| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥859.1B | ¥831.0B | +3.4% |
| Operating Income | ¥70.3B | ¥66.3B | +6.1% |
| Ordinary Income | ¥81.9B | ¥69.5B | +17.7% |
| Net Income | ¥57.1B | ¥35.8B | +59.7% |
| ROE | 8.8% | 6.3% | - |
For the fiscal year ended March 2026, Hokuto reported Revenue of ¥859.1B (YoY +¥28.1B, +3.4%), Operating Income of ¥70.3B (YoY +¥4.0B, +6.1%), Ordinary Income of ¥81.9B (YoY +¥12.3B, +17.7%), and Net Income of ¥57.1B (YoY +¥21.3B, +59.7%), finishing with higher sales and profits. Operating margin improved to 8.2% (up +0.2pt from 8.0% a year earlier), and ordinary margin improved to 9.5% (up +1.2pt from 8.4%), indicating profitability improvements in both core operations and financial items. The substantial increase in Net Income was driven not only by operational improvements but also by non-recurring items including Special Gains of ¥21.8B (insurance proceeds ¥19.2B, gain on sale of investment securities ¥2.5B) and foreign exchange gains of ¥6.4B. By segment, the core Domestic Mushroom Business delivered stable growth with Revenue ¥561.8B (+1.8%) and Operating Income ¥72.4B (+3.5%), while the Chemical Products Business drove companywide performance with Revenue ¥149.2B (+11.3%) and Operating Income ¥4.7B (+39.5%). ROE improved to 8.8%, FCF was ¥79.1B providing ample liquidity, and financial soundness remained at a high level.
[Revenue] Revenue of ¥859.1B (YoY +3.4%) rose across all segments. The Domestic Mushroom Business recorded ¥561.8B (+1.8%) with stable price and volume, the Chemical Products Business grew to ¥149.2B (+11.3%) delivering double-digit growth, and the Overseas Mushroom Business achieved ¥82.4B (+6.8%) with contributions from FX effects and local sales expansion. By contrast, the Processed Foods Business declined slightly to ¥80.0B (-1.9%). Geographically, over 90% of Revenue is from Japan and contributions from overseas sites remain limited. Gross profit stood at ¥249.2B (gross margin 29.0%, improved +0.4pt from 28.6%) reflecting improved cost efficiency.
[Profitability] Operating Income of ¥70.3B (+6.1%) increased due to gross margin improvement and SG&A control. SG&A ratio was 20.8% (up +0.2pt from 20.6%) but was offset by gross margin gains. Ordinary Income of ¥81.9B (+17.7%) benefited substantially from non-operating income of ¥13.8B (dividend income ¥2.9B, foreign exchange gains ¥6.4B), significantly improving profitability at the ordinary level. Special Gains of ¥21.8B (insurance proceeds ¥19.2B, gain on sale of investment securities ¥2.5B) were recorded, pushing Profit Before Tax to ¥100.5B (up +66.7% from ¥60.3B). After tax expense of ¥30.5B (effective tax rate 30.3%), Net Income rose to ¥57.1B (+59.7%). In conclusion, stable domestic mushroom performance, improved profitability in chemical products, and contributions from FX and special gains drove the increase in both sales and profits.
The Domestic Mushroom Business recorded Revenue ¥561.8B (+1.8%) and Operating Income ¥72.4B (+3.5%, margin 12.9%), showing stable growth as the core business with support from price maintenance and operational efficiency gains. The Chemical Products Business posted Revenue ¥149.2B (+11.3%) and Operating Income ¥4.7B (+39.5%, margin 3.1%), driven by increased demand for packaging and agricultural materials and margin improvements. The Overseas Mushroom Business achieved Revenue ¥82.4B (+6.8%) and Operating Income ¥11.5B (-0.8%, margin 13.9%) with revenue growth but slight decline in profit due to some productivity deterioration at overseas sites; nevertheless margins remain high. The Processed Foods Business had Revenue ¥80.0B (-1.9%) and Operating Income ¥5.1B (+36.6%, margin 6.4%), reflecting revenue decline but significant margin improvement from structural improvements in retort foods. After allocation of corporate common expenses of ¥23.4B, each segment remained profitable at the operating level, resulting in a well-balanced portfolio.
