| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4184.2B | ¥4108.8B | +1.8% |
| Operating Income | ¥220.8B | ¥214.9B | +2.8% |
| Ordinary Income | ¥248.7B | ¥243.9B | +2.0% |
| Net Income | ¥220.3B | ¥250.8B | -12.1% |
| ROE | 7.6% | 10.2% | - |
For the fiscal year ended March 2026, Revenue was ¥4,184B (YoY +¥75B +1.8%), Operating Income was ¥221B (YoY +¥6B +2.8%), Ordinary Income was ¥249B (YoY +¥5B +2.0%), and Net Income was ¥220B (YoY -¥31B -12.1%). The operating base achieved revenue and profit growth, with the operating margin modestly improving to 5.3% (up +0.1pt from 5.2% in the prior year). Gross margin remained flat at 25.0%, while SG&A ratio rose slightly to 19.8% (from 19.0% prior year, +0.8pt); however, improvements in the Flour Milling business margin (7.7%, from 7.4%) and high growth in Other Businesses (Operating Income +15.3%) offset this. Net Income declined by ¥31B year-on-year primarily due to a reduction in non-recurring gains (despite an increase in gain on sales of investment securities from ¥47B to ¥63B, gains on sales of fixed assets fell sharply from ¥87B to ¥8B, reducing total special gains from ¥134B to ¥71B), indicating that core earnings quality remains solid.
【Revenue】 Revenue reached ¥4,184B (YoY +1.8%), a modest increase. By segment, the Food Business accounted for ¥2,446B (+2.2%), representing 58.4% of consolidated revenue and driving growth, while the Flour Milling Business fell to ¥1,229B (-1.5%). Other Businesses grew strongly to ¥584B (+7.1%), supported by diversification into pet food, health food, and real estate. Revenue from contracts with customers amounted to ¥4,174B, representing 99.8% of revenue, while other income (e.g., leases) was limited at ¥10B. External factors: stabilization in raw material prices and progress on price pass-through supported revenue growth, while the decline in Flour Milling suggests weaker demand.
【Profit & Loss】 Operating Income was ¥221B (+2.8%). Cost of sales ratio improved to 75.0% (from 75.8% prior year, -0.8pt), keeping gross margin at 25.0%. SG&A was ¥827B, 19.8% of sales (prior year 19.0%), rising slightly; depreciation was stable at ¥17B (prior year ¥17B), while increases in retirement benefit expenses and personnel costs contributed. Segment operating income: Flour Milling ¥95B (+2.9%), Food ¥91B (-2.3%), Other ¥37B (+15.3%), confirming Flour Milling as the largest contributor. Non-operating items included dividend income of ¥25B (prior year ¥24B) and foreign exchange gains of ¥5B, increasing non-operating income to ¥44B (prior year ¥35B). Equity in earnings of affiliates was -¥2B (prior year -¥1B). Ordinary Income was ¥249B (+2.0%). In special items, the company recorded gain on sales of investment securities ¥63B and gain on sales of fixed assets ¥8B, but the drop from prior-year fixed asset gains of ¥87B (presumably a large real estate sale) halved total special gains to ¥71B (prior year ¥134B). Profit before income taxes was ¥317B (prior year ¥369B, -14.0%); after income taxes of ¥97B (effective tax rate 30.5%), Net Income was ¥220B (-12.1%). In conclusion, the operating base saw revenue and profit growth and ordinary income increased, but Net Income fell due to a temporary reduction in special gains.
