Ajinomoto Co Inc

TSE:2802

Q1-2026 Earnings Call

[Operator]

Good evening, everyone. Thank you for joining Ajinomoto Group's conference call on the financial results for the first quarter of FY 2025 despite your busy schedule. I'm [ Pac ] from IR, serving as moderator today. From Ajinomoto, we have Mr. Kaji, Corporate Fellow, GM IR office, is on the call. The meeting is scheduled for 60 minutes, and the first 20 minutes or so would be explanation using disclosed material by Mr. Kaji, followed by a Q&A session. Please refer to the material uploaded on Ajinomoto's IR website. We would like to record today's meeting and later upload them on our website. So we would like to have your understanding on this.

So we would like to start the conference call, Kaji-san, please?

[Masataka Kaji, executive]

Yes. Thank you very much for joining us today. First of all, could you turn to Page 2. This is a summary. The first quarter sales, Ajinomoto Althea sale had an impact, but excluding currency translation, the sales increased 103% year-on-year. Business profit grew by double digit year-on-year to 112%, excluding currency translation. The business profit margin rose significantly to 13% plus 1.2% year-on-year, thanks to the effect of price increase and strengthened business structure.

Now by segment. Sauce & Seasonings plus Quick Nourishment led the food product business with double-digit growth in business profit. Frozen Foods revenue and profit increased in North America, excluding currency translation, but Japan's performance continued to be a challenge. Growth was strong in Bio & Fine Chemical business with continued strong performance of Functional Materials and the Bio-Pharma Services & Ingredients also achieved significant increase in profits. Profit attributable to the owners of parent increased significantly due to the growth in business profit and improvement in valuation of foreign exchange gains. We would continue to challenge to achieve the FY '25 forecast and realize FY 2030 road map.

Please move on to Page 3. As I have mentioned to you earlier, although sales with the strong yen and the sales of Althea through structural reforms, there was an impact. So sales remained at the same level as the previous year. Excluding the impact of currency translation and strong yen and sale of Althea, our organic growth -- sales increased by around 3% and our organic growth was mid-single-digit percentage of sales increase. So the currency translation excluded business profit grew by 12.4%, double-digit increase. Profit attributable to owners of the parent rose 34.4%, significant increase. EPS was up 38.8%. We will continue to focus on bottom line profit as well and aim to achieve our FY '25 forecast.

Now moving on to Page 4. This is the changes in business profit for the first quarter of FY 2025. I hope you would refer to this table, but this is shown on a yen basis. And we have some impact from currency translation.

So if you could please turn to Page 15. This is the changes of businesses. In the first quarter, excluding currency translation -- this is excluding currency translation and showing changes of business profit. We have achieved steady business profit growth of more than JPY 5 billion by firmly increasing the GP amount and controlling SG&A through the effective revenue growth and improvement of GP margin. The GP margin improved in both the Foods and Bio & Fine Chemicals businesses in the first quarter results and the company as a whole improved by 1.2%.

And moving back to Page 5, please. This is changes in business profit by disclosure segment. This is also a graph in Japanese yen basis. So please refer to the graph on Page 6, which is excluding currency translation. Here is an analysis of the changes in business profit by segment, excluding currency translation. Seasonings & Foods business saw overall profit increase due to significant growth in Overseas Sauce & Seasonings and Quick Nourishment. In Healthcare and Others, Functional Materials and Bio-Pharma Services & Ingredients also recorded a significant increase and led the overall increase. On the other hand, in Frozen Food business, although profit increased in North America, profit decreased overall due to lower profit in Japan and upfront investment associated with the expansion of Overseas business development.

Moving on to Page 7. These are the key financial results by segment. Our Overseas business here are also explained by excluding currency translation. First, Seasonings & Foods. In Japan, April and September '24 and March 2025, we did price hikes for coffee, and that turned around to record both sales and profit increase. On the other hand, Sauce & Seasonings sales increased, but profit decreased, and sales and income decreased in Solution & Ingredients for restaurants and industrial use for total Japan, therefore, sales increased, but profit decreased.

