CHUBU SHIRYO CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

For Q1 of the fiscal year ending March 2027, the company recorded higher revenue and higher profit at the operating and ordinary income levels, supported by revenue growth in the Feed Business and other businesses. In addition, extraordinary income, primarily gains on the sale of fixed assets, substantially boosted net income. Revenue was ¥562.9B (¥522.8B in the same period of the previous year, YoY +7.7%), Operating Income was ¥12.3B (¥11.1B, YoY +10.6%), and Ordinary Income was ¥16.0B (¥13.3B, YoY +19.9%). Net Income attributable to owners of the parent was ¥34.7B (¥10.2B, YoY +238.5%); however, this increase was largely attributable to the recognition of ¥35.0B in extraordinary income, including a ¥31.2B gain on the sale of fixed assets, and should therefore be considered separately from recurring earnings power.

Factors Affecting Performance

【Revenue】Revenue was ¥562.9B, up +7.7% year on year. The core Feed segment remained solid at ¥498.7B (88.6% composition ratio, YoY +4.1%), while other businesses not included in the reportable segments, such as livestock equipment and chicken egg sales, grew substantially to ¥64.3B (11.4% composition ratio, YoY +47.1%), contributing significantly to revenue growth.

【Profit and Loss】The gross margin improved by +0.2pt to 9.5% (9.3% in the previous year), while the SG&A ratio was nearly flat at 7.3% (7.2% in the previous year). Operating Income was ¥12.3B (YoY +10.6%), and the Operating Income margin improved slightly to 2.2% (+0.06pt year on year). Ordinary Income rose to ¥16.0B (YoY +19.9%), also supported by increases in non-operating income, including ¥1.9B in dividend income and ¥1.1B in foreign exchange gains. Profit Before Tax expanded to ¥51.0B, primarily due to the recognition of ¥35.0B in extraordinary income, including a ¥31.2B gain on the sale of fixed assets and a ¥1.8B gain on the sale of investment securities. Extraordinary income accounted for 68.6% of Profit Before Tax. This temporary factor drove Net Income attributable to owners of the parent to ¥34.7B (YoY +238.5%). In conclusion, the company achieved higher revenue and higher profit at the operating and ordinary income levels, while the substantial increase in net income was primarily a one-time boost from extraordinary income.

Segment Analysis

Profit in the Feed segment was ¥1.267B (¥1.178B in the previous year, YoY +7.6%), with a segment margin of 2.5%. Profit in other businesses was ¥0.460B (¥0.231B in the previous year, YoY +99.1%), with a margin of 7.2%, exceeding that of the Feed Business and highlighting the difference in profitability. The segment profit adjustment amount expanded sharply to ¥3.373B (¥0.28B in the previous year), reflecting the inclusion of ¥△0.61B in company-wide expenses, ¥0.85B in financial income and expenses, and a ¥3.11B gain on the sale of fixed assets. The fact that adjustments outside the reportable segments have a significant impact on quarterly earnings should be considered when evaluating the underlying performance of each segment.

Key Financial Indicators

【Profitability】Compared with an Operating Income margin of 2.2% and an Ordinary Income margin of 2.8%, the Net Income attributable to owners of the parent margin was significantly higher at 6.2%, reflecting the recognition of extraordinary income. The Operating Income margin and gross margin (9.5%) should therefore be emphasized as indicators of core earnings power.【Cash Flow Quality】Of Profit Before Tax of ¥51.0B, ¥35.0B consisted of extraordinary income, indicating a clear divergence between recurring profit-generating capacity and net income. Accounts receivable were ¥334.0B, equivalent to approximately 59% of quarterly revenue, while inventories of ¥27.7B had contracted slightly from the previous year.【Investment Efficiency】ROE was 4.6%, while the total asset turnover ratio remained low. The increase in ROE was primarily attributable to extraordinary income. Net assets of ¥750.5B against total assets of ¥1097.8B indicate a capital structure with substantial equity, which somewhat constrains investment efficiency.【Financial Soundness】The Equity Ratio increased to 68.4% (66.8% in the previous year), while long-term borrowings declined to ¥47.6B (¥53.5B in the previous year). Cash and deposits of ¥122.0B exceeded interest-bearing debt, indicating a net cash position, and the financial foundation is generally stable.

Cash Flow Analysis

Because the disclosed classifications of the statement of cash flows are not included in the available data, funding trends are assessed based on changes in the balance sheet. Cash and deposits increased to ¥122.0B from ¥118.3B in the previous year, while long-term borrowings declined to ¥47.6B from ¥53.5B, suggesting that interest-bearing debt reduction and cash accumulation progressed simultaneously. Accounts receivable increased slightly to ¥334.0B from ¥329.7B in the previous year, while accounts payable increased to ¥162.3B from ¥157.1B. Changes in working capital were therefore largely offset by movements in receivables and payables. Property, plant and equipment declined to ¥265.9B from ¥271.9B in the previous year, consistent with the recognition of a ¥31.2B gain on the sale of fixed assets. Overall, while asset sales generated funds and borrowings were reduced, the company’s cash-generating capacity from operating activities themselves cannot be directly confirmed from the available data.

