| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥295.6B | ¥280.5B | +5.4% |
| Operating Income / Operating Profit | ¥4.1B | ¥10.1B | -59.0% |
| Ordinary Income | ¥4.0B | ¥11.7B | -66.3% |
| Net Income / Net Profit | ¥1.3B | ¥8.7B | -84.5% |
| ROE | 0.2% | 1.3% | - |
Fujiya’s FY2026 Q1 results delivered revenue of ¥295.6B (YoY +¥15.1B +5.4%) while profit declined sharply: Operating Income ¥4.1B (YoY -¥6.0B -59.0%), Ordinary Income ¥4.0B (YoY -¥7.8B -66.3%), and Quarterly Net Income attributable to owners of the parent ¥0.3B (YoY -¥7.5B -96.1%), indicating a marked deterioration in profitability. Revenue was driven by the Confectionery Business (+9.3%), but gross margin fell to 31.6% (from 34.5% YoY, -2.9pt), and the company could not fully pass through increases in raw material, energy, and logistics costs, compressing the operating margin to 1.4% (from 3.6% YoY, -2.2pt). SG&A ratio improved to 30.2% (YoY -0.6pt) but could not offset the gross margin deterioration, resulting in significant deterioration at the operating level. Below ordinary income, higher interest expense and reduced equity-method investment income were headwinds; although special gains of ¥2.8B (gain on sale of subsidiary shares) provided support, a persistently high effective tax rate left the final net profit effectively at break-even levels.
[Revenue] Revenue of ¥295.6B (+5.4%) was led by the core Confectionery Business at ¥212.6B (+9.3%), which showed near double-digit growth. The confectionery category (sweets) was ¥199.7B and beverages ¥12.4B, with sales expansion continuing backed by brand strength. Conversely, the Western Confectionery Business was ¥74.5B (-4.0%), continuing to decline, with Western Confectionery ¥59.6B and restaurants ¥14.8B both down. Other businesses were ¥10.2B (-0.7%), essentially flat. Sales composition was Confectionery 71.9%, Western Confectionery 25.2%, Other 3.4%, indicating high revenue dependence on Confectionery. Large growth disparities across segments meant Confectionery expansion supported consolidated revenue growth.
[Profit & Loss] Cost of sales rose to ¥202.1B (from ¥183.9B last year, +9.9%), increasing faster than revenue, leaving gross profit at ¥93.5B (+3.2%). Gross margin deteriorated to 31.6% (from 34.5% YoY, -2.9pt), reflecting the impact of higher raw material, energy, and logistics costs. SG&A was ¥89.3B (from ¥86.5B last year, +3.2%), and the SG&A ratio improved to 30.2% (from 30.8% YoY, -0.6pt), indicating progress in cost control; however, the decline in gross margin had a larger impact, shrinking Operating Income to ¥4.1B (-59.0%) and compressing operating margin to 1.4%. Non-operating items comprised non-operating income ¥0.8B (interest income ¥0.2B, dividend income ¥0.1B, equity-method investment income ¥0.2B, etc.) versus non-operating expenses ¥1.0B (including interest expense ¥0.7B and commission expenses ¥0.2B), resulting in a net non-operating loss of ¥0.2B and Ordinary Income of ¥4.0B (-66.3%). Special gains of ¥2.8B (gain on sale of subsidiary shares) occurred, offset by special losses ¥0.3B (loss on disposal of fixed assets), leaving profit before tax of ¥3.6B. Corporate taxes and others were ¥2.2B (62.7% of profit before tax), with a high effective tax rate; after deducting quarterly net income attributable to non-controlling interests ¥1.0B, Net Income attributable to owners of the parent was ¥0.3B (-96.1%). In conclusion, the company posted revenue growth but significant profit decline, primarily originating from gross margin deterioration.