Overseas sales for B2C foods, unit price increased by 3%, and the volume was up 1% with -- the volume may not be at a satisfactory level. In addition to a temporary decline in volume due to a reaction to price hikes in certain categories in some major countries. In also Nigeria, where business confidence has been severely affected by currency devaluation and inflation, we experienced a significant volume decline. The volume decline in Nigeria pushed down the overall volume of Overseas Seasonings & Food Products by about 1%. On the other hand, Overseas business profit increased by double-digit percentage.

Next is Frozen Foods. In Japan, the price hike in March 2025 had a negative impact on volume, mainly for household users and the increase in unit price wasn't enough to compensate for it, resulting in lower sales and profit. We are currently considering a fundamental review of our strategy. Overseas, in North America, both sales and operating income increased by mid-single-digit percentages. Although overall Overseas sales increased, business profit decreased due to upfront costs incurred in expanded regional operations.

Next is Page 8. So this is the Healthcare & Other segment. Starting with the Functional Materials business, which is on the very top, as AI-related demand continued to expand as well as the firm trends for the PCs and servers, this business saw a substantial increase both in sales and profit. In the amino acids for pharmaceuticals and foods, inventory adjustments at the customers has mostly ended. Additionally, as the high-margin amino acids for pharma use and culture media was strong, both sales and profit increased.

In the Bio-Pharma Services, the CDMO business, each of the modalities in small molecules, medium molecules and gene therapy has steadily grown. Sales has declined as we sold Althea for structural reform purposes, but excluding this impact, sales has increased substantially. We have been able to realize a large increase in business profits as each business area saw an increase in profit as well as a possibility of impact coming from the sales of Althea.

Next, please turn to Page 9. From this slide onwards, please allow me to offer supplementary explanations about each segment, starting with the Seasoning & Foods segment. On the left, in the Sauce & Seasonings and Quick Nourishment business, the so-called B2C business in Japan in total, sales has increased by 9%. Excluding the coffee business in which volume declined due to the negative impact of multiple price increases, volume was 100% and unit price was 102% year-over-year. For instance, Ajinomoto's sales declined in reaction against increased sales volume due to the One Piece Bottle Campaign conducted in the previous year and Western [indiscernible] was slightly negative. However, many specific seasoning sales grew double digit, reflecting the effect of new product launches.

Going forward, we will continue to execute various initiatives such as launching new products and renewal of products in the flavor seasoning category, such as HONDASHI and Ajinomoto KK consomme targeting volume growth. On the right, in the Overseas business, we have been impacted by a one-off reactionary decline after raising prices in many specific seasoning products in Indonesia and the Philippines. We were also impacted by the situation in Nigeria, which was mentioned earlier. So we saw a deceleration in volume growth. We will focus on introducing products and advancing market initiatives in the Sauce & Seasonings category in major markets and aim to achieve full year forecast numbers, including volume targets.

For your reference, this is not written on the slide. In the Overseas B2C business, the major category and the local currency-based sales growth, I would like to mention about that. First, Ajinomoto product, local currency basis, please understand that we're between looking at currency, the sales has increased by the low single-digit level. For the Flavor & Seasoning, mid-single digit for the main specific ingredients, so the high single-digit level growth and the drinks. This is the canned coffee business in Thailand, low single-digit decline. So the instant noodles, negative of the low single digit. For the powdered drinks, this is a double-digit level growth.

In the same category, in terms of the business profit for each in local currencies, Ajinomoto double -- high single-digit plus. For the flavor seasoning, double-digit level plus. Menu-specific seasoning, double-digit increase. But for the beverage, double-digit decline. Instant noodles, double-digit increase of profit. Powdered beverage, double-digit level increase. So if you had not been able to write down all of the numbers, maybe you can check up later.

Going to Page 10. Moving to the Frozen Food business. As I said, some products in the North American market were impacted by tariffs. However, excluding the currency translation impact, we have been able to realize a mid-single-digit level of increase for both sales and profit. On the other hand, we consider the Japan business as a challenge and are conducting a drastic review of our strategy. We are preparing to explain about the specific actions when we announce our first half results. Against this backdrop, for our core products, Gyoza, Chinese dumplings, we renewed the brand logo so that the connection to our corporate brand, Ajinomoto, can be strengthened.

