| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥11736.9B | ¥11540.7B | +1.7% |
| Operating Income | ¥933.1B | ¥847.0B | +10.2% |
| Ordinary Income | ¥965.7B | ¥820.1B | +17.7% |
| Net Income | ¥253.8B | ¥425.7B | -40.4% |
| ROE | 3.1% | 5.4% | - |
FY2025 full-year results were Revenue ¥11736.9B (vs prior year +¥196.2B +1.7%), Operating Income ¥933.1B (vs prior year +¥86.1B +10.2%), Ordinary Income ¥965.7B (vs prior year +¥145.6B +17.7%), and Net Income attributable to owners of parent ¥253.8B (vs prior year -¥171.9B -40.4%). While revenue growth was modest, Operating Margin expanded to 7.9% (up +0.6pt from 7.3%) due to price measures taking hold and product mix improvement. At the ordinary profit level, foreign exchange gains of ¥26.9B and a reversal to profit in equity-method investment results (prior year -¥44.7B, current year +¥6.0B) contributed to double-digit growth in Ordinary Income. However, the year included Special Losses of ¥426.9B, mainly impairment losses of ¥244.9B, compressing profit before tax to ¥680.4B and resulting in a substantial YoY decline in Net Income of -40.4%. In summary, the Company recorded higher revenue and higher profits at the operating and ordinary stages, but special losses led to a final-year decline in Net Income.
[Revenue] Revenue rose modestly to ¥11736.9B (+1.7%). By segment, Food was ¥9428.8B (+1.9%, revenue composition 80.3%) and Pharmaceuticals ¥2322.4B (+1.1%, composition 19.7%), both achieving revenue growth. Food benefited from price revisions and steady sales in core categories; Pharmaceuticals was driven by stable growth in prescription pharmaceuticals and animal health. Gross margin improved to 30.6% (up +1.2pt from 29.4%), reflecting successful pass-through of raw material cost increases and product mix improvement.
[Profitability] Cost of sales was controlled to ¥8146.5B (vs prior year -0.1%), expanding Gross Profit to ¥3590.4B (+5.9%). SG&A was ¥2657.3B (+1.6%), growing less than revenue, resulting in an SG&A ratio of 22.6% (up +0.6pt from 22.0%). Gross profit improvement outpaced SG&A increases, leading to Operating Income of ¥933.1B (+10.2%). Segment Operating Income was Food ¥687.5B (+6.4%, margin 7.3%) and Pharmaceuticals ¥304.6B (+23.1%, margin 13.1%), with Pharmaceuticals’ high margins driving overall profitability. Non-operating items produced net income of ¥32.6B (prior year loss -¥27.2B), aided by expanded foreign exchange gains ¥26.9B (prior year ¥6.3B) and improved equity-method investment income (current +¥6.0B, prior -¥44.7B), lifting Ordinary Income to ¥965.7B (+17.7%). At the special items stage, Special Losses of ¥426.9B—mainly impairment losses of ¥244.9B (Food ¥225.2B, Pharmaceuticals ¥19.7B)—were recorded. Even after Special Income of ¥141.6B (including gain on sale of fixed assets ¥19.9B and subsidy income ¥110.2B), the net special items amounted to a loss of -¥285.3B. Profit before tax declined to ¥680.4B (vs prior year ¥824.8B, -17.5%). Income taxes were ¥292.4B (effective tax rate 43.0%), and non-controlling interests were ¥37.2B, resulting in Net Income attributable to owners of parent of ¥253.8B (-40.4%). Net margin fell to 2.2% (down -1.5pt from 3.7%). Conclusion: operating and ordinary-stage results showed revenue and profit growth, but recognition of substantial special losses produced a year-end decline in Net Income.
