| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥155.13B | ¥152.40B | +1.8% |
| Operating Income | ¥3.68B | ¥3.48B | +5.8% |
| Ordinary Income | ¥4.03B | ¥4.30B | -6.4% |
| Net Income | ¥14.58B | ¥9.00B | +62.0% |
| ROE | 5.9% | 3.7% | - |
Although the Company secured higher revenue and operating income from its core business in Q1, it should be noted that the substantial increase in net income was primarily attributable to a one-time gain on the sale of fixed assets. Revenue increased 1.8% year on year to ¥155.13B, while operating income rose 5.8% to ¥3.68B, achieving solid revenue and profit growth despite the high-cost environment. Meanwhile, ordinary income declined 6.4% year on year to ¥4.03B due to a contraction in non-operating income and expenses. Net income surged 62.0% to ¥14.58B, but this was attributable to the recognition of a ¥17.59B gain on the sale of fixed assets as extraordinary income and does not reflect the underlying strength of the core business. Operating cash flow (OCF) was -¥10.59B, representing a significant divergence from net income, as deterioration in working capital—primarily increases in inventories and trade receivables—pressured cash generation.
【Revenue】Revenue increased 1.8% year on year to ¥155.13B. By segment, Dairy Products (44.2% of revenue, +1.0%) maintained its position as the mainstay business but recorded lower profit; Beverages and Desserts (43.0%, +1.8%) achieved higher revenue and profit; Feed and Seedlings (8.9%, +2.8%) posted higher revenue but lower profit; and Other Businesses (8.7%, +3.8%) achieved higher revenue and profit. The primary drivers of company-wide revenue growth were the expansion of Beverages and Desserts and the effects of price revisions.
【Profit and Loss】Operating income increased 5.8% year on year to ¥3.68B, and the operating margin improved slightly from the previous year to 2.4%. The SG&A ratio declined to 14.4% from 14.5% a year earlier, with cost control contributing to profit growth. However, the Dairy Products segment recorded a 20.7% decline in operating income due to higher raw material and logistics costs. Ordinary income declined 6.4% year on year to ¥4.03B, falling below the growth in operating income as a result of the contraction in non-operating income and expenses. Net income increased significantly by 62.0% to ¥14.58B, but this was primarily attributable to a ¥17.59B gain on the sale of fixed assets, a one-time factor accounting for most of extraordinary income, which directly increased profit before tax to ¥21.04B. In conclusion, the core business achieved higher revenue and profit, while the increase in net income was accompanied by a temporary boost from extraordinary income.
Dairy Products recorded revenue of ¥68.50B (+1.0%) and operating income of ¥1.38B (-20.7%), resulting in lower profit and a low operating margin of 2.0%. This segment was significantly affected by higher raw material and logistics costs. Beverages and Desserts recorded revenue of ¥66.71B (+1.8%) and operating income of ¥0.92B (+42.1%), achieving higher revenue and profit. Its operating margin also improved to 1.4%, contributing to the increase in company-wide profit. Feed and Seedlings recorded revenue of ¥13.87B (+2.8%) and operating income of ¥0.53B (-11.4%), resulting in lower profit. Other Businesses, including joint distribution and real estate leasing, recorded revenue of ¥13.52B (+3.8%) and operating income of ¥0.86B (+89.3%), representing substantial profit growth. Its operating margin was 6.4%, the highest among all segments, making a significant contribution to company-wide profit growth. While the core Dairy Products segment recorded lower profit, improvements in Other Businesses and Beverages and Desserts supported overall profitability.
【Profitability】The operating margin was 2.4% and the gross margin was 16.8%, both broadly unchanged from the previous year. The net profit margin was elevated at 9.4% due to the impact of extraordinary income. ROE was 5.9%, indicating that profitability remains low relative to the cost of equity. 【Cash Flow Quality】OCF was -¥10.59B, substantially below net income of ¥14.58B, resulting in a negative OCF/NI ratio. The primary factors were the non-cash adjustment for the gain on the sale of fixed assets, an increase in tax payments to ¥11.89B, and deterioration in working capital, including an increase of -¥4.60B in inventories and -¥0.52B in trade receivables. Challenges therefore remain regarding earnings quality. 【Investment Efficiency】The total asset turnover ratio remained low, while investing cash flow was positive at +¥14.03B due to proceeds from the sale of fixed assets. Although free cash flow of ¥3.44B was secured, it was below the combined amount of dividends and share repurchases. 【Financial Soundness】The equity ratio was high at 58.7%, indicating a sound financial base. BPS steadily increased to ¥4,058.98 from ¥3,923.36 in the previous year.
OCF was -¥10.59B, and the significant divergence from net income of ¥14.58B was the most notable feature of cash flow. Although the ¥17.59B gain on the sale of fixed assets was recognized in the income statement, it was deducted as a non-cash item in OCF. In addition, an increase in income taxes paid to ¥11.89B, an increase in inventories of -¥4.60B, and an increase in trade receivables of -¥0.52B, among other working-capital deterioration, reduced OCF. Investing cash flow was +¥14.03B, with proceeds from the sale of fixed assets driving cash inflows and partially offsetting the negative OCF. Financing cash flow was -¥7.90B, primarily due to dividend payments and ¥1.50B in share repurchases. As a result, free cash flow (OCF + investing cash flow) was +¥3.44B, although this was below the combined amount of dividends and share repurchases. Cash and deposits declined year on year to ¥9.66B. Going forward, restoring core-business cash generation through working-capital reduction will be a key challenge.