By enhancing the connection with the corporate brand, we will contribute to enhance our brand value. Furthermore, we launched new products such as Kokuma [indiscernible], which goes well with rice and [indiscernible] Gyoza Dumplings [indiscernible] and soups, which come in large packages and offers convenience. By doing so, we will expand touch points with families who are our main targets. By strengthening the main product, Gyoza products and the new strategy that is currently under development, we'll conduct challenges to recover growth and profitability in the frozen food business in Japan.

Going to Page 11, going to the Healthcare and Other segments, starting with the Functional Materials business. For Q1 of this fiscal year, we have been able to attain substantial growth in both sales and profit for 6 quarters in a row. Profitability declined slightly from the first quarter of the previous year to a little over 50%. The major reason for this was proactive investment in R&D and increased investment in human capital. With the continued expansion of AI application and steady growth of PC server business, we will continue to strive to achieve the full year target.

Going to Page 12. Next is the Bio-Pharma Services, CDMO. In Europe, which is our largest site, we have been able to achieve a steady growth, both in the small molecule and medium molecule business. Furthermore, IT phase in Japan has performed well as well as impressive sales increase at Forge in North America. As a result, excluding the impact of sales of Althea, we were able to achieve a strong increase in sales. Our business profit grew strongly in Japan and Forge saw a substantial improvement in profitability. In addition, as Europe's profit grew steadily with the effect of the sales of the Althea conducted as a structural reform being reflected, we saw a strong increase in business profit. In the Bio-Pharma service, we will continue to be united globally to accelerate the growth of each modality, focusing on technology so that this year's forecast can be achieved.

Page 13. Lastly, this is the update of each segment's ASP indicators. For the 3 months in Q1, organic growth was slightly smaller due to one-off reasons in the food business, but we'll conduct measures mainly in the food business to achieve our full year plan. We were able to improve the EBITDA margin in each segment. We will execute various initiatives to enhance our capability to generate cash flow. Overall, although there is a risk of currency translation having an impact on sales, but we will put in our utmost efforts as a company so that each profit line can be achieved. I'd like to ask for your continued support.

Thank you very much for your attention. I'd like to go into Q&A session from this point.

[Operator]

[Operator Instructions] From Mizuho Securities. Saji-san, please.

[Hiroshi Saji, analyst]

I have a CDMO issue. Althea sales impact is JPY 19 billion per year. That means quarter -- JPY 5 billion negative for the first quarter. That means CDMO sales is 20% up. But in each modalities, the result was good. So I'm interested in AJICAP and you mentioned the double-digit [indiscernible] sales will be achieved. And you mentioned that each modality is having a good performance. Could you elaborate on the sustainability of that?

[Unknown Executive]

So I will go one by one. Okay. CDMO question. First, Althea sales impact is, as Kaji-san mentioned, yes, the figures you mentioned is the level that we have impact. And excluding that, yes, as you mentioned, we will be having the result. Sustainability, various countries. Well, of course, we have U.S. tariff issues and its impact. But currently, we do not see any impact coming from that for this quarter. So in that sense, we have the momentum. And with the strength that we have, we have various initiatives and transactions with our customer very active. So I think we will be able to and are looking forward to increasing and improving our business there.

In the first quarter, steady sales have been recorded for AJICAP, and we have various initiatives. So we are looking forward to see its performance.

[Hiroshi Saji, analyst]

By the way, AJICAP double-digit JPY 100 million -- several million yen. So you mentioned that it's more than expected. It's along with the plan, yes, in line with the plan. Second is on Page 11, the Functional Materials is 11% increase in sales and 24% for the first quarter. Your start is very good. And in each of the area, there was some good performances. Year-on-year and vis-a-vis plan, how do you feel? And of course, sales increase, significant, is continuing towards the second quarter to fourth quarter. I think according to this plan, this is a bit of a slowdown. Basically, are you assuming that a bit of a slowdown? So could you elaborate on this point?

