| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥537.2B | ¥511.2B | +5.1% |
| Operating Income / Operating Profit | ¥32.0B | ¥30.1B | +6.5% |
| Ordinary Income | ¥35.3B | ¥31.7B | +11.5% |
| Net Income / Net Profit | ¥22.5B | ¥17.3B | +29.6% |
| ROE | 9.0% | 7.8% | - |
For the fiscal year ended March 2026, Revenue was ¥537.2B (YoY +¥26.0B +5.1%), Operating Income was ¥32.0B (YoY +¥2.0B +6.5%), Ordinary Income was ¥35.3B (YoY +¥3.6B +11.5%), and Net Income was ¥22.5B (YoY +¥5.1B +29.6%), resulting in growth in both top- and bottom-line. Operating margin improved to 6.0% from 5.9% a year earlier (+0.1pt), and Net margin improved to 4.2% from 3.4% (+0.8pt). Ordinary Income grew more than Operating Income due to an increase in non-operating income to ¥4.2B (from ¥2.4B, +¥1.8B), primarily driven by foreign exchange gains of ¥1.7B. The significant increase in Net Income (+29.6%) was supported by an improvement in extraordinary items (previous year net loss ¥1.7B → current year approximately break-even) and a change in effective tax burden (prior year 30.2% → current period 32.4%). ROE of 9.0% was achieved under a healthy financial structure with an Equity Ratio of 57.8%.
[Revenue] Revenue reached ¥537.2B (YoY +5.1%), representing steady growth. By segment, the core Distribution Business accounted for ¥489.6B (YoY +5.2%), representing 91.1% of consolidated Revenue, driven by confectionery, foods, daily chilled products, and frozen desserts. The Seasonings Business recorded ¥48.7B (YoY +4.5%), 9.1% of sales, with stable growth in natural seasonings and fermented seasonings. Other businesses (real estate leasing, lease agency, etc.) accounted for ¥2.6B (YoY +2.2%). Revenue growth drivers included effective pricing policies, improved product mix, and expanded supply capacity from capital expenditures. Cost of goods sold was ¥351.2B (YoY +5.4%), slightly outpacing sales growth, resulting in a gross margin of 34.6%, down 0.2pt from 34.8% a year earlier. While the company largely passed through rising raw material and energy costs via pricing, it did not fully offset the increases.
[Profitability] Operating Income was ¥32.0B (YoY +6.5%), outpacing revenue growth and benefiting from positive operating leverage. SG&A was ¥154.0B (YoY +4.1%), with an SG&A ratio of 28.7%, improved 0.2pt from 28.9% due to economies of scale and efficiency gains. By segment, Distribution Business Operating Income was ¥44.2B (YoY +4.8%, margin 9.0%), Seasonings Business Operating Income was ¥6.6B (YoY +4.3%, margin 13.6%), where the high profitability of the Seasonings Business contributed to consolidated mix. Ordinary Income was ¥35.3B (YoY +11.5%), boosted by increased non-operating income: dividend income ¥0.9B, foreign exchange gains ¥1.7B, and other ¥1.2B. Non-operating expenses were ¥0.9B (including interest expense ¥0.8B), keeping financing costs minimal. Extraordinary items were largely neutral: extraordinary gains ¥3.0B (including investment securities disposal gains ¥0.9B) and extraordinary losses ¥3.0B (including impairment losses ¥0.6B and loss on disposal of fixed assets ¥0.4B) netted to near zero. Income taxes amounted to ¥11.4B (effective tax rate 32.4%), producing Net Income of ¥22.5B from pre-tax income of ¥35.3B. In conclusion, the company achieved revenue and profit growth; non-operating income supported Ordinary Income, while improvement in extraordinary items and tax burden contributed to higher Net Income.
The Distribution Business posted Revenue of ¥489.6B (YoY +5.2%) and Operating Income of ¥44.2B (YoY +4.8%), a margin of 9.0%. As the core business (91.1% of Revenue), it manufactures and sells confectionery, foods, daily chilled products, dim sum deli, frozen desserts, sweets, and sake. Revenue growth slightly outpaced profit growth, suggesting gross margin compression and higher SG&A may have pressured margins. The Seasonings Business recorded Revenue of ¥48.7B (YoY +4.5%) and Operating Income of ¥6.6B (YoY +4.3%), margin 13.6%. Although small at 9.1% of sales, it is a high-margin segment with approximately 1.5x the margin of the Distribution Business, driven by natural seasonings, nutritional foods, fermented and liquid seasonings. Other Businesses had Revenue of ¥2.6B (YoY +2.2%) and Operating Income of ¥0.7B (YoY +15.6%), margin 27.8%, consisting of non-manufacturing activities such as real estate leasing and lease agency, contributing modestly but at high margins. Aggregate segment profit before corporate allocations was ¥51.5B; after deducting unallocable corporate expenses of ¥19.5B, consolidated Operating Income was ¥32.0B. The high margin of the Seasonings Business indicates potential for margin expansion if its share of the mix increases.
