Medium-Term Management Plan 2023

Medium-Term Management Plan 2023, toward Achieving Long-Term Vision 100

• Long-Term Vision 100

Background for Revising Medium-Term Management Plan 2020

The Oenon Group has worked toward the quantitative targets set in Medium-Term Management Plan 2020, namely “net sales of ¥100.0 billion and ordinary income of ¥5.0 billion.” However, the external environment has changed significantly from the time this plan was formulated.

• Cost of sales has increased, due to rising energy costs (crude oil and gas).
• Logistics costs have grown, due to mounting personnel and fuel expenses.
• Repeated, severe natural disasters have suppressed consumption.
• Competition has grown more stringent due to the revised Liquor Tax Act going into effect.
• The Hokkaido Eastern Iburi Earthquake led to the suspension of operations at the Tomakomai Factory.

To take these external environmental factors into account, we have formulated our next medium-term management plan before the previous plan has ended. Hence, Medium-Term Management Plan 2023 runs for the five-year period from 2019 to 2023.

Overview of Medium-Term Management Plan 2023

1. Focus on the shochu business

・Kou-type shochu: Centering on Big Man, establish local-brand products that are closely rooted in the community.

・Kou-otsu blended shochu: Strengthen brands in the Sugo series (Sugo-mugi and Sugo-imo) and the Tantakatan series.

・Otsu-type shochu: Expand the scale of sales by enhancing our lineup in the Hakata no Hana series.

2. Expand sales in the brewing and industrial alcohol business

・Leverage the enhancement of distillation facilities at the Shimizu Factory of GODO SHUSEI CO., LTD. to expand sales routes with the aim of achieving the second largest share of the market, by sales, for brewing and industrial alcohol.

3. Conduct production reforms

・Work to obtain orders from client companies, and bolster efficiency by fully utilizing facilities at OENON PRODUCT SUPPORT CO., LTD.

4. Achieve new development in the enzymes and pharmaceuticals business

・Prioritize the improvement of existing lactase and develop new lactase.

・Aim to expand the production support business in Japan and overseas.

5. Follow a real estate CRE strategy

・Cultivate this as a business that supports Group profits

6. Quantitative targets

・On February 10, 2022, the Company decided to withdraw the quantitative targets below for now, mainly because its management environment is changing dramatically and its outlook remains uncertain due to factors such as surging or persistently high ingredient prices and energy prices, and the expectation of prolonged increases in material prices and logistics expenses driven by high crude oil prices.

Net sales	\90 billion
Ordinary income	\3 billion
Ordinary income margin	3.3%
Dividends per share	\10
ROE	9%

7. Quantitative targets by segment

(Billions of yen; figures have been rounded down below 100 million yen)

	2018	2023	Growth rate
Alcoholic beverages	68.8	78.4	14%
Shochu	40.1	42.7	6%
Chu-hi (RTD)	7.3	10.2	39%
Sake and sake compounds	7.3	6.5	-11%
Brewing and industrial alcohol	6.0	11.4	88%
Wine and spirits	6.1	5.8	-5%
Others	1.8	1.8	0%
Enzymes and pharmaceuticals	4.0	6.3	53%
Starch for food processing	3.8	4.0	3%
Real estate	0.3	1.3	290%
Total	77.1	90.0	17%

* The overview and quantitative targets reflect conditions as of the announcement of the medium-term management plan (February 2019).