| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4755.7B | ¥4583.5B | +3.8% |
| Operating Income / Operating Profit | ¥91.3B | ¥89.5B | +2.0% |
| Ordinary Income | ¥111.8B | ¥105.0B | +6.5% |
| Net Income | ¥105.7B | ¥80.4B | +31.5% |
| ROE | 8.1% | 6.2% | - |
For the fiscal year ended March 2026, Revenue was ¥4,755.7B (YoY +¥172.2B +3.8%), Operating Income was ¥91.3B (YoY +¥1.8B +2.0%), Ordinary Income was ¥111.8B (YoY +¥6.8B +6.5%), and Net Income attributable to owners of the parent was ¥45.9B (YoY -¥24.9B -35.2%). While top-line growth and operating-stage profitability were solid, recognition of Extraordinary Losses of ¥36.7B including impairment losses of ¥27.2B caused a significant decline in net income. Gross profit margin improved to 11.1% (up +0.5pt from 10.6% last year) due to pricing actions, while SG&A ratio rose to 9.1% (up +0.5pt), leaving Operating Margin essentially flat at 1.9% (down -0.1pt). Ordinary Income was lifted +22.3% above operating-stage results by non-operating income including foreign exchange gains of ¥5.6B and dividend income of ¥3.6B. The effective tax rate was a high 72.2% and non-controlling interests of -¥21.7B further depressed profits, resulting in a report of higher revenue, slightly higher operating profit, higher ordinary income, but substantially lower net income. Operating Cash Flow was strong at ¥197.5B (YoY +39.0%), generating 4.3x the Net Income, Free Cash Flow of ¥59.9B covered dividends of ¥40.3B by 1.5x, and financial soundness was maintained.
[Revenue] Revenue was ¥4,755.7B (YoY +3.8%), marking the third consecutive year of revenue growth. By product, meat was ¥1,747.8B (from ¥1,607.2B last year, +8.7%), ham & sausage was ¥1,245.8B (YoY +5.1%) and processed foods were ¥1,733.2B (YoY -1.7%) showing a slight decline. Sales to major customer Seven-Eleven were ¥1,065.6B, representing about 22% of total sales (down from ¥1,181.7B last year, -9.8%). By segment, the Processed Foods Division (meat processing & processed foods) recorded Revenue of ¥3,146.9B (YoY +0.4%) essentially flat, while the Meat Division expanded to ¥1,817.2B (YoY +9.8%). Price revisions were implemented to address raw material and logistics cost pressures, improving gross margin to 11.1% (from 10.6% last year, +0.5pt), but a rise in SG&A ratio (9.1%, up +0.5pt from 8.6%) led to a slight decline in Operating Margin to 1.9%.
[Profit & Loss] Cost of goods sold was ¥4,230.0B, representing a cost ratio of 88.9% (improved -0.5pt from 89.4% last year). SG&A was ¥434.4B (YoY +9.9%), outpacing revenue growth (+3.8%) and squeezing profits due to persistent increases in logistics and labor costs. Operating Income was ¥91.3B (YoY +2.0%), Operating Margin 1.9% (down -0.1pt). Non-operating income totaled ¥24.2B (including foreign exchange gains ¥5.6B, dividend income ¥3.6B, other ¥8.0B) and non-operating expenses were ¥3.7B (including interest expense ¥1.8B), leading to Ordinary Income of ¥111.8B (YoY +6.5%). Extraordinary gains were ¥11.5B (including gains on sale of investment securities ¥2.3B) while Extraordinary losses were ¥36.7B (impairment losses ¥27.2B, loss on disposal of fixed assets ¥6.6B), producing Profit before Income Taxes of ¥86.7B (YoY -20.6%). Income taxes were ¥62.6B, yielding an effective tax rate of 72.2%, and non-controlling interests of -¥21.7B further reduced attributable profit, resulting in Net Income attributable to owners of the parent of ¥45.9B (YoY -35.2%). In summary: revenue up, slight operating income increase, Ordinary Income up, but net income fell substantially due to Extraordinary losses and high tax burden.
The Processed Foods Division posted Revenue of ¥3,146.9B (YoY +0.4%), Operating Income of ¥79.3B (YoY +0.1%), and an Operating Margin of 2.5%. This core division—comprised of ham & sausage and processed foods—accounts for approximately 66% of sales; price pass-through and raw material cost increases offset each other and profits were essentially flat. The Meat Division recorded Revenue of ¥1,817.2B (YoY +9.8%), Operating Income of ¥19.3B (YoY +60.4%), and an Operating Margin of 1.1%. Profit increased significantly on stable meat market prices and procurement optimization, but the division remains low-margin. Other businesses (e.g., scientific equipment) had Revenue of ¥9.4B (YoY +28.1%) and Operating Income of ¥2.9B (YoY -3.6%). Processed Foods accounted for about 87% of consolidated operating profit, while Meat has substantial room for profitability improvement. Segment assets: Processed Foods ¥1,618.9B, Meat ¥457.3B, with relatively higher capital efficiency in Processed Foods. Goodwill balances for both Processed Foods and Meat were written down to zero at year-end due to impairment.
