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Ajinomoto Co Inc 2802

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Ajinomoto's Guidance Upward Revision no Surprise; COVID-19 Remaining a Key Swing Factor

Jeanie Chen Senior Equity Analyst

Analyst Note

| Jeanie Chen |

It was no surprise that narrow-moat Ajinomoto revised up its full-year profit guidance again although the increase of 10% is greater than our expectation as the rising COVID-19 cases have again deterred in-store promotions and boosted stay-at-home demand. As profit growth of the seasonings business, a key growth driver over the past two quarters, decelerated to low-single digits after the company resumed marketing spend, we reiterate our view that profit growth boosted by a lack of competition during COVID-19 looks unlikely to be sustained.

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Company Profile

Business Description

Ajinomoto is Japan’s leading food company specializing in amino acids and seasonings derived from amino-acid fermentation technologies. It also produces processed foods including dry soup mixes, frozen foods, and beverage products. Apart from the consumer business, it is a key supplier of MSG and nucleotides to global food manufacturers including Nestle. The food business represents more than three quarters of group sales and 80-plus% of profits with roughly half generated overseas. Animal nutrition, healthcare, and specialty chemicals make up the balance of its business portfolio.

15-1, Kyobashi 1-chome, Chuo-ku
Tokyo, 104-8315, Japan
T +81 352508111
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Dec 31, 2020
Fiscal Year End Mar 31, 2020
Stock Type
Employees 41,528