| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1129.0B | ¥970.7B | +16.3% |
| Operating Income / Operating Profit | ¥103.2B | ¥82.1B | +25.8% |
| Profit Before Tax | ¥97.6B | ¥85.6B | +14.1% |
| Net Income / Net Profit | ¥65.1B | ¥57.5B | +13.3% |
| ROE | 8.4% | 7.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1,129.0B (¥+158.4B YoY, +16.3%), Operating Income was ¥103.2B (¥+21.2B YoY, +25.8%), Ordinary Income was ¥77.4B (¥+10.1B YoY, +15.0%), and Net Income was ¥65.1B (¥+7.6B YoY, +13.3%), achieving year-over-year increases at all stages. Operating margin improved by +0.6pt to 9.1% (prior year 8.5%), driven by price pass-through in the core Sugar business and cost management. However, equity-method investment income deteriorated by ¥8.3B from +¥2.5B to ▲¥5.8B, constraining growth from the Ordinary Income stage onward. Versus company guidance (Revenue ¥1,100.0B, Operating Income ¥92.0B), results beat at 102.6% of Revenue and 112.2% of Operating Income. Operating Cash Flow was ¥107.6B (¥+20.6% YoY), indicating solid cash generation; Free Cash Flow was ¥60.6B, covering dividends of ¥35.9B by 1.7x. Equity Ratio improved to 72.9% (prior year 66.1%), maintaining a high level of financial soundness.
[Revenue] Revenue rose substantially to ¥1,129.0B (+16.3% YoY). By segment, the Sugar Business expanded to ¥967.1B (+15.4% YoY), continuing growth in the core business. Full-year contribution from the consolidation of Toyo Seito (acquired in prior year) plus price adjustments and volume increases in existing operations pushed sales higher. Food & Wellness recorded ¥161.9B (+22.0% YoY), maintaining double-digit growth, with Food Science and Fitness businesses contributing. Revenue composition is 85.7% Sugar and 14.3% Food & Wellness, reflecting high dependence on Sugar; diversification remains an ongoing issue.
[Profitability] Cost of goods sold was ¥891.2B (+17.4% YoY), rising faster than sales, but Gross Profit increased to ¥237.8B (+22.1% YoY), and Gross Margin improved by +1.0pt to 21.1% (prior year 20.1%). SG&A was ¥128.9B (+17.6% YoY), roughly in line with sales growth, keeping SG&A ratio flat at 11.4% (prior year 11.3%). Operating Income reached ¥103.2B (+25.8% YoY) as revenue growth and Gross Margin improvement combined, lifting Operating Margin to 9.1%. Financial income was ¥2.1B versus financial expenses of ¥1.9B, roughly neutral, but equity-method income worsened to ▲¥5.8B (prior year +¥2.5B), an ¥8.3B negative swing that moderated growth at the Ordinary Income stage, resulting in Ordinary Income of ¥77.4B (+15.0% YoY). After income taxes of ¥32.5B (effective tax rate 33.3%), Net Income was ¥65.1B (+13.3% YoY). The picture is one of strong operating performance but headwinds at non-operating items; profit growth decelerates across Operating Income > Ordinary Income > Net Income.
The Sugar Business posted Revenue of ¥967.1B (+15.4% YoY), Operating Income of ¥110.8B (+18.9% YoY), and Operating Margin of 11.5% (prior year 11.1%), achieving higher sales, profits, and margin as the core segment. Price policy adoption and production efficiency improvements enhanced profitability. Segment assets were ¥795.2B, accounting for 75.1% of corporate assets and representing the main capital deployment. The Food & Wellness Business delivered Revenue of ¥161.9B (+22.0% YoY) and Operating Income of ¥1.2B (prior year ¥0.1B, +837.5%), turning profitable. However, Operating Margin remains low at 0.7%, indicating early-stage monetization despite revenue growth. Segment assets were ¥153.9B. Consolidated Operating Income after corporate adjustments was ¥103.2B, with the Sugar segment generating the bulk of operating profit. Improving Food & Wellness profitability will be key to lifting overall corporate margins.
