| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥2366.7B | ¥2289.6B | +3.4% |
| Operating Income | ¥223.9B | ¥212.7B | +5.3% |
| Ordinary Income | ¥226.6B | ¥223.0B | +1.6% |
| Net Income | ¥150.9B | ¥117.8B | +28.1% |
| ROE | 10.5% | 8.9% | - |
For the fiscal year ended March 2026, Revenue was ¥2366.7B (YoY +¥77.1B +3.4%), Operating Income was ¥223.9B (YoY +¥11.3B +5.3%), Ordinary Income was ¥226.6B (YoY +¥3.6B +1.6%), and Net Income attributable to owners of the parent was ¥150.9B (YoY +¥33.1B +28.1%). Revenue increased for the third consecutive year, driven by price and mix improvements in the core Food Manufacturing business. Operating margin improved to 9.5% from 9.3% a year earlier (+0.2pt), maintaining a gross margin of 40.1% while containing SG&A ratio to 30.7%. Net Income rose significantly YoY (+28.1%) due to special gains of ¥32.7B including ¥29.2B gains on sales of investment securities, resulting in ROE of 10.5% (equivalent to approximately 9.0% on an equity basis in the prior year). Operating Cash Flow (OCF) was ¥236.4B (YoY +119.6%), exceeding Net Income and indicating high cash quality. The company entered an active investment phase (Capital Expenditure ¥169.9B, Construction in Progress ¥187.9B), resulting in Free Cash Flow of ¥93.5B.
[Revenue] Revenue of ¥2366.7B (YoY +3.4%) was led by the core Food Manufacturing segment at ¥2251.8B (+3.5%), which accounted for 95.1% of sales and whose increase was mainly due to price revisions and mix improvement toward higher-value products. By region, Japan was firm at ¥2056.4B (prior ¥1985.7B, +3.6%), the U.S. declined slightly to ¥190.9B (prior ¥196.7B, -3.0%), and Other regions grew to ¥119.4B (prior ¥107.2B, +11.4%). Food Wholesale was ¥92.0B (+2.5%), Real Estate & Services ¥19.0B (+1.4%), and Other ¥16.8B (+2.4%), all modest increases. Gross margin of 40.1% was essentially flat YoY, with raw material cost increases covered by price pass-through.
[Profitability] Cost of sales was ¥1417.1B (prior ¥1389.1B, +2.0%), resulting in Gross Profit of ¥949.6B (gross margin 40.1%). SG&A was ¥725.6B (prior ¥687.8B, +5.5%) driven by increases in logistics and personnel costs; the SG&A ratio rose only 0.7pt to 30.7% from 30.0%. Operating Income was ¥223.9B (+5.3%) and operating margin improved to 9.5% (+0.2pt). Non-operating items comprised Interest Income ¥1.6B, Dividend Income ¥2.7B, Equity-method investment loss -¥2.2B, and Interest Expense ¥1.3B, resulting in net non-operating income of ¥2.7B and Ordinary Income of ¥226.6B (+1.6%). Special gains totaled ¥32.7B (gains on sales of investment securities ¥29.2B, gains on sales of fixed assets ¥3.4B) less special losses of ¥6.0B (loss on disposal of fixed assets ¥4.1B, impairment losses ¥0.4B), leading to Profit before Tax of ¥253.3B (+4.3%). After Income Taxes of ¥73.9B (effective tax rate 29.2%) and Non-controlling Interests of ¥1.7B, Net Income attributable to owners of the parent was ¥150.9B (+28.1%). In summary, both Revenue and Operating Income increased, Ordinary Income was also higher, and one-off gains on sales of investment securities materially boosted Net Income.
The Food Manufacturing segment posted Revenue of ¥2251.8B (YoY +3.5%), Operating Income of ¥223.3B (+12.4%), and margin of 9.9%, contributing the majority of consolidated Operating Income. Margin improved 1.1pt from 8.8% in the prior year, driven by price/mix improvements and productivity gains. The Food Wholesale segment recorded Revenue ¥92.0B (+2.5%), Operating Income ¥6.9B (-52.1%), and margin 7.5%, delivering a significant decrease in profit as logistics and labor inflation pressured margins. Real Estate & Services posted Revenue ¥19.0B (+1.4%), Operating Income ¥8.8B (+9.9%), and margin 46.3%, maintaining high profitability and stable contribution. Other segments (e.g., research reagents) had Revenue ¥16.8B (+2.4%), Operating Income ¥1.4B (-12.1%), margin 8.6%, a slight decline in profit. High profitability in Food Manufacturing (9.9%) underpins consolidated profitability, while the large profit decline in Wholesale highlights the challenge of addressing structural cost increases.
[Profitability] Operating margin 9.5% (prior 9.3% +0.2pt), gross margin 40.1% (prior 39.3% +0.8pt), SG&A ratio 30.7% (prior 30.0% +0.7pt), and ROE 10.5%; improvements in gross margin contributed to higher profitability. ROE decomposes into Net Profit Margin 6.4% × Total Asset Turnover 1.05x × Financial Leverage 1.57x.
