address the rising price of green bean. That is how we'd like to shift our business structure in terms of powdered beverage. I hope that answers your second question.
Next is from Daiwa Securities, Morita-san, please.
This is Morita from Daiwa Securities. I have 2 questions. One is that I think this was in the discussions. The external environment has changed dramatically. So for next year onwards, so Fujie-san, what is the change of the external environment that you are concerned about? What do you think that the management should respond to? Are there any changes that is a source of a concern for the management, specifically with the -- I'm specifically talking about the Seasonings & Food business?
So for the seasoning and food business, compared to the past, I think in terms of the potential, I think it has been enhanced. But I think it has not been realized. I think there has been a trend in the past couple of years for the seasoning and food. Of course, the raw material costs has gone up, and the COVID situation, maybe that was kind of a bottleneck for you. But for the -- if you are -- you have talked about forming a format. From next fiscal year, the structural reform, for the seasoning and foods -- sustainable growth for the seasoning and food, is that next fiscal really the timing for the sustainable growth for the seasoning and food? Or next fiscal year, you will continue to be responding to the inflation or the raw material cost increase? So what is the stage that the seasoning and food business is at?
So I will respond to your first point. And for the second point, myself and Masai will respond. In terms of the external environment -- change of the external environment, so it's -- what I know -- what we know is that we don't know what's going to happen. So I think that's [indiscernible] situation that we're talking about. So how can we respond to that? I think basically, we should be capable to be responding to that uncertainty.
So I guess that the backdrop, what is more or less visible in terms of the threat is the reduction, or the decline of consumption. So how long will this continue? It depends on the business. It depends on the market. But in the U.S., B2C market consumption decline for the non-seasoning and food area, it has already started. And for a certain period of time, there is a possibility that this will continue.
On the other hand, in terms of the seasoning, even -- under the recession, actually, we'll be able to exert strength. So for this business, I think we'll be able to steadily grow the business. Against this backdrop, how can we stimulate the consumption, including the marketing investment that we have to conduct? Now this is what we have to consider.
In the short term, I think this type of initiatives will be necessary. So some level of marketing investment budget will be allocated, and we will use this budget appropriately.
So for this point, in any case, from FY '23 onwards, this is -- well, this will be related to your second question. From FY -- to second half of FY '22, the price increases will start to contribute. And I have -- we have been seeing that from before. And I think the direction is just as we have explained, that is our understanding.
For -- going to FY '23, so when in FY '23, we'll be able to go back to the pre-COVID situation, we're still trying to analyze that. But I think if we -- safe to say that the profitability will return -- well, the momentum has started to recover. Actually, we feel that way in our day-to-day business. So we want to, everyday, put in our efforts so that this can be solidified.
And to your second point, in terms of the potential, you have understood the potential. But in terms of the format, how will this be actually be effective. In the short term, as I said, with the overseas Seasoning business, for FY '23, or the second half of '22 to FY '23, we think the recovery is -- there will be a large recovery. As long as there are no further cost increases, we are quite confident about that turnaround in the midterm. I think basically, it's very important for us to plant the seeds and conduct the BMX and focus on that. So Masai will talk some points about this thing.
So this is Masai speaking. Let me touch upon your point. So I, myself, maybe you've heard about this already, but -- so I have been climbing in my career ladder basically on the AminoScience. So I have been GM of the AminoScience, of the Chemicals, but I'm now in charge of the food business. So from my position, I think the future of AminoScience and food, I think that will be my very important mission that I have to achieve. That is my understanding.
So if you consider that perspective, actually, in the seasoning business, the transformation is difficult to see. So one reason behind this is that our products, we are already listing product lineup whether it be food, we utilizes a lot of AminoScience -- amino acid technology.
So that is what Ajinomoto, or the -- what other seasoning business. So this is designing the deliciousness. So whether it be smell, taste, whatever, the AminoScience is leverage. But it's just taken as granted. So even the product development staff do not understand this leverage. So we want to visualize this. So with this, we want to conduct one transformation.