[Profitability] Operating Margin improved to 9.1% (prior year 8.5%, +0.6pt), aided by higher Gross Margin and controlled SG&A. ROE rose slightly to 8.6% (prior year 8.0%), as Net Income growth outpaced equity growth. Basic EPS was ¥197.88 (prior year ¥175.61, +12.7%), in line with Net Income growth. [Cash Quality] Operating Cash Flow was ¥107.6B, 1.65x Net Income of ¥65.1B, indicating high-quality earnings. Operating CF / EBITDA (EBITDA = Operating Income + Depreciation ¥25.5B = ¥128.7B assumed) is 0.84x, somewhat low, with working capital movement (Accounts Payable decrease ▲¥16.2B) a partial headwind. Accrual ratio ((Net Income - Operating CF subtotal ¥137.9B) / Total Assets = ▲6.9%) is favorable, showing strong cash backing for profits. [Investment Efficiency] Total Asset Turnover was 1.07x (Revenue ¥1,129.0B ÷ Total Assets ¥1,058.3B), indicating efficient asset use. Inventory Days were 81 days (Inventories ¥198.4B ÷ COGS ¥891.2B × 365) and are somewhat high, suggesting room to improve inventory efficiency. [Financial Soundness] Equity Ratio rose to 72.9% (prior year 66.1%), supported by reduced short-term borrowings and increased Retained Earnings. Interest-bearing debt (short-term borrowings ¥100.1B) is roughly matched by cash and equivalents ¥104.6B, near net cash. Debt/EBITDA is 0.78x (Interest-bearing debt ¥100.1B ÷ EBITDA ¥128.7B), indicating very strong financial resilience.
Operating Cash Flow was ¥107.6B (+20.6% YoY), landing after working capital changes of ▲¥30.3B from an Operating CF subtotal (pre-working capital) of ¥137.9B. Within this, inventory decrease of +¥12.7B supported cash, while Accounts Payable decrease ▲¥16.2B, Accounts Receivable decrease +¥2.8B, and other items +¥5.3B were net headwinds. After payments of income taxes ▲¥30.6B, interest paid ▲¥1.7B, and lease payments ▲¥7.5B, Operating CF settled at ¥107.6B, 1.65x Net Income of ¥65.1B, reflecting high quality. Investing CF was ▲¥47.1B, primarily capital expenditures ▲¥45.6B, partially offset by proceeds from sale of investment securities ¥4.5B. Free Cash Flow was ¥60.6B, covering dividend payments ▲¥35.9B by 1.7x. The aggregate of Dividends + CapEx was ¥81.5B, with FCF coverage at 0.74x, indicating some use of cash balances to pursue both growth investment and shareholder returns. Financing CF was ▲¥110.4B, driven mainly by net short-term borrowings decrease ▲¥58.0B, dividend payments ▲¥35.9B, and acquisition of non-controlling interests ▲¥14.0B. Ending cash was ¥104.6B (beginning ¥154.5B), down ¥49.8B, but net-cash-like position and financial stability were maintained.
Operating Income of ¥103.2B compared to Ordinary Income of ¥77.4B shows a negative variance of ¥25.8B at non-operating levels. The main cause was equity-method income ▲¥5.8B (down ¥8.3B from prior year +¥2.5B), where performance swings at equity-method affiliates pressured Ordinary Income. Financial income ¥2.1B vs. financial expenses ¥1.9B were broadly neutral, offsetting interest and dividend items. Other income ¥0.6B vs. other expenses ¥6.3B produced a small net ▲¥5.7B, likely reflecting one-off items such as impairment or disposal of fixed assets. Income Taxes of ¥32.5B on Profit Before Tax ¥97.6B produced an effective tax rate of 33.3%, within normal range and suggesting limited tax-specific anomalies. Comprehensive Income was ¥73.0B, ¥7.9B higher than Net Income, driven by Other Comprehensive Income ¥7.9B (valuation gains on financial assets ¥7.6B, remeasurement of defined benefit plans ▲¥1.5B, etc.). The accrual metric (Net Income - Operating CF subtotal) was ▲¥72.8B, a large negative indicating very strong cash backing of profits. Operating profits are recurring and high quality, while non-operating items suffered temporary headwinds from equity-method volatility; core earnings power is judged solid.
Company guidance was Revenue ¥1,100.0B, Operating Income ¥92.0B, Net Income ¥65.0B. Results exceeded guidance with Revenue ¥1,129.0B (achievement 102.6%), Operating Income ¥103.2B (112.2%), and Net Income ¥65.1B (100.2%), outperforming on Revenue and Operating Income. The ¥11.2B Operating Income upside suggests that price revisions and inventory-driven COGS compression progressed better than planned. Net Income finished in line with guidance after absorbing deterioration in equity-method income. EPS was ¥197.88 (forecast ¥198.54), broadly in line. Dividend forecast of annual ¥60.00 was far exceeded with actual dividends Midterm ¥54 + Year-end ¥65 = ¥119, reflecting an upsized payout consistent with strong results. The beat versus plan was mainly due to stronger-than-expected Sugar segment performance and inventory efficiency improvements; continued application of price policy and inventory turnover gains are prerequisites for sustained solid performance in following years.