The Food segment posted Revenue ¥9428.8B (+1.9%) and Operating Income ¥687.5B (+6.4%), yielding a margin of 7.3% (up +0.3pt from 7.0%). Price revisions for core products such as yogurt and chocolate took hold and volumes remained firm. The Food segment recorded impairment losses of ¥225.2B this year related to reassessments of profitability at certain sites and assets. The Pharmaceuticals segment reported Revenue ¥2322.4B (+1.1%) and Operating Income ¥304.6B (+23.1%), achieving a margin of 13.1% (up +2.3pt from 10.8%), a significant improvement in profitability. Product mix improvements in prescription pharmaceuticals and expanded sales of animal health products drove higher-margin sales, improving operating margins. The Pharmaceuticals segment also recorded impairment losses of ¥19.7B, but the underlying trend in core earnings power remains positive. Segment assets were Food ¥8705.4B and Pharmaceuticals ¥4358.6B, and investment continues across both segments; notably, Construction in Progress rose sharply to ¥913.1B (from ¥458.1B, +99.4%), indicating ongoing growth investments.
[Profitability] Operating Margin 7.9% (up +0.6pt from 7.3%), Net Margin 2.2% (down -1.5pt from 3.7%), Gross Margin 30.6% (up +1.2pt from 29.4%). Operating-stage profitability improved, but Net Margin was reduced by special losses. ROE 3.1% (prior year 6.8%) roughly halved due to lower net income and declined substantially versus historical levels. ROA (on Ordinary Income basis) improved to 7.9% (up +1.0pt from 6.9%), reflecting better asset efficiency at the operating level. [Cash Quality] Operating Cash Flow / Net Income is 2.23x (¥565.2B/¥253.8B), indicating cash generation materially exceeds accounting profit, and non-cash items such as impairments depressed Net Income. The accrual ratio is -0.37 ((Operating CF before working capital changes ¥835.1B - Net Income ¥253.8B)/Total Assets), calculated using Operating CF before working capital changes 835.1B - Net Income 253.8B divided by Total Assets, indicating a large non-cash impact and that working capital increases (Inventory +¥378.9B, Accounts receivable +¥28.6B) pressured cash flow. [Investment Efficiency] Total asset turnover 0.93x (prior 0.97x) edged down due to inventory and fixed asset increases. CAPEX was ¥968.5B, 1.76x depreciation ¥549.5B, indicating an aggressive investment phase; accumulated Construction in Progress points to higher future depreciation. [Financial Soundness] Equity Ratio 64.8% (prior 66.8%), Current Ratio 186.9% (prior 176.1%), Quick Ratio 140.7% (prior 134.6%) — short-term liquidity is sound. However, long-term borrowings rose materially to ¥672.7B (from ¥124.2B, +441.5%), bringing total interest-bearing liabilities to ¥951.7B (including short-term borrowings ¥213.2B and corporate bonds ¥200.0B). Debt/EBITDA is estimated at 0.60x (EBITDA = Operating Income ¥933.1B + Depreciation ¥549.5B = ¥1,582.6B), and Interest Coverage is 95.5x (Operating Income ¥933.1B / Interest expense ¥9.8B), indicating very conservative leverage levels.
Operating CF was ¥565.2B (prior ¥689.8B, -18.1%). Operating CF before working capital changes totaled ¥835.1B (prior ¥997.2B, -16.3%). The primary drivers were cash tax payments of ¥294.0B plus working capital cash outflows from inventory increase ¥378.9B and accounts receivable increase ¥28.6B. Inventory grew to ¥1447.3B (prior ¥1276.2B, +13.4%), worsening DIO to approximately 115 days (from 96 days). Accounts payable decreased by ¥33.1B, and CCC lengthened to about 130 days (DSO ~61 days + DIO ~115 days - DPO ~46 days). Investing CF was a large outflow of -¥1103.8B (prior -¥406.4B), driven by CAPEX ¥968.5B (prior ¥527.9B, +83.4%). The build-up in Construction in Progress suggests significant investment in large-scale production facilities. Net transactions in marketable and investment securities amounted to a modest outflow of ¥7.8B. Free Cash Flow was negative at -¥538.5B (prior +¥283.5B), reflecting the growth investment phase and working capital increases that temporarily suppressed cash generation. Financing CF was +¥346.0B (prior -¥616.7B), comprising long-term borrowings procured ¥560.0B, short-term borrowings change -¥1.1B, and long-term borrowings repayment -¥51.6B, resulting in net borrowing of about ¥507B. Dividend payments were ¥277.1B (prior ¥267.5B), maintaining shareholder returns. Cash and deposits fell to ¥692.5B (prior ¥781.9B, -11.4%), and year-end balance including cash equivalents was ¥496.1B (prior ¥664.0B). Operating CF / EBITDA ratio was 0.36x (¥565.2B / ¥1,582.6B), indicating a low level; normalization of working capital is key to improving next year’s cash flow.
