NH Foods (2282) FY2026 Q3 Earnings Report

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Executive Summary

The Company posted higher revenue and profit, with profit growth exceeding revenue growth, indicating an improving profitability trend. Revenue was ¥1兆1,085.9B (前年比+5.1%), Net Income attributable to owners of the parent was ¥335.8B (同+15.2%), and Profit Before Tax was ¥536.6B (同+23.9%). The primary drivers appear to have been higher revenue and improved profit margins in the Meat Business Division, with price pass-through and cost management proving effective.

Factors Affecting Business Performance

【Revenue】Revenue was ¥1,108.6B (前年比+5.1%). By segment, the Meat Business Division led overall performance with ¥742.8B (構成比67.0%、YoY+7.4%), while the Ballpark Business also performed strongly at ¥24.9B (同+16.5%). Meanwhile, the Processed Foods Business remained almost flat at ¥339.6B (同-0.2%).

【Profit and Loss】Consolidated Operating Income (total segment profit) was ¥581.2B (前年比+45.4%), Profit Before Tax was ¥536.6B (同+23.9%), and Net Income attributable to owners of the parent was ¥335.8B (同+15.2%). The main driver of profit growth was the Meat Business Division, which improved significantly, with Operating Income of ¥464.3B (同+69.0%、利益率6.3%). In contrast, the Processed Foods Business recorded ¥69.9B (同-30.7%、利益率2.1%), with its profit margin declining, highlighting divergent performance among the businesses. Equity in earnings of affiliates resulted in a loss of ¥11.1B, representing a minor downward factor for Profit Before Tax. Both revenue and profit exceeded the previous year, resulting in higher revenue and higher profit.

Segment Analysis

The Meat Business Division recorded revenue of ¥742.8B (構成比67.0%、YoY+7.4%) and Operating Income of ¥464.3B (同+69.0%), representing substantial profit growth, while its profit margin improved to 6.3%. The Processed Foods Business Division recorded almost flat revenue of ¥339.6B (構成比30.7%、YoY-0.2%), but Operating Income declined to ¥69.9B (同-30.7%), with its profit margin falling to 2.1%. Although the Ballpark Business is small in scale, with revenue of ¥24.9B (構成比2.2%), it is a highly profitable segment, recording Operating Income of ¥84.0B and a profit margin of 33.7%; its profit growth of 同+44.2% contributed to overall profit. Among the segments, quantitative expansion and price pass-through in the Meat Business and the high profitability of the Ballpark Business boosted consolidated profit, while increases in costs and SG&A expenses weighed on profit in the Processed Foods Business.

Key Financial Indicators

【Profitability】The gross profit margin of 17.8%, Operating Income margin (based on segment profit) of 5.2%, and Net Income margin of 3.0% showed an improving trend from the previous year, while the Profit Before Tax margin rose to 4.8% (前年4.1%).【Cash Flow Quality】Operating Cash Flow (OCF) was ¥452.2B, reaching 1.35 times Net Income of ¥335.8B; the accrual ratio was negative, indicating favorable cash conversion of earnings.【Investment Efficiency】Annualized ROE was 8.6% and total asset turnover was 1.10 times. Together with an Equity Ratio of 53.6%, these figures indicate a balanced combination of capital efficiency and financial soundness.【Financial Soundness】The current ratio was approximately 182.8%, the debt-to-equity ratio was 0.81 times, and total interest-bearing debt of ¥237.0B exceeded cash and cash equivalents of ¥63.1B; however, the burden is not excessive in light of the Company’s OCF generation capacity.

Cash Flow Analysis

Operating Cash Flow was ¥452.2B (前年比+40.6%), representing 1.35 times Net Income of ¥335.8B and indicating strong cash backing for earnings. An increase in trade receivables was a ¥559.7B use of funds, while an increase in trade payables of ¥186.1B and a decrease in inventories of ¥53.9B supported OCF. Investing Cash Flow was an outflow of ¥199.4B, primarily due to ¥240.7B in acquisitions of property, plant and equipment, and was funded within the range of OCF. As a result, Free Cash Flow was ¥252.8B. Financing Cash Flow was an outflow of ¥374.1B, mainly due to ¥300.0B in share repurchases and ¥134.6B in dividend payments. Cash and cash equivalents decreased by ¥84.5B from the beginning of the period to ¥631.1B; however, no significant funding concerns are apparent given the Company’s OCF generation capacity and liquidity level.

