| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥11058.9B | ¥10786.3B | +2.5% |
| Operating Income | ¥311.9B | ¥303.8B | +2.7% |
| Ordinary Income | ¥312.5B | ¥322.5B | -3.1% |
| Net Income (Attributable to Owners of Parent) | ¥162.4B | ¥182.7B | -11.1% |
| ROE | 5.6% | 6.6% | - |
For the fiscal year ended March 2026, Revenue was ¥11,058.9B (YoY +¥272.6B, +2.5%), Operating Income was ¥311.9B (YoY +¥8.1B, +2.7%), Ordinary Income was ¥312.5B (YoY -¥10.0B, -3.1%), and Net Income Attributable to Owners of Parent was ¥162.4B (YoY -¥20.3B, -11.1%). The company achieved higher revenue and operating-level profit, but Ordinary Income and Net Income declined. Non-operating results were affected by increased financial costs (interest expense ¥45.2B) and fluctuations in foreign exchange-related gains/losses, eliminating the prior-year effect of +¥1,003B at the ordinary level. Extraordinary items boosted pre-tax profit by a net ¥82.5B (gain on sale of investment securities ¥77.2B, gain on sale of fixed assets ¥35.9B, etc.), but Net Income was compressed by an effective tax rate of 28.5% and deduction for non-controlling interests of ¥60.6B. Gross profit margin improved to 13.9% from 13.5% (+0.4pt), but SG&A ratio rose to 11.1% from 10.7% (+0.4pt), leaving Operating Margin at 2.8% broadly flat. By segment, core Food Ingredient Distribution accounts for 66.2% of revenue but saw Operating Income decline -12.5%; Processed Foods saw a large Operating Income decline of -27.7% due to higher raw material and promotion costs, while Marine Resources achieved a V-shaped recovery with Operating Income +162.7%, demonstrating progress in revenue diversification.
[Revenue] Revenue of ¥11,058.9B (+2.5%) reflects price revisions taking hold and firm volumes, delivering YoY growth of ¥272.6B. By segment, Food Ingredient Distribution ¥7,851.9B (+2.6%) accounted for 71.0% of total revenue, supported by expanded transactions in foodservice and wholesale channels and the effect of price revisions for marine, livestock, and agricultural products. Processed Foods ¥2,021.5B (+3.1%) benefited from higher sales of frozen foods, chikuwa, and pet food, adding ¥61.6B YoY. Marine Resources ¥1,687.5B (+2.5%) saw contributions from higher sales in North American fishing and aquaculture and improved resource prices, up ¥41.1B YoY. Other ¥296.4B (+3.4%) comprised steady logistics and real estate operations.
[Profitability] Operating Income ¥311.9B (+2.7%) reflected an improved gross margin of 13.9% (prior 13.5%, +0.4pt), but SG&A of ¥1,227.9B (prior ¥1,152.2B, +6.6%) rose faster than revenue growth, keeping Operating Margin at 2.8% in a flat range. The main drivers of SG&A increase were higher personnel and logistics costs and goodwill amortization of ¥17.4B (prior ¥16.4B). By segment, Food Ingredient Distribution Operating Income ¥157.8B (-12.5%) declined, with a margin of 2.0% (prior 2.4%) due to delayed pass-through of price increases and reduced cost absorption. Processed Foods Operating Income ¥100.7B (-27.7%) fell substantially, with margin down to 5.0% (prior 7.7%) as higher raw material and promotion costs weighed on profits. Conversely, Marine Resources Operating Income ¥24.4B (+162.7%) improved to a margin of 1.4% (prior 0.6%) due to operational efficiency and better revenue management. Non-operating income totaled ¥54.3B (dividend income ¥12.5B, FX gains ¥2.6B, etc.) versus non-operating expenses ¥53.7B including interest expense ¥45.2B (prior ¥41.9B), resulting in a net effect of ¥0.6B, nearly neutral. Equity-method loss was -¥1.7B (prior -¥2.2B), a slight improvement. Ordinary Income ¥312.5B (-3.1%) turned negative YoY as deterioration in non-operating items offset operating-level gains. Extraordinary items were net +¥82.5B (gain on sale of investment securities ¥77.2B, gain on sale of fixed assets ¥35.9B, head office relocation costs ¥21.2B, etc.), lifting pre-tax profit to ¥395.0B, but these were one-off and do not reflect ordinary operating strength. Income taxes were ¥112.5B (effective tax rate 28.5%), and after deducting non-controlling interests ¥60.6B, Net Income Attributable to Owners of Parent was ¥162.4B (-11.1%). In conclusion, while operating-level revenue and profit increased, front-loaded SG&A and volatility in non-operating and extraordinary items resulted in lower bottom-line profit.
