| Metric | This Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3354.1B | ¥3344.2B | +0.3% |
| Operating Income / Operating Profit | ¥119.4B | ¥111.3B | +7.3% |
| Ordinary Income | ¥144.6B | ¥135.9B | +6.4% |
| Net Income / Net Profit | ¥58.0B | ¥77.7B | -25.3% |
| ROE | 3.8% | 5.6% | - |
Fiscal year ended March 2026 results: Revenue ¥3,354.1B (YoY +¥9.9B +0.3%), Operating Income ¥119.4B (YoY +¥8.2B +7.3%), Ordinary Income ¥144.6B (YoY +¥8.7B +6.4%), Net Income attributable to owners of the parent ¥106.1B (YoY -¥9.9B -8.5%). While revenue edged up and operating profitability improved, Net Income declined due to the absence of prior-year gain on sale of fixed assets (¥27.1B). Gross margin improved to 17.8% (YoY +0.8pt) and operating margin improved to 3.6% (YoY +0.2pt). Non-operating items such as dividend income and equity-method gains contributed steadily, and extraordinary items included a step-acquisition gain of ¥9.1B. Feed business margin correction and price/mix improvement in the Food Business drove operating profit growth.
[Revenue] Revenue was ¥3,354.1B, up +0.3% YoY. By segment: Food Business (81.9% of total) ¥2,746.4B (-0.8%), Feed Business (17.5%) ¥587.5B (+4.6%), Others (2.4%) ¥78.9B (+1.4%). Food was impacted by weak domestic demand in commodity markets for flour, oils, and saccharification products, but achieved higher gross margins through price revisions and product mix improvements. Feed saw simultaneous top-line growth and margin recovery as adjustments to compound feed volumes and prices progressed. Over 90% of external customer sales are domestic; regional breakdown is undisclosed.
[Profitability] Cost of sales was ¥2,756.2B (cost of sales ratio 82.2%, improved -0.8pt from 82.9% prior) resulting in Gross Profit ¥597.9B (Gross Margin 17.8%, +0.8pt YoY). SG&A was ¥478.5B (SG&A ratio 14.3%, +0.5pt from 13.7% prior), delivering Operating Income ¥119.4B (Operating Margin 3.6%, +0.2pt YoY). The SG&A ratio rise reflects logistics and labor cost inflation, but gross margin improvement offset this, resulting in operating profit growth. Non-operating income totaled ¥30.4B (Dividend income ¥8.3B, equity-method gains ¥13.0B, foreign exchange gains ¥3.1B, etc.), non-operating expenses ¥5.2B (interest expense ¥4.0B, etc.), yielding Ordinary Income ¥144.6B (+6.4%). Extraordinary gains were ¥11.1B (primarily step-acquisition gain ¥9.1B), extraordinary losses ¥6.0B (impairment and loss on disposal of fixed assets), producing Profit before Tax ¥149.7B. Income taxes ¥42.0B (effective tax rate 28.0%) and non-controlling interests ¥1.6B were deducted to arrive at Net Income attributable to owners of the parent ¥106.1B (-8.5%). Net Income decline is due to the prior-year one-off fixed asset sale gain of ¥27.1B; on an ordinary basis, earnings power improved. In summary: slight revenue increase, operating profit growth, Net Income decline driven by special factors.
Food Business (Revenue ¥2,746.4B, -0.8%) delivered Operating Income ¥113.2B (+3.2%, margin 4.1%). A broad portfolio including flour, oils, starch, and frozen foods absorbed raw material inflation through price revisions and cost corrections, yielding higher profits. Feed Business (Revenue ¥587.5B, +4.6%) delivered Operating Income ¥10.1B (+107.2%, margin 1.7%). After prior-year margin pressure from high compound feed costs, substantial improvement was achieved via price corrections and stronger margin management. Others (Revenue ¥78.9B, +1.4%) posted Operating Income ¥13.9B (-2.7%, margin 17.6%), with warehousing, real estate, and transport maintaining high margins but slightly down. Total segment profit ¥137.2B less corporate costs ¥17.8B equals consolidated Operating Income ¥119.4B.
