Fujiya Co.,Ltd. FY2026 Q2 Earnings Report

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Executive Summary

The key feature of the current results is that, despite higher revenue, Operating Income and Ordinary Income contracted substantially, while Net Income attributable to owners of the parent fell into a quarterly loss. Revenue increased 4.8% year on year to ¥59.41B, but the deterioration in gross margin caused by higher raw-material and energy costs, together with the continued losses in the Pastry Business, weighed on earnings. Operating Income was limited to ¥0.30B (¥1.20B in the previous year, YoY -75.3%), while Ordinary Income was ¥0.46B (¥1.71B in the previous year, YoY -73.1%). Net Income attributable to owners of the parent was -¥0.07B (¥0.84B in the previous year), turning from a profit in the same period of the previous year to a loss, while the persistently high effective tax rate also pressured final earnings. Consolidated Net Income before deduction of non-controlling interests was ¥0.10B (¥1.03B in the previous year, YoY -90.3%).

Factors Affecting Earnings

【Revenue】Revenue increased 4.8% year on year to ¥59.41B. By segment, the core Confectionery Business led growth, rising to ¥43.08B (72.5% of total revenue, +8.8%), driven by growth in confectionery products and beverages. In contrast, the Pastry Business continued to decline, with revenue of ¥14.67B (24.7% of total revenue, -4.9%), while Other Businesses also decreased slightly by 1.4% to ¥2.02B.

【Profit and Loss】Gross margin deteriorated to 30.3% from 32.9% in the previous year, a decline of -2.6pt, as price pass-through failed to keep pace with increases in raw-material, energy, and packaging-material costs. The SG&A ratio improved by -1.0pt to 29.8% from 30.8% in the previous year, but this was insufficient to offset the deterioration in gross margin. Operating Income declined to ¥0.30B (¥1.20B in the previous year, YoY -75.3%), and the Operating Income margin fell to 0.5% from 2.1%. By segment, Operating Income in the Confectionery Business decreased 23.1% to ¥3.24B, with the margin narrowing to 7.5%, while the Pastry Business’s Operating Loss narrowed to ¥0.70B from ¥0.95B in the previous year (+25.8%). Ordinary Income was maintained at ¥0.46B (YoY -73.1%), supported by ¥0.18B in equity-method investment income and other items. However, the Company recorded ¥0.05B in extraordinary losses (including losses on disposal of fixed assets and other temporary factors), and the effective tax rate increased to 75.5% from 37.8% in the previous year. After deducting ¥0.17B in Net Income attributable to non-controlling interests, Net Income attributable to owners of the parent was a loss of -¥0.07B. Revenue increased while earnings declined, and final earnings turned negative.

Segment Analysis

The reported segments comprise the Confectionery Business, the Pastry Business, and Other Businesses. The Confectionery Business generated revenue of ¥43.08B (+8.8%) and Operating Income of ¥3.24B (-23.1%), with a margin of 7.5%, making it the main contributor to Company-wide earnings; however, its margin narrowed from the previous year due to higher raw-material costs. The Pastry Business generated revenue of ¥14.67B (-4.9%) and an Operating Loss of ¥0.70B. Although the loss narrowed from ¥0.95B in the previous year, profitability remained weak, with a margin of -4.8%. Other Businesses (including mail-order sales, licensing, and real estate) generated revenue of ¥2.02B (-1.4%) and Operating Income of ¥0.29B (-14.0%), representing the highest margin at 14.5%. In July 2025, certain subsidiaries changed their business classification from the Pastry Business to the Confectionery Business, which may affect the allocation of revenue and profit or loss between segments going forward. Adjustments for Company-wide expenses and other items amounted to -¥2.53B, reducing total segment Operating Income of ¥2.83B to Company-wide Operating Income of ¥0.30B.

Key Financial Metrics

【Profitability】The Operating Income margin declined to 0.5% from 2.1% in the previous year, while the gross margin also deteriorated by -2.6pt to 30.3% from 32.9%. The Net Income margin based on Net Income attributable to owners of the parent was -0.1%, compared with 1.5% in the previous year.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥6.38B, substantially exceeding Net Income (attributable to owners of the parent: -¥0.07B). The main factors were the collection of accounts receivable of +¥7.62B and depreciation and amortization of ¥3.22B. It should be noted that this figure does not directly reflect the earning power of the current period.【Investment Efficiency】ROE was 0.2% (based on consolidated Net Income), and the total asset turnover ratio remained approximately 0.58x.【Financial Soundness】The Equity Ratio was 64.3%, and the Current Ratio was approximately 193.7% (current assets of ¥36.99B / current liabilities of ¥19.10B). The Company held cash and deposits of ¥12.71B against an interest-bearing debt structure centered on long-term borrowings of ¥15.00B, indicating a conservative financial foundation.

