CALBEE,Inc. FY2027 Q1 Earnings Report

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Executive Summary

The first quarter delivered higher revenue and earnings, with both Operating Income and Ordinary Income increasing by double digits year on year, clearly demonstrating the effects of price revisions and cost management. Revenue was ¥867.6B (¥822.3B in the same period last year, YoY +5.5%), Operating Income was ¥65.8B (¥53.0B, YoY +24.4%), and Ordinary Income was ¥66.6B (¥52.8B, YoY +26.1%). Net Income attributable to owners of the parent was ¥40.85B (¥35.45B in the same period last year, YoY +15.2%), slightly below the growth in Ordinary Income due to the recognition of ¥2.4B in extraordinary losses (losses on disposal of fixed assets and litigation settlement expenses). Operating Income growth significantly exceeding revenue growth indicates the emergence of operating leverage through improved gross margin and restrained growth in selling, general and administrative expenses.

Factors Affecting Results

【Revenue】Revenue was ¥867.6B, up +5.5% year on year. The Company operates as a single segment, the Food Manufacturing and Sales Business, and does not disclose a breakdown by segment. Price revisions and an improved product mix were the primary drivers of revenue growth.

【Profit and Loss】The gross margin was 32.4%, improving by +0.9pt from 31.5% in the same period last year, while the SG&A ratio was 24.8%, down -0.3pt from 25.1%. As a result, Operating Income was ¥65.8B (Operating Margin of 7.6%, +1.2pt from 6.4% in the same period last year), representing a +24.4% increase, significantly exceeding revenue growth of +5.5%. Non-operating income amounted to ¥2.9B, including ¥0.9B in foreign exchange gains, resulting in Ordinary Income of ¥66.6B (+26.1%). After recognizing ¥2.4B in extraordinary losses (¥1.2B in losses on disposal of fixed assets and ¥1.0B in litigation settlement expenses) as temporary factors, Profit Before Tax was ¥64.2B. After deducting income taxes of ¥22.0B (an effective tax rate of approximately 34.3%), Net Income attributable to owners of the parent was ¥40.85B (+15.2%). Revenue and earnings both increased.

Key Financial Metrics

【Profitability】The Operating Margin was 7.6%, improving by +1.2pt from 6.4% in the same period last year, while the gross margin also increased by +0.9pt to 32.4% from 31.5%. The SG&A ratio was 24.8%, down -0.3pt from 25.1%. Both the absorption of fixed costs through revenue growth and expense control contributed to the improvement in the Operating Margin.【Cash Quality】Operating Cash Flow (OCF) was ¥59.4B, exceeding Net Income attributable to owners of the parent of ¥40.85B. However, OCF decreased -38.5% from ¥96.6B in the same period last year, as deterioration in working capital, including an increase in inventories (-¥11.3B) and an increase in trade receivables (-¥2.3B), put pressure on cash generation.【Investment Efficiency】Capital expenditures were ¥39.9B, nearly equivalent to depreciation and amortization expense of ¥39.4B, maintaining a level centered on maintenance and replacement investment. The quarterly ratio of Revenue to total assets was 0.268x, while ROE remained at 1.9%.【Financial Soundness】The Equity Ratio remained high at 67.6%. Current assets of ¥1265.3B significantly exceeded current liabilities of ¥622.1B, resulting in a current ratio of 203.4%. The combined balance of cash and deposits and trade receivables was equivalent to 143.9% of current liabilities, indicating substantial short-term liquidity capacity.

Cash Flow Analysis

OCF was ¥59.4B, exceeding Net Income attributable to owners of the parent of ¥40.85B, but declining -38.5% from ¥96.6B in the same period last year. The subtotal before changes in working capital was ¥99.2B, from which an increase in inventories of -¥11.3B, an increase in trade receivables of -¥2.3B, income tax payments of -¥38.0B, and other items were deducted, resulting in actual OCF. An increase in trade payables of +¥10.4B partially offset the deterioration in working capital. Investing Cash Flow was -¥53.0B, primarily due to expenditures centered on capital expenditures of ¥39.9B. Financing Cash Flow was -¥81.2B, mainly reflecting dividend payments of ¥79.2B. Free Cash Flow (OCF + Investing Cash Flow) was limited to a positive ¥6.4B, insufficient to cover dividend payments through Financing Cash Flow, contributing to the decline in cash balances during the quarter (cash and deposits decreased -¥63.1B year on year).