Operating Income ¥933.1B reflects sustainable earnings improvement from price measures and product mix shifts, indicating high persistence. Non-operating income ¥69.1B constitutes 0.6% of revenue and is limited; components include dividend income ¥10.0B, foreign exchange gains ¥26.9B, interest income ¥10.0B, and others ¥16.2B. Foreign exchange gains expanded from ¥6.3B prior year and stem from real trade flows, not speculative factors. Equity-method investment results improved from prior -¥44.7B to current +¥6.0B, suggesting recovery at affiliates. Special items were a net loss of -¥285.3B, primarily due to impairment losses ¥244.9B (Food ¥225.2B, Pharmaceuticals ¥19.7B). Special income ¥141.6B included gains on sale of fixed assets ¥19.9B and subsidy income ¥110.2B, the latter likely policy support for capital investment. While impairments are non-recurring accounting losses, ongoing monitoring of fixed asset efficiency and profitability is required. The accrual ratio ((Operating CF ¥565.2B - Net Income ¥253.8B)/Total Assets approx ¥12618B) ≒ 0.025 is low, and with Operating CF being 2.23x Net Income, the cash backing of profits is solid. Comprehensive income was ¥651.8B (prior ¥566.9B), well above Net Income ¥253.8B, boosted by Other Comprehensive Income (foreign currency translation adjustments ¥107.2B, valuation difference on available-for-sale securities ¥61.6B, retirement benefit adjustments ¥97.3B, etc.). Recognition of gains in retirement benefit adjustments reflects improved pension asset performance and supports financial soundness.
FY2026 full-year guidance forecasts Revenue ¥12120.0B (vs prior year +3.3%), Operating Income ¥1000.0B (vs prior year +7.2%), Ordinary Income ¥1010.0B (vs prior year +4.6%), and Net Income attributable to owners of parent ¥625.0B (vs prior year +146.2%). The Company plans to further improve Operating Margin to 8.3%, assuming price maintenance and continued product mix improvement. The large expected increase in Net Income reflects the assumption that this year’s special losses will not recur; EPS is forecast at ¥230.61 (from ¥129.42 this year, +78.1%). Progress ratios are Operating Income 93.3% (actual ¥933.1B / plan ¥1,000.0B) and Ordinary Income 95.6% (actual ¥965.7B / plan ¥1,010.0B), suggesting a steady path to full-year targets. Dividend forecast is annual ¥55 (interim ¥27.5, year-end ¥27.5), a reduction from this year’s annual ¥105 (interim ¥52.5, year-end ¥52.5); on forecast EPS the Payout Ratio is approximately 23.8%, a conservative level. The Company identifies inventory normalization and working capital efficiency as key priorities for next year and expects a recovery in cash generation.
This year’s dividend was annual ¥105 (interim ¥52.5, year-end ¥52.5), maintained unchanged from prior year. Total dividend payments of ¥277.1B (based on outstanding shares excluding treasury stock) against Net Income attributable to owners of parent ¥253.8B resulted in a Payout Ratio of 109.2%, i.e., dividends exceeded Net Income. DPS ¥105 against EPS ¥129.42 implies a payout ratio of approximately 81.1%; based on average shares outstanding of 2億7,102万株, total dividends are estimated at about ¥284B. Free Cash Flow was negative -¥538.5B, so dividends were funded from cash reserves on the balance sheet and from long-term borrowings of ¥560.0B. Share buybacks were negligible at ¥0.1B, so Total Return Ratio consisted solely of dividends. Although the payout ratio is high this year, the Company’s Equity Ratio 64.8% and cash ¥692.5B indicate financial soundness, and dividend sustainability is expected to improve as special losses subside and working capital normalizes. Next year’s dividend forecast at annual ¥55 (Payout Ratio 23.8%) represents a planned reduction, but excluding this year’s exceptional items the Company appears to maintain a stable dividend policy.