Cash Flow Analysis

Operating Cash Flow was ¥6.38B, virtually unchanged from ¥6.47B in the previous year (-1.4%). However, the breakdown shows that the subtotal before working capital movements was ¥7.00B. Collection of accounts receivable of +¥7.62B was a positive factor, while an increase in inventories of -¥1.46B and a decrease in trade payables of -¥1.51B offset this effect. Investing Cash Flow was -¥5.67B, primarily reflecting capital expenditures of ¥5.03B, mainly for the acquisition of property, plant and equipment. Financing Cash Flow was -¥1.05B, including dividend payments of ¥0.77B and dividend payments to non-controlling interests of ¥0.16B. As a result, Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was positive at ¥0.71B, improving from ¥0.34B in the same period of the previous year, although the Company remains in a state of investment exceeding internally generated funds.

Quality of Earnings

Non-operating income was ¥0.34B, equivalent to only 0.6% of revenue, and primarily comprised dividend income of ¥0.04B and equity-method investment income of ¥0.18B. Recurring sources of income accounted for the majority. Extraordinary losses of ¥0.05B consisted of losses on disposal of fixed assets and other items, and their impact on earnings was limited as a temporary factor. In contrast, Net Income attributable to owners of the parent was -¥0.07B, substantially below Ordinary Income of ¥0.46B. The primary reasons were the increase in the effective tax rate to 75.5% from 37.8% in the previous year and the deduction of ¥0.17B in Net Income attributable to non-controlling interests. Although Operating Cash Flow of ¥6.38B substantially exceeded the level of Net Income, its primary sources were the collection of accounts receivable and depreciation and amortization, which are non-recurring and non-cash factors. From an accrual perspective, it should therefore be noted that this does not indicate an improvement in earning power.

Earnings Forecast and Guidance

Progress against the Company’s full-year forecasts varies by indicator. Revenue was ¥59.41B, representing progress of 47.5% against the full-year forecast of ¥125.00B and generally tracking smoothly. In contrast, Operating Income was ¥0.30B, representing progress of only 9.3% against the full-year forecast of ¥3.20B, while Ordinary Income was ¥0.46B, representing progress of 12.6% against the full-year forecast of ¥3.65B. Both indicators are substantially behind plan. Net Income attributable to owners of the parent was a loss of -¥0.07B at the interim stage, requiring a substantial improvement in earnings during the second half to achieve the full-year forecast of ¥2.10B in profit. No revisions were made to the earnings forecast or dividend forecast during the current quarter.

Shareholder Returns

The interim dividend was zero (¥0), and the full-year dividend forecast remains unchanged at ¥30.00 per share. Based on the Company’s forecast EPS of ¥81.47, the Payout Ratio is approximately 36.8%. Although the first half recorded a net loss attributable to owners of the parent, Free Cash Flow of ¥0.71B was secured, and no revision was made to the dividend forecast during the current quarter.

Risk Factors

1. Profitability of the Pastry Business: Revenue was ¥14.67B (-4.9%), and the Operating Loss was ¥0.70B (narrowing from a loss of ¥0.95B in the previous year). The margin remains at -4.8%, constituting a structural factor that continues to depress the Company-wide profit margin.

2. Rising Raw-Material Costs and Deterioration in Gross Margin: The gross margin declined by -2.6pt to 30.3% from 32.9% in the previous year. Cost of sales increased to 69.7% of revenue from 67.1% in the previous year, making the progress of price pass-through a key focus going forward.

3. Delayed Earnings Progress Against the Full-Year Plan: Progress was limited to 9.3% for Operating Income and 12.6% for Ordinary Income. Net Income attributable to owners of the parent was negative in the first half, representing negative progress against the full-year forecast of ¥2.10B in profit. A recovery in the second half will be necessary.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Comparable median data for the Company’s profitability indicators within the same industry is limited, and the Company remains at a low level of profitability in absolute terms.

Growth and Capital Efficiency

Revenue growth remains on an upward trend, but the divergence from profit margins suggests a challenge in relative earnings efficiency within the industry.

※Source: Compiled by the Company

Key Points from the Results

1. The gross margin deteriorated by -2.6pt from 32.9% in the previous year to 30.3% in the current period. Achieving the full-year plan will require margin recovery through stabilization of raw-material and energy costs and the broad implementation of price revisions.

2. The Pastry Business’s Operating Loss narrowed from ¥0.95B in the previous year to ¥0.70B, but a structurally loss-making condition continues. The impact of the July 2025 change in business classification at certain subsidiaries to the Confectionery Business on future segment profit and loss is also a point to monitor.

3. Operating Cash Flow of ¥6.38B was at a solid level, but it was boosted by the temporary working-capital factor of +¥7.62B in accounts receivable collections. It should be noted that underlying earning power remains at the level implied by the 0.5% Operating Income margin.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade period). It is not a forecast of the market share price or a recommendation to undertake any specific investment action.

Sensitivity: ¥2,052–¥2,170 at ±1% for the cost of equity, and ¥2,096–¥2,119 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat on the high side.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with professionals as necessary.

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