| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2384.0B | ¥2349.7B | +1.5% |
| Operating Income | ¥75.0B | ¥54.7B | +37.2% |
| Ordinary Income | ¥79.3B | ¥60.6B | +31.0% |
| Net Income | ¥80.8B | ¥41.9B | +92.9% |
| ROE | 10.5% | 6.3% | - |
The fiscal year ended March 2026 posted Revenue of 2,383.96B (+34.26B YoY +1.5%), Operating Income of 75.04B (+20.35B YoY +37.2%), Ordinary Income of 79.32B (+18.76B YoY +31.0%), and Net Income Attributable to Owners of the Parent of 97.86B (+56.66B YoY +78.3%). Revenue recorded modest growth, while the operating margin improved materially to 3.1% (up 0.8pp from 2.3% last year) as price revisions and SG&A efficiency in the core Processed Foods segment were effective. The large increase in final profit was primarily driven by non-recurring items — Special Gains of 59.56B including a gain on sale of investment securities of 50.41B. Operating Cash Flow (OCF) was 105.36B (+95.3% YoY), exceeding Net Income, and financial soundness further improved as short-term borrowings were sharply reduced (82.75B → 10.50B).
[Revenue] Revenue was 2,383.96B (+1.5%), a modest increase. By segment, core Processed Foods led with 1,605.00B (+1.8%, 67.3% of total), of which Ham & Sausage was 744.99B and Prepared/Processed Foods 860.00B, both slightly up. The Meat business was 777.63B (+0.8%, 32.6% of total), essentially flat. Other was 9.72B (-3.8%). In Processed Foods, the penetration of price revisions and improved product mix contributed to revenue growth, while Meat was affected by raw material price fluctuations and volume stagnation. Company-wide revenue growth has decelerated from prior improvement trends; re-acceleration will likely require premiumization of the product portfolio and strengthened channel strategy.
[Profitability] Gross Profit was 395.53B (Gross Margin 16.6%, up 0.8pp from 15.8%), SG&A was 320.49B (SG&A Ratio 13.4%, down 0.1pp from 13.5%), resulting in Operating Income of 75.04B (Operating Margin 3.1%, up 0.8pp from 2.3%) — a substantial increase. By segment, Processed Foods Operating Income was 67.88B (+37.3%, margin 4.2%) driving most of the company-wide gain; Meat expanded to 6.89B (+39.2%, margin 0.9%). Non-operating items included dividend income 4.06B, interest income 0.17B, and equity-method investment income 0.22B, while interest expense was 2.71B, keeping Ordinary Income at 79.32B (+31.0%). In extraordinary items, Special Gains of 59.56B included gain on sale of investment securities 50.41B and gain on sale of fixed assets 8.13B; Special Losses totaled 8.27B including impairment losses of 3.24B. Profit before tax was 130.61B; after corporate taxes of 32.25B, Net Income Attributable to Owners of the Parent was 97.86B (+78.3%). The large jump in Net Income was largely due to one-off Special Gains, so sustainability of operating improvements will be a key focus next year. Conclusion: revenue and profit both increased.
The Processed Foods business recorded Revenue of 1,605.00B (+1.8%) and Operating Income of 67.88B (+37.3%), with a margin of 4.2% (up 1.1pp from 3.1%). Ham & Sausage was 744.99B (+1.9%) and Prepared/Processed Foods was 860.00B (+1.7%), both up. Penetration of price revisions and improved product mix lifted gross margins, and combined with disciplined SG&A control delivered substantial profit growth. Processed Foods accounts for approximately 90% of company Operating Income and is the core earnings driver. The Meat business posted Revenue of 777.63B (+0.8%), Operating Income of 6.89B (+39.2%), margin 0.9% (up 0.3pp from 0.6%). Revenue was only slightly up, but procurement cost optimization and improved sales efficiency expanded profits; however, margin remains below 1%, diluting company-wide Operating Margin. Other business recorded Revenue of 9.72B (-3.8%), Operating Income of 0.26B (-13.3%), margin 2.7%, including insurance agency services, but scale and contribution are small.
