| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3401.5B | ¥3225.6B | +5.5% |
| Operating Income / Operating Profit | ¥261.7B | ¥290.7B | -10.0% |
| Ordinary Income | ¥270.9B | ¥298.4B | -9.2% |
| Net Income / Net Profit | ¥146.0B | ¥191.0B | -23.6% |
| ROE | 6.6% | 8.9% | - |
FY March 2026 results show Revenue ¥3401.5B (YoY +¥175.9B +5.5%), Operating Income ¥261.7B (YoY -¥29.0B -10.0%), Ordinary Income ¥270.9B (YoY -¥27.5B -9.2%), Net Income ¥146.0B (YoY -¥45.0B -23.6%) — revenue up, profit down. Revenue expansion was solid supported by price revisions and overseas expansion, but Operating Income margin was compressed to 7.7% (down -1.3pt from 9.0%) due to sustained high raw material, energy and logistics costs. Selling, General and Administrative Expenses (SG&A) increased to ¥846.3B, representing 24.9% of sales (prior 25.1%), while gross margin narrowed to 32.6% (prior 34.1%, -1.5pt). Special losses totaled ¥13.5B (including impairment/retirement of fixed assets ¥7.2B) and an increase in the effective tax rate to 32.9% further pressured Net Income. Operating Cash Flow (OCF) was ¥356.0B (YoY -9.0%) — 2.4x Net Income — indicating solid cash generation; Free Cash Flow (FCF) of ¥93.8B secured funds for dividends and share buybacks. Guidance for FY March 2027 forecasts Revenue ¥3700B (+8.8%) and Operating Income ¥262B (+0.1%) — revenue growth with flat profits — making cost control a continued focus.
[Revenue] Revenue was ¥3401.5B (YoY +5.5%), showing steady progress. Price revisions, improved product mix, and expansion of overseas businesses appear to be the main drivers. Segment information is undisclosed, so detailed analysis is limited, but the food manufacturing and sales segment operates domestically and internationally. Gross margin was 32.6% (prior 34.1%, -1.5pt), and Gross Profit was ¥1108.0B (prior ¥1098.8B), registering only a slight increase. Elevated raw material prices (potatoes, fats/oils), energy costs, and packaging material expenses continued to pressure gross profit.
[Profitability] Operating Income was ¥261.7B (YoY -10.0%), with an Operating Income margin of 7.7% (down -1.3pt from 9.0%). SG&A was ¥846.3B (24.9% of sales), up from ¥807.1B by ¥39.2B, where brand investment, logistics costs, and labor costs were factors compressing profit. Ordinary Income was ¥270.9B (YoY -9.2%). Non-operating items included interest income ¥4.5B, foreign exchange gains ¥3.9B, and investment partnership gains ¥2.0B, offset in part by interest expense ¥3.9B. Extraordinary items showed a net loss of ¥9.0B: extraordinary gains ¥3.0B (gain on sale of investment securities) versus extraordinary losses ¥13.5B (impairment/retirement of fixed assets ¥7.2B, valuation losses on investment securities ¥2.1B, litigation settlement ¥1.4B, etc.). Pretax Income was ¥261.9B; after deducting income taxes of ¥86.1B (effective tax rate 32.9%) and non-controlling interests ¥2.5B, Net Income attributable to owners of the parent was ¥146.0B (prior ¥191.0B, -23.6%). In conclusion, despite achieving revenue growth, higher raw material costs and increased SG&A led to revenue up/profit down.
[Profitability] Operating Income margin 7.7% (prior 9.0%), Net Income margin 4.3% (prior 5.9%), Gross Margin 32.6% (prior 34.1%) — all declined year-over-year. EBITDA was ¥410.0B, with an EBITDA margin of 12.0%, maintaining cash-generating capability. ROE was 6.6% (prior 8.8%), declining; DuPont decomposition shows contraction in Net Income margin as the largest negative driver. Total asset turnover 1.04x (prior 1.01x) slightly improved; financial leverage 1.48x (prior 1.48x) was flat. Goodwill amortization ¥22.8B compresses Net Income relative to IFRS peers, but goodwill/EBITDA 0.51x indicates a minor burden.
[Cash Quality] OCF ¥356.0B is 2.4x Net Income ¥146.0B, indicating high quality. OCF/EBITDA 0.87x is slightly below the benchmark (>0.9x), with inventory increase (-¥31.2B) and receivables increase (-¥6.6B) absorbing working capital. Accrual ratio -14.4% indicates cash-driven earnings. FCF ¥93.8B covers dividend payments ¥72.6B by 1.3x.
[Investment Efficiency] Capital expenditure ¥233.9B was 1.58x depreciation ¥148.1B, indicating continued proactive investment. ROIC is estimated at approximately 3.5%, potentially below WACC, so monitoring capital recovery from invested capital is necessary.