Food Ingredient Distribution maintained revenue of ¥7,851.9B (+2.6%) but saw Operating Income decline to ¥157.8B (-12.5%), reducing margin to 2.0% (prior 2.4%). While expansion in marine trading, livestock, and agricultural product handling lifted revenue, delayed price pass-through and higher logistics and labor costs compressed margins. Intensified competition in the foodservice channel and increased promotion expenses also contributed to margin pressure. Processed Foods revenue ¥2,021.5B (+3.1%) grew, but Operating Income dropped sharply to ¥100.7B (-27.7%), with margin down to 5.0% (prior 7.7%). Although sales of frozen foods, canned goods, and chikuwa were solid, higher raw material costs (fish prices, wheat, packaging) and energy costs reduced gross margin, and increased promotion activity pushed up SG&A. Marine Resources revenue ¥1,687.5B (+2.5%) and Operating Income ¥24.4B (+162.7%) marked a large improvement, with margin recovering to 1.4% (prior 0.6%). Operational efficiency in North American fisheries, improved resource prices, and strengthened revenue management in aquaculture contributed to a V-shaped recovery from prior weakness. Other (logistics, real estate, etc.) revenue ¥296.4B (+3.4%), Operating Income ¥37.2B (-10.9%), margin 12.6% (prior 14.6%); lower profitability in logistics weighed on results.
[Profitability] ROE 5.6% (prior 5.7%) edged down due to lower Net Income. Operating Margin 2.8% (prior 2.8%) was flat; Net Margin 1.5% (prior 1.7%) declined due to volatility in extraordinary items and tax burden. Total Asset Turnover 1.47x (prior 1.58x) slowed due to higher inventories. Financial leverage 2.58x (prior 2.47x) supported ROE. [Cash Quality] Operating Cash Flow (OCF) ¥248.0B is 1.53x Net Income ¥162.4B, indicating reasonable cash generation, but OCF/EBITDA 0.50x (EBITDA = Operating Income ¥311.9B + Depreciation ¥183.2B = ¥495.1B) is low due to inventory increases. Free Cash Flow ¥36.4B (OCF ¥248.0B - CAPEX ¥253.4B) does not cover dividend payments ¥55.6B, yielding an FCF coverage ratio of 0.65x, which is fragile. Accrual ratio -0.5% ((Net Income ¥162.4B - OCF ¥248.0B = -¥85.6B) / Total Assets ¥7,517.0B) is healthy, but cash is notably tied up in inventories. [Investment Efficiency] Total Asset Turnover 1.47x remains high for a wholesale/distribution model. CAPEX ¥253.4B / Depreciation ¥183.2B = 1.38x indicates growth investment exceeds renewal spending. Goodwill ¥76.2B / EBITDA = 0.15x, showing light goodwill burden. [Financial Soundness] Equity Ratio 38.8% (prior 40.4%) declined due to expansion of total assets from inventory increases. Current Ratio 162.6% (Current Assets ¥4,574.7B / Current Liabilities ¥2,812.9B) is healthy, but Quick Ratio 75.6% (Quick Assets ¥2,126.8B / Current Liabilities ¥2,812.9B) highlights high inventory dependency. Interest-bearing debt ¥2,268.8B (short-term borrowings ¥1,373.9B, long-term borrowings ¥894.9B, bonds ¥51.0B, CP ¥29.0B) and Debt/EBITDA 4.58x show rising leverage. Short-term debt ratio 60.6% indicates maturity concentration risk, and Cash ¥541.4B / Short-term Liabilities ¥2,812.9B = 0.19x shows a thin liquidity buffer.
OCF ¥248.0B (prior ¥391.8B, -36.7%) was derived from Operating Cash Flow subtotal ¥369.0B less inventory increase -¥194.0B, accounts receivable increase -¥59.2B, accounts payable increase +¥68.3B, and tax payment -¥120.5B, indicating cash generation of 1.53x Net Income ¥162.4B but a large inventory buildup reduced YoY cash. Investing Cash Flow -¥211.6B (prior -¥18.9B) was mainly driven by CAPEX -¥253.4B (prior -¥190.0B) as purchases of tangible and intangible assets increased, along with purchase of investment securities -¥12.5B and acquisition of subsidiary shares -¥70.4B. These were partially offset by sale of investment securities +¥108.9B (prior +¥152.2B) and sale of fixed assets +¥56.8B (prior +¥14.9B). Free Cash Flow ¥36.4B (prior ¥372.9B) did not cover dividends ¥55.6B (parent ¥55.5B + non-controlling interests ¥67.7B), resulting in FCF coverage 0.65x and a shortfall. Financing Cash Flow -¥8.1B (prior -¥293.5B) included proceeds from long-term borrowings +¥364.4B (prior +¥412.5B) and bonds issuance +¥179.1B (prior +¥149.2B), while repayments of long-term borrowings -¥409.7B (prior -¥570.5B), net short-term borrowings -¥54.0B (prior -¥210.8B), dividends -¥123.2B (parent ¥55.5B + non-controlling interests ¥67.7B), and transactions with non-controlling shareholders -¥154.0B were carried out. CP balance increased by +¥240.0B, supplementing funding. Cash balance rose from ¥484.2B at the beginning of the period to ¥529.3B at the end (+¥45.1B, including FX effects +¥16.8B). However, operating cash alone could not fully absorb outflows from inventory increases; liquidity was supplemented by sale of securities and fixed assets and increased borrowings/CP.