Reoccurrence of impairment risk: This year the Company recognized impairment losses of ¥244.9B (Food ¥225.2B, Pharmaceuticals ¥19.7B) and reassessed fixed asset profitability. With Construction in Progress at ¥913.1B (from ¥458.1B, +99.4%) and significant capital projects underway, if post-commissioning performance falls short of plan, additional impairments may arise. As CAPEX / depreciation ratio is 1.76x and the Company is in an aggressive investment phase, monitoring investment project profitability and improving fixed asset turnover will be critical.
Deterioration in working capital efficiency: Inventory increased to ¥1447.3B (YoY +13.4%), DIO about 115 days (prior ~96 days), and CCC about 130 days, indicating lengthening. Inventory growth caused a cash outflow of ¥378.9B from OCF, and OCF/EBITDA at 0.36x remains low. Inventory increasing +13.4% versus revenue growth +1.7% suggests risk of excess inventory, and potential valuation losses or disposals could pressure future profits and cash flow. The Company’s ability to respond to demand fluctuations during a price revision phase will be tested.
Rising dependence on borrowings: Long-term borrowings surged to ¥672.7B (from ¥124.2B, +¥548.4B, +441.5%), financing growth investments with interest-bearing liabilities. Current Debt/EBITDA 0.60x and Interest Coverage 95.5x are healthy, but continued negative Free Cash Flow (-¥538.5B) combined with rising interest rates could increase financial costs and capital costs, pressuring profitability and ROE. If working capital normalization and investment payback are delayed, borrowing dependence could persist and reduce financial flexibility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.9% | 5.0% (3.3%–8.4%) | +2.9pt |
| Net Margin | 2.2% | 3.2% (1.9%–6.6%) | -1.0pt |
Operating Margin exceeds the industry median by +2.9pt, reflecting strong pass-through and product mix improvements. Net Margin is below the industry median by -1.0pt due to special losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.7% | 5.4% (1.0%–8.6%) | -3.7pt |
Revenue growth trails the industry median of +5.4% by -3.7pt, reflecting domestic market maturity and restrained volume growth.
※Source: Company compilation
Continued improvement in core earnings power: Operating Margin 7.9% (up +0.6pt from 7.3%) marks three consecutive periods of improvement, driven by price measures and product mix. Pharmaceuticals margin of 13.1% (up +2.3pt from 10.8%) indicates a higher-value earnings structure and contributes to raising company-wide margins. The Company plans to reach Operating Margin 8.3% next year; if cost optimization and higher-value product sales continue, ROE recovery after special losses (current 3.1% → returning to historical mid-single-digit to 6% levels) is feasible. Operating CF / Net Income of 2.23x provides strong cash backing for profits, and excluding non-cash impairments core operating performance is healthy.
Working capital normalization is key to cash flow recovery: Rapid inventory increase (+13.4%) and CCC of 130 days are likely temporary adjustments in supply-demand; if inventory normalizes next year, OCF/EBITDA could recover from 0.36x toward industry averages (above 0.5x). Large CAPEX ¥968.5B (1.76x depreciation) is accumulated in Construction in Progress ¥913.1B; upon start-up this will increase depreciation (estimated annual increase ~¥100B) and will require corresponding revenue and profit gains to absorb. Next year’s inventory and working capital management and ramp-up of new facilities will determine the pace of Free Cash Flow recovery and ROE improvement.
Dividend sustainability underpinned by financial soundness: Equity Ratio 64.8% and Debt/EBITDA 0.60x indicate a conservative capital structure. This year’s Payout Ratio of 109.2% reflects temporary Net Income decline from special losses. The Company forecasts Net Income recovering to ¥625.0B next year and plans dividends of ¥55 (Payout Ratio 23.8%), a conservative adjustment; as Free Cash Flow improves, dividend capacity should recover. The rise in long-term borrowings (+¥548.4B) financed growth investments and leverage remains low, preserving financial flexibility. If special losses abate and inventory normalizes, a return to progressive dividend increases or higher dividends could be reconsidered.
This report was automatically generated by AI analyzing XBRL financial disclosure data. It is not a recommendation to invest in any specific securities. Industry benchmarks are compiled by the Company from public financial statement data and provided for reference only. Investment decisions are your own responsibility; please consult advisors as appropriate.