[Profitability] Operating Margin 3.6% (up +0.2pt YoY), ROE 7.0% (down -1.8pt YoY). ROE decline was driven by lower Net Income (absence of special gains); however, ordinary earnings power improved. [Cash Quality] Operating Cash Flow / Net Income = 1.70x, indicating strong cash generation; FCF ¥54.7B covers dividend payments ¥35.8B at 1.53x. Accrual ratio -2.7% indicates favorable cash realization of profits. Operating CF / EBITDA 0.81x suggests scope for improvement, possibly due to timing effects in working capital. [Investment Efficiency] Capex ¥114.2B / Depreciation ¥103.4B = 1.10x, implying maintenance plus growth investment. Investment securities ¥585.2B (prior ¥472.2B) account for 38.3% of net assets, with valuation gains and additional acquisitions driving comprehensive income ¥180.0B (prior ¥117.2B, +53.5%). [Financial Soundness] Equity Ratio 55.5% (up +2.7pt YoY), Interest-bearing debt ¥207.5B, Debt/EBITDA 0.93x, Interest Coverage 29.6x — conservative metrics. However, short-term debt ratio 66.5% and Cash/Short-term Debt 0.61x indicate continued monitoring of refinancing risk (including CP ¥185B). Current Ratio 140.3%, Quick Ratio 120.6% — short-term liquidity within a comfortable range.
Operating Cash Flow was ¥180.1B (prior ¥202.7B, -11.2%). Subtotal was ¥218.6B (including Depreciation ¥103.4B and Goodwill amortization ¥2.6B), from which working capital changes -¥38.5B (inventory increase ¥8.4B, decrease in trade receivables ¥1.3B, increase in trade payables ¥4.6B, etc.) and corporate tax and other payments ¥47.7B were deducted. Working capital increase was mainly due to higher inventories; despite Operating CF/Net Income 1.70x indicating high quality, this was slightly down YoY. Investing CF was -¥125.4B (prior -¥113.9B), driven by Capex ¥114.2B; proceeds from sale of tangible fixed assets were ¥0.8B, increasing net outflow. Free Cash Flow ¥54.7B (prior ¥88.9B) fell -38.5% YoY but sufficiently covered dividend payments (dividends + share buybacks = ¥35.9B). Financing CF was -¥39.7B, including redemption of corporate bonds ¥70.0B, long-term loan repayments ¥5.2B, dividend payments ¥35.8B, partly offset by new long-term borrowings ¥1.9B. Ending cash ¥83.5B (prior ¥68.7B) rose +21.5%, improving liquidity buffers.
Of Ordinary Income ¥144.6B, Operating Income ¥119.4B was the primary contributor. Non-operating income ¥30.4B comprised stable items such as dividend income ¥8.3B (from investment securities), equity-method gains ¥13.0B (reflecting associate performance), and forex gains ¥3.1B. Non-operating income to Revenue is 0.9%, indicating low reliance on non-core operations. Extraordinary gains ¥11.1B largely reflect step-acquisition gain ¥9.1B (valuation gain from consolidation), a one-off item that is smaller than the prior-year fixed asset sale gain of ¥27.1B. Extraordinary losses ¥6.0B (impairment ¥0.2B, loss on disposal of fixed assets ¥0.2B, etc.) were minor. The divergence between Ordinary Income and Net Income (¥144.6B → ¥106.1B) is within acceptable range given special items and taxes. Accrual ratio -2.7% is healthy; Operating CF ¥180.1B / Net Income ¥106.1B = 1.70x confirms strong cash conversion. Comprehensive Income ¥180.0B was boosted by valuation gains on securities ¥57.3B (expansion of unrealized gains on investment securities), actuarial gains/losses adjustment ¥8.8B, and deferred hedge ¥1.4B, contributing to net asset growth.
Full Year guidance: Revenue ¥3,500.0B (vs. actual +4.3%), Operating Income ¥120.0B (vs. actual +0.5%), Ordinary Income ¥140.0B (vs. actual -3.2%), Net Income attributable to owners of the parent ¥95.0B (vs. actual -10.5%). Revenue growth is expected in both Feed and Food, but Operating Income is seen roughly flat and Ordinary/Net Income projected lower on a conservative basis. Forecast EPS ¥292.34 with dividend guidance ¥70 (Payout Ratio 23.9%) is lower than the realized payout ratio 35.8%, reflecting the incorporation of one-off gains normalization and flattened valuation gains. Progress ratios stand at Revenue 95.8% and Operating Income 99.5%, near completion and leaving upside potential to the full-year forecast.
