Message
Signs of change in the first fiscal year of the medium-term management plan and the speed barrier to be overcome
Recognizing that speeding up our transformation is an urgent task, we will use this sense of urgency as a driving force to advance further reforms.
One year has passed since we launched the Medium-Term Management Plan (Breaking Through Toward 2028). Looking back on my first two years as President, I feel a strong sense of responsibility having witnessed our tangible progress, but also knowing that urgency still remains.
In terms of financial results, we achieved record-high consolidated net sales of 139.7 billion yen in FY2025 as we continued to steadily expand. On the other hand, operating profit totaled 2.7 billion yen, revealing lingering issues in terms of profitability caused by the impacts of international uncertainty, instability in raw material procurement, and sharp fluctuations in exchange rates. Yet, even under these conditions, the fact that each of our businesses was able to maintain and expand its growth foundation speaks to the tenacious efforts of our employees, and as top management, I hold this in high regard. To be honest, however, the pace of the transformation needed within the Company still sits at only about 60% of what we had anticipated, and I am by no means satisfied with that.
The Group’s key phrase “Breaking Through” is more than just a slogan. It represents our unwavering determination to fundamentally break away from our reliance on past successes accumulated over our century-long history, as well as the wait-and-see attitude that has unconsciously become ingrained in the organization. The marine products industry currently finds itself in a paradigm shift where conventional wisdom no longer applies. Drastic changes in the external environment—such as shifts in fish species due to climate change, rising sea temperatures, and soaring logistics and energy costs driven by geopolitical risks—force us to recognize that maintaining the status quo is tantamount to regression.
Signs of change are certainly beginning to emerge within the Company. A healthy sense of urgency, or the realization that we cannot go on like this, is beginning to take hold, and in FY2026, we are determined to turn that sense of urgency into action and significantly speed up the pace at which we produce tangible results.
Frontline capabilities reaffirmed in town hall-style meetings
Through open dialogue, we are bringing the voices of the frontlines to management. The combination of stability and quick reflexes will also lead to organizational transformation.
One of the initiatives I have devoted myself to over the past year has been holding town hall-style meetings with our employees across Japan. These have allowed me to take part in numerous discussions directly with employees across the country, and I plan to spend the first half of FY2026 visiting all of our business locations.
When I attended my first town hall-style meeting, rather than simply conveying my thoughts as President, I wanted to get a firsthand sense of our frontline people, including what they were thinking and any concerns they had. I deliberately spoke candidly about my impressions of each department and Group company, asking whether my understanding was correct. Immediately, employees began to speak up one after another, saying things like, “That’s not right,” and “This is what’s actually happening on the ground.” Afterwards, I was asked to meet with some people individually, and there were instances where I received suggestions that sharply highlighted gaps in my understanding.
I am confident that these conversations have helped bridge the psychological gap between management and our employees. I want to continue being a president who engages in comprehensive discussions. The door to my office is always open, both physically and psychologically. It’s not the president’s directives that change a company, but the passion of each and every employee who continues to take on challenges on the frontlines.
One of the takeaways from these town hall-style meetings was the unwavering sense of stability possessed by Nichimo’s employees. Because they work in the marine products industry, which interacts with nature, they have the resilience to remain calm and composed while working, without being swayed by every little thing. On the other hand, there is no denying that this stability also contributes to a lack of speed in execution. The challenge lies in how to leverage this solid strength while simultaneously incorporating quick reflexes to respond to the changing times. That is precisely what we define as the challenge in management for the second year of the medium-term management plan onward.
Current state of our four major businesses and
future transformation scenarios
We aim to both transform growth businesses into pillars and strengthen our foundation. We will carry out a true transformation, not merely an extension of our past.
The basic policy of the medium-term management plan is to “strengthen core businesses and stabilize earnings structure.” Following this strategy, each business segment is promoting disruptive transformation that is not simply change based on an extension of the past.