Flour Milling recorded Revenue ¥1,229B (YoY -1.5%), Operating Income ¥95B (+2.9%), and margin 7.7% (up +0.3pt from 7.4%). Profit growth amid revenue decline suggests cost reductions and a shift to higher-value-added products, aided by stable raw material prices. Food recorded Revenue ¥2,446B (+2.2%), Operating Income ¥91B (-2.3%), margin 3.7% (from 3.9%, -0.2pt). Revenue expanded steadily but margin compression reflects higher raw material and logistics costs and increased promotional investment. Demand for premixes, frozen foods, and ready-to-eat meals remains resilient, but competitive pressure affected profitability. Other Businesses achieved Revenue ¥584B (+7.1%), Operating Income ¥37B (+15.3%), margin 6.3% (from 5.8%, +0.5pt), delivering high growth and profitability. Diversification into pet food, health food, and property leasing supported consolidated profits. On a consolidated basis, after intersegment eliminations and adjustments, Operating Income was ¥221B, confirming Flour Milling as the largest profit contributor.
【Profitability】Operating margin improved to 5.3% (from 5.2%, +0.1pt), and gross margin remained stable at 25.0%. ROE declined to 7.6% (prior year 10.6%), driven by lower Net Income (reduction in one-off gains) and an increase in equity of ¥4,340B. ROA fell to 5.7% (prior year 6.2%), and total asset turnover deteriorated to 0.88x (prior year 1.03x). This reflects total assets expanding from ¥3,992B to ¥4,768B (+19.4%) while revenue grew only +1.8%, attributable to asset buildup from large investments. 【Cash Quality】Operating Cash Flow (OCF) was ¥252B, 1.15x Net Income (¥220B), a healthy level, but OCF/EBITDA (Operating Income + Depreciation ¥113B = ¥334B) was 0.76x, below the ideal 0.9x, indicating room to improve working capital efficiency. Inventory increased to ¥297B (prior year ¥266B, +11.6%), worsening inventory turnover to 10.6x (prior year 11.7x). Receivables turnover was stable at 7.2x (prior year 7.1x), and payables turnover improved slightly to 8.9x (prior year 9.1x); working capital has not sharply deteriorated but rising inventory is notable. 【Investment Efficiency】Total asset turnover dropped to 0.88x, and fixed asset turnover was 2.66x (prior year 3.06x), indicating higher capital intensity. Capital expenditure (tangible + intangible) totaled ¥340B, 3.0x depreciation of ¥113B, signaling an aggressive investment stance. Future improvement in asset efficiency depends on investment payback progress. 【Financial Soundness】Equity Ratio was 60.8% (prior year 61.7%), maintaining a high level. Current ratio was 234.6% and quick ratio 198.7%, indicating very strong liquidity. Interest-bearing debt totaled ¥910B (short-term borrowings ¥158B + long-term borrowings ¥432B + corporate bonds ¥200B + lease liabilities, etc.), with Debt/EBITDA at 2.7x, within a healthy range. Interest coverage (Operating Income / Interest Expense) was 37.4x, and (Operating Income + Depreciation) / Interest Expense was 56.5x, showing very high interest burden resilience.
OCF was ¥253B (prior year ¥188B, +34.7%), a significant increase and above Net Income ¥220B. OCF subtotal (before working capital changes) was ¥310B, and after working capital movements—inventory increase -¥32B, receivables decrease +¥3B, payables increase +¥13B—and payment of corporate taxes -¥85B, OCF totaled ¥253B. Interest and dividend income received was ¥33B, interest paid -¥5B, a net positive financial contribution of ¥28B that boosted OCF. Investing CF was -¥271B, primarily fixed asset acquisitions -¥312B (production equipment and efficiency investments), subsidiary acquisitions +¥17B, proceeds from sale of investment securities +¥72B, and short-term investment securities purchases -¥60B. Free Cash Flow was -¥18B (OCF + Investing CF), a deficit reflecting active growth investments. Financing CF was +¥245B, raising external funds via corporate bond issuance ¥199B and long-term borrowings ¥30B, and covering long-term borrowings repayment -¥29B, dividend payments -¥54B, and share buybacks -¥40B. As a result, cash and deposits rose substantially to ¥692B (prior year ¥449B, +54.0%), and liquidity on hand is ample. While inventory growth pressures OCF, financial soundness and financing capacity support continued growth investment.