[Profitability] Operating Margin 1.9% (down -0.1pt from 2.0% last year) remains low within the food industry. Net Income Margin 2.2% (up +0.4pt from 1.8%) is constrained by extraordinary losses. Gross Margin 11.1% (up +0.5pt from 10.6%) reflects pricing actions; SG&A ratio 9.1% (up +0.5pt from 8.6%) due to higher logistics and labor costs. ROE 8.1% is the XBRL reported value, but calculating using Net Income attributable to owners ¥45.9B ÷ Equity attributable to owners of the parent ¥1,116.7B yields approximately 4.1% (DuPont decomposition: Net Income Margin 1.0% × Total Asset Turnover 1.97 × Leverage 1.98). ROA (on Ordinary Income basis) is 4.7%, up from 4.3% last year. [Cash Quality] Operating Cash Flow (OCF) was ¥197.5B, 1.9x Net Income ¥105.7B and 4.3x Net Income attributable to owners ¥45.9B, indicating strong cash generation. OCF/EBITDA (EBITDA = Operating Income ¥91.3B + Depreciation ¥118.1B = ¥209.4B) was 0.94x, a high level, and the accrual ratio was -6.3%, indicating good earnings quality. [Investment Efficiency] ROIC (NOPAT ÷ Invested Capital) approximates (Operating Income ¥91.3B × (1 - effective tax rate 72.2%)) ÷ (Equity ¥1,305.4B + Interest-bearing debt ¥142.4B) ≈ 1.8%, a low level. Total Asset Turnover was 1.97x (up from ~1.91x) due to inventory compression. [Financial Soundness] Equity Ratio was 54.1% (up +4.3pt from 49.8% last year), Current Ratio 121.5%, Quick Ratio 91.4% indicating acceptable short-term liquidity. Interest-bearing debt was ¥142.4B, Net Interest-bearing Debt approximately ¥44.7B, Debt/EBITDA 0.68x, Interest Coverage 50.5x, showing good leverage tolerance.
Operating Cash Flow was ¥197.5B (from ¥142.1B last year, +39.0%). Profit before income taxes ¥86.7B plus Depreciation ¥118.1B, Impairment losses ¥27.2B and other non-cash expenses were added back. Working capital effects included increase in trade receivables -¥8.2B, increase in inventories -¥1.6B, increase in trade payables +¥2.1B, for a net working capital outflow of -¥7.7B, which was limited. After income taxes paid -¥33.3B, the subtotal of ¥221.3B adjusted for working capital movements produced the final OCF of ¥197.5B. Investing Cash Flow was -¥137.6B with capital expenditures -¥101.5B and intangible asset acquisitions -¥70.9B reflecting active investment; proceeds from sale of investment securities +¥4.4B partially offset outflows. Free Cash Flow was ¥59.9B (from ¥6.4B last year, +837%) supported by controlled capex and expanded OCF. Financing Cash Flow was -¥63.8B, including long-term debt repayments -¥47.5B, dividend payments -¥40.3B, and long-term borrowings +¥30.0B, reflecting a conservative stance. Cash and cash equivalents decreased from ¥62.7B to ¥59.2B (-¥3.5B) during the period, with a year-end balance of ¥97.6B (including short-term deposits etc.), maintaining liquidity. OCF/EBITDA at 0.94x and OCF/Net Income at 4.3x confirm robust cash backing of earnings.
Of Ordinary Income ¥111.8B, core Operating Income accounted for ¥91.3B and non-operating income ¥24.2B (foreign exchange gains ¥5.6B, dividend income ¥3.6B, interest income ¥3.3B, etc.), meaning dependence on non-operating income is limited at about 0.5% of Revenue. Extraordinary items were net -¥25.1B (Extraordinary gains ¥11.5B - Extraordinary losses ¥36.7B), with impairment losses ¥27.2B and loss on disposal of fixed assets ¥6.6B being temporary charges; gains on sale of investment securities ¥2.3B and insurance proceeds ¥2.7B were one-off gains. Ordinary Income ¥111.8B versus Profit before Income Taxes ¥86.7B shows a -22.4% divergence; Profit before Income Taxes ¥86.7B versus Income Taxes ¥62.6B yields an effective tax rate of 72.2%, a high level. The difference between Net Income ¥105.7B and Net Income attributable to owners of the parent ¥45.9B (-¥59.8B) is attributable to non-controlling interests -¥21.7B and adjustments to comprehensive income. OCF ¥197.5B versus EBITDA (Operating Income ¥91.3B + Depreciation ¥118.1B = ¥209.4B) gives OCF/EBITDA = 0.94x; accrual ratio (Net Income - OCF) / Total Assets = -6.3%, indicating good earnings quality. The recurring earnings base is stable with Operating Income ¥91.3B and non-operating income ¥24.2B, while one-off impairment/disposal losses ¥36.7B and high tax rate are pressuring Net Income. Next fiscal year could see Net Income improvement from the reversal of extraordinary losses and normalization of tax rate.