Food Business
Shifting from raw material trading to mid and downstream areas
The Food Business, which accounts for the majority of Nichimo’s sales, has long centered around the purchase and wholesaling of raw materials. With greater instability in fishery resources, however, a low-margin, high-volume sales model cannot lead to sustainable growth. Therefore, we are accelerating our strategy to significantly increase the degree of processing and expand our business domains to the mid and downstream areas, closer to consumers. For example, instead of simply selling Norwegian mackerel as a raw material, we are in the process of establishing a successful model in which value is added through our proprietary processing techniques, enabling us to offer a greater breadth of products in the domestic market. Going forward, we will expand this model to other fish species such as herring and strengthen branding-focused product development. Anticipating the decline in Japan’s population, we will step up our proactive overseas expansion by leveraging the high-quality processing technologies we have cultivated in Japan to connect with the rapidly growing Asian and North American markets.
Marine Business
Making aquaculture and environmental materials the dominant pillar of future growth
Our core business, Marine Business, which deals with fishing nets and other marine-related products, is currently facing the most dynamic paradigm shift. We will demonstrate our true value as a trading company with engineering capabilities by focusing on two main pillars: a shift from “capture fisheries” to “culture fisheries (aquaculture),” and “environmental materials” that protect the ocean. Land-based aquaculture, in particular, is a decisive solution for a sustainable protein source unaffected by external environmental factors such as rising water temperatures or marine pollution. We will leverage the expertise gained at our Group company, Fish Farm Mirai LLC, to build a business model that provides total support, from equipment design to production. We aim to accelerate the social implementation of biodegradable materials as a concrete solution to the microplastics problem and to create a standard for the marine products industry.
Machinery Business and Materials Business
Turning labor shortages and environmental needs into our greatest opportunity
The Machinery Business continues to perform well, buoyed by the growing demand for automation and labor-saving solutions stemming from Japan’s severe labor shortage. Going forward, we will do more than sell equipment; we will also refine our engineering capabilities for the entire manufacturing line and expand our product lineup, with M&A as a possible avenue. In our Materials Business, we will accurately identify demand for synthetic products not only in food packaging but also in mobility and building materials, particularly the need for material conversion from petroleum-based to bio-based materials, and cultivate this into our next source of revenue.
Regarding our Food Business, which is of particular interest to investors, we will further strengthen our policy of adding greater value and expanding downstream, which I mentioned earlier. While we are very knowledgeable about purchasing, it is a positive sign that there is still room for growth in our involvement on the front lines of sales. We will focus our management resources on this area to accelerate product development and market expansion that enhances our brand power.
Toward operating profit of 7.7 billion yen in 2035,
the key is bottom-up growth investment
We will use backcasting to double profits
and refine our capital efficiency to pave the way to the future.
In this medium-term management plan, we have for the first time fully introduced the concept of backcasting, which involves working backward from the future. We envisioned what our ideal state would be in 2035, 10 years from now, and worked backward to determine what should be done now to achieve it. This represents a significant challenge, as it deviates from the conventional approach of planning based on past results.
Within the heart of every employee, we believe there is a dream of where they want Nichimo to be in 10 years. We formalized this approach for the first time in our medium-term management plan and publicly announced it to society as a numerical target. Achieving an operating profit of 7.7 billion yen in FY2034 is by no means an easy target. However, now that we have announced it, we must seriously consider what to create to reach this target and also look beyond that goal.
This target of nearly tripling our current operating profit of around 2.7 billion yen cannot be achieved with our existing businesses. What is essential is growth investment to create future source of revenue. Over the three-year period of our medium-term management plan, we have set an unprecedented investment budget of 12.0 billion yen, combining capital investment and funds for M&A.
The crucial point here is that management should not unilaterally dictate where investments are made. The goal is to foster a bottom-up culture where ideas for helping a business flourish continuously emerge from our frontline operations. M&A is also an effective way to utilize capital to reduce the time needed to achieve our goals. This will not limit us to our own resources, but will allow us to actively incorporate external knowledge and technologies to promote open innovation. We are asking all employees to adopt this dual approach of breaking away from an over-reliance on internal resources and introducing external vitality.
Of course, investing involves risks. That is why we introduced business-specific Return on Invested Capital (ROIC) as a compass for managing our progress. We will instill the perspective of capital efficiency—which considers not only the absolute amount of sales and profits, but also the amount of results generated relative to the capital invested—into the front lines of our business. I am confident that this will be a powerful tool for taking a solid step forward in uncertain times.