Earnings Quality

The growth of Profit Before Tax of ¥536.6B (前年比+23.9%) significantly exceeded revenue growth (+5.1%), primarily due to the recurring factor of improved Operating Income in the Meat Business Division. Among non-operating items, financial income of ¥29.2B and financial expenses of ¥28.8B almost offset each other, while the difference between other income of ¥120.2B and other expenses of ¥111.7B was also limited to ¥8.5B, indicating low reliance on temporary extraordinary gains and losses. Equity in earnings of affiliates resulted in a loss of ¥11.1B, expanding from a loss of ¥7.9B in the previous year, and fluctuations in investee performance slightly reduced Profit Before Tax. As OCF reached 1.35 times Net Income and the accrual ratio was negative, the gap between accounting profit and cash generation is small, and earnings quality can generally be assessed as favorable. Comprehensive income was ¥507.1B, exceeding Net Income of ¥358.8B, with foreign currency translation adjustments of ¥91.8B serving as an upward factor.

Earnings Forecast and Guidance

Progress toward the Full-Year earnings forecast shows that revenue reached 77.0% of the forecast of ¥1兆4,400.0B, while actual EPS of ¥343.14 exceeded the forecast EPS of ¥355.76円 at a pace that was above the standard progress rate of 75% as of Q3. Progress toward the forecast Net Income attributable to owners of the parent of ¥340.0B reached 98.8%, indicating favorable progress toward achieving the Full-Year forecast. No revisions were made to either the earnings forecast or the dividend forecast during the current quarter.

Shareholder Returns

The annual dividend forecast is ¥160, representing an expected increase from the previous year’s dividend of ¥135. Dividend payments for the cumulative Q3 period amounted to ¥134.6B, and the Payout Ratio based on the Full-Year Net Income forecast of ¥340.0B is approximately 45.0%. In addition, the Company conducted share repurchases of ¥300.0B, bringing total shareholder returns, including dividends and share repurchases, to ¥434.6B. Compared with Free Cash Flow of ¥252.8B for the cumulative Q3 period, total shareholder returns exceeded FCF, indicating an active shareholder return policy.

Risk Factors

1. Raw material and energy cost fluctuation risk: The cost of sales ratio is high at 82.2%, and under a structure with a gross profit margin of 17.8%, increases in livestock products, feed, and logistics costs could readily pressure profit margins. The Operating Income margin of the Processed Foods Business declined to 2.1% (前年比-30.7%), with differences in the ability to pass through costs appearing as profitability disparities among the segments.

2. Working capital risk due to an increase in trade receivables: Trade and other receivables increased by ¥559.7B, weighing on OCF. If the accumulation of receivables accompanying revenue expansion continues, it could lead to a widening divergence between profit and cash flow.

3. Risk of imbalance between shareholder returns and Free Cash Flow: Total shareholder returns of ¥434.6B, comprising dividends of ¥134.6B and share repurchases of ¥300.0B, exceeded cumulative Q3 Free Cash Flow of ¥252.8B. If shareholder returns at this level continue, maintaining OCF and improving working capital will be important.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (food_beverage)

Profitability and Returns

The Net Income margin is slightly below the industry median, positioning the Company from the middle to slightly below the middle within the industry.

Growth and Capital Efficiency

The Revenue growth rate exceeds the industry median, demonstrating top-line growth in the upper tier of the industry.

※Source: Company research

Key Points from the Earnings Results

1. Net Income increased 15.2% and Profit Before Tax increased 23.9%, compared with revenue growth of 5.1%. The fact that profit is expanding at a pace exceeding revenue growth is noteworthy as a qualitative change in the earnings structure. In particular, the improvement in the Meat Business Division’s profit margin (6.3%、前年比+69.0%) is driving overall performance.

2. Progress toward the Full-Year Net Income forecast reached 98.8%, meaning that only a small amount of profit is required in Q4. However, the decline in the Processed Foods Business’s profit margin (2.1%) requires continued monitoring as a persistent profitability disparity among the segments.

3. Total shareholder returns of ¥434.6B, combining dividends and share repurchases, exceeded Free Cash Flow of ¥252.8B. Whether an active capital return policy can continue will depend on future OCF and the collection trends for trade receivables.

Theoretical Share Price (Reference Value)

Sensitivity: ¥5,132〜¥5,428 at Cost of Equity ±1%, and ¥5,264〜¥5,285 at ω±0.1.

Notes:

• As progress toward the Full-Year Net Income forecast (99%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with leading progress tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• As 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 from the Full-Year forecast).

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

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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, where necessary, after consulting with a professional advisor.

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