[Unknown Executive]

Second is about ABS. Vis-a-vis plan, the first quarter plan. Well, internally, we have, but we have not disclosed. So when we compare with the full year plan, this is a very good start. And what we see, the visibility is that for the time being, well, there is not a factor that would negatively impact this. So continuously, of course, initially, we have showed you the plan. We have not changed for both sales and profit, I think we will be able to grow. Did this answer your question?

[Hiroshi Saji, analyst]

Yes. And PC server networks applications, what were the areas that was good vis-a-vis plan?

[Unknown Executive]

All of them. Steadily compared to what we had expected, I think the demand is expanding in line with what we had planned.

[Hiroshi Saji, analyst]

So could you comment comparing with the actual application.

[Unknown Executive]

I think AI server and these things are very good toward the performance, I think they're very strong.

[Operator]

Next, Takashi Miyazaki Goldman Sachs Securities.

[Takashi Miyazaki, analyst]

I'm Takashi Miyazaki from from Goldman Sachs. So I have two questions. The first question is about the Seasonings and Foods segment. So If you look at Page 9, when you were explaining about that, so something was 102%. I think something was 102%. I didn't get it. Can you once repeat that? In the Overseas, you have been proactively increasing prices. So the volume seems to be a bit weak. But in terms of the unit price, it has been increased by 3%. From the second quarter, the impact of the price increase is going to be contributing. But from Q1, the volume already has started to decline. So I understand that overall, the profit situation was good. But in terms of the sales in the Overseas market, how should I interpret this?

[Unknown Executive]

So this 102%, this is a domestic Japan B2C business that will be the Sauce & Seasonings plus Quick Nourishment, excluding the coffee business, volume and unit price. That was the number. In terms of the volume, 100% year-over-year, that's the same. The unit price is 102%, excluding coffee, that was the situation for the Japan B2C business.

[Takashi Miyazaki, analyst]

Okay. Yes, I think I understand. Going to the Overseas price increase and volume situation.

[Unknown Executive]

For the first quarter, in Indonesia, the Philippines, for the menu-specific seasoning products, we have increased the prices. But this was planned in the first place. And after the price increase, temporarily, the volume will decline. In the first quarter, in terms of the volume, that is the reason why it was a bit weak. But going forward, we want to recover the volume growth. That is our plan. And basically, in the first quarter, because of this one-off situations, I think that is what we have seen as well in the first quarter.

[Takashi Miyazaki, analyst]

So this is a confirmation. Even if we have increased the price, the unit price increase of 3%. Is that in the first quarter. I was just wondering whether maybe the price should be higher.

[Unknown Executive]

In Japan, coffee price increase impact in the first quarter, I think basically, it has been contributing to the profit.

[Takashi Miyazaki, analyst]

For the second quarter onwards, for the Japan Seasonings & Foods business, can we expect more growth? Or is this cost is going to be a burden going forward?

[Unknown Executive]

Well, first of all, in terms of the unit price, going forward, based on the raw material costs -- and each of the materials, if necessary, we want to flexibly conduct price increases and that policy is unchanged. So this depends on -- including the currency situation of each of the markets, it depends on the raw material cost situation of each of the markets.

[Takashi Miyazaki, analyst]

And in terms of the Japan coffee business?

[Unknown Executive]

So July, actually, we have increased the prices substantially.

[Takashi Miyazaki, analyst]

So going forward, how this will impact the volume, including that aspect.

[Unknown Executive]

We are carefully looking at the situation. That stance is unchanged. So in that sense, for this fiscal year, the initial plan that we have announced, against that, the first quarter, I think we have seen a positive performance.

[Unknown Analyst]

Again, I want to recap on the -- this is the second question from my side. So the -- when you announced the full year results, in terms of the Healthcare and Others business, there were some timing differences. So that was the reason why the fourth quarter was a bit weak. Has that been able to -- you have been able to see that in the first quarter? Or are there other things that you have not been able to see materialize? But basically, you have seen that kind of timing difference appear in the first quarter. I was just wondering maybe the profits should have been higher in the Healthcare and Others business?

[Unknown Executive]

Well, initially, at the end of last fiscal year, the shipment timing has been shifted to this year's first quarter.