A PBR below 1 is a poor result. Now we need to stick to the
“essence” of growth investment.
I am concerned that our price-to-book ratio (PBR) sits below one. In response, we will now work to improve capital efficiency to achieve a solid increase in corporate value.
We take the harsh market criticism, particularly the persistent fact that our PBR remains below one, very seriously. I understand this to mean that investors are sounding the alarm, saying, “While it is making a profit, we still have doubts about Nichimo’s future growth potential and efficiency.”
To break this stalemate, the only things that matter are to decisively implement growth investments to strengthen the source of corporate value and to powerfully boost market expectations (stock price). We will not be content with merely reaching a PBR of one. We intend to pursue the very essence of sustainable value creation that lies at its core. Specifically, instead of passively retaining cash, we will actively allocate money to growth investments fully conscious of ROIC. At the same time, we will maintain an aggressive stance of returning profits to shareholders, aiming to increase the payout ratio to over 35% and to over 40% in 10 years, while also striving to maintain a stable and continuous ROE of over 10%.
There are no changes whatsoever to the shareholder return policy outlined in our medium-term management plan. While we may need to make flexible decisions depending on our performance and other factors, I assure you that our commitment to prioritizing returns to our shareholders remains unwavering. At last year’s General Meeting of Shareholders, we received warm encouragement from an individual shareholder who has supported Nichimo for many years. This individual said, “I have high expectations for Nichimo for the sake of Japan’s marine products industry.” We sincerely hope to be a company that continues to earn trust and live up to these expectations.
Every employee embracing and taking ownership of change will
create Nichimo’s future
Viewing sustainability management as the heart of Nichimo’s business, we will establish a culture where employees embrace and take ownership of change, thereby achieving true transformation.
Sustainability management is the very essence of our business. If we do not protect fishery resources, the very foundation of our existence will be lost. On the other hand, developing materials that consider the marine environment will directly lead to the creation of a new, vast market. I am confident that demonstrating this virtuous cycle of environment and society through concrete results will be proof of our “Breaking Through.”
We are already beginning to see these efforts bear fruit. For example, biodegradable materials developed by Nichimo have been applied to mozuku farming in Okinawa. These materials have shown to promote the seaweed’s growth, resulting in the successful harvests of extremely high-quality mozuku. This has already been commercialized as Okinawa Thick Mozuku Seaweed. Studies have also shown that octopus pots made from the same material yield superior catches compared to those made from conventional plastic. Although we have yet to fully elucidate the scientific mechanisms, it is important to accumulate these success stories one by one and spread the news throughout society.
In order to ensure that “Breaking Through” is not just a one-off event, I am actively participating as an observer in meetings of each business division. This is to directly address the concerns and challenges faced by those on the ground, without the filter of a written report. What should I, as President, do to encourage a change in employee attitude? The correct answer cannot be found in any textbook. I am determined to walk the frontlines myself, get my hands dirty, and create my own textbook for our transformation.
Message for Stakeholders
This year, we have adopted “Challenge” as part of our Purpose. A challenge is not a one-time event. We will take on challenges, monitor the progress, identify the problems, and then tackle even higher obstacles. The true meaning lies in faithfully repeating this cycle and making continuous challenges a part of our culture.
At the core is an intense sense of urgency: If we don’t change, we won’t survive. We cannot achieve a true breakthrough if we are satisfied with the status quo. The process of transformation will undoubtedly involve overcoming numerous challenges. Despite the challenges, the future of Nichimo, and of the marine products industry as a whole, lies only in pushing forward without hesitation.
What I ask of employees is that they embrace and take ownership of change, and find personal enjoyment in it. I want our employees to abandon the attitude of waiting for instructions and directly express their desires for how things should be and how to change things to management. I believe that a truly bright future awaits us once we overcome the growing pains that arise during this challenge.
From Ocean To Dining, Challenges For The Better Future. This represents our very DNA, which has weathered countless storms throughout our more than 100-year history. We will demonstrate to all our stakeholders, through our actions and numbers, that we are a truly different Nichimo. We are grateful for your strong support and high expectations as we navigate vast uncertainty and forge ahead toward a sustainable future.
The Nichimo Group will continue its journey of challenges and will continue to create new and unseen value.