Annual dividend increased to Interim ¥50 + Year-end ¥65 = ¥115 (prior ¥40), Payout Ratio 35.8% (based on Net Income) — sustainable. Share buybacks minimal at ¥0.1B; returns are dividend-centric. Free Cash Flow ¥54.7B covers dividend payments ¥35.8B at 1.53x, a comfortable coverage. Forecast dividend ¥70 is lower than actual, but still provides a buffer vs. 3-year average payout trends; the company is taking a conservative stance.
Raw material & energy price volatility: With Gross Margin 17.8% at a relatively low level, rapid pass-through of cost increases for wheat, oils, and starch is challenging and could compress Operating Margin. The Gross Margin improvement of +0.8pt YoY was driven by price revisions, but SG&A ratio rose +0.5pt, leaving limited resilience to external cost shocks. Inventory ¥161.4B equals 4.8% of Revenue — adequate, but purchase cost swings can quickly affect profitability.
Short-term debt bias and refinancing risk: Short-term debt ratio 66.5% (Short-term interest-bearing debt ¥137.5B / Total interest-bearing debt ¥207.5B), with CP ¥185B representing 22.6% of current liabilities. Cash ¥83.5B / Short-term liabilities ¥820.2B = 10.2% — thin. Although Interest Coverage is a healthy 29.6x, adverse rollover conditions could pressure liquidity; maturity management remains a key monitoring item.
Domestic demand dependence and competitive pressure: Over 90% of sales domestic, and Food Business is centered on commodity markets like flour and oils. Price competition with private brand (PB) products is intense; Operating Margin 3.6% is below peer median 5.0%, and rising SG&A trend (+0.5pt) is eroding price revision benefits. Under structural domestic demand decline and population decrease, delayed shift to higher value-added products risks growth deceleration.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.6% | 5.0% (3.3%–8.4%) | -1.4pt |
| Net Margin | 1.7% | 3.2% (1.9%–6.6%) | -1.4pt |
Both Operating and Net Margins are 1.4pt below industry median, placing profitability in the lower peer cohort. Low Gross Margin 17.8% is the primary driver; continued price pass-through and mix improvement are key to relative performance improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.3% | 5.4% (1.0%–8.6%) | -5.1pt |
Revenue growth lags the industry median significantly, placing the company near the bottom in growth. Domestic demand weakness and a price-revision-focused strategy underlie the slowdown.
※ Source: Company compilation
Continued improvement in core earnings and separation of the impact from the lapse of special gains: Operating Income +7.3% and Operating Margin +0.2pt reflect price/mix improvements and feed margin correction, indicating healthy core operations. Net Income -8.5% was due to the lapse of prior-year fixed asset sale gain ¥27.1B; ordinary earnings strength remains. Comprehensive Income ¥180.0B (+53.5%) reflects valuation gains on investment securities, increasing Net Assets by +10.1% YoY. The company’s conservative full-year guidance (flat Operating Income, lower Net Income) could be beaten if raw material markets and pricing policies remain favorable.
Maintenance of financial soundness and cash generation: Debt/EBITDA 0.93x, Interest Coverage 29.6x indicate conservative leverage; Operating CF ¥180.1B / Net Income ¥106.1B = 1.70x shows high-quality cash earnings. FCF ¥54.7B covers dividend payments 1.53x, supporting dividend sustainability. However, short-term debt ratio 66.5% and Cash/Short-term Debt 0.61x indicate maturity concentration risk; CP balance and market conditions require ongoing oversight. Capex / Depreciation 1.10x suggests growth-oriented investments and sets the stage for mid-term productivity improvements and value-added product development.
This report was automatically generated by AI analyzing 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 from public financial statements. Investment decisions should be made at your own discretion and, if necessary, after consulting a professional advisor.