| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥291.1B | ¥280.7B | +3.7% |
| Operating Income / Operating Profit | ¥12.3B | ¥14.1B | -12.5% |
| Ordinary Income | ¥29.1B | ¥26.7B | +9.0% |
| Net Income / Net Profit | ¥30.0B | ¥38.8B | -22.7% |
| ROE | 4.8% | 7.1% | - |
For the fiscal year ending March 2026, Revenue was ¥291.1B (YoY +¥10.4B +3.7%), Operating Income was ¥12.3B (YoY -¥1.8B -12.5%), Ordinary Income was ¥29.1B (YoY +¥2.4B +9.0%), and Net Income was ¥30.0B (YoY -¥8.8B -22.7%). This was a revenue-increasing but profit-decreasing result: growth in the Grocery Business (sales mix 86.5%) and rapid expansion of the Real Estate Business drove revenue, while SG&A growth (+¥6.6B +10.0%) caused the decline in operating profit. At the ordinary income stage, received dividends of ¥14.1B and gains on sales of investment securities of ¥3.9B contributed to increased profit, but Net Income declined because prior-year special gains of ¥37.1B contracted to ¥14.5B. Operating margin deteriorated to 4.2% (down -0.8pt from 5.0% a year ago), while Net Profit Margin improved to 10.3% (up +6.6pt), reflecting a structure where non-operating and special items partially offset the operating-stage efficiency decline.
Revenue of ¥291.1B (YoY +3.7%) saw increases across all segments: Grocery Business ¥251.7B (+3.1%), FineChemicals Business ¥35.5B (+4.6%), and RealEstate Business ¥3.9B (+42.4%). Grocery was driven by higher sales of core product groups such as chocolate and powdered beverages; FineChemicals was supported by enzymes and fragrances; Real Estate benefited from expansion of golf course and rental income. Gross profit was ¥84.7B (gross margin 29.1%, up +0.7pt from 28.4% a year ago), with cost of sales ratio improving to 70.9%. However, SG&A increased to ¥72.4B (SG&A ratio 24.9%, up +1.5pt from 23.4%), primarily due to advertising and promotional expenses rising to ¥7.2B (¥3.1B in the prior year), approximately 2.3x higher.
Operating Income was ¥12.3B (-12.5%), with operating margin falling to 4.2% (-0.8pt). SG&A growth of +10.0% outpaced revenue growth of +3.7%, causing negative operating leverage. Non-operating income amounted to ¥19.6B, led by received dividends of ¥14.1B (¥11.7B prior year) and equity-method investment income of ¥0.5B; after subtracting non-operating expenses of ¥2.7B (including interest expense ¥1.2B), Ordinary Income reached ¥29.1B (+9.0%). Special gains/losses totaled a positive ¥14.5B, including gains on sales of investment securities ¥14.5B and gains on sales of fixed assets ¥3.4B, but this was a significant decline from prior-year special gains of ¥37.1B (which included ¥33.6B gains on sales of investment securities). Pre-tax profit therefore declined to ¥42.6B (prior ¥63.7B). After deducting income taxes of ¥11.9B (effective tax rate 28.0%), Net Income was ¥30.0B (-22.7%). Other comprehensive income was ¥93.7B, aided by an increase in valuation differences on available-for-sale securities of ¥63.5B. In conclusion, this was a revenue-increasing, profit-decreasing fiscal year in which deterioration in operating profitability was partially offset by non-operating and special items, but Net Income fell due to contraction of one-off gains.
Grocery Business: Revenue ¥251.7B (¥244.1B prior year, +3.1%), Operating Income ¥17.4B (¥14.8B prior year, +17.7%), with segment margin improving to 6.9% from 6.1% (+0.8pt). Price adjustments and improved product mix in core food products contributed to margin improvement. FineChemicals Business: Revenue ¥35.5B (¥33.9B prior year, +4.6%), Operating Income ¥8.1B (¥8.4B prior year, -3.5%), maintaining a high segment margin of 22.8% but down from 24.7% a year ago. Strong sales of enzyme and fragrance products were offset by higher SG&A. RealEstate Business: Revenue ¥3.9B (¥2.8B prior year, +42.4%), Operating Income ¥2.0B (¥0.9B prior year, +110.6%), with an extremely high segment margin of 50.4%. Expansion of golf course revenues, rental income, and contribution from newly acquired assets were significant. Aggregate segment operating income was ¥27.5B; after deducting corporate overheads of ¥15.2B (¥10.0B prior year), consolidated Operating Income was ¥12.3B. The +51.3% increase in corporate overheads was a major driver compressing consolidated margins.