The Confectionery Business recorded sales of ¥212.6B (+9.3%) and Operating Income of ¥18.8B (-22.6%), with margin falling to 8.8% (from 12.5% YoY, -3.7pt), meaning profitability worsened substantially despite higher sales. Promotional spending to expand sales and rising manufacturing costs appear to have pressured profits. The Western Confectionery Business posted sales of ¥74.5B (-4.0%) and an operating loss of ¥3.3B (improved from an operating loss of ¥4.0B last year, narrowing the deficit by ¥0.7B, +16.8%), with margin at -4.4%; although still loss-making, deficit reduction is underway through unprofitable store measures and cost cuts. Other businesses recorded sales of ¥10.2B (-0.7%) and Operating Income of ¥1.5B (-17.3%), maintaining a margin of 14.5%, supported by stable earnings from character goods, licensing, and real estate. At consolidated level, head office expenses not allocated to segments amounted to ¥12.9B (from ¥12.1B YoY, +6.6%), weighing on Operating Income, which totaled ¥4.1B. Large margin gaps between segments mean improving Confectionery profitability and returning Western Confectionery to profit are key to restoring consolidated profits.
[Profitability] Operating margin 1.4% (from 3.6% YoY, -2.2pt) and net margin 0.5% (from 2.8% YoY, -2.3pt) declined materially. EBIT ¥4.1B with total asset turnover 0.29x (annualized 1.14x) and ROE 0.2% (from 4.8% YoY, -4.6pt) indicate significantly impaired capital efficiency. The fall in gross margin to 31.6% (from 34.5% YoY, -2.9pt) was the primary driver of weaker profitability; raw material, energy, and logistics cost increases were not fully passed through. SG&A ratio improved to 30.2% (from 30.8% YoY, -0.6pt), showing progress in cost management, but could not offset gross margin deterioration, compressing operating profitability. [Cash Quality] DSO (Days Sales Outstanding) 162 days (from 254 days YoY, -92 days) improved as receivables decreased sharply from ¥19,580M to ¥13,140M (-32.9%), improving collection. DIO (Days Inventory Outstanding) extended to 211 days (from 92 days YoY, +119 days) with inventory increasing from ¥4,630M to ¥5,500M (+18.8%). DPO (Days Payables Outstanding) shortened to 140 days (from 166 days YoY, -26 days) with payables decreasing from ¥8,360M to ¥7,760M (-8.5%), driving CCC (Cash Conversion Cycle) to 233 days (from 180 days YoY, +53 days), indicating deterioration in working capital efficiency and headwinds to operating cash generation. [Investment Efficiency] Total assets ¥1,037.5B with tangible fixed assets ¥460.0B (44.3% of assets), indicating a capital-intensive business; intangible assets ¥15.1B (1.5%), and investment securities ¥74.7B (7.2%). [Financial Soundness] Equity Ratio 63.0% (from 62.2% YoY, +0.8pt) and D/E ratio 0.27x (short-term borrowings ¥9.6B + long-term borrowings ¥150.0B = ¥159.6B ÷ shareholders’ equity ¥548.8B) reflect a conservative capital structure. Net debt ¥14.6B (interest-bearing debt ¥159.6B - cash ¥145.0B) shows a light net leverage. Current ratio 188.5% and quick ratio 162.7% indicate sufficient short-term liquidity, and Interest Coverage 5.75x (Operating Income ¥4.1B ÷ interest expense ¥0.7B) shows interest-paying ability at the lower bound of investment-grade but still resilient.