Earnings quality is broadly healthy. Operating Income ¥221B represents 5.3% of revenue. The difference between Ordinary Income ¥249B and Operating Income ¥221B (¥28B) corresponds to net non-operating items: non-operating income ¥44B (dividend income ¥25B, foreign exchange gains ¥5B, interest income ¥7B, etc.) less non-operating expenses ¥16B. Non-operating income is limited at 1.1% of revenue, indicating low dependence on non-core activities. Special gains totaled ¥71B (gain on sales of investment securities ¥63B, gain on sales of fixed assets ¥8B), a temporary factor that shrank substantially from ¥134B in the prior year. Consequently, profit before income taxes ¥317B exceeds ordinary income ¥249B by ¥68B, matching the net of special gains ¥71B less special losses ¥3B. The effective tax rate was 30.5%, a standard level. Net income attributable to non-controlling interests was ¥2B (negligible), and net income attributable to owners of the parent was ¥218B. OCF ¥253B exceeded Net Income ¥220B, and the accrual ratio (Net Income - OCF) / Total Assets was -0.7%, within a healthy range. However, OCF/EBITDA at 0.76x is below the ideal 0.9x, indicating scope for improving working capital (especially inventory) efficiency. Comprehensive income was ¥365B, well above Net Income ¥220B, driven by Other Comprehensive Income ¥145B (valuation differences on available-for-sale securities ¥114B, actuarial gains/losses adjustments ¥25B, etc.), reflecting unrealized gains on investment securities and qualitative strengthening of the balance sheet. Overall, recurring earnings stability is high, reliance on one-off gains is declining, and OCF quality is good, but improving working capital efficiency is a key focus for the next fiscal year.
Progress versus full-year forecasts: Revenue ¥4,184B / Forecast ¥4,300B = 97.3% (slightly short), but Operating Income ¥221B / Forecast ¥195B = 113.3%, Ordinary Income ¥249B / Forecast ¥210B = 118.4%, Net Income ¥220B / Forecast ¥212B = 103.8%, exceeding forecasts at each profit level. Revenue shortfall is likely driven by the Flour Milling decline (-1.5%), but cost control and mix improvement delivered higher-than-expected operating margin. Forecast operating margin was 4.5% (¥195B / ¥4,300B), while actual was 5.3% (+0.8pt), confirming improved profitability. Forecast EPS was ¥256.47 vs. actual ¥262.51, and forecast dividend was annual ¥34 vs. actual annual ¥68 (interim ¥33 + year-end ¥35), a doubling. This maintains the prior-year dividend level; payout ratio is 20.8% (forecast 26.4%), a sustainable level. Key points going forward include demand recovery in Flour Milling, margin improvement in the Food Business, improvement in inventory efficiency to raise OCF/EBITDA, and reversal of total asset turnover through monetization of large investments.
Dividends were interim ¥33 and year-end ¥35, maintaining an annual ¥68 (same as prior year), with payout ratio 20.8% (dividends paid ¥54B against Net Income ¥220B), a conservative level. The dividend policy states "continuation of stable dividends" targeting a consolidated payout ratio of 20%, and this fiscal result exceeds that target. Additionally, share buybacks of ¥40B were executed, bringing the total shareholder return ratio (dividends ¥54B + share buybacks ¥40B) / Net Income ¥220B = 42.7%. The buybacks were a tactical measure to improve capital efficiency and shareholder value. However, Free Cash Flow was negative ¥18B, meaning combined dividends and buybacks totaling ¥94B were not fully covered by internal funds. This resulted from prioritizing aggressive growth investments (capex ¥340B, M&A, etc.) and was financed externally (corporate bonds ¥199B, long-term borrowings ¥30B). Cash and deposits were ¥692B (prior year ¥449B), supporting short-term dividend sustainability, but for sustainable shareholder returns an improvement in OCF/EBITDA and stronger internal cash generation through investment payback is necessary. Dividend yield cannot be calculated due to lack of share price information, but a 20.8% payout ratio is conservative relative to peers, indicating scope for future dividend increases.