Profitability: Operating margin 4.2% (prior 5.0%), Net Profit Margin 10.3% (prior 13.8%), ROE 4.8% (prior 8.9%), all deteriorated. Decline in operating efficiency and contraction of special gains lowered profitability metrics. Gross margin improved to 29.1% (prior 28.4% +0.7pt), indicating improved cost efficiency, but SG&A ratio rose to 24.9% (prior 23.4%), pressuring operating margin. Cash Quality: Operating Cash Flow / Net Income ratio was -0.23x, with Operating Cash Flow of -¥7.1B against Net Income of ¥30.0B. Operating CF subtotal was ¥2.0B, but working capital deterioration—inventory increase ¥14.5B, decrease in trade payables ¥5.8B—and corporate tax payments of ¥22.1B weighed on cash flows. EBITDA (Operating Income + Depreciation & Amortization) was ¥32.2B, giving an OCF/EBITDA ratio of -0.22x, which is low. Investment Efficiency: Total asset turnover slowed to 0.29x (prior 0.34x) due to increases in fixed assets. ROIC (NOPAT / Invested Capital) is roughly 1.2%, very low, indicating significant room to improve returns on invested capital. Financial Soundness: Equity Ratio 62.0% (prior 65.9%) remains high, supporting a sound financial base, but interest-bearing debt increased to ¥163.0B (short-term borrowings ¥18.5B + long-term borrowings ¥144.5B), raising Debt/EBITDA to 5.06x (based on EBITDA ¥32.2B). Liquidity is healthy with current ratio 171.4% and quick ratio 144.4%.
Operating CF was -¥7.1B (sharply down from +¥42.4B prior year), with operating CF subtotal of ¥2.0B (prior ¥34.8B) hit by working capital deterioration and corporate tax payments. Inventory increased by ¥14.5B, lengthening inventory days; trade payables decreased by ¥5.8B; and tax payments reached ¥22.1B. Adjustments for investment-related gains (subtraction of gains on sales of securities ¥18.4B, etc.) also reduced operating CF. Investing CF was -¥93.0B (prior +¥9.6B), with capital expenditures expanding to ¥115.4B versus ¥35.2B a year earlier (about 3.3x), far exceeding proceeds from sales of investment securities of ¥22.5B. Financing CF was +¥63.9B (prior -¥43.7B), as long-term borrowings raised ¥76.9B exceeded repayments of ¥9.9B, and dividends of ¥6.4B and share buybacks of ¥15.0B were executed. FCF was -¥100.0B (prior +¥52.0B), reflecting an aggressive investment phase. Cash and deposits declined to ¥35.8B (prior ¥71.9B, down ¥36.2B), pressured by working capital funding needs and large investments.
Of Net Income ¥30.0B, Operating Income was ¥12.3B (operating margin 4.2%), indicating limited operating profit-generating capacity. The uplift to Ordinary Income ¥29.1B relied on non-operating income of ¥19.6B (mainly received dividends ¥14.1B and gains on sales of investment securities ¥3.9B), representing a high non-operating dependence of 6.7% of revenue. Special items were a positive ¥14.5B, mainly gains on sales of investment securities ¥14.5B, but these shrank from prior-year special gains of ¥37.1B, causing Net Income to decline. Comprehensive income ¥93.7B exceeded Net Income substantially, aided by an increase in valuation differences on available-for-sale securities ¥63.5B; this is unrealized mark-to-market gains rather than realized profit. With Operating CF at -¥7.1B versus Net Income ¥30.0B, the Operating CF/Net Income ratio is -0.23x, indicating weak cash-generating quality. Earnings are dependent on one-off and non-recurring items such as dividends and gains on sales of securities; sustainable earnings will require improvement in operating margins.
For FY2027 (year ending March 2027), management forecasts Revenue ¥305.0B (YoY +4.8%), Operating Income ¥18.0B (+46.3%), Ordinary Income ¥30.0B (+3.0%), and Net Income attributable to owners of the parent ¥21.0B (EPS ¥128.81). The plan assumes substantial operating profit growth driven by contributions from newly operating capital expenditures and sustained high margins in Real Estate and FineChemicals businesses. Ordinary Income is expected to be broadly flat, with reductions in non-operating income offsetting operating profit gains. Net Income is projected at ¥21.0B (down from ¥30.0B this period), reflecting a conservative assumption of reduced one-off gains such as proceeds from sales of investment securities. Dividend forecast is ¥40 per year (payout ratio approx. 31%), deemed sustainable. Progress ratios (first-half results / full-year forecast) are approximately 95.4% for Revenue, 68.3% for Operating Income, and 146% for Net Income — Net Income has already exceeded plan, while Operating Income requires significant second-half improvement. Achieving the plan depends on improving inventory efficiency, restraining SG&A ratio, and early commercialization of new invested assets.