[Takashi Miyazaki, analyst]

And that will be the oligonucleotide-related business. So that has been ended in the first quarter.

[Unknown Executive]

Well, this is something that happens every year. But the first quarter, including the small molecule business that we have anticipated will be shifting towards from the first quarter to second quarter, that happens every year. So the overall CDMO business, the current situation is strong. I think that aspect is unchanged.

[Operator]

Next question, SMBC Nikko. Furuta-san, please.

[Tsukasa Furuta, analyst]

This is Furuta of SMBC Nikko. I have also two questions. First, AJIPHASE. Increased profit and sales. Can I confirm on those points? As you mentioned, of course, there are some time differences and its impact. But other than that, is there any chance that you're having new customers? And compared to the traditional trend, what is the accelerating factor for this?

[Unknown Executive]

The first question was about AJIPHASE. Yes, AJIPHASE is so and including AJICAP and Others as well, continuously, we have new customers. And we are positively doing various activities and proposing to our customers, and this is including AJIPHASE. And I think our initiatives are moving in a good way. So this is how the business goes.

[Tsukasa Furuta, analyst]

So first quarter, is there any specific factor?

[Unknown Executive]

No.

[Tsukasa Furuta, analyst]

That means that you're having continuously good business performance.

[Unknown Executive]

Yes, yes, Furuta-san. I've been talking to you from 2010. CDMO business, depending on the shipment of the business by quarter, there are some volume of shipment or not, depending on quarter, it's different, and this trend will continue. So I'm very sorry. I would like to have a longer perspective on your side and look at this business.

[Tsukasa Furuta, analyst]

And second question is about the frozen food Japan. The drastic strategy changes you're coming up with the first half. Can you provide us some more hints about the strategy?

[Unknown Executive]

Yes, this is a management matter, and various reforms and considerations are going on. So if this is shaped and we have some format, our CEO, Mr. Nakamura, would like to make the announcement and then get your advice. So I'm very sorry to say. We are not able to comment today.

[Tsukasa Furuta, analyst]

Thank you in that sense. So it is going to be rather drastic reform. And in the first half, you're going to be making announcement?

[Unknown Executive]

Yes, we would like to do so, including the management -- this is the management's focus at this point of time to come up with a drastic strategy.

[Operator]

Going to next question, UBS Securities, Hirata-san please?

[Shingo Hirata, analyst]

This is Hirata from UBS Securities. I have two questions. One is a kind of overlap with Miyazaki-san. So the first quarter business profit against your internal plan, how was the progress? I would like to confirm about that. So 13% for the full year, but increased for the -- 10% increase for the first quarter. CDMO timing difference is included. Maybe some people are thinking that the first quarter should have been a higher profit growth. In terms of the progress of the situation in the first quarter, by businesses, how is the progress against your internal plan?

[Unknown Executive]

Yes, as we have been talking, against the -- we won't be commenting about our progress for the first quarter against our internal plan.

[Shingo Hirata, analyst]

So maybe some qualitative comments will be welcome, maybe whether it was good or bad?

[Unknown Executive]

I have been utilizing the presentation materials to give you some information. But basically, that's all I can say at this point.

[Shingo Hirata, analyst]

Understood. My second question is, again, maybe this is a difficult question to answer. In the first quarter, for the Bio-Pharma service, JPY 2.9 billion of profit increase. So the impact of selling Althea and the loss shrinking at Forge and you look at the modality, each of the modalities, what will be the reason of this increased profit? Can you break it out?

[Unknown Executive]

So individually, we do not communicate about these numbers. But for each of the reasons, I think in the first quarter, they have been contributing to the increase of the profit in a well-balanced manner.

[Shingo Hirata, analyst]

Okay. I understand. So -- but Forge, EBITDA has turned to the positive. I think that's your target for this fiscal year. What's the progress of that?

[Unknown Executive]

For this fiscal year's plan, which will be bringing the EBITDA level to the black. The first quarter, the increase of the profit has been quite solid and powerful. So we want to maintain this momentum. And we want to achieve our targets. That is our stance right now. So Forge, basically, there's no negative impact situation right now. Yes, they are enjoying a very good and solid performance right now.