No cash flow statement data is available, so funding trends are analyzed from balance sheet movements. Cash and deposits rose to ¥145.0B (from ¥123.2B YoY, +¥21.8B), improving short-term liquidity. Accounts receivable compressed to ¥13,140M (from ¥19,580M YoY, -¥6,440M, -32.9%), with changes in collection terms and sales mix positively contributing to cash collection. Conversely, inventory increased to ¥5,500M (from ¥4,630M YoY, +¥870M, +18.8%), possibly due to demand forecast variance and SKU mix changes leading to inventory buildup. Accounts payable decreased to ¥7,760M (from ¥8,360M YoY, -¥600M, -8.5%), with changes in procurement terms or earlier payments causing cash outflow. These working capital movements meant receivables decline provided cash inflow while inventory increase and payables decline caused outflows; net effect was an overall cash increase, but CCC of 233 days remains prolonged, making inventory reduction and payables term review key to improving operating cash flow. Capital expenditure-related movements show tangible fixed assets at ¥460.0B (from ¥454.6B YoY, +¥5.4B), indicating restrained large-scale investment. Investment securities stood at ¥74.7B (from ¥75.5B YoY, -¥0.8B), largely unchanged. On financing, short-term borrowings ¥9.6B and long-term borrowings ¥150.0B were unchanged YoY, indicating limited new debt financing.
Ordinary Income ¥4.0B versus Operating Income ¥4.1B indicates operating activities slightly outperformed subsequent items. Non-operating income ¥0.8B (interest income ¥0.2B, dividend income ¥0.1B, equity-method investment income ¥0.2B, etc.) versus non-operating expenses ¥1.0B (interest expense ¥0.7B, commission expenses ¥0.2B) resulted in a net non-operating loss of ¥0.2B, so non-operating contributions were small. Special gains ¥2.8B (mainly gain on sale of subsidiary shares) supported the final result, indicating a relatively large contribution from one-off items. On an ordinary basis excluding special items, Ordinary Income ¥4.0B versus Net Income attributable to owners of the parent ¥0.3B reflects the dilutive impact of a high effective tax rate (corporate taxes ¥2.2B on profit before tax ¥3.6B, tax burden 62.7%) and deduction of net income attributable to non-controlling interests ¥1.0B. Comprehensive income was ¥3.8B (from ¥2.3B YoY, +¥1.5B), with a positive translation adjustment contribution of ¥3.7B; valuation difference on available-for-sale securities -¥0.3B, actuarial differences on retirement benefits -¥0.5B, and share of other comprehensive income of equity-method affiliates -¥0.5B were negative. Comprehensive income attributable to owners of the parent ¥1.4B exceeded net income ¥0.3B, so other comprehensive income improved total earnings. Equity-method investment income ¥0.2B was small and had minor impact company-wide, not materially affecting the quality of operating cash flow. Overall, recurring earning power is weakening due to declines at the operating level, with special gains and FX factors providing support; restoring a sustainable earnings base remains a challenge.
Full Year / FY guidance: Revenue ¥1,250.0B (YoY +4.6%), Operating Income ¥32.0B (YoY +12.6%), Ordinary Income ¥36.5B (YoY +1.1%), Net Income attributable to owners of the parent ¥21.0B, EPS forecast ¥81.47, with dividend forecast unchanged at nil. Q1 progress rates: Revenue 23.6% (¥295.6B ÷ ¥1,250.0B), roughly near seasonal expectation (Q1 ≈ 25%), but Operating Income 12.9% (¥4.1B ÷ ¥32.0B), Ordinary Income 10.8% (¥4.0B ÷ ¥36.5B), and Net Income attributable to owners of the parent 1.4% (¥0.3B ÷ ¥21.0B) show significant lag on profitability. The gap reflects gross margin deterioration (-2.9pt), margin decline in the Confectionery Business, ongoing losses in Western Confectionery, deterioration in non-operating items (higher interest expense, lower equity-method income), and a persistently high effective tax rate. Full-year plan may assume back-loaded performance, but if Q2 onward price revisions, SKU-mix improvements, manufacturing efficiency gains, and inventory reductions to limit markdown losses do not materialize, achieving Operating Income ¥32.0B for the year will be challenging. There is no forecast revision or dividend change at this quarter, but a reappraisal of the full-year outlook may be considered depending on Q2 progress.