Another point I want to make is that -- well, maybe, I'm not the right person to say this, but before the fusion of food and AminoScience, the food -- within the food business, there are 5 businesses in that. So we have -- I want to combine this and across functional matter. So I am in -- mostly focused on AminoScience and on the Chemicals, and they have some -- the size is quite different. So food business is quite large in terms of scale. So the -- I think within these subsegments, I think there are some silos that has to be overcome.
So how are we going to collaborate within the food business, and between the various countries, there are silos. So we -- I think there has to be some cross-functional, or cross-market initiatives. So that will be reflected. I would like to flag this in the road map as well.
So it was very interesting, but there's some fusion with AminoScience, or the cross-functional integration with the food business. What are you going to start with? From externally -- in terms of the first step, where will be the trigger, the first step?
So in terms of the design of the -- design technology of deliciousness, well, amino acid primary function was nutrition. So basically, the focus was nutrition. But in terms of -- this will be very useful in designing deliciousness. So this was taken for granted within us, but we have not been able to communicate that externally. So what we are very proud of, this design of deliciousness. This utilizes the amino acid technology. How can we communicate that?
So we are discussing about that within the members. So it's a bit vague, but it's not nutrition, but deliciousness. I think that's the perspective that we want to communicate. So marketing product development is going to start from there.
Yes. Another point is that product development -- well, has -- a marketing division has great influence in the product development. But R&D, marketing and manufacturing, or the salespeople who have their contact with the customers, they are -- they should be contributing to the product development, including marketing. So not marketing-oriented specifically, but this fusion is to be conducted from the other areas as well.
Well, that has been -- well, price increases for another sort of conversation. Well, that was important. I think basically going to go to a different stage. So I am very interested when this stage is going to happen. So I will be looking forward to the -- your feedback.
Yes, yes, we are going to start from right now. Thank you very much for your expectations.
We'd like to take questions from Yamaguchi-san, Goldman Sachs.
This is Yamaguchi speaking. My first question pertains to the progress of structural reform. Well, today, we talked about this, especially on Frozen Foods and coffee, those are the low profit margin, very low in terms of their profit margin, and ROI, as the level is going up. So the -- well, the ROIC needs to be raised, and we -- you need to actually do something about these low-profit businesses. So what are the concrete measures you are already taking place? And next February, you are to announce your MTP, or a new management plan. But this list needs to grow. So if you can comment on the structural reform progress. Please comment.
My second question pertains to JPY 400 billion -- excuse me, JPY 40 billion and JPY 10 billion in terms of share stock buy -- share buyback and how did you actually -- excuse me, and JPY 30 billion in terms of share buyback. And what was the calculation behind it?
Thank you very much for the question, Yamaguchi-san. Regarding structural reform, I'm sorry for causing the concerns about the structural reform. Well, structural reform is underway for the businesses that face challenges, especially on Frozen Foods. As Kawano-san mentioned earlier, the current structural reform is underway, and we are considering Plan B or even Plan C for a worse situation. And this reform is undergoing. We are undergoing this reform right now.
And in terms of the coffee business, especially with the AGF profitability, that is struggling. So within our executive training meeting, we discussed this matter. We need to create our portfolio to address the issue.
As Mori-san pointed out earlier, coffee, green beans. The price is highly fluctuated by the price of green beans. It is very -- with that, we will be -- it will be difficult for us to further increase the profitability. So stick coffee needs to be expanded. And we are visualizing the current situation to make sure that the structural reform is generating positive impact. So not only Plan A but also Plan B are being formulated, and we are closely monitoring the situation.
In addition, regarding cash conversion cycle, especially the inventory, which is yet to hover high, once the pandemic started, we had to make sure that we supply goods to consumers. So inventory was increased. That was how we dealt with the situation at the start of the pandemic. But now the global economy may start to shrink, or go into a recession, then the inventory level is a big risk for us.