[Shingo Hirata, analyst]

So last question from my side. So in terms of oligonucleotide peptide, maybe you said that talking about maybe the timing difference, first quarter to second quarter, second quarter to third quarter. In terms of the end market demand, I am concerned that maybe that is weak, but you don't have to be concerned about that?

[Unknown Executive]

Well, I think the -- for the pharma business, there will be some market situations, but we are focusing on each of the modalities that we are focused on. In terms of our business, we are continuing to see a very strong and solid situation.

[Operator]

Next question. Igarashi-san from Daiwa Securities.

[イガラシ, analyst]

This is Igarashi from Daiwa Securities. I have one question about overseas Foods business. In your presentation, you mentioned that after a price hike in some regions, there is a negative impact in the Philippines and in several areas. And you have the paper of the financial statements supplementary says Philippines seems to be increasing though. By region or countries, is there any area where price hike is well accepted or not? Can you elaborate on this point? And also, can you tell us about how much we can expect?

[Unknown Executive]

Yes. domestic is -- Japan is different, but overseas, basically speaking, because of the rational reason, if the price hike is done, then I think smoothly, the market would accept it. It was so in the past as well. So price hike, if we do that, basically speaking, in any countries, whether it be overseas or Japan, when we announced that at that timing, we have increase in demand. And after the price hike with a rebound, the volume should go down. Of course, these trends will continue. So this is not a special factor for this first quarter only. I would like to have that understanding from you.

[Operator]

Let's go to the English channel. There are some questions coming in English. Bernstein, Euan-san, please.

[Euan Mcleish, analyst]

It's Euan McLeish from Bernstein here. I was interested to see in your Functional Materials division that the operating profit growth was slower than the revenue growth. Can you help us understand what's driving the margin decline, please? Is this a one-off cost that was in -- or a factor that was in Q1? Or is this relating to the new capacity that you brought online and more of a cost structure change that's going to continue going forward?

[Unknown Executive]

I think we have been using Slide 11, and I have referred to that using Slide 11. For the first quarter, this is our policy for this fiscal year. There's a lot of initiatives that are going forward. So R&D cost, we're going to spend more. And towards that, in terms of the human resources, we want to increase more capable people. So that is the reason why we are going to invest more in human capital. So this is -- in the first quarter, actually, we have this type of investment. Because we took these initiatives, compared to the first quarter last fiscal year, the profitability has gone down slightly.

But the impact -- but these initiatives, this happened last fiscal year as well. When we say that we want to accelerate our business, if we want to take these initiatives. So we tend to do that in April and May. So in the first quarter, these type of initiatives to be more active. And I think that's the reason why we're seeing more of these impacts coming in the first quarter.

[Operator]

Next question. Morita-san from Nomura Securities.

[Makoto Morita, analyst]

This is Nomura Securities, Morita speaking. The first question is about the sales in Thailand. Can you elaborate on this point for raw material and instant noodles, it is decline? But compared to that, the flavor seasonings and Ajinomoto is better. So can you elaborate on the Thailand situation?

[Unknown Executive]

As for Thailand, so to speak, product Ajinomoto, flavor seasonings, low single to mid-single-digit growth is being seen. And menu-specific seasonings, its percentage is still low, but we have high growth there. As for beverages, yes, the raw material cost is increasing. So currently, we cannot accelerate with our business. That means that looking at our profit and balancing with our profit, we are not making a full price pass-through. But for instant noodles, the domestic demand is not decelerating. So this is rather an issue of timing. That means that last year, by quarter, the instant noodle business in Thailand, depending on shipment timing, we had a negative growth or maybe double-digit growth. So by quarter, it's different. So this is not a special thing.

[Makoto Morita, analyst]

One confirmation about beverages. I think competitors are in trouble, and you have the negative factor. Is it that the market itself is shrinking? Is it so?

[Unknown Executive]

Well, last year, in the fourth quarter, we had accelerated nearly double-digit growth in shipments. So I think it depends on the timing of the shipment, I believe.