Annual dividend was ¥119 (Midterm ¥54 + Year-end ¥65), a large increase of ¥73 from prior year ¥46. Payout Ratio was 60.0% (Dividend ¥119 ÷ EPS ¥197.88), at a reasonable level, demonstrating a shareholder return stance aligned with profit growth. Total dividends paid were ¥35.9B, with coverage by Free Cash Flow ¥60.6B at 1.7x, providing comfortable coverage. Share buybacks were small at cash outflow ▲¥1.9B, resulting in a Total Return Ratio of (Dividends ¥35.9B + Share Buybacks ¥1.9B) ÷ Net Income ¥65.1B = 58.1%. Treasury stock decreased to ▲¥1.6B at fiscal year-end (prior year ▲¥6.6B), reflecting disposals that improved capital efficiency. With Dividends + CapEx totaling ¥81.5B versus FCF ¥60.6B, the company is partially deploying cash balances while pursuing growth investment and returns. Sustained expansion of Operating CF and inventory efficiency improvements to increase FCF will be the source of durable dividend increase capacity.
Raw material price volatility: Gross Margin at 21.1% is below industry benchmark (25–40%), making the company vulnerable to margin compression when raw sugar and energy commodity prices rise. COGS was ¥891.2B (78.9% of Revenue), indicating high raw material dependence; pricing pass-through lag can cause margin volatility. Currency moves (yen depreciation) can increase import costs; hedging policy (Cash Flow Hedge OCI ¥1.5B) is in place but cannot fully eliminate exposure.
Business concentration risk: Sugar accounts for 85.7% of Revenue and more than 100% of Operating Income, indicating extremely high single-segment dependence. Although Food & Wellness grew 22.0% in Revenue, its Operating Margin is only 0.7%, so its earnings contribution is limited; adverse Sugar market conditions could substantially swing consolidated results. Industry and geographic diversification remain medium- to long-term challenges for stable growth.
Equity-method income volatility risk: Equity-method income deteriorated from +¥2.5B to ▲¥5.8B (¥8.3B decline), reducing Ordinary Income by 5.6%. Investments in equity-method affiliates amount to ¥163.8B (prior year ¥168.6B), representing 15.5% of assets; performance swings at these affiliates directly affect Net Income. If recovery at equity-method entities is delayed, profit growth beyond the Ordinary Income stage may remain constrained.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 8.6% | 6.0% (2.6%–11.7%) | +2.6pt |
| Operating Margin | 9.1% | 5.0% (3.3%–8.4%) | +4.1pt |
| Net Margin | 5.8% | 3.2% (1.9%–6.6%) | +2.6pt |
Profitability exceeds industry medians across metrics, ranking the company highly in Operating and Net Margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 16.3% | 5.4% (1.0%–8.6%) | +10.9pt |
Revenue growth substantially exceeds industry median, driven by M&A contributions and expansion of existing operations.
※ Source: Company compilation
Improvement in operating profitability: Operating Margin improved to 9.1% (YoY +0.6pt, industry median +4.1pt), driven by price changes and cost management. While Gross Margin at 21.1% remains below industry benchmarks, the YoY +1.0pt improvement suggests structural progress. Targeted reduction of Inventory Days from 81 toward <60 and expansion of higher-margin products are expected to help close the gap to industry Gross Margin. Operating CF / EBITDA at 0.84x is somewhat low; improving working capital efficiency is key to enhancing cash conversion.
Balancing financial stability and growth investment: Equity Ratio 72.9%, Debt/EBITDA 0.78x, and near-net-cash structure provide very high resilience. Free Cash Flow ¥60.6B covers Dividends ¥35.9B by 1.7x, but Dividends + CapEx ¥81.5B versus FCF coverage 0.74x means some draw on cash is being used to pursue both investments and returns. Continued sustainability of CapEx and shareholder returns depends on maintaining Operating CF > ¥11.0B annually and increasing FCF via inventory efficiency gains.
Segment balance and equity-method risk: Sugar accounts for 85.7% of Revenue; Food & Wellness is profitable but low margin at 0.7%. Equity-method loss ▲¥5.8B reduced Ordinary Income by 5.6%, undermining final profit stability. Improving Food & Wellness margin (target >3%) and normalization of equity-method affiliate performance are essential for sustained ROE improvement and diversification of the profit structure.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult advisors as needed before making investment decisions.