Current period dividend forecast is ¥0 and the company maintains a no-dividend policy for the full year. Prior year same period also had zero dividend. Given current profit levels and working capital absorption pressure, the company prioritizes internal reserves to stabilize the financial base and fund growth investments. Payout Ratio is 0%, reflecting a conservative stance. Interest-bearing debt ¥159.6B versus cash ¥145.0B yields net debt ¥14.6B, a light profile with some financial capacity; however, with Operating Margin at 1.4% and materially reduced profitability, increases or resumption of dividends will be considered cautiously until profit recovery and operating cash flow improvements are confirmed. No share buybacks or disclosure of Total Return Ratio have been implemented; shareholder returns are currently constrained.
Gross margin pressure from rising raw material, energy, and logistics costs: Gross margin fell to 31.6% (from 34.5% YoY, -2.9pt), and the company could not fully pass through cost increases. Continued deterioration in external cost environment would further compress margins and operating income. Timing of price adjustments and customer acceptance are critical variables.
Inventory stagnation and deterioration in working capital efficiency: Inventory rose +18.8% YoY and DIO reached 211 days, CCC 233 days, extending durations and increasing risks of obsolescence, markdowns, and valuation losses. Promotional intensification in the Confectionery Business and declining sales in Western Confectionery may delay inventory adjustments; if markdown losses expand from Q2 onward, operating cash flow and earnings quality could worsen. Improving demand forecasting accuracy and strict SKU-level inventory control are urgent.
Continued structural losses in Western Confectionery diluting consolidated margins: Western Confectionery posted an operating loss of ¥3.3B (margin -4.4%) and sales down -4.0%. Although loss narrowing is in progress, visibility to profitability is unclear. If improvement is delayed, the Confectionery Business may not be able to fully offset the impact, significantly delaying recovery of consolidated operating income. Exiting unprofitable stores, menu engineering, and optimizing labor/rent ratios are key.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.4% | – | – |
| Net Margin | 0.5% | – | – |
Relative evaluation is difficult due to lack of median industry benchmark data, but Operating Margin 1.4% and Net Margin 0.5% are well below typical food/confectionery industry levels (Operating Margin ~5–10%), suggesting the company is likely in the lower tier on profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.4% | – | – |
Revenue growth of 5.4% is healthy given market maturity in food/confectionery, but the lack of accompanying profit growth indicates inferior quality.
※ Source: Company compilation
Gross margin deterioration is the primary driver of profitability pressure; execution of price adjustments, SKU-mix improvement, and manufacturing efficiency is the focus going forward. The Confectionery Business delivered sales +9.3% but Operating Income -22.6%, with margin down to 8.8%, indicating promotional spending and higher manufacturing costs have not been offset. SG&A ratio improved by -0.6pt, so if gross margin recovers there is room for operating leverage. If price revision effects and inventory compression to limit markdown losses materialize from Q2 onward, an operating margin turnaround is possible.
Deterioration in inventory efficiency and the cash conversion cycle is a bottleneck to cash generation. With DIO 211 days and CCC 233 days extended YoY, working capital absorption pressure is rising. Although receivables compressed by -32.9% helping DSO, the combination of inventory +18.8% and payables -8.5% is a headwind to short-term operating cash flow. SKU-level inventory reduction, better demand forecasting, and shorter procurement lead times will directly shorten CCC and improve earnings quality.
Progress in reducing losses in Western Confectionery is evident, suggesting initial effects of structural reforms. Operating loss narrowed by ¥0.7B YoY (+16.8%) to ¥3.3B, but margin remains -4.4% and loss-making. Since this segment accounts for about 25% of sales, delay in returning it to profit will delay consolidated margin recovery; accelerating unprofitable store closures, menu engineering, and labor cost management is critical. Concentrating management resources on the Confectionery Business and optimizing the portfolio are also options.
This report is an AI-generated earnings analysis document automatically 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; consult a professional advisor as necessary.