[Makoto Morita, analyst]

So there's another question, maybe we see some visibility of the Trump tariffs and FX is also moving now. The market environment is changing a lot. From your perspective, Mr. Kaji, and looking at Ajinomoto's performance, is there any factor that we have to take in mind, thinking macroeconomic factors. Earlier, you mentioned about the African market being a bit tough. So any changes that you are taking care of and focusing on?

[Masataka Kaji, executive]

Well, the market and economic situation in various countries. Now we have the tariffs fixed. And from here, how that will impact each economic market, we are focusing and carefully monitoring that. Well, of course, our product that is close to the people's life is, even though there should be the economic changes, this was not impacted so much. So therefore, we have no big concern. But for example, the products for industries and so forth, I think we need to focus and pay attention to it.

[Operator]

Going to the next question. BofA Securities.

[Unknown Analyst]

This is [indiscernible] from BofA Securities. So this is about the Bio-Pharma Services and Ingredients. I would like to ask about that. This is a detailed question about the numbers. At the beginning, Kaji-san numbers. So including Althea and currency translation, the organic business growth is a mid-single-digit growth. Is that the correct understanding?

[Masataka Kaji, executive]

For the Bio Services, I don't think I have mentioned that number. Overall, I think -- as you talked about the overall situation. So the total business profit growth, excluding currency translation, Althea is mid-single digit, I understand. In terms of sales, we're talking about total sales. So total sales, excluding currency and Althea, the organic growth of sales was mid-single digit. That was what I said.

[Unknown Analyst]

Oh, excuse me, I understand. So in terms of profit?

[Unknown Executive]

As [indiscernible] said, we can't disclose, but it's solid.

[Unknown Analyst]

You're talking about the CDMO?

[Unknown Executive]

Yes, CDMO. For the CDMO business, it's JPY 3.9 billion increase of the profit. We have disclosed that number.

[Unknown Analyst]

Understood. So the sales of Althea...

[Unknown Executive]

Excuse me, it's JPY 2.9 billion. So the increase -- including the profit increase through the Althea sales is JPY 2.9 billion. For the full year profit, it's I think JPY 10.8 billion profit increase. So there will be some timing differences, but basically, it's in line. Well, this JPY 10.8 billion increase, it would be including the Bio-Pharma Service and Ingredients overall, including amino acids for pharmaceutical and foods. So that will be in Page 2 on the lower end side.

So including the amino acids for pharmaceutical and foods, that will be JPY 3.4 billion to JPY 3.5 billion for this fiscal year. And I think it should reflects that towards the -- This JPY 3.4 billion, JPY 3.5 billion, growth, that's JPY 10.8 billion for the full year. So that will be the like-for-like.

[Unknown Analyst]

So the second question is the North American Frozen Foods. So I want to know about the top line growth on a local currency basis. In terms of profit, on a local currency basis, business profit has increased, but the market for the instant -- if you look at the instant noodle, I seem to hear that -- you're saying it's a tougher market. So maybe the future risks and opportunities, could you talk about that?

[Unknown Executive]

But the North American Frozen Food in the first quarter on a local currency basis in sales and profit with a mid-single-digit level plus. If you look at the situation, the home use. So for instance, home use Asian or the foods and for the rice-related foods. But if you look at the situation in the U.S. for people eating out, I think, because it's the inflation pressure, I think people are refraining a bit from eating that. So for that type of business, there's a slight decrease. But overall, the home use has a higher ratio, and we have been able to increase the home use. So the first quarter, that is the reason why we have been able to achieve these results.

[Unknown Analyst]

Understood. So Asian frozen food, which has a higher price point. So I think in the past, we have been impacted by the inflation. But currently, you haven't seen that impact appear?

[Unknown Executive]

So the Asian frozen food for the first quarter on a local currency basis, the mid-single-digit level sales increase. That's what we have seen.

[Operator]

Next question. Miyake-san from Morgan Stanley MUFG.

[Haruka Miyake, analyst]

This is Miyake from Morgan Stanley. I would like to ask about the Japanese frozen food, and I'm looking to see the drastic strategy that is coming up. The first quarter sales was minus 1% year-on-year. I would like to know by category, what was good and what was bad.