Core recurring earnings are represented by Operating Income ¥311.9B, which reflects business operations after deducting SG&A ¥1,227.9B from Gross Profit ¥1,539.8B. Non-operating income ¥54.3B (dividend income ¥12.5B, FX gains ¥2.6B, etc.) is limited at 0.49% of revenue and roughly offsets non-operating expenses ¥53.7B (interest expense ¥45.2B, etc.), so net impact on Ordinary Income is minor. Equity-method loss -¥1.7B is small and contributes little to earnings structure. One-off items include Extraordinary Gains ¥114.7B (gain on sale of investment securities ¥77.2B, gain on sale of fixed assets ¥35.9B, insurance proceeds ¥16.9B, etc.) and Extraordinary Losses ¥32.2B (head office relocation costs ¥21.2B, loss on retirement of fixed assets ¥4.5B, impairment losses ¥2.1B, etc.), netting to +¥82.5B and boosting pre-tax profit to ¥395.0B, but these are non-recurring and have low persistence. Accrual ratio -0.5% ((Net Income ¥162.4B - OCF ¥248.0B = -¥85.6B) / Total Assets ¥7,517.0B) is healthy, indicating profits are backed by cash; however, OCF/EBITDA 0.50x (OCF ¥248.0B / EBITDA ¥495.1B) shows cash conversion has slowed due to working capital increases. The gap between Ordinary Income ¥312.5B and Net Income ¥162.4B is large, primarily due to taxes ¥112.5B (effective tax rate 28.5%) and non-controlling interests ¥60.6B. Comprehensive Income ¥423.5B (Net Income ¥162.4B + Other Comprehensive Income ¥261.1B) exceeded Net Income significantly, driven by translation adjustments +¥65.4B, valuation gains on securities +¥39.5B, and retirement benefit adjustments +¥25.4B, expanding balance-sheet valuation gains that have not been monetized. For the next fiscal year, reproducibility of extraordinary gains is limited; improving earnings quality will depend on building operating-level profits and tightening working capital management.
For the fiscal year ending March 2027, the company forecasts Revenue ¥11,100.0B (+0.4%), Operating Income ¥320.0B (+2.6%), Ordinary Income ¥300.0B (-4.0%), Net Income Attributable to Owners of Parent ¥150.0B (-7.6%), and EPS ¥99.22. The company expects operating-level profit growth from consolidation of price revisions, normalization of raw material costs, and improved profitability in Processed Foods and Marine Resources segments, but Revenue growth is modest at +0.4%, reflecting an assumption of slowing volume growth and completion of an initial round of price revisions. The forecasted decrease in Ordinary Income (-4.0%) likely assumes increased interest burden (given interest-bearing debt ¥2,268.8B and Debt/EBITDA 4.58x) and FX risk, such that non-operating expenses offset operating profit gains. Net Income forecast ¥150.0B assumes prior-year extraordinary gains of +¥82.5B will not recur. Dividend guidance is annual ¥45 (interim ¥22, year-end ¥23); at projected EPS ¥99.22, payout ratio is about 45%, within a sustainable range. Achieving guidance will require inventory reductions (improving turnover of Inventories ¥2,447.3B), refinancing and extending/locking maturities of short-term borrowings and CP, and control of SG&A ratio (improving SG&A ratio from 11.1% to the 10% range).