[Cash Quality] OCF of ¥236.4B is 1.57x Net Income of ¥150.9B, and the OCF/EBITDA ratio is 0.73x (EBITDA = Operating Income ¥223.9B + Depreciation ¥101.6B = ¥325.5B), though inventory increase (-¥22.3B) was a drag. Accrual ratio -2.8% (= (150.9-236.4)/Total Assets 2259.2) indicates good quality.
[Investment Efficiency] CapEx ¥169.9B is 1.67x Depreciation ¥101.6B, indicating an active investment phase; Construction in Progress ¥187.9B (8.3% of total assets) reflects large ongoing projects. Total Asset Turnover 1.05x (Revenue ¥2366.7B / Total Assets ¥2259.2B) and Inventory Days 103 days (Inventories ¥220.0B ÷ (Cost of Sales ¥1417.1B ÷ 365)) show room for improvement.
[Financial Soundness] Equity Ratio 63.6% (prior 62.3% +1.3pt), Current Ratio 183.8%, Debt/EBITDA 0.31x (interest-bearing debt (Long-term borrowings ¥70B + Bonds ¥90B + Short-term borrowings ¥30B) ÷ EBITDA ¥325.5B), and Interest Coverage 167x (EBIT ¥223.9B / Interest Expense ¥1.3B), indicating extremely healthy levels; long-term borrowings decreased by 30% from ¥100B to ¥70B year-on-year.
OCF was ¥236.4B (prior ¥107.6B, +119.6%), starting from Profit before Tax ¥253.3B, adding Depreciation ¥101.6B, and adjusting for working capital: Inventory increase -¥22.3B, Trade Receivables increase -¥6.5B, Trade Payables decrease -¥9.6B for net working capital change of -¥38.4B, and Income Taxes paid -¥50.5B. Operating cash flow subtotal was ¥280.6B (prior ¥204.8B, +37.0%), the main source of OCF, with YoY increase supported by a reduction in impairment losses (from ¥10.0B to ¥0.4B) and higher subsidy income (from ¥1.7B to ¥3.3B). Investing Cash Flow was -¥142.9B, primarily due to CapEx -¥169.9B (prior -¥135.8B), partially offset by proceeds from sales of investment securities ¥36.6B and proceeds from sales of tangible fixed assets ¥10.5B. Free Cash Flow was ¥93.5B (OCF ¥236.4B + Investing CF -¥142.9B), turning positive from prior -¥92.0B. Financing Cash Flow was -¥132.4B, consisting of dividend payments -¥78.9B, share buybacks -¥47.5B (corresponding to ¥48.9B equivalent from share acquisition information), long-term debt repayments -¥35.0B, increase in short-term borrowings ¥30B, and new long-term borrowings ¥5B. Cash and cash equivalents decreased by -¥51.2B from opening ¥308.5B to closing ¥257.3B; cash and deposit balance including time deposits not classified as cash equivalents was ¥264.2B. Elevated inventory days of 103 indicate scope for working capital efficiency improvements; as Construction in Progress ¥187.9B projects become operational, investing cash flow normalization and acceleration of EBITDA generation are expected.
Ordinary Income ¥226.6B is composed of Operating Income ¥223.9B plus net non-operating income ¥2.7B (non-operating income ¥7.6B - non-operating expenses ¥5.0B), with non-operating income representing 0.3% of Revenue and thus minimal—dependency on non-operating items for recurring earnings is low. One-off factors include Special Gains ¥32.7B (gains on sales of investment securities ¥29.2B, gains on sales of fixed assets ¥3.4B) which lifted Profit before Tax to ¥253.3B; the difference of ¥26.7B between Profit before Tax and Ordinary Income was the primary contributor to the Net Income increase. Special Losses ¥6.0B (loss on disposal of fixed assets ¥4.1B, impairment losses ¥0.4B) were limited, substantially lower than prior year impairment losses of ¥10.0B. Effective tax rate 29.2% is close to statutory effective tax rate, with no notable tax anomalies. Accrual ratio -2.8% indicates OCF exceeded Net Income and quality of earnings is high; OCF/Net Income multiple of 1.57x is also healthy. Comprehensive Income ¥239.2B exceeded Net Income ¥150.9B by ¥88.3B, with Other Comprehensive Income composed of remeasurements of defined benefit plans ¥41.4B, foreign currency translation adjustments ¥13.0B, valuation difference on available-for-sale securities ¥3.8B, and deferred hedge gains/losses ¥1.7B—primarily driven by pension remeasurement. Recurring earning power should be assessed on Operating Income; approximately 17.7% of Net Income (special gains net ¥26.7B ÷ Net Income ¥150.9B) is attributable to one-off factors.