Dividend paid totaled ¥55 per year (interim ¥20, year-end ¥35), payout ratio 29.9%, including a ¥2 commemorative dividend for the 80th anniversary in the year-end payment. Total dividends of ¥6.4B against Net Income ¥30.0B place the payout ratio within an appropriate range. Share buybacks of ¥15.0B were executed, and combined with dividends, the Total Return Ratio was approximately 71.4%, indicating an aggressive shareholder return stance. However, FCF was -¥100.0B, so return funding was not supported by cash generation but rather by long-term borrowings and cash drawdown. Next fiscal year dividend forecast is ¥40 per year (payout ratio approx. 31%), a planned reduction reflecting conservative Net Income assumptions. Medium-term sustainability of returns depends on restoring Operating CF to positive and improving FCF through inventory compression and higher returns on invested capital.
Risk of persistently low profitability: Operating margin at 4.2% is below the industry median of 5.0%, with ROE 4.8% and ROIC 1.2% indicating very low capital efficiency. Rising SG&A ratio to 24.9% has produced negative operating leverage, creating structural risk where revenue growth does not translate into profit growth. Risks include delayed price pass-through, insufficient cost pass-through of raw material and logistics cost increases, and inefficient allocation of advertising spend.
Risk of working capital and cash flow deterioration: Operating CF has turned negative at -¥7.1B, with inventory up ¥14.5B and trade payables down ¥5.8B, worsening working capital. Inventory days extended to 105 days and the cash conversion cycle reached 132 days. If sales plan deviations, inventory valuation losses, or receivables collection delays materialize, liquidity pressure and the need for additional borrowing would increase.
High leverage and investment recovery risk: Interest-bearing debt of ¥163.0B yields Debt/EBITDA of 5.06x, and capital expenditure of ¥115.4B is 5.8x depreciation of ¥19.9B, signaling an aggressive investment mode. Delays in operation of new equipment or real estate assets, shortfalls in expected returns, or rising interest rates could increase financial burden and entrench low ROIC. Market value volatility of investment securities ¥517.3B (51.6% of total assets) also raises capital volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.2% | 5.0% (3.3%–8.4%) | -0.8pt |
| Net Profit Margin | 10.3% | 3.2% (1.9%–6.6%) | +7.1pt |
Operating margin lags the industry median, indicating weaker operating profitability, but Net Profit Margin exceeds the industry median significantly due to contributions from dividends and gains on sales of securities.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.7% | 5.4% (1.0%–8.6%) | -1.7pt |
Revenue growth underperforms the industry median, placing the company in the lower tier for growth.
※ Source: Company aggregation
Low operating profitability and timeline for recovering large investments: With Operating Margin 4.2%, ROE 4.8%, and ROIC 1.2%, capital efficiency is very low. Aggressive capital expenditure of ¥115.4B (5.8x depreciation) contributed to increased leverage this period (Debt/EBITDA 5.06x). Next fiscal year targets Operating Income +46.3% growth, but achieving this depends on the operational contribution of new assets, restraint of SG&A ratio, and improvements in inventory efficiency. Visualizing investment recovery (operational rate data, ROIC improvement trend) and improving working capital management are keys to medium-term value creation.
Dependence on non-operating and one-off gains and quality of earnings: Of Net Income ¥30.0B, Operating Income accounted for only ¥12.3B, while dividends received ¥14.1B and gains on sales of investment securities ¥14.5B boosted profits. Operating CF of -¥7.1B indicates weak cash generation, and dividends ¥6.4B plus share buybacks ¥15.0B were not covered by FCF of -¥100.0B. Next period’s Net Income plan of ¥21.0B reflects a conservative assumption of reduced one-off gains, but sustainable shareholder returns and debt reduction require positive Operating CF and working capital improvement via inventory compression.
Relative industry position and scope for improvement: Operating margin is below the industry median of 5.0% and revenue growth below the industry median of 5.4%. However, Net Profit Margin of 10.3% exceeds the industry median due to non-recurring items. High-margin businesses exist at the segment level—Grocery margin 6.9%, FineChemicals 22.8%, RealEstate 50.4%—so medium-term improvement scenarios include Grocery efficiency gains (price adjustments and product mix optimization), expansion of high-value FineChemicals product sales, and higher operating rates in RealEstate to normalize operating leverage.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as necessary before making investment decisions.