Raw Material Price Volatility Risk: Cost of sales ¥3,137B represents 75.0% of Revenue, and increases in prices of principal inputs—wheat, oils/fats, and packaging materials—would directly compress gross margin. The prior-year improvement from 75.8% to 75.0% was due to price pass-through and calmer commodity markets; a reversal in market conditions could materially pressure gross margin. Hedging and futures procurement mitigate risk, but delayed price pass-through could make maintaining a 5.3% operating margin difficult.
Inventory Efficiency Risk: Inventory rose to ¥297B (prior year ¥266B, +11.6%), and inventory turnover deteriorated to 10.6x (prior year 11.7x). OCF/EBITDA is 0.76x, below the ideal 0.9x, with inventory growth pressuring working capital. If demand forecasting accuracy deteriorates or product mix changes keep inventory elevated, the risk of impairment or obsolescence losses increases, further weakening OCF. Improving inventory turnover is urgent.
Investment Recovery Risk: Tangible and intangible fixed asset acquisitions totaled ¥340B (3.0x depreciation ¥113B), and total assets expanded by ¥776B (+19.4%). Yet revenue growth was only +1.8%, and total asset turnover worsened to 0.88x (prior year 1.03x). If large investments fail to generate expected returns, declines in ROA and ROE may persist, and returns could fall below capital costs. Monitoring investment projects and accelerating commercial ramp-up are key to restoring capital efficiency.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.3% | 5.0% (3.3%–8.4%) | +0.3pt |
| Net Profit Margin | 5.3% | 3.2% (1.9%–6.6%) | +2.1pt |
Operating margin is +0.3pt above the industry median, and net profit margin is +2.1pt above. Profitability is positioned mid-to-upper within the food industry, supported by cost control and accumulated financial income.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.8% | 5.4% (1.0%–8.6%) | -3.6pt |
Revenue growth lags the industry median by -3.6pt, indicating a slower growth pace compared with peers. The decline in Flour Milling is restraining consolidated growth; accelerating growth via the Food Business and diversification is a challenge.
※ Source: Company compilation
Stability of core earnings and strong financial soundness: Operating margin of 5.3% improved +0.1pt year-on-year, and the company likely achieved three consecutive years of operating profit growth. Equity Ratio 60.8%, Debt/EBITDA 2.7x, and Interest Coverage 56.5x indicate very high financial soundness and the capacity to balance growth investments and shareholder returns. Net Income declined due to reduced one-off gains, but this reflects normalization of earnings and indicates future profit growth depends on improvements at the operating level, a healthy transition.
Need to convert aggressive investments into improved capital efficiency: Capex is 3.0x depreciation and total assets expanded +19.4%, while revenue grew only +1.8%, causing total asset turnover to fall to 0.88x. Inventory increase (+11.6%) and OCF/EBITDA 0.76x also suggest declining capital efficiency. If investment monetization and inventory turnover improve over the next 2–3 years, ROE and ROA may reverse upward; if recovery lags, returns below capital cost may persist. Monitoring investment recovery progress and working capital efficiency is critical.
Shareholder return capacity and industry positioning: Payout ratio 20.8% and total return ratio 42.7% are sustainable, but FCF is negative ¥18B, implying short-term reliance on external financing. With cash and deposits ¥692B and low leverage, dividend maintenance is feasible, but expansion of shareholder returns requires OCF/EBITDA improvement. Versus peers, operating and net margins are mid-to-upper, but revenue growth ranks lower. Covering the Flour Milling decline through Food and diversification is stabilizing in the short term, but medium-term growth acceleration hinges on recovery in Flour Milling demand and margin improvement in the Food Business.
This report was automatically generated by AI analyzing XBRL financial statement data as a financial results analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your own responsibility; consult a professional as needed before making investment decisions.