Therefore, we are announcing all departments to make sure that the inventory level will be minimized to achieve -- to hit the appropriate level, reduce to the appropriate level. That is a company-wide effort to cut down on inventories. Those are part of the discussions at the Executive Meeting. And going towards the future, MTP or MTV, ASV management plan, we need to stop more or reduce more. We have to make decisions. And within the Executive Committee or BoD, we are discussing this matter internally. That is the current situation.
To address the second question, well, JPY 40 billion this year and JPY 30 billion this year in terms of share buyback. Considering the cash flow situation -- well, inventory is up. Therefore, the current cash flow stands at JPY 112 billion. And considering all these encompassing landscape, we decided to go ahead with the JPY 30 billion share buyback. If you could follow up Nakano-san, could you please comment?
This is Nakano speaking. If you could refer to Page 30. In terms of the cash flow forecast, or cash in, operating cash flow is the one we prioritize. How much cash will be coming in, and how much of that can be used to invest for growth. And if there's any excess, then we'd like to return the remaining to shareholders. So there needs to be a delicate balance between the 2 to prioritize this -- these 2. And with that in mind, we decided to cap the amount of share buyback to JPY 30 billion. That is how Fujie-san explained.
So regarding the first question, in terms of structural reform, this year cost inflation was prioritized, may have been. But in terms of the competition as well as the demand, based on those, then by when -- if -- well, unless you achieve what and by when, what is the specific decision for us to evaluate? What is the actually KPI? When you announce the MTP next February or March, please show those threshold.
And then in terms of shareholder return in the divestment or sales of Kawasaki plant, well, there is an incoming cash flow in that sense. So did you actually factor that in? Or is it something else?
Well, I'd like to address the first point. Well, we'd like to show what can be disclosed for you -- to seek your maximum understanding. In terms of the current status of business and especially the social value we are to create in the future, by ascertaining that, by when, by what level we must achieve what in order for us to continue our business. Or otherwise, we will make a bold decision to may have terminate that business. If there's any item we can disclose at the time of MTP announcement, then we will.
And to address the second question, Nakano-san, could you please comment?
Yes. Well, we are yet to complete the sales of the plant in Kawasaki. The timing is yet to be decided. Considering that, we are forecasting this future cash flow. And based on that, we decided to make the share buyback this time.
Next question. JPMorgan Securities, Yoshida-san, please.
I am Yoshida from JPMorgan Securities. So I have 2 questions related to Healthcare. One is about the Functional Materials business. So the other day at the presentation, maybe the -- temporarily to the second half, the growth momentum will slow down. I think you have mentioned that. Going to -- I think, at the end of August, at the earnings report meeting, not only ABF, but for instance, the encapsulation or the magnetic material, the contribution was coming from those type of products, I think you explained that. But what was the applications for this? Is it the type -- same type of ABF? So maybe is this 30% exposure to the business like ABF? I would like to ask about the applications and what's the current status?
The second point is about the biopharma service. So in the second half, I think in the presentation, through the mix improvement, maybe able to improve the profit. But in today's presentation, it means that in terms of the culture, was the main explanation. So the -- is this going -- business going to go in the second half, is that incorporated into your outlook? Is the same situation going to continue towards next fiscal year? Would you give me some explanation about that?
Yoshida-san, thank you very much. So Maeda-san, first, would you kick off the answer?
Yoshida-san, thank you very much for your questions. And I was looking forward to your question actually. So for the Functional Materials, and industry-wise, I think we are in the -- we are thinking that we're going through the adjustment stage. But as Fujie has said in the explanation, for 2025, CAGR, 18%. Growth is going to be expected. That's like a best-case scenario. So if you look at higher data, wider network, higher speed is required, including that. So within a certain period of time, the CAGR, 18%, I think it's quite solid. But maybe, currently, I think there is a possibility that we will enter a adjustment phase.