Most of current-period net income of ¥14.58B depended on the one-time gain on the sale of fixed assets of ¥17.59B, and the gap with operating income of ¥3.68B, which reflects the earning power of the core business, was substantial. Non-operating income was ¥0.59B, including ¥0.09B in dividend income, while non-operating expenses were ¥0.25B, including ¥0.09B in interest expenses; both were immaterial. Ordinary income of ¥4.03B therefore declined only slightly by 6.4% year on year and remained a relatively close proxy for core-business performance. Of extraordinary income of ¥17.62B, the gain on the sale of fixed assets accounted for ¥17.59B. Together with extraordinary losses of ¥0.60B, including ¥0.38B in losses on disposal of fixed assets, this structure pushed profit before tax to ¥21.04B. A reversal of this effect is expected from the next fiscal year onward. Comprehensive income was ¥14.12B, slightly below net income of ¥14.58B, with valuation changes in other securities, including a -¥0.52B change in the valuation difference on securities, accounting for the difference. The fact that OCF was substantially below net income also indicates a large accrual difference between accounting profit and cash. Accordingly, evaluating earnings quality requires close attention to both core earnings excluding extraordinary income and cash-generation capacity.
The Q1 progress rates against the full-year earnings forecasts—revenue of ¥645.00B, operating income of ¥21.00B, and ordinary income of ¥21.80B—were 24.1% for revenue, 17.5% for operating income, and 18.5% for ordinary income. Revenue progress was broadly in line with a typical year, while operating income was somewhat behind the annual plan. The key issue going forward will be the extent to which the impact of higher raw material and logistics costs can be absorbed through price revision effects and cost reductions in the second half of the fiscal year. No revisions were made to the earnings or dividend forecasts during the quarter.
The Company’s published annual dividend forecast is ¥100 per share, at the same level as the previous fiscal year. Based on the full-year EPS forecast of ¥413.03, the payout ratio is approximately 24.2%, remaining at a conservative level. During Q1, the Company conducted ¥1.50B in share repurchases, continuing shareholder returns together with dividends. However, free cash flow of ¥3.44B for the period was below the combined amount of dividend payments and share repurchases, meaning that on a quarterly basis, shareholder distributions exceeded cash generation. Given the sound financial base reflected in an equity ratio of 58.7%, there is considered to be no major impediment to maintaining dividends for the time being. However, recovery in core operating cash flow will be a key focus in assessing the sustainability of future shareholder returns.
Cash Flow Quality Risk: OCF was -¥10.59B, substantially diverging from net income of ¥14.58B, primarily due to deterioration in working capital, centered on increases of +¥4.60B in inventories and +¥0.52B in trade receivables. If cash generation from the core business does not recover, investment and shareholder returns may continue to depend on temporary sources of income, such as proceeds from the sale of fixed assets.
Profitability Pressure from Higher Raw Material and Logistics Costs: The Dairy Products segment recorded a 20.7% decline in operating income despite revenue growth of +1.0%, while the gross margin remained broadly unchanged from the previous year at 16.8%. If higher costs exceed the benefits of price revisions, profitability in the core segment may continue to deteriorate.
Earnings Structure Volatility Risk Due to Dependence on Extraordinary Income: The increase in net income depended heavily on the one-time gain on the sale of fixed assets of ¥17.59B. Excluding this factor, profit before tax would be substantially lower. If an extraordinary gain of a similar scale does not occur in subsequent fiscal years, net income may decline sharply as this factor reverses.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.4% | 5.5% (1.4%–6.7%) | -3.1pt |
| Net Profit Margin | 9.4% | 3.7% (0.5%–4.9%) | +5.7pt |
The operating margin was below the industry median, indicating an earnings structure that compares unfavorably with peers. However, the net profit margin was substantially above the industry median due to the impact of extraordinary income.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.8% | 5.4% (3.6%–10.3%) | -3.6pt |
The revenue growth rate was below the industry median, with revenue growth remaining relatively modest compared with peers.
※Source: Company research
The Company secured higher revenue and profit on a core-business basis, but the substantial increase in net income was primarily attributable to the one-time gain on the sale of fixed assets, and a reversal of this effect is expected from the next fiscal year onward. When evaluating the financial results, it is important to continue monitoring trends in core earnings power excluding extraordinary income.
OCF remains substantially below net income, and trends in working capital, including increases in inventories and trade receivables, represent a structural issue that will determine future cash-generation capacity.
By segment, the core Dairy Products business recorded lower profit, while higher profit in Beverages and Desserts and Other Businesses, including joint distribution and real estate leasing, supported company-wide earnings. This confirms that the earnings structure within the business portfolio is changing.
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). It is not a forecast of the market stock price or a recommendation of any specific investment action.
| Scenario | Theoretical Stock Price |
|---|---|
| bear | ¥4,075 |
| base | ¥4,233 |
| bull | ¥4,248 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥4,059 |
| Adjusted Forecast EPS | ¥456.5 |
| Cost of Equity r | 9.77% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Residual Income Persistence Coefficient ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 24.2% |
| Forecast EPS Confidence Adjustment | ×1.100 (based on progress ahead of the full-year forecast) |
| Implied PBR / PER | 1.04x / 9.3x |
Sensitivity: ¥4,114–¥4,358 at ±1% for the cost of equity, and ¥4,229–¥4,239 at ±0.1 for ω.
Notes:
(Model used: Residual Income Model / Interest Rate Reference Month: 2026-07 / This figure is not intended to predict or guarantee the future stock price.)
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. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional advisor.
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These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.