[Profitability] Operating margin improved to 8.2% (up +0.2pt from 8.0%), and net margin improved to 6.6% (up +2.3pt from 4.3%), indicating stronger core and bottom-line profitability. ROE was 8.8%, decomposed as Net Margin 6.6% × Total Asset Turnover 0.76x × Financial Leverage 1.75x. ROA (on an ordinary income basis) improved to 7.4% from 6.6% a year earlier. [Cash Quality] Operating Cash Flow / Net Income was 1.89x (Operating Cash Flow ¥108.2B / Net Income ¥57.1B), indicating high quality as profits are backed by cash. Operating Cash Flow / EBITDA was 0.89x (EBITDA ¥121.9B = Operating Income ¥70.3B + Depreciation ¥51.6B), somewhat modest and includes a temporary uplift from insurance proceeds of ¥19.3B. [Investment Efficiency] Depreciation ¥51.6B versus CapEx ¥49.2B gives CAPEX/Depreciation of 0.95, indicating restrained investment. FCF of ¥79.1B (Operating CF ¥108.2B - Investing CF ¥29.2B) provides capacity for both internal growth and shareholder returns. [Financial Soundness] Equity Ratio was 57.1% (improved +4.3pt from 52.8%), Current Ratio 172.6% (prior 155.6%), Quick Ratio 163.1% (prior 142.2%), indicating a strong financial base. Interest-bearing debt was ¥163.2B (short-term borrowings ¥56.4B + long-term borrowings ¥106.8B) versus cash & deposits ¥187.4B, yielding a net cash position. Debt/EBITDA was 1.34x, and interest coverage was 44.5x (Operating CF ¥108.2B / Interest Paid ¥1.6B × 1.2), indicating low leverage and ample interest coverage.
Operating Cash Flow was ¥108.2B (YoY -11.4%). Starting from Profit Before Tax ¥100.5B, non-cash charges (Depreciation ¥51.6B, Impairment ¥1.5B) were added back, insurance proceeds ¥19.3B and corporate tax payments ¥19.5B offset each other, resulting in Operating CF at 1.89x of Net Income ¥57.1B. In working capital, a decrease in accounts receivable of ¥2.0B contributed positively, inventory slight increase of -¥0.3B and decrease in accounts payable of -¥7.9B were negative, resulting in a modest net working capital outflow. Investing CF was -¥29.2B, comprised of CapEx -¥49.2B, net increase in time deposits +¥0.5B, and redemption/sale of securities +¥20.0B as financing sources. Financing CF was -¥44.2B, including net repayment of borrowings -¥9.3B (long-term borrowings +¥20.0B - repayments -¥33.9B; short-term borrowings +¥50.0B - repayments -¥65.0B), bond issuance +¥100.2B, dividends -¥15.9B, and share buybacks -¥0.6B. FCF ¥79.1B (Operating CF ¥108.2B - Investing CF ¥29.2B) sufficiently covers dividends and debt repayments. Ending cash of ¥187.4B increased by ¥24.2B from beginning cash ¥163.2B, further strengthening liquidity.
Separating recurring earnings and one-off items clarifies earnings quality. Operating Income of ¥70.3B represents recurring core earnings. Of non-operating income ¥13.8B, foreign exchange gains ¥6.4B are market-volatile and dividend income ¥2.9B is stable income from held equities. Special Gains ¥21.8B (insurance proceeds ¥19.2B, gain on sale of investment securities ¥2.5B) are non-recurring and warrant caution for potential reversal next fiscal year. Approximately 28% of Profit Before Tax ¥100.5B is attributable to non-recurring items, implying ordinary pre-tax capability is around ¥80B. Accrual quality is strong: Operating CF ¥108.2B significantly exceeds Net Income ¥57.1B and accrual ratio (Net Income - Operating CF)/Total Assets is -4.5%, indicating good cash conversion. Comprehensive Income ¥95.5B exceeded Net Income ¥57.1B, with valuation gains on investment securities ¥16.7B, foreign currency translation adjustments ¥5.2B, and retirement benefit adjustments ¥3.5B contributing. The gap between Ordinary Income ¥81.9B and Net Income ¥57.1B is driven by special gains and tax expenses, and the sustainability of the Net Income level is limited.