So for the applications, well basically, these are for the films, for the substrate, for the semiconductors. Those films will be heat resistance, will be not inducing electronic. Well, it's easy to explain about, but very difficult to copy. So that's the reason why we are appreciated.
For the magnetic material, I think that's what's going to grow going forward. So higher speed, or higher capacity is going to be asked for -- I mean that -- you use a lot of electricity, you'll be heating up. Energy consumption-wise, it's not good. The PCs and servers will be heated up. For the less electricity, the same level of functionality can be offered using these magnetic materials. So that is what we're focusing in terms of development.
So not only it's the semiconductors for PCs, but for smartphones, functional materials. And there are a lot of interesting materials that is included in this segment. So that's all for me.
But in terms of the culture medium. So for to -- for the pharmaceutical development phase, so it's a kind of a supporting actor. So for the development of pharmaceuticals to go well, it's kind of a nutrition. So like -- by combining amino acid and other nutrients, this will support the research and development. So this cutting-edge medical is developing. So the -- this culture media has been from before, but more high functional media is asked for. So the functions, or the -- accelerating the speed, high value add, more and more difficult demands are coming from the customers. So the medical world becomes more cutting edge. And the customers' demands are becoming more higher, we can differentiate. So this will not be commodity. We will be able to add value.
So basically, looking at the progress of the pharmaceutical or the medical business, I think the important thing is that how much of the pipeline that we can have for the cell cultures at the -- on the media. So Shiragami-san, can you follow up on that?
So first of all, in terms of the functional materials, so on the second half for the next year, well, maybe this is a very short-term look. But in terms of how much of the growth rate are you anticipating in terms of CAGR, 18%, I think that will be the same. But -- so in terms of the bottom of the range of the growth rate, and so the biopharma service for this business -- so the medium is going to grow in the second half. Is that the assumption?
So the functional materials, well, we cannot disclose the details. But compared to first half and second half, maybe the second half will see adjustment. The growth rate, first half will be higher.
And in terms of the full year growth, by 2025, CAGR at 18%. Well, this year compared to that, this year will be higher than this 18%. But the second half, at some stage, for a couple of months, or maybe for the 6 months, maybe compared to the first half, the momentum will decelerate. There is a possibility of that. So that's the reason why for the full year, maybe -- but that said, the higher than 18% growth rate for this year can be achieved in terms of medium.
So food, and this is different from food and other businesses. So if there's a clinical trial that the customers have to do, or when there is a product and it happens, then there's a huge bulk of orders. So it's kind of lumpy, so to speak, in terms of how the segment works.
So the first half, there has been some orders that we have not gotten or on the other hand, there are some orders that we have expected to come in the first half. In the second half, I think basically, we think the orders will be flowing in steadily. But for instance, whether the development stage of the clients will be on time, or whether they'll be able to get the approval or not, that is how we look at the demand supply situation for the medium.
We are about to close the QA session, and we'd like to take one more question before we close the QA. Miura-san from Citigroup.
This is Miura speaking from Citigroup. Nice to speak to you all. My first question pertains to -- well, in Japan and Southeast Asia and the United States, Ajinomoto is well known and you have this strong brand equity. However, even with that company, while the profit is eroding, and Nestle is in the same situation. I'm not to blame you or anything. Having said that though, even for a Japanese company, depending on each region, even with the price hike, the profit does not increase or there is a -- well, positive and negative signs in the food industry. There are the ones that favor -- that are favored by the price hike.
Even with the brand equity of Ajinomoto, your profit was down. What was the background? Especially in Asia, Usually, you have -- you enjoy your strong sales and your profit could have grown. However, your profit was down quite significantly. So what is the underlying basis for you to explain the situation? That is my first question.
My second question. Well, we've already completed this financial results for the first half. But what are the business profit driver for the next half year or next year? I'd like to address this question to Fujie-san.