And another question is Gyoza is the major product -- and I understand that you need recovery. But when you look at by category, is that the source of the issue? Or is there any other issue in other categories. So what is the actual situation amongst different products?

[Unknown Executive]

Yes, the current situation. In the first quarter, domestic frozen foods home use. First, home use was high single-digit minus. Restaurant and industrial use was low single-digit plus. And to your question, Miyake-san, the home use Gyoza. I think a major product is Gyoza, and we have value and high volume and the result for Gyoza was quite severe. So that has also impacted the whole frozen food home use products.

[Haruka Miyake, analyst]

So that means that home use products other than Gyoza -- compared to Gyoza, so they were not so troubled?

[Unknown Executive]

Well, in the first quarter, it was mixed. That means that there were good product, and there were some difficult product as well.

[Haruka Miyake, analyst]

So for Frozen Food, you're trying to come up with drastic changes, right?

[Unknown Executive]

Yes, yes.

[Operator]

Let's go to the next question. JPMorgan Securities, Fujiwara-san, please.

[Satoshi Fujiwara, analyst]

Fujiwara from JPMorgan Securities. So I'm going into details. But if you look at the outline of the presentation, so the raw material impact year-over-year, japan food cost increase for raw material. So JPY 4.2 billion increase impact for the first quarter. If you look at the -- in the past 5 years, we have seen the cost inflation, but this seems to be large even compared to that level. So what is the background of this? And the cost increase outlook, I would like to -- can you elaborate on that point?

[Unknown Executive]

Well, for the Seasonings and Food, the JPY 4.2 billion is of course for the raw material, most of it is coming from raw material for coffee.

[Satoshi Fujiwara, analyst]

So for example, for last year, first half, including that cost increase basically was marginal. But you can see this acceleration of raw material? Is it the inventory situation, the timing situation?

[Unknown Executive]

For last fiscal year, the coffee raw material was going up, but for the other raw material hasn't been going up. So on a net-net basis, even if we have been able to offset more or less the coffee raw material increase. But for the first quarter, for the other costs was the same year-over-year, but the coffee raw material has continued to increase. Okay. So the first quarter, the coffee business as you see profit has increased. You're going to do some additional price hikes. But in terms of the environment, they have to be vigilant.

[Satoshi Fujiwara, analyst]

Another question about the Healthcare and Others business, and you have Others. So a decline of JPY 4.3 billion of profit -- excuse me, 4.3 billion in sales and JPY 1.1 billion decline in profit. So there's a lot of businesses in here. But why we have seen this huge decline in sales and profit? Can you comment on that?

[Unknown Executive]

In terms of profit -- so this is the first quarter that we do put in a lot of initiatives because we are investing the strategic costs, including new businesses. We're spending a lot in the first quarter. That's the major reason. On the other hand, in terms of sales -- although the size is small, the North America, we still have some manufacturing facilities for the [indiscernible]. We have been conducting structural reform. In the first quarter, that has progressed. So the so-called -- we have stopped the production of this product and has been converting into M&A for pharmaceutical and foods. That has progressed a lot, and that has the impact reflected in the Other subsegments. So basically, for the full year, in terms of the profit level -- so the JPY 2.8 billion of the substantial increase of profit for the Other subsegment. But in terms of the progress, it's in line. So this is the first quarter. I think basically, the cost seems to come first in the first quarter. So in terms of the numbers, I think, yes, I do understand it's difficult to understand in the first quarter. But in terms of the progress, it's in line with your plan.

[Operator]

Thank you for your questions. And I think everybody has finished with their questions. We would like to close at this point of time, Q&A session. Lastly, but not least, Mr. Kaji would like to say a few words.

[Masataka Kaji, executive]

Everyone, despite your busy schedule, thank you very much for joining the conference call. In the first quarter, we had some currency translations, but I think we were able to steadily grow our business, especially top line. We have the sales momentum, and we will be able to recover this, and there should be more measures and initiatives coming up. I would like to have your expectation towards this. And also your frank opinion and advice will be reflected and that will be shared with our management and that will be incorporated into our strategies. Thank you very much for your time today.

[Operator]

This concludes the conference call. Thank you for your participation. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]