The company plan for the full year is Revenue ¥5,000.0B (YoY +5.1%), Operating Income ¥110.0B (YoY +20.5%), Ordinary Income ¥120.0B (YoY +7.3%), and Net Income attributable to owners of the parent ¥75.0B. An Operating Margin of 2.2% (up +0.3pt from 1.9% this year) assumes improved profitability, reduced Extraordinary losses and tax rate normalization. DPS 40円 is a semiannual payout contributing to an annual ¥80 payout, signaling a stable dividend stance. Progress vs. full-year guidance stands at Operating Income 83.0% and Ordinary Income 93.2%, generally on track, but Net Income underperformed due to Extraordinary losses. Cost optimization, continued price pass-through, and stable meat market prices are key to achieving the plan. Risks include resurgence of raw material/energy costs and volatility in major customer transactions.
An annual dividend of ¥80 (interim ¥40, year-end ¥40) was paid, with total dividends of ¥40.3B. Dividend payout ratio relative to Net Income attributable to owners of the parent ¥45.9B was 87.8%, a high level, but Free Cash Flow ¥59.9B covers dividends by 1.5x supporting cash sustainability. Last year’s payout ratio was 56.8% (approximately 57% in practice), indicating payout ratio varies with earnings levels. No share buybacks were executed (Financing CF ▲¥0.0B). From company plan EPS 149.22 and DPS 40 (disclosed values) for the next fiscal year, no intent to cut dividends is apparent; with recovery in profits (smaller Extraordinary losses, tax rate normalization) and continued cash generation, stable dividends can be maintained. Future dividend increases depend on progress in improving Operating Margin and capital efficiency.
Risk of entrenchment of low-profit structure: Operating Margin 1.9%, Gross Margin 11.1% are low within the industry. Delayed price pass-through and persistent logistics/labor cost increases (SG&A ratio +0.5pt) highlight negative operating leverage. SG&A growth +9.9% far outpaced Revenue growth +3.8%, indicating weak pricing power as a structural issue. High private brand (PB) ratio in processed foods (about 22% to major convenience store customers) and price competition in meat wholesale are persistent.
Risk of recurrence of Extraordinary losses and high tax rate: Impairment losses ¥27.2B (Processed Foods ¥23.5B, Meat ¥3.7B) and disposal losses ¥6.6B resulted in Extraordinary losses totaling ¥36.7B, up +61.7% from ¥22.7B last year. Intangible asset balance ¥220.7B (up +54.9% from ¥142.5B) has increased, raising future impairment/amortization risk. Effective tax rate 72.2% (from 34.7% last year) driven by valuation allowance on deferred tax assets etc. makes tax rate volatile and destabilizes Net Income.
Customer & segment concentration risk: Sales to major customer Seven-Eleven ¥1,065.6B (about 22% of total) show high dependence; sales declined -9.8% from ¥1,181.7B last year, and changes in trading terms could materially affect results. Processed Foods accounts for ~87% of operating profit while Meat is low-margin (Operating Margin 1.1%), indicating insufficient segment diversification. Volatility in meat market prices and foreign exchange could compress profits; delays in procurement optimization could further erode Meat Division profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.9% | 5.0% (3.3%–8.4%) | -3.1pt |
| Net Income Margin | 2.2% | 3.2% (1.9%–6.6%) | -1.0pt |
Operating Margin is -3.1pt below industry median and below the lower quartile, indicating low profitability. Gross Margin 11.1% and cost structure constraints are the main causes.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.8% | 5.4% (1.0%–8.6%) | -1.6pt |
Revenue growth is -1.6pt below industry median, driven by declines to major customer and flat processed foods sales.
※ Source: Company compilation
Strong cash generation and financial soundness: OCF ¥197.5B, OCF/EBITDA 0.94x, Free Cash Flow ¥59.9B covers dividends 1.5x, and interest-bearing debt ratio is low (Debt/EBITDA 0.68x, Interest Coverage 50.5x). Reduction of investment securities (-57.9%) and active investment in intangibles (+54.9%) indicate moves toward long-term capital efficiency improvement and efficiency-enhancing investments. The financial base is robust, enabling a balance of dividend sustainability and growth investment.
Structural issues of low profitability and volatility from Extraordinary items: Operating Margin 1.9% (industry median -3.1pt), Gross Margin 11.1% are low, and rise in SG&A ratio (+0.5pt) has revealed negative operating leverage. Impairment losses ¥27.2B and high tax rate (72.2%) led to significant Net Income decline and ROE at ~4.1% with weak capital efficiency. Next fiscal year may see Net Income improvement as Extraordinary losses shrink and tax rate normalizes, but fundamental improvement in core profitability (strengthening pricing power, product mix improvement) is key for sustained ROE improvement. Customer concentration (about 22% to a single major client) and segment concentration (Processed Foods contributing ~87% of profit) remain medium- to long-term challenges.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions should be made at your own responsibility and, where appropriate, after consulting professional advisors.