Quality of Earnings

Current-period profit was primarily generated by recurring business activities. Non-operating income of ¥2.9B was modest at 0.3% of Revenue, including ¥0.9B in foreign exchange gains that boosted Ordinary Income. Meanwhile, extraordinary losses of ¥2.4B (¥1.2B in losses on disposal of fixed assets and ¥1.0B in litigation settlement expenses) were identified as temporary factors and reduced Profit Before Tax. Comprehensive Income was ¥52.5B, exceeding Net Income attributable to owners of the parent of ¥40.85B. The difference was attributable to Other Comprehensive Income (OCI) items, including foreign currency translation adjustments of +¥8.2B and adjustments related to retirement benefits of +¥3.4B. The fact that OCF exceeded Net Income indicates that profit conversion into cash is generally functioning, although increases in inventories and trade receivables require attention with respect to the future pace of cash conversion.

Earnings Forecasts and Guidance

Progress against the full-year forecasts (Revenue of ¥3700.0B, Operating Income of ¥262.0B, Ordinary Income of ¥267.0B, and Net Income of ¥174.0B) was 23.5% for Revenue, 25.1% for Operating Income, 25.0% for Ordinary Income, and 23.5% for Net Income (on an attributable-to-owners-of-the-parent basis). Operating Income and Ordinary Income were broadly in line with the 25% benchmark for evenly distributed quarterly progress, indicating that pricing initiatives and cost management are progressing as planned. Revenue and Net Income were progressing somewhat more slowly; however, full-year Revenue is forecast to increase +8.8% year on year, compared with growth of only +5.5% in Q1. Accordingly, acceleration in the pace of growth toward the second half of the year is a prerequisite for achieving the full-year plan. No revisions were made to the earnings forecasts or dividend forecasts during the quarter.

Shareholder Returns

Dividend payments during Q1 totaled ¥79.2B, representing one factor behind the decrease in cash and deposits. According to the disclosed data, per-share dividends for the current and previous fiscal years and the full-year dividend forecast were all stated as ¥0. Consequently, the Payout Ratio cannot be definitively calculated from this report. No share repurchases were identified, and shareholder returns are centered on dividends.

Risk Factors

1. Risk relating to pricing power and private-label competition: The gross margin improved to 32.4% from 31.5% in the same period last year due to price revisions and mix improvements. However, competition with private-label products may constrain pricing power, making it necessary to monitor future gross margin trends.

2. Delayed cash conversion due to increased working capital: Inventories increased to ¥303.0B (¥290.9B in the same period last year), while trade receivables increased to ¥442.5B (¥438.3B). OCF decreased -38.5% year on year. If inventories and trade receivables are not reduced, the decline in cash-generation capacity may continue.

3. Risk of fluctuations in raw material, energy, and logistics costs: Although the SG&A ratio improved to 24.8% from 25.1% in the same period last year, a renewed increase in raw material, energy, or logistics costs could reverse the improvement trend in the Operating Margin achieved during the current period.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Margin and Net Profit Margin exceeded the industry median, placing the Company among the more profitable companies in the food industry.

Growth and Capital Efficiency

The Revenue Growth Rate was slightly below the industry median, with the pace of revenue growth remaining at a mid-range level within the industry.

Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The Operating Margin was 7.6%, improving by +1.2pt from 6.4% in the same period last year and exceeding the industry median of 5.2% by +2.4pt. The simultaneous progress of price revisions and a decline in the SG&A ratio (24.8%, compared with 25.1% in the same period last year) is noteworthy as evidence of the quality of the profitability improvement.

2. OCF was ¥59.4B, down -38.5% year on year, primarily due to increases in inventories and trade receivables. Free Cash Flow was limited to ¥6.4B, below dividend payments of ¥79.2B, highlighting the need for continued monitoring of working capital trends.

3. Progress against the full-year forecasts was 25.1% for Operating Income and 25.0% for Ordinary Income, consistent with the benchmark for evenly distributed quarterly progress, and there were no revisions to the earnings forecasts or dividend forecasts. Progress for Revenue and Net Income (23.5%) is structured to depend on the pace of growth in the second half of the year.

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 of any specific investment action.

Sensitivity: ¥1,764–¥1,872 for a ±1% change in the cost of equity, and ¥1,816–¥1,817 for a change of ±0.1 in ω.

Notes:

• Goodwill amortization of ¥19.9 per share has been added back to profit (to account for a non-cash expense and comparability with IFRS companies).
• Net assets as of the end of the quarter 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 higher.

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

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The 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 a professional as necessary.

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