[Profitability] Operating Margin improved to 3.1% from 2.3% (up 0.8pp); Gross Margin 16.6% (up 0.8pp) and SG&A Ratio 13.4% (down 0.1pp) both contributed. ROE was 12.7% versus 8.6% prior year, indicating efficient use of equity. However, Operating Margin at 3.1% is 1.9pp below the industry median of 5.0%, reflecting relative weakness in profitability.
[Cash Quality] OCF was 105.36B, 1.08x of Net Income 97.86B, generally favorable, but OCF/EBITDA was 0.85x (EBITDA 124.15B, computed as Operating Income 75.04B + Depreciation 49.11B), below 0.9x, indicating working capital absorption constrains cash generation. The accrual ratio is -0.6%, conservative, confirming cash backing of profits.
[Investment Efficiency] Total Asset Turnover was 1.91x, maintaining high efficiency that supports earnings despite modest revenue growth. Capital expenditure was 70.71B, 1.44x depreciation 49.11B, indicating continued growth investment.
[Financial Soundness] Equity Ratio was 61.1% (up 6.7pp from 54.4%), current ratio 165.6%, quick ratio 128.7% — financial position is sound. Debt/EBITDA was 0.48x, Debt/Capital 7.2%, conservative, and Interest Coverage was 27.69x (calculated as Operating Income + non-operating income ÷ interest expense), indicating minimal interest burden. Short-term borrowings fell substantially from 82.75B to 10.50B, reducing maturity mismatch risk.
OCF was 105.36B (+95.3% YoY), derived from Profit Before Tax 130.61B plus non-cash items (Depreciation 49.11B, impairment losses 3.24B), and working capital movements (trade receivables -9.13B, inventories +4.55B, trade payables -6.51B) and corporate tax payments -12.65B. OCF subtotal (before working capital changes) was 115.79B, indicating room for improvement in working capital management. Investing Cash Flow turned positive at +3.67B, as acquisitions of tangible/intangible fixed assets -70.71B were more than offset by proceeds from sale of fixed assets 16.53B and sale of investment securities 61.36B. Free Cash Flow was 109.03B (OCF 105.36B + Investing CF 3.67B), high but substantially supported by asset sales. Financing Cash Flow was -100.91B, driven by net decrease in short-term borrowings -72.25B, repayment of long-term borrowings -26.46B, dividend payments -12.19B, and share buybacks -6.92B. Lease liability repayments -7.30B were also included, reducing financial leverage while maintaining shareholder returns. Cash and cash equivalents increased from 89.83B at the beginning of the period to 97.96B at year-end, preserving liquidity.
Ordinary Income of 79.32B versus Net Income Attributable to Owners of the Parent of 97.86B (+23% upside) was mainly due to Special Gains of 59.56B (including 50.41B gain on sale of investment securities), indicating heavy reliance of final profit on one-off items. Non-operating income was 8.04B (0.34% of Revenue), modest, mainly dividend income 4.06B and equity-method investment income 0.22B, implying high dependence on core operations. Comprehensive income was 116.27B, exceeding Net Income 97.86B; Other Comprehensive Income of 18.41B comprised actuarial adjustments related to retirement benefits 14.09B, valuation difference on available-for-sale securities 3.20B, and deferred hedge gains/losses 0.40B. Accrual ratio -0.6% and OCF/Net Income 1.08x are healthy, indicating sound cash quality of accounting accruals, but OCF/EBITDA 0.85x shows working capital absorption affecting cash conversion; focus on receivables and inventory turnover efficiency is necessary. EBITDA margin was 5.2% (EBITDA 124.15B ÷ Revenue 2,383.96B), at the lower end of industry norms. Goodwill amortization impact is minor with intangible assets of 6.43B. For sustainable earnings assessment, trend in operating and ordinary profit excluding one-off special gains is crucial.
Guidance for the fiscal year ending March 2027 is Revenue 2,450.00B (+2.8% YoY), Operating Income 80.00B (+6.6%), Ordinary Income 84.00B (+5.9%), and Net Income Attributable to Owners of the Parent 64.00B (-34.6%). Modest operating profit growth is expected, but final profit is projected lower reflecting the absence of current-period Special Gains such as the 50.41B gain on sale of investment securities, resulting in conservative guidance. EPS forecast is 263.51 yen versus 399.89 yen actual this period. Progress rates are 93.8% for Operating Income and 94.4% for Ordinary Income, steady, but persistence of operating-level improvements will be key next year. Dividend forecast is annual 40 yen (assuming introduction of interim dividend), consistent with next-year profit expectations.