Progress against the Full Year forecast (FY2026) is: Revenue 92.1% (¥2366.7B/¥2570.0B), Operating Income 98.2% (¥223.9B/¥228.0B), Ordinary Income 102.1% (¥226.6B/¥222.0B), with Ordinary Income exceeding the forecast. Revenue actual +3.4% vs forecasted YoY +8.6% missed, but Operating Income actual +5.3% outperformed forecasted YoY +1.8%, and Ordinary Income actual +1.6% beat forecasted YoY -2.0%. Due to contribution from special gains, Net Income actual ¥150.9B compared with forecast ¥165.0B (EPS forecast ¥196.03) resulted in EPS actual ¥211.07 (EPS outperformance). Dividend actual annual ¥65 (interim ¥32.5 + year-end ¥32.5) substantially exceeded forecast annual ¥35, with Payout Ratio actual 29.9% vs forecast 17.9%. The beat in Ordinary Income was supported by SG&A control and stable non-operating income, while EPS outperformance in Net Income was influenced by special gains. The full-year forecasts were likely set conservatively; in preparing next-year guidance, it will be important to see whether cost control effects and sustainability of price pass-through are incorporated.
Annual dividend was ¥65 (interim ¥32.5 + year-end ¥32.5), marking an increase on a full-year basis compared with the prior year which disclosed only an interim dividend. Payout Ratio was 29.9% (Total dividends ¥78.9B / Net Income attributable to owners of the parent ¥150.9B × based on weighted average shares outstanding 84,172 thousand shares). The ratio of total dividends to Free Cash Flow is 84.4% and FCF coverage is 1.18x. Share buybacks totaled ¥47.5B (corresponding to ¥48.9B equivalent from share acquisition information), making combined returns (dividends + buybacks) approximately ¥126.4B and Total Return Ratio approximately 83.8% ((¥78.9 + ¥47.5) / ¥150.9). DOE (dividends to net assets) is 5.5% of Net Assets ¥1437.0B. Payout Ratio 29.9% is a sustainable level (<60%), FCF coverage is favorable, and Total Return Ratio 83.8% including buybacks indicates a policy that prioritizes shareholder returns while balancing profit growth and investment needs. Cash & deposits ¥264.2B are 8.8x short-term borrowings ¥30B, so there is no concern over dividend continuity. Going forward, a combination of stable dividends and flexible share repurchases is judged feasible while monitoring profit growth and the progress of large investment projects.
Excess Inventory Risk: Inventories ¥220.0B (prior ¥213.9B, +2.9%), Inventory Days 103 days (prior 96 days +7 days) show rising inventory levels. Inventory increase on OCF -¥22.3B (prior -¥85.3B) has improved but demand swings could lead to higher markdowns, disposal costs, or working capital lock-up risk. Inventory/Revenue ratio 9.3% (220.0/2366.7) is within an appropriate range, but in a demand slowdown scenario watch for inventory write-downs or higher promotional spending.
Large Investment Project Startup Risk: Construction in Progress ¥187.9B (prior ¥39.6B, +374.8%) represents 8.3% of total assets and 21.0% of tangible fixed assets, indicating large projects underway. CapEx ¥169.9B is 1.67x Depreciation ¥101.6B; delays or cost overruns could push back EBITDA generation timing, increase depreciation burden, and compress margins. Project progress control and budget discipline will directly affect profitability from next fiscal year onward.
Customer Concentration Risk: Sales to major customer Mitsubishi Shokuhin amounted to ¥249.0B, representing 10.5% of total sales. Any change in trading terms or channel shifts with this customer could materially impact Revenue and profits. Channel diversification and increasing direct sales ratio are required as medium-to-long-term risk mitigation.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.5% | 5.0% (3.3%–8.4%) | +4.5pt |
| Net Profit Margin | 6.4% | 3.2% (1.9%–6.6%) | +3.2pt |
Both Operating Margin and Net Profit Margin substantially exceed industry medians, indicating top-tier profitability within the food sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.4% | 5.4% (1.0%–8.6%) | -2.0pt |
Revenue growth rate is below the median, indicating somewhat modest growth relative to peers.
※ Source: Company compilation
Maintaining gross margin of 40.1% and improving operating margin to 9.5% through price and mix improvements demonstrates structurally improved profitability supported by brand strength. Food Manufacturing margin of 9.9% (prior 8.8% +1.1pt) reflects strengthened competitiveness of the core business; continued expansion of high-value products and disciplined pricing will be keys to future profit growth.
Progress in an active investment phase (CapEx/Depreciation = 1.67x, Construction in Progress ¥187.9B) suggests upside from productivity gains and strengthened new product supply capabilities once projects commence. If projects ramp smoothly, they could catalyze EBITDA margin expansion and renewed ROE acceleration from next fiscal year. Conversely, delays or initial yield shortfalls would increase depreciation burden and delay monetization risk; quarterly progress disclosures will be important for investment decisions.
Financial safety is very high (Debt/EBITDA 0.31x, Current Ratio 183.8%, Equity Ratio 63.6%), and the balance between dividend payout 29.9% and Total Return Ratio 83.8% is sound, so sustainability of shareholder returns is not a concern. Normalization of inventory days from 103 and shortening of the cash conversion cycle could improve OCF/EBITDA from 0.73x toward >0.9x, creating room for further shareholder returns.
This report is an earnings analysis document 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 based on publicly available financial statements. Investment decisions are your own responsibility; please consult a professional advisor as necessary before acting.
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