Miura-san, thank you very much for the questions. Well, these are the essence of our business, and touches upon the very core of our businesses. And regarding the first question, the top management is highly aware of the financial situation, and we are monitoring the situation and closely analyzing the situation currently. And according to our assessment, we increased prices. However, we needed to do more in terms of the price hike. So price hike was not enough or adequate. That was our reflection.
But on our part, short-term profit is also important, but midterm scale is important for us to generate -- keep generating profit. Therefore, we did not want to lose our share because of the extreme price hike. That was the risk we carefully managed. Depending on the situation in each country, we carefully assess the margin of price hike. And there is a significant time lag. Compared to before, the time lag has been reduced compared to before. But the margin, or the price -- the level of a price increase varied from country to country, and that was the issue that was identified by the executives, and we need to carefully monitor the situation.
But further price hike will be introduced by how much we can, and how can we address this lower consumption. And how can we stimulate this slowing consumption. Those are the biggest struggles or other obstacles that we have to face. And there were certain positive impacts that we were able to generate, but we do have issues and we are cognizant of that. And we'd like to further our ability to address those remaining issues.
Regarding the second question, going forward, what are the growth drivers for the next years and onwards. As we've announced earlier, Overseas Seasonings, that is expanding or will be expanding, that is our forecast. And we will be able to reach the pre-COVID level of top line. The top line is already growing significantly, which could buttress the entire group business.
And also for the electronics materials, as Maeda-san mentioned earlier, CAGR 18% will be achievable, and continue to be achieved midterm. And then in August, when we had the business meeting, biopharma service is also another driver to make a progress as planned. And as Maiko-san presented today, the cell media, cell culture media and also he is the expert of AminoScience -- who heads the AminoScience division.
In the last 10 years, the business has expanded steadily, both top line as well as the bottom line. Especially the quality and supply chain management, or trust level from the supply chain is enhancing or increasing. So we don't actually call it or single out as a growth driver, the cell media itself, but those will buttress our entire businesses. That is how we foresee the future.
There are headwinds that we have to face, but there are growing areas, which will make contribution to the profit increase in the future. As expected by the investors and shareholders, we are determined to increase profit. The entire management team is thoroughly implementing ASV, which is exemplified by the slogan -- thorough measure of ASV.
Thank you very much, Fujie-san. So I'd like to confirm a few points. At the end of the day, Ajinomoto Seasonings, half of which is already found in a variety of households. So it is -- the general public's budget needs to be valued. So that means why there is a significant time lag for you to generate profit. So you have to carefully balance the household budget as well as the level of price increase.
Yes, your point is taken. In terms of Thailand, the MSG as well as Umami seasonings, these prices are tightly controlled by the government. So not only by our business decision alone, cannot increase price for those seasonings. And also, we have to take consider the household budget by the consumers. So that is why we'd like to provide food and health-related issue solution.
So for the second half, food business will enjoy positive increase of profit? Is that -- you planned that? But we're already November 8. In Thailand, price control caps the level of price increase going forward. So in terms of the visibility of your plan, is it quite high?
Yes, it's highly visible. In that sense, we are implementing measures in order for us to attain what's in the plan.
Thank you very much. So this ends the Q&A session. Firstly, Fujie-san is going to say a few words for the ending.
Well, thank you very much for attending despite your very busy schedule. We have been able to get a good -- sort of a good dialogue. Through this dialogue, I think there are various findings. And there are things that we realize that these are the things that we are lacking, these are the things that we should accelerate.
So I think -- I hope in terms of the visions that we share, and the power of these visions, I think that supports us. We appreciate your support. And at the same time, I think we should try to answer your expectations. So the Directors, so the Board of Directors or the Management Committee and the people working on the ground is going -- is unified as one team to be able to answer to your expectations. So thank you for your support in advance.
This ends today's presentation. Thank you very much for your participation. Goodbye.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]