[Profitability] Operating margin was 6.0%, up 0.1pt from 5.9%. Gross margin was 34.6%, down 0.2pt from 34.8%. SG&A ratio was 28.7%, improved 0.2pt from 28.9%. EBITDA was ¥53.4B (Operating Income ¥32.0B + Depreciation ¥21.4B), with an EBITDA margin of 9.9%. ROE was 9.0%, achieved under a healthy Equity Ratio of 57.8%. [Cash Quality] Operating Cash Flow (OCF) was ¥38.4B, 1.71x Net Income of ¥22.5B, indicating good cash quality. OCF/EBITDA ratio was 0.72x, below the benchmark 0.9x, affected by inventory increase of ¥6.1B and other working capital movements. Free Cash Flow was -¥13.7B, mainly due to aggressive capital expenditures of ¥53.5B. [Investment Efficiency] Total asset turnover was 1.24x (Revenue ¥537.2B ÷ average total assets during period ¥432.0B). Capex/Depreciation was 2.50x, indicating a capacity expansion phase. Inventory turnover was 9.5x (COGS ¥351.2B ÷ average inventory during period ¥38.3B), with inventory days about 39, appropriate for processed foods. [Financial Soundness] Equity Ratio was 57.8% (down 2.5pt from 60.3%). Current ratio was 0.92 (down from 1.08), indicating short-term liquidity is at a cautionary level. Interest-bearing debt (short-term borrowings ¥27.0B) is entirely short-term, and cash ¥13.1B gives a debt coverage ratio of 0.49x, low. Nevertheless, Debt/EBITDA ratio is 0.51x and interest coverage is 40.0x (Operating Income ¥32.0B ÷ interest expense ¥0.8B), indicating very solid solvency and limited interest burden risk.
OCF was ¥38.4B (down 36.7% from ¥60.7B) mainly due to working capital movements. Pre-tax profit was ¥35.3B; adding back non-cash expenses such as depreciation ¥21.4B produced subtotal OCF before working capital changes of ¥45.4B. Working capital changes included inventory increase -¥6.1B (prior year -¥4.5B), decrease in trade receivables +¥0.1B (prior year increase -¥17.9B), decrease in trade payables -¥0.7B (prior year increase +¥2.6B), and net increase in other current assets/liabilities -¥4.3B, which all pressured OCF. Income tax payments were -¥8.9B. As a result, OCF ¥38.4B was 1.71x Net Income ¥22.5B, indicating good cash backing of profits, but OCF/EBITDA ratio of 0.72x fell below the 0.9x benchmark, reflecting inventory build and working capital management. Investing Cash Flow was -¥52.1B, comprising capital expenditures -¥53.5B, intangible asset acquisitions -¥0.1B, investment securities acquisitions -¥0.1B, proceeds from sale of securities +¥1.2B, and subsidy receipts +¥0.7B. Capex was 2.5x depreciation, indicating an active phase of production capacity expansion and efficiency investments. Free Cash Flow was -¥13.7B (OCF ¥38.4B + Investing CF -¥52.1B), negative due to front-loaded investments. Financing Cash Flow was +¥11.3B, reflecting net increase in short-term borrowings +¥18.0B, lease liability repayments -¥2.0B, share repurchases -¥0.0B, and dividend payments -¥4.6B. Investment funding has been covered by short-term borrowings, and cash at period end was ¥13.1B (down ¥2.1B from ¥15.2B). Going forward, EBITDA growth from capex ramp-up and improved cash conversion will be key to repaying short-term borrowings and maintaining dividend sustainability.
Of Ordinary Income ¥35.3B, Operating Income ¥32.0B accounted for 90.7%, indicating high quality of earnings. Non-operating income ¥4.2B consisted of dividend income ¥0.9B (recurring), foreign exchange gains ¥1.7B (largely one-off), and other non-operating income ¥1.2B (including subsidies). The foreign exchange gain ¥1.7B reflects FX impacts on imported raw materials and is subject to significant volatility, so sustainability is low. Non-operating expenses ¥0.9B (interest expense ¥0.8B, foreign exchange losses ¥0.2B, etc.) were minor, keeping financing burden limited. Extraordinary items were neutral: extraordinary gains ¥3.0B (investment securities disposal gains ¥0.9B, subsidies ¥0.4B, etc.) and extraordinary losses ¥3.0B (impairment losses ¥0.6B, loss on disposal of fixed assets ¥0.4B, etc.) netted out, so there was no one-off boost to earnings. Comprehensive income was ¥33.7B, ¥11.2B above Net Income ¥22.5B, mainly due to valuation gains on other securities +¥8.1B, actuarial adjustments related to retirement benefits +¥2.6B, and translation adjustments -¥0.8B. The unrealized gains on securities boosted comprehensive income but remain valuation items that may be realized in the future. From an accrual perspective, OCF ¥38.4B being 1.71x Net Income ¥22.5B indicates strong cash backing of profits. Overall, operating earnings are stable; non-operating FX gains temporarily lifted Ordinary Income but sustainability is limited; and Net Income landed at a high-quality level due to neutral extraordinary items.
