ROKKO BUTTER CO.,LTD. FY2026 Q2 Earnings Report

Quick View

Executive Summary

Rokko Butter’s 2026 FY interim results secured generally standard progress against the full-year plan, despite thin margins. Revenue was ¥269.1B, Operating Income was ¥7.8B (Operating Margin: 2.9%), Ordinary Income was ¥8.3B, and Net Income was ¥6.1B (Net Margin: 2.3%). The Gross Margin of 18.0% remained low for the food industry, indicating continued pressure from raw material, packaging material, and logistics costs. Progress rates for the first half against the full-year forecast (Revenue of ¥550B and Operating Income of ¥15.0B) were 48.9% for Revenue, 52.3% for Operating Income, and 43.8% for Net Income. Both Revenue and earnings were broadly tracking the standard benchmark of Q2=50%.

Factors Affecting Performance

【Revenue】Revenue was ¥269.1B. By segment, Cheese generated ¥212.6B (78.9% of the total) and Nuts generated ¥57.0B (21.1%), indicating a structure highly concentrated in the Cheese Business. Progress against the full-year forecast of ¥550B was 48.9%, remaining at a standard level for the first half.

【Profit and Loss】Operating Income was ¥7.8B (Operating Margin: 2.9%), maintaining profitability within a thin-margin structure consisting of an 18.0% Gross Margin and a 15.1% SG&A Expense Ratio. Ordinary Income expanded to ¥8.3B, supported by ¥2.6B in non-operating income (¥0.9B in dividends received and ¥0.9B in foreign exchange gains). Net Income was ¥6.1B after deducting ¥2.3B in income taxes and other taxes from ¥8.5B in Profit Before Tax. Extraordinary items were minor, comprising ¥0.2B in gains and ¥0.1B in losses, and the difference between Ordinary Income and Net Income was primarily attributable to the effective tax rate (approximately 27.7%). Segment profit margins were broadly similar at 2.8% for Cheese and 3.1% for Nuts. There was no significant concentration in either revenue growth or profit factors; overall, the period can be characterized as one in which thin margins were maintained amid modest revenue growth.

Segment Analysis

The Cheese Business remained the core business, generating Revenue of ¥212.6B (78.9% of the total), Operating Income of ¥6.0B, and a Profit Margin of 2.8%. The Nuts Business generated Revenue of ¥57.0B (21.1% of the total), Operating Income of ¥1.7B, and a Profit Margin of 3.1%, making a complementary contribution with a margin slightly exceeding that of Cheese. The margin difference between the two segments was small at 0.3pt, and the company-wide Profit Margin of 2.9% is strongly determined by the performance of the Cheese Business. The business portfolio is heavily weighted toward Cheese, making it susceptible to fluctuations in raw material prices and foreign exchange rates.

Key Financial Indicators

【Profitability】Operating Margin of 2.9%, Net Margin of 2.3%, and ROE of 1.9% all remained low compared with general levels in the food industry. The Gross Margin was 18.0%, leaving limited profit accumulation after deducting the 15.1% SG&A Expense Ratio. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥76.5B, approximately 12.5 times Net Income of ¥6.1B. In addition to ¥11.2B in depreciation and amortization, a significant collection of accounts receivable (+¥65.4B) contributed to the increase. Free Cash Flow (FCF) was ample at ¥81.6B. 【Investment Efficiency】Capital expenditures of ¥5.8B were approximately half of depreciation and amortization of ¥11.2B, indicating restrained investment. Asset turnover based on Revenue relative to total assets was moderate, leaving room to improve asset efficiency through better inventory and accounts receivable turnover. 【Financial Soundness】The Equity Ratio was 54.5% (54.7% in the previous year), remaining broadly unchanged. Liquidity was sound, with current assets of ¥315.4B against current liabilities of ¥190.9B. Long-term borrowings increased to ¥47.2B (¥37.7B in the previous year), indicating progress in terming out short-term borrowings.

Cash Flow Analysis

Operating Cash Flow (OCF) was ¥76.5B, substantially exceeding Net Income of ¥6.1B, indicating strong cash conversion of earnings. The primary factors were ¥11.2B in depreciation and amortization and an improvement in working capital resulting from the decrease in accounts receivable (+¥65.4B cash impact). Meanwhile, inventories increased by ¥0.9B, indicating some residual stagnation in inventory turnover. Investing Cash Flow (ICF) was a net inflow of ¥5.1B, despite capital expenditures of ¥5.8B, due to proceeds from the sale of investment securities and other items. Financing Cash Flow (FCF) was an outflow of ¥16.7B, reflecting share repurchases of ¥12.0B, debt restructuring, and dividend payments. Free Cash Flow, combining OCF and ICF, reached ¥81.6B, securing sufficient cash generation capacity to cover share repurchases and dividends.