Progress against the full-year company forecast is: Revenue 97.5% (¥859.1B / ¥881.0B), Operating Income 96.8% (¥70.3B / ¥72.6B), Ordinary Income 107.0% (¥81.9B / ¥76.5B), Net Income 135.0% (¥57.1B / ¥42.3B). Revenue and operating-level results were slightly below guidance, while ordinary and bottom-line results significantly exceeded guidance. The upside in Ordinary Income was primarily due to foreign exchange gains of ¥6.4B, and the upside in Net Income was largely due to Special Gains of ¥21.8B. The company set conservative operating-level guidance, and the emergence of non-recurring items resulted in a substantial beat at the bottom line. No guidance for next fiscal year has been disclosed, but plans are expected to revert to performance based on core operating and ordinary capabilities, assuming a normalization of this year’s special gains and FX benefits.
Dividends were interim ¥10 and year-end ¥45, totaling ¥55 per share (same as prior year). Payout Ratio was 35.6% (dividends total ¥15.7B against Net Income ¥57.1B), at a sustainable level. With FCF of ¥79.1B and dividends of ¥15.7B, FCF coverage is 5.0x, indicating ample room and low risk of dividend cuts. Share buybacks were small at ¥0.6B, and Total Return Ratio is (Dividends ¥15.7B + Share Buybacks ¥0.6B) / Net Income ¥57.1B = 28.6%, a conservative posture. Given cash & deposits ¥187.4B, net cash position, and ROE 8.8%, next fiscal year’s dividend is likely to be maintained or modestly increased; although there is room for higher payout, the company’s cautious stance is expected to continue.
Inventory & Production Risk: Work-in-process of ¥43.5B is roughly twice inventories of ¥22.2B, indicating a high work-in-process ratio. If mushroom production yields decline or supply-demand adjustments are delayed, inventory write-downs or disposal costs could occur, pressuring profitability. Proper management of WIP levels and improvements in turnover are required.
Dependence on Non-Recurring Income: Of this period’s Net Income ¥57.1B, non-recurring items total ¥28.2B (Special Gains ¥21.8B — insurance proceeds ¥19.2B, gain on sale of investment securities ¥2.5B — plus foreign exchange gains ¥6.4B). This represents about 28% of Profit Before Tax ¥100.5B, and Net Income may decline next year due to the reversal of these items. Ordinary-level capability is estimated around Operating Income ¥70.3B plus recurring non-operating income, yielding pre-tax ordinary results near ¥80B, so Net Income sustainability is limited.
Market Price Volatility of Investment Securities: Investment securities rose to ¥110.5B (up +31.9% from ¥83.7B). This period recorded valuation gains on securities ¥16.7B and sale gains ¥2.5B. Should market conditions deteriorate, valuation losses or impairments may materialize, reducing comprehensive income and balance sheet equity. Disclosure on the composition and valuation volatility of investment securities is limited, making risk assessment difficult.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.2% | 14.6% (7.2%–39.4%) | -6.5pt |
| Net Margin | 6.6% | 11.9% (7.2%–35.4%) | -5.2pt |
Profitability lags the industry median, reflecting the commodity nature of mushrooms and processed foods and the heavy fixed-cost burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.4% | 10.1% (7.3%–12.1%) | -6.7pt |
Revenue growth trails the industry median, constrained by a mature domestic mushroom market and the limited scale of overseas operations.
※Source: Company compilation
The core Domestic Mushroom Business exhibits stable growth in both Revenue and Operating Income, maintaining a 12.9% operating margin. Large profit gains in the Chemical Products Business and structural improvements in the Processed Foods Business have steadily improved operating profitability. Financial soundness is strong (Equity Ratio 57.1%, net cash position), and dividend and investment capacity are expected to be maintained even in a downturn.
Approximately ¥28B of this period’s Net Income ¥57.1B depends on non-recurring income (Special Gains ¥21.8B, foreign exchange gains ¥6.4B), posing a risk of reduced Net Income next fiscal year due to reversal of one-off items. Ordinary capability is viewed as Operating Income ~¥70B plus recurring non-operating income, with pre-tax ordinary level around ¥80B, so Net Income sustainability is limited. The payout ratio of 35.6% is sustainable, but dividend policy should be monitored for changes in response to earnings volatility.
While the high WIP ratio poses inventory valuation and disposal risk, CapEx is restrained (CAPEX/Depreciation 0.95) and cash generation is stable. The increase in investment securities (¥110.5B, +31.9%) raises market price volatility risk; monitoring valuation differences and realization trends is necessary. Next fiscal year will focus on sustaining core operating improvements while absorbing the reversal of non-recurring gains.
This report was auto-generated by AI analyzing XBRL earnings release data and serves as a financial analysis document. It does not constitute an investment recommendation for any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.