Full year guidance is Revenue ¥560.0B (YoY +4.2%), Operating Income ¥33.0B (YoY +3.1%), Ordinary Income ¥34.0B (YoY -3.8%), and Net Income ¥24.0B (EPS ¥187.54). Progress against current year results is: Revenue 95.9%, Operating Income 97.0%, Ordinary Income 103.8%, Net Income 93.5%. Revenue and Operating Income are slightly below the initial forecast, while Ordinary Income exceeded expectations due to stronger non-operating income. Net Income is expected to miss by -6.5% versus forecast due to changes in tax burden. The projection of Ordinary Income down YoY (-3.8%) likely incorporates the disappearance of non-operating gains such as foreign exchange gains. The company expects continued operating-stage profit growth, assuming Revenue +4.2% and Operating Income +3.1%. Compared to the prior year, the full-year Revenue target of ¥560.0B requires an incremental ¥22.8B over the current period ¥537.2B, implying planned acceleration in the second half.
Year-end dividend is ¥38, with total annual dividend ¥38, representing a Payout Ratio of 20.4% (Net Income ¥22.5B ÷ shares outstanding 12,797 thousand × dividend ¥38) and is at a conservative level. Total dividends amount to ¥4.6B, giving a dividend coverage ratio versus OCF of 8.3x, indicating ample capacity. However, Free Cash Flow is -¥13.7B, and while dividends are funded from OCF, overall funding (including capex) is being supplemented by an increase in short-term borrowings (+¥18.0B). Share buybacks were -¥0.0B and shareholder returns are concentrated on dividends. The 20.4% payout is conservative versus peers and consistent with ROE of 9.0%; given the active investment phase, the policy balances dividend maintenance and investment expansion. Future dividend sustainability depends on recovery of cash generation from capex ramp-up and management of short-term borrowings. The full-year forecast discloses dividends as 0 yen (mid-year?), suggesting the possibility of a year-end lump-sum dividend or performance-linked distribution, but based on actuals the company continues stable dividends.
Short-term liquidity risk: Current ratio 0.92, cash ¥13.1B / short-term liabilities ¥148.5B = 0.09x, very low, with interest-bearing debt ¥27.0B concentrated entirely in short-term borrowings. Cash coverage of debt is 0.49x (cash ¥13.1B ÷ short-term borrowings ¥27.0B), implying refinancing-dependent liquidity. Nevertheless, Debt/EBITDA 0.51x and interest coverage 40x indicate strong repayment capacity, and if banking relationships are good, liquidity can likely be secured.
Inventory & working capital management risk: Inventory increased to ¥38.7B (from ¥35.4B, +9.3%), pressuring OCF by -¥6.1B. Inventory turnover 9.5x and 39 days are within acceptable ranges, but future demand or seasonality shifts could expand inventory levels, further weakening cash conversion and increasing short-term funding needs. OCF/EBITDA 0.72x below industry benchmark 0.9x highlights the need to improve working capital efficiency.
Investment recovery risk: Capital expenditures of ¥53.5B are 2.5x depreciation ¥21.4B, and construction in progress increased to ¥23.5B (from ¥7.5B, +213%), indicating accumulation of non-operational assets. Delays in capex commissioning or demand forecast errors could increase depreciation burden and delay monetization, depressing margins and cash flow. Land acquisitions also increased by ¥13.4B, warranting caution over capital efficiency (ROIC) deterioration.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.0% | 5.0% (3.3%–8.4%) | +1.0pt |
| Net Margin | 4.2% | 3.2% (1.9%–6.6%) | +1.0pt |
Both Operating and Net margins exceed the industry median by 1.0pt, placing profitability from mid- to upper-range within the peer group.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.1% | 5.4% (1.0%–8.6%) | -0.3pt |
Revenue growth slightly trails the industry median of 5.4% but remains within the IQR, indicating a standard growth pace.
※ Source: Company compilation
Concurrent phase of aggressive investment and short-term liquidity management: Capex/Depreciation = 2.5x and Construction-in-Progress +213% indicate a capacity expansion phase, and EBITDA growth from subsequent commissioning is expected. However, FCF -¥13.7B and short-term borrowings +¥18.0B show reliance on short-term debt, and current ratio 0.92 signals caution on short-term liquidity. Progress on investment returns and refinancing management will determine future funding stability.
Potential for segment mix improvement and sustainability of profitability: Seasonings Business margin of 13.6% is 1.5x the Distribution Business margin of 9.0%, so expanding the 9.1% composition of the Seasonings Business is key to improving consolidated margins. Operating margin of 6.0% exceeds the industry median by 1.0pt; gross margin 34.6% and SG&A ratio 28.7% are at reasonable levels. The foreign exchange gain ¥1.7B is largely one-off, so sustained Ordinary Income growth depends on operating performance. ROE 9.0% was achieved with low leverage, indicating a good balance between capital efficiency and financial soundness.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement 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 own responsibility; please consult professionals as needed.