Quality of Earnings

Operating Income of ¥7.8B, representing core operating earnings power, was the center of recurring profitability. The impact of temporary factors was limited, with extraordinary income of ¥0.2B (¥0.2B gain on the sale of investment securities) and extraordinary losses of ¥0.1B. Non-operating income of ¥2.6B, equivalent to approximately 1.0% of Revenue, consisted of ¥0.9B in dividends received, ¥0.9B in foreign exchange gains, and ¥0.4B in other income. These items contributed to Ordinary Income of ¥8.3B by supplementing the profitability of the core business; however, it should be noted that foreign exchange gains are susceptible to market fluctuations. The difference between Ordinary Income of ¥8.3B and Net Income of ¥6.1B resulted from the effective tax rate of approximately 27.7% and minor extraordinary items, with no significant divergence observed. The fact that OCF substantially exceeded Net Income indicates a small accrual component (the difference between accounting profit and cash) and high earnings quality.

Earnings Forecasts and Guidance

Progress rates for the first half against the full-year forecasts (Revenue of ¥550.0B, Operating Income of ¥15.0B, and Ordinary Income of ¥16.0B) were 48.9% for Revenue, 52.3% for Operating Income, 51.9% for Ordinary Income, and 43.8% for Net Income. Revenue, Operating Income, and Ordinary Income were tracking the standard progress benchmark of around 50% at Q2, and can be assessed as progressing smoothly. The somewhat slower 43.8% progress for Net Income may have been affected by the tax burden and seasonality in non-operating income. Although the earnings forecast was revised during the current quarter, there was no revision to the dividend forecast.

Shareholder Returns

No dividend was paid for Q2, while the full-year dividend forecast is ¥20.00 per share. Based on the total dividend amount calculated from the full-year Net Income forecast of ¥14.0B and the number of shares outstanding (after deducting treasury shares), the Payout Ratio is estimated to be approximately 25–30%. During the first half, the company also conducted share repurchases of ¥12.0B, resulting in shareholder returns of a certain scale when dividends and share repurchases are combined. FCF of ¥81.6B was sufficient to cover dividends, capital expenditures, and share repurchases, indicating shareholder return capacity underpinned by strong cash generation.

Risk Factors

1. Business concentration risk: The Cheese Business accounts for 78.9% of Revenue, creating a structure susceptible to raw material prices, dairy market conditions, and foreign exchange fluctuations. The Gross Margin of 18.0% is low compared with the industry average, leaving limited capacity to absorb cost increases.

2. Leverage and maturity structure risk: Long-term borrowings increased to ¥47.2B (¥37.7B in the previous year, +25.1%), while short-term borrowings of ¥57.8B remain outstanding. Cash of ¥104.4B provides coverage of 1.8 times short-term borrowings; however, attention should be paid to the potential increase in the burden if interest rate conditions change.

3. Prolonged working capital cycle: Inventories of ¥69.9B and accounts receivable of ¥124.8B represent substantial asset balances, making improvements in inventory and accounts receivable turnover key to improving asset efficiency (total asset turnover) and ROE. During the current period, significant collection of accounts receivable progressed, while inventories increased slightly.

Industry Benchmark (Reference, Company Analysis)

Industry Benchmark (food_beverage)

Profitability and Returns

Because comparative data within the industry is limited, the company’s clear positioning relative to the median cannot be confirmed. However, the company’s Operating Margin of 2.9% and Net Margin of 2.3% are considered to be toward the low end compared with general levels in the food industry.

※Source: Company compilation

Key Points from the Earnings Results

1. Despite its thin-margin structure, progress against the full-year plan has generally remained on the standard track, confirming a structure in which non-operating income (dividends received and foreign exchange gains) supports Ordinary Income.

2. OCF reached approximately 12.5 times Net Income, demonstrating strong cash generation capacity primarily due to progress in collecting accounts receivable, while some stagnation remains in inventory turnover.

3. A review of the funding structure through increased long-term borrowings (terming out) is progressing, and a structural change in the financial profile—namely, reduced reliance on short-term liabilities—can be observed.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,464–¥1,549 at Cost of Equity ±1%; ¥1,496–¥1,511 at ω±0.1.

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 relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment 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 responsibility, after consulting with professionals as necessary.

---End of Report---