OUR WORLD

NISSIN FOODS HOLDINGS was first out of the gate with the world’s original instant noodles in 1958. Fifty years later, the industry we launched is still opening up new markets around the world. To win hearts in each of those markets, we strive to out-distance the competition not only through innovation, but also through our commitment to deliver the ultimate in food safety and customer enjoyment.

On October 1, 2008, our 50th anniversary, NISSIN FOODS HOLDINGS CO., LTD. (“the Company”) implemented a transformation to a holding company structure. We are embarked on a new course, suited to the times and in pursuit of the unlimited potential of food.

Review of business performance

In the year ended March 31, 2010 (fiscal 2010), NISSIN FOODS HOLDINGS CO., LTD. (the “Company”) posted consolidated net sales of ¥371,178 million (U.S.$3,989 million), a 2.5% increase from the previous year. Numerous factors contributed to this rise — from a trend in Japan to eat at home and product quality improvements based on technical innovation, to a successful product concept diversification encompassing consumer needs, pricing and distribution strategy, which is being implemented in strategic sales policies.

Profits in the year under review soared to the highest level ever. Operating income increased by 16.1% to ¥27,342 million (U.S.$294 million), and net income rose by 29.0% to ¥20,496 million (U.S.$220 million). Although pension costs increased, worldwide raw material costs stabilized, and the first profit in seven years from North American operations contributed significantly to these results.

The watchword in corporate management is “sustainability”

I recently participated in The Consumer Goods Forum¹ in London. I would sum up the most powerful message at the forum with the word “sustainability.” Heretofore, companies were thought of primarily as organizations for efficiently linking resources with consumers, and it was sufficient to consider them in terms of capitalist principles or operating efficiency. However, considering the question of biodiversity, I think that focusing solely on economics is no longer sufficient, nor acceptable. I believe that in business management at the Group, we must consider not only efficiency, but also balance with regard to matters such as CO2 emissions reduction, water resource saving, stable cereal grain supply and environmental preservation to maintain a sustainable global environment.

For example, when cereal grain, a principal ingredient in instant noodles, is used to produce beef, 11 kilograms of wheat or corn produce one kilogram of beef. This is not at all efficient. When wheat is used to produce instant noodles, up to 80% of the volume of the wheat can be converted into product. That's why at the seventh WINA² summit in April, I maintained that, considering the issue of the future of foodstuffs a few decades from now, “Instant noodles could save the Earth.” It might be better if humans became more herbivorous.

Constructive dissatisfaction with the status quo

I often say that instant noodles have many benefits as emergency rations for times of natural disaster. And, in times of economic crisis, their basic affordability makes them ideal, too. That is to say, they are a universally effective contingency for emergencies.

During normal, non-emergency times, we have devoted ourselves to new product development and marketing initiatives, which have increased total demand for instant noodles. We release no fewer than 450 new instant noodle products in Japan each year, approximately 300 items from NISSIN FOOD PRODUCTS CO., LTD. and another 150 items from MYOJO FOODS CO., LTD. These new products are quickly and automatically withdrawn from the shelves if their weekly sales prove to be too low. This may be the most frenetic pace of competition in the world. To prevail in this competition, product brand managers must hone their marketing sense, keeping their antennas constantly attuned to what products are catching on with consumers.

Ironically, despite such competition, basic instant noodle technology was mostly unchanged for 50 years. People took it for granted that instant noodles were wavy. However, people also expect fresh noodles to be straight. The development of a new technology has made it possible to produce straight instant noodles, a breakthrough we struggled to achieve for many years, along with new technology for making thick noodles. Incidentally, we plan to introduce products made using even more advanced technologies in autumn 2010. These technological breakthroughs have enabled us to achieve what others said was impossible. However, we must always remain dissatisfied with the status quo. My personal perception is that noodle technology remains perpetually only 37% perfected. This constructive dissatisfaction is the spirit that sustains NISSIN FOODS Group.

We intend to take advantage of new technologies that we call “JAPAN TECHNOLOGY” to raise our worldwide market share from the current 14.4% to approximately 20% in three years amid growing worldwide demand. For example, microwave ovens are common in the U.S., and that is why a high value-added product line CHOW MEIN has proven so successful there. In the coming years, we will step up the infusion of new Japanese technologies and marketing power in China and other growth markets in Asia to achieve further growth by reinforcing the sales structure.

A message for our stakeholders

In January 2010, we announced UNITE FOOD POWERS 2012, our first medium-term business plan, which covers the three-year period beginning in fiscal 2011. The purpose of the plan is to facilitate a fair and reasonable evaluation of the Company by setting forth our growth strategy centered on innovation and renovation. We announced in the plan a capital policy involving the use of ROE as a performance indicator and a target dividend payout ratio of 40% for fiscal 2013.

The Company constantly strives to boost the Group's earning potential. We hold enhancement of corporate value and appropriate shareholder returns to be our highest management priority, and I think that NISSIN FOODS HOLDINGS can reliably deliver shareholder satisfaction throughout the medium and long term. We have been blessed with technological breakthroughs that can support stable growth, and we have a business structure that is capable of delivering excellent business results. From these foundations, we will also strive to discharge our corporate social responsibility by expanding activities such as the Hyakufukushi Project³. In these and all of our endeavors, I ask your steadfast support and encouragement in the years to come.