Annual dividend was interim ¥50 and year-end ¥28, total ¥78, but a 1-for-3 reverse split was implemented on January 1, 2026 (1 share → 3 shares), and post-split conversion equates to an annual amount of ¥44.67 (interim ¥16.67, year-end ¥28). Direct comparison with the prior-year annual dividend ¥50 (pre-split) is not straightforward, but after split adjustment, the effective payout ratio is healthy at 34.2% (Total Dividends ¥55.6B vs. Net Income Attributable to Owners of Parent ¥162.4B). However, Free Cash Flow ¥36.4B vs. dividends ¥55.6B yields an FCF coverage of 0.65x, indicating part of dividend funding relied on working capital adjustments or external financing (borrowings/CP). Share buybacks were minor at ¥0.05B (¥5M), so Total Return Ratio approximates the payout ratio at 34.3%. Next fiscal year dividend guidance ¥45 (interim ¥22, year-end ¥23) implies a payout ratio of about 45% against forecast EPS ¥99.22; if earnings targets are met, this is sustainable, contingent on FCF improvement (inventory compression, working capital optimization). A payout ratio of 34.2% is conservative relative to the industry average, leaving room for further increases if profit growth and cash generation improve, but short-term sustainability depends on stabilizing FCF.
Inventory stagnation and working capital risk: Inventories ¥2,447.3B (32.6% of total assets, YoY +12.3%) are pressuring total assets and constraining OCF. Inventory turnover days are extended at 94 days (Inventories ¥2,447.3B / Revenue ¥11,058.9B × 365), and working capital days are 121 days (CCC = Accounts Receivable Turnover 47 days + Inventory Turnover 94 days - Accounts Payable Turnover 20 days), showing a lengthening trend. In a demand slowdown or price decline scenario, valuation losses or write-offs may materialize, prolonging cash constraint. Inventory optimization (improving order accuracy, enhancing demand forecasting) and turnover improvement are urgent; failure to make progress could create liquidity stress and profit pressure.
Short-term debt concentration and interest-rate risk: Of interest-bearing debt ¥2,268.8B, short-term borrowings ¥1,373.9B + CP ¥29.0B result in a short-term debt ratio of 60.6% and concentrated maturities. Cash ¥541.4B / Short-term Liabilities ¥2,812.9B = 0.19x indicates a thin liquidity buffer and high refinancing risk. Debt/EBITDA 4.58x represents a high leverage level; in a rising-rate environment (interest expense ¥45.2B, up 7.9% from prior ¥41.9B), interest burden could increase further and compress Ordinary Income. Refinancing into long-term borrowings and bonds and interest-rate fixing (use of hedges) are necessary; delays would weaken financial flexibility.
Margin deterioration in core segments and lag in price pass-through: Food Ingredient Distribution (66.2% of revenue, 50.6% of Operating Income) saw margin decline to 2.0% (prior 2.4%) and Operating Income down -12.5%. Delayed pass-through of higher raw material and logistics costs and intensified competition are primary causes; external volatility (fish prices, livestock prices, energy) directly impacts margins. Processed Foods also saw margin fall to 5.0% (prior 7.7%). Without gross margin improvement and SG&A control, maintaining an Operating Margin of 2.8% will be difficult. Continued delays in price revision implementation (customer negotiations, competitor responses) and increased promotion spending would worsen operating leverage and further erode Net Margin.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.8% | 14.6% (7.2%–39.4%) | -11.8pt |
| Net Margin | 1.5% | 11.9% (7.2%–35.4%) | -10.4pt |
Profitability lags significantly behind the industry median, reflecting a low-margin, high-volume wholesale/distribution business model.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.5% | 10.1% (7.3%–12.1%) | -7.6pt |
Revenue growth is below the industry average, reflecting operations in mature markets. High asset turnover helps compensate in terms of capital efficiency.
※ Source: Company compilation
At the operating level, the company achieved revenue and operating profit growth, and the significant improvement in Marine Resources (Operating Income +162.7%) indicates progress in revenue diversification. However, declines in Food Ingredient Distribution (-12.5%) and Processed Foods (-27.7%) weighed on consolidated profit, making price pass-through progress and SG&A control the focus for next-year Operating Margin improvement. Revenue growth +2.5% trails industry median +10.1%, consistent with mature-market dynamics and a completed round of price revisions, but the high Total Asset Turnover 1.47x continues to support capital efficiency.
Inventory build-up to ¥2,447.3B (+12.3%) led to OCF ¥248.0B (-36.7%) and OCF/EBITDA 0.50x, significantly slowing cash conversion; Free Cash Flow ¥36.4B falls short of dividends ¥55.6B, with FCF coverage 0.65x. Weak cash generation stems from delayed inventory turnover and working capital optimization. Interest-bearing debt ¥2,268.8B, Debt/EBITDA 4.58x, and short-term debt ratio 60.6% create tight leverage and maturity profiles; rising interest costs (interest expense ¥45.2B) pose a risk to Ordinary Income. Refinancing to longer-term borrowing and inventory compression to restore cash generation are structural priorities for financial soundness and sustaining shareholder returns.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial disclosures. Investment decisions should be made at your own responsibility; consult with professional advisors as needed.