[Financial Soundness] Equity Ratio 67.7% (prior 67.4%), Current Ratio 202.8%, Quick Ratio 158.0% — solid. Debt/EBITDA 0.86x, Net Debt/EBITDA 0.25x, Interest Coverage 67.3x — very low interest burden. Cash and deposits ¥515.5B versus interest-bearing debt short-term borrowings ¥17.7B and long-term borrowings ¥250B, total ¥267.7B, net cash ¥247.8B — significant financial flexibility.
OCF was ¥356.0B (YoY -9.0%). Pretax Income ¥261.9B plus depreciation ¥148.1B, goodwill amortization ¥22.8B and other non-cash expenses yielded a subtotal before working capital changes of ¥437.3B. Working capital movements included inventory increase -¥31.2B and trade receivables increase -¥6.6B as cash absorptions, partially offset by trade payables increase +¥6.1B. After tax payments -¥82.2B, OCF totaled ¥356.0B. Investing Cash Flow was -¥262.1B, mainly due to capital expenditure -¥233.9B (capacity expansion and efficiency investments) and intangible asset investments -¥15.8B; inflows included long-term loan repayments ¥1.0B and sale of securities ¥5.9B. Financing Cash Flow was -¥170.0B: long-term borrowings raised ¥100B were offset by share buybacks -¥100.0B, dividend payments -¥72.6B, lease repayments -¥4.6B, and non-controlling interests dividends -¥1.1B. FCF was ¥93.8B and exceeded dividends but total shareholder returns (dividends + buybacks ¥172.6B) resulted in cash decrease of -¥78.8B. Cash balance declined to ¥515.5B (prior ¥567.6B), but liquidity and low leverage remain ample and funding risk is low.
Recurring earnings are centered on Operating Income ¥261.7B; non-operating income ¥14.9B (interest income ¥4.5B, FX gains ¥3.9B, investment partnership gains ¥2.0B, etc.) is limited at 0.4% of Revenue. One-off items included Extraordinary Gains ¥4.5B (gain on sale of investment securities ¥3.0B, gain on sale of fixed assets ¥0.1B) versus Extraordinary Losses ¥13.5B (retirement/impairment of fixed assets ¥7.2B, valuation losses on investment securities ¥2.1B, litigation settlement ¥1.4B, impairment losses ¥0.1B, etc.), producing a net extraordinary loss -¥9.0B that depressed earnings. These extraordinary losses are related to equipment renewal and business restructuring and are not seen as materially distorting core operating profitability. OCF ¥356.0B is 2.4x Net Income ¥146.0B, and accrual ratio -14.4% supports robust cash backing. Comprehensive income was ¥235.0B (parent ¥225.7B); in addition to Net Income ¥146.0B, foreign currency translation adjustments ¥49.2B, retirement benefit adjustments ¥9.7B, and valuation differences on securities ¥0.4B augmented OCI, reflecting significant FX effects from overseas businesses. The roughly 46% gap between Ordinary Income ¥270.9B and Net Income ¥146.0B is primarily due to extraordinary items -¥9.0B and tax expense ¥86.1B (effective tax rate 32.9%); core business sustainability should be evaluated on the Ordinary Income basis.
FY March 2027 full-year guidance: Revenue ¥3700B (YoY +8.8%), Operating Income ¥262B (YoY +0.1%), Ordinary Income ¥267B (YoY -1.4%), Net Income ¥174B (YoY +19.2%). EPS guidance ¥143.11円 (slight increase from FY March 2026 actual ¥139.98円). The Company plans Revenue growth of ¥298.5B through price revisions, new product launches, and overseas expansion, while Operating Income is projected to be almost flat (+¥0.3B). Operating Income margin is expected at approximately 7.1% (vs. 7.7% in FY March 2026, -0.6pt), assuming continued high raw material and logistics costs and increased SG&A. Progress rates as of 2Q: Revenue 91.9% (vs. full-year plan), Operating Income 99.9% — profit targets are nearly achieved. Recovery in Net Income assumes the one-off extraordinary losses have passed and tax burden normalizes. Slight decrease in Ordinary Income reflects conservative outlook for non-operating income, including FX and financial income. For a revenue-and-profit growth scenario, cost control (containment of SG&A ratio) and productivity improvements (realization of benefits from capex) are key.