Earnings Quality

Of the company’s ¥51.0B in Profit Before Tax for the current period, Ordinary Income was only ¥16.0B, while the remaining ¥35.0B consisted primarily of extraordinary income from a ¥31.2B gain on the sale of fixed assets and a ¥1.8B gain on the sale of investment securities. Non-recurring items therefore accounted for approximately 69% of Profit Before Tax. The ¥3.8B in non-operating income primarily comprised ¥1.9B in dividend income and ¥1.1B in foreign exchange gains, both of which are separate from the company’s core earning power. Comprehensive Income was ¥32.2B, slightly below Net Income attributable to owners of the parent of ¥34.7B. The difference was primarily attributable to negative other comprehensive income items, including a ¥△1.5B valuation difference on other securities, a ¥△0.8B foreign currency translation adjustment, and a ¥△0.5B adjustment related to retirement benefits. Accordingly, the quality of current-period earnings is highly dependent on extraordinary income, and Operating Income and Ordinary Income should serve as the primary bases for evaluating recurring earnings power.

Earnings Forecast and Guidance

The full-year earnings forecast calls for Revenue of ¥2210.0B (YoY +4.3%), Operating Income of ¥59.0B (YoY -10.4%), and Ordinary Income of ¥62.0B (YoY -13.5%), representing plans for lower operating and ordinary income compared with the previous fiscal year. While Q1 progress was broadly standard at 25.5% for Revenue and 25.8% for Ordinary Income, Operating Income progress was somewhat behind at 20.9%. Progress toward full-year forecast Net Income attributable to owners of the parent of ¥69.0B was 50.3%; however, this was brought forward by the recognition of extraordinary income in Q1 and should be interpreted together with the fact that the full-year plan itself incorporates lower profit. No revisions were made to the earnings forecast or dividend forecast as of this quarter.

Shareholder Returns

The full-year dividend forecast is ¥76.00 per share, representing a Payout Ratio of approximately 31.6% against forecast EPS of ¥240.45. The financial foundation, characterized by an Equity Ratio of 68.4% and cash and deposits of ¥122.0B exceeding long-term borrowings of ¥47.6B, supports this dividend level. Although Q1 net income was boosted by extraordinary income, the dividend plan appears to be based on recurring earnings power for the full year. In light of the company’s strong financial soundness, the sustainability of the approximately 31.6% Payout Ratio is considered relatively high.

Risk Factors

1. Concentration of the business portfolio: The Feed segment accounts for 88.6% of Revenue, and the business structure has a strong commodity orientation, with a gross margin of 9.5%. As a result, fluctuations in raw material prices, including grain and oils and fats, as well as foreign exchange rates, can readily affect profitability.

2. Dependence on extraordinary income: Of Q1 Net Income attributable to owners of the parent of ¥34.7B, approximately 69% on a Profit Before Tax basis was attributable to extraordinary income, including gains on the sale of fixed assets. The divergence from recurring earnings power is therefore significant.

3. Working capital conditions: Accounts receivable of ¥334.0B represent approximately 59% of quarterly Revenue. The management of working capital, including comparison with accounts payable of ¥162.3B, will be monitored when evaluating future cash-generation capacity.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

The Operating Income margin is below the industry median, while the Net Income margin exceeds the industry median due to the contribution from extraordinary income.

Growth and Capital Efficiency

The Revenue growth rate is slightly above the industry median.

※Source: Compiled by the Company

Key Points in the Earnings Results

1. Net Income attributable to owners of the parent increased substantially by YoY +238.5%; however, the primary factor was the recognition of ¥35.0B in extraordinary income, including a ¥31.2B gain on the sale of fixed assets. The significant one-time component is important when evaluating the quality of the earnings results.

2. The gross margin was 9.5% (9.3% in the previous year, +0.2pt), and the Operating Income margin was 2.2% (+0.06pt year on year), indicating a modest improvement in core profitability. The 7.2% profit margin of other businesses exceeded the 2.5% margin of the Feed Business.

3. Q1 progress against the full-year plan was at a standard level for Revenue and Ordinary Income, while Operating Income was somewhat behind. The accumulation of core Operating Income from Q2 onward, after the extraordinary income impact fades, will be a key focus.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.

Sensitivity: ¥2,576–¥2,727 at Cost of Equity ±1%; ¥2,649–¥2,651 at ω ±0.1.

Notes:

• Because progress of net income against the full-year forecast (50%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with progress ahead of plan tend to exceed forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee a future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional adviser as necessary.

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