Year-end dividend is 70 yen. Total dividends against Net Income Attributable to Owners of the Parent 97.86B results in aggregate dividends of approximately 17.11B (estimated using shares outstanding 26,505,581 minus treasury shares 2,218,252 = 24,287,329 shares), implying a Payout Ratio of approximately 17.5%, conservative. Note the dividend payout ratio disclosed in the earnings release of 22.5% uses a different calculation basis. Share buybacks of 6.92B were executed; combined with dividends, the Total Return Ratio is approximately 24.5%. Dividend coverage relative to Free Cash Flow (109.03B) is 6.4x, indicating high sustainability. Even after CapEx of 70.71B, the company can fund dividends and buybacks, maintaining financial soundness while returning capital to shareholders. Next-year dividend forecast of 40 yen reflects adjustment anticipating the drop in one-off gains.
Business Concentration Risk: The Processed Foods segment accounts for 67.3% of Revenue and about 90% of Operating Income, so delays in price pass-through or demand declines in this segment would directly impact company performance. With Gross Margin 16.6% and high commodity characteristics, rapid price pass-through is essential amid rising raw material, energy, or logistics costs; delays would quickly compress margins.
Working Capital Efficiency Risk: OCF/EBITDA of 0.85x is below 0.9x, and movements of trade receivables -9.13B, inventories +4.55B, and trade payables -6.51B have constrained OCF. If accounts receivable turnover or inventory management do not improve, cash generation may lag profit growth, affecting capacity for investments and shareholder returns.
Sustainability of Profit Improvement Risk: This period’s large increase in Net Income depended heavily on Special Gains of 59.56B (gain on sale of investment securities 50.41B), which is unlikely to recur at the same level next year. Operating Margin of 3.1% is 1.9pp below the industry median of 5.0%, and Meat segment margin of 0.9% dilutes the company average. If operating profit improvements do not progress as planned, downside risk to guidance exists.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.1% | 5.0% (3.3%–8.4%) | -1.9pt |
| Net Margin | 3.4% | 3.2% (1.9%–6.6%) | +0.2pt |
Operating Margin lags the industry median by 1.9pp, indicating remaining profitability challenges, while Net Margin exceeds the median by 0.2pp, reflecting positive contribution from special gains at the final profit level.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.5% | 5.4% (1.0%–8.6%) | -3.9pt |
Revenue growth rate is 3.9pp below the industry median, indicating a slower growth pace.
※ Source: Company aggregation
An improvement trend at the operating level is evident, but Gross Margin 16.6% and Operating Margin 3.1% remain below industry norms; the commodity nature of the cost structure and the low-margin Meat segment suppress company-wide profitability. Medium-term improvement hinges on expanding premium SKUs in Processed Foods, continuing pricing strategy, and manufacturing/logistics efficiency gains.
The large increase in Net Income this period is heavily attributable to Special Gains of 59.56B including the 50.41B gain on sale of investment securities, a one-off contribution. Next year will test the sustainability of improvements at the operating and ordinary income levels. Financial position is robust with Equity Ratio 61.1% and Debt/EBITDA 0.48x; the substantial reduction in short-term borrowings has lowered maturity mismatch risk, preserving capacity to balance growth investment and shareholder returns.
OCF/EBITDA 0.85x indicates room to improve working capital efficiency; enhancement of receivables and inventory turnover is critical to strengthen cash generation. Payout Ratio 17.5% and Total Return Ratio 24.5% are conservative, and FCF coverage of 6.4x suggests high sustainability, but the next-year dividend forecast of 40 yen reflects adjustment for the absence of one-off gains; stable core-cash generation will determine dividend policy sustainability.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the Company based on publicly disclosed earnings data. Investment decisions are the responsibility of the investor; please consult a professional advisor as needed before making any investment decisions.