Year-end dividend of ¥66 was paid (total dividends approx. ¥72.6B), with a payout ratio of approx. 50% (DPS ¥66 / EPS ¥139.98). The payout ratio is at a sustainable medium-to-long-term level, and dividends account for 20.4% of OCF ¥356.0B, indicating ample coverage. In addition, share buybacks of ¥100.0B were executed, making total shareholder returns approx. 118% (dividends + buybacks ¥172.6B / Net Income ¥146.0B), which exceeds FCF ¥93.8B and reflects an aggressive return policy. Given cash ¥515.5B and low leverage (Debt/EBITDA 0.86x), this is sustainable in the short term, but maintaining total returns requires expansion of FCF via working capital efficiency and realization of investment returns mid-term. The Company maintains a stable dividend policy and dividend safety against earnings volatility is high. Share buybacks are positioned as a tactical measure to improve capital efficiency, and combined with prior dividend history, the shareholder return stance is clear.
Raw material & energy cost volatility risk: Gross margin contracted to 32.6% (prior 34.1%, -1.5pt); sustained high procurement costs for potatoes, fats/oils, packaging materials continue. This is a key factor in the decline of Operating Income margin to 7.7% (prior 9.0%). If price revisions and procurement diversification are insufficient to absorb cost increases, further margin pressure may occur. Inventories ¥290.9B (prior ¥251.4B) rose +15.7%, raising the risk of inventory valuation losses or profit pressure in price-decline scenarios.
SG&A increase and deterioration of operating leverage risk: SG&A ¥846.3B (24.9% of sales) increased +4.9% from prior ¥807.1B, nearly matching sales growth of +5.5%. Continued increases in brand investment, logistics and labor costs make it difficult for sales growth to fully absorb SG&A growth, weakening operating leverage. FY March 2027 guidance assumes further decline in Operating Income margin to 7.1%; delays in SG&A control could cause structural deterioration of margins.
Working capital absorption and weakening cash conversion efficiency risk: OCF ¥356.0B corresponds to OCF/EBITDA 0.87x, below the benchmark (>0.9x), with inventory increase -¥31.2B and receivables increase -¥6.6B absorbing cash. Continued extension of inventory turnover days or lengthening of collection terms could pressure FCF, affecting the sustainability of dividends and buybacks. While cash ¥515.5B and low leverage limit short-term risk, maintaining total return ratio of 118% requires optimization of working capital and recovery of OCF quality.
Profitability & Returns
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 7.7% | 5.0% (3.3%–8.4%) | +2.7pt |
| Net Income Margin | 4.3% | 3.2% (1.9%–6.6%) | +1.1pt |
Profitability exceeds the industry median, placing the company in the upper tier within the food manufacturing & sales sector.
Growth & Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.5% | 5.4% (1.0%–8.6%) | +0.1pt |
Revenue growth is roughly in line with the industry median, supported by price revisions and overseas expansion.
※ Source: Company compilation
Achieved revenue growth despite margin compression; cost control is now the focal point: Revenue up +5.5% supported by price revisions and overseas expansion, but Operating Income margin 7.7% (down -1.3pt from 9.0%) and Gross Margin 32.6% (down -1.5pt) compressed profits. FY March 2027 guidance shows Revenue +8.8% vs Operating Income +0.1%, implying further margin decline to 7.1%. With sustained high raw material, energy, and logistics costs and SG&A growth (nearly matching sales growth), improvement in price/mix and SG&A efficiency (logistics optimization, DX investments, etc.) are keys to margin recovery. The Company ranks +2.7pt above industry median in Operating Income margin, but is on a declining trend relative to past levels; addressing structural cost increases is a mid-term priority.
Room to improve working capital efficiency and restore cash conversion: OCF ¥356.0B corresponds to OCF/EBITDA 0.87x, below benchmark (>0.9x), with inventory increase (-¥31.2B) and receivables increase (-¥6.6B) absorbing cash. Inventory ¥290.9B (YoY +15.7%) grew faster than sales, suggesting extended inventory days. FCF ¥93.8B exceeds dividends but is insufficient to cover total returns (dividends + buybacks), leading to cash drawdown. Optimizing inventory (improving demand forecasting accuracy, product portfolio optimization) and accelerating receivables collection could restore OCF/EBITDA to >1.0x and expand FCF margins, improving sustainability of total returns and room for additional growth investment.
Proactive investment and financial flexibility underpin mid-term growth: Capital expenditure ¥233.9B (1.58x depreciation) and continued overseas expansion support capacity expansion, efficiency, and new market entry. Goodwill ¥209.9B (goodwill/EBITDA 0.51x) is modest and limits M&A risk. Equity Ratio 67.7%, Debt/EBITDA 0.86x, and cash ¥515.5B indicate substantial financial capacity to balance investment and shareholder returns. Mid-term focus should be on recovering returns on invested capital (ROIC) and realizing benefits from capex (cost reductions, productivity gains) to drive margin recovery and ROE improvement. FY March 2027 is a transitional period for cost absorption, but given revenue momentum and financial stability, the mid-to-long-term growth story remains intact.
This report is an AI-generated financial analysis document based on XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your own responsibility; please consult professionals as needed.