MARUDAI FOOD CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Although the Company secured higher revenue in the quarter, operating income and subsequent profit measures declined by double digits, resulting in earnings pressured by rising costs. Revenue was ¥605.3B (+1.9% YoY), operating income was ¥13.4B (-33.4%), ordinary income was ¥13.9B (-31.4%), and net income attributable to owners of the parent was ¥10.2B (-28.5%). The gross profit margin declined to 15.5% from 16.3% in the previous year, while the SG&A ratio increased to 13.2% from 12.9%. As cost increases exceeded revenue growth (+1.9%), the operating margin contracted to 2.2% from 3.4%.

Factors Affecting Earnings

【Revenue】Revenue was ¥605.3B, representing a 1.9% YoY increase. While the Processed Foods Business remained almost flat at ¥402.4B (66.5% of total revenue, +0.7% YoY), the Meat Business grew primarily on higher volume to ¥202.6B (33.5% of total revenue, +4.5% YoY), driving overall revenue growth.

【Profit and Loss】The gross profit margin declined to 15.5% from 16.3% in the previous year, suggesting increases in raw material, energy, and logistics costs. SG&A expenses were ¥80.1B (+4.8% YoY), and the SG&A ratio rose to 13.2% from 12.9%. Cost growth exceeding revenue growth directly led to the decline in the operating margin to 2.2% from 3.4%. Non-operating income and expenses were relatively small, at income of ¥1.4B and expenses of ¥0.9B, respectively, leaving ordinary income at ¥13.9B (-31.4% YoY). Extraordinary items were also limited, with gains of ¥0.3B and losses of ¥0.1B. Against profit before tax of ¥14.1B, income taxes and other taxes of ¥3.9B (effective tax rate of 27.8%) were recorded, resulting in net income of ¥10.2B (-28.5% YoY). Higher revenue but lower profit.

Segment Analysis

The core Processed Foods Business reported revenue of ¥402.4B (66.5% of total revenue, +0.7% YoY) and operating income of ¥12.7B (-28.7% YoY), with its operating margin declining to 3.2% from 4.5%. The Meat Business reported revenue of ¥202.6B (33.5% of total revenue, +4.5% YoY) and operating income of ¥0.8B (-64.6% YoY), with its operating margin contracting sharply to 0.4% from 1.1%. Other Businesses (including insurance agency services) generated revenue of ¥2.4B and recorded an operating loss of ¥0.1B. While both reported segments secured revenue growth, margins declined across both businesses, indicating that higher raw material and logistics costs pressured margins, particularly in the Meat Business.

Key Financial Indicators

【Profitability】The operating margin declined to 2.2% from 3.4%, and the net profit margin declined to 1.7% from 2.4%; ROE was 1.4%. 【Cash Quality】Operating cash flow (OCF) was -¥8.5B, below net income of ¥10.2B, as increases in inventory and accounts receivable delayed cash conversion. 【Investment Efficiency】Capital expenditures of ¥18.4B were 1.55 times depreciation and amortization expense of ¥11.9B, maintaining investment at approximately the previous year’s level. 【Financial Soundness】The equity ratio was 58.9% (61.1% in the previous year), while the current ratio was 151.3% and the quick ratio was 115.4%, indicating secured short-term liquidity. However, short-term borrowings increased by +364.8% to ¥48.8B from ¥10.5B in the previous year, raising the Company’s reliance on short-term funding.

Cash Flow Analysis

Operating cash flow was -¥8.5B, a significant deterioration from +¥34.3B in the previous year, resulting in negative cash generation below net income of ¥10.2B. The primary factors were increases of ¥27.9B in inventories and ¥16.4B in accounts receivable. Although the ¥32.7B increase in accounts payable partially offset these outflows, income taxes and other taxes paid of ¥27.6B further increased cash outflows. Investing cash flow was -¥17.0B; capital expenditures of ¥18.4B were 1.55 times depreciation and amortization expense of ¥11.9B, keeping investment at approximately the previous year’s level. Free cash flow was negative at -¥25.4B, while financing cash flow was positive at +¥11.2B, primarily due to an increase in short-term borrowings (+¥38.3B). Although the Company paid dividends of ¥16.3B and repurchased ¥7.8B of treasury stock, these shareholder returns were effectively supplemented through short-term borrowings.

Earnings Quality

Current-period profit was primarily generated by recurring operating activities, while the scale of temporary factors was limited, with extraordinary gains of ¥0.3B and extraordinary losses of ¥0.1B. Non-operating income and expenses were income of ¥1.4B and expenses of ¥0.9B, respectively, equivalent to approximately 0.2% of revenue, indicating limited reliance on non-recurring income. The difference between ordinary income of ¥13.9B and net income of ¥10.2B was primarily attributable to the ¥3.9B tax burden, resulting in an approximate effective tax rate of 27.8%. Meanwhile, OCF of -¥8.5B was below net income, and the expansion of working capital through increases in inventories and accounts receivable delayed cash conversion of earnings. This requires monitoring from an earnings-quality perspective.

Earnings Forecasts and Guidance

Against the full-year plan, revenue progress was 24.7% (¥605.3B/¥2450.0B), approximately in line with the standard quarterly progress rate of 25%. In contrast, operating income progress was 16.8% (¥13.4B/¥80.0B), ordinary income progress was 16.5% (¥13.9B/¥84.0B), and net income progress was 15.9% (¥10.2B/¥64.0B), representing a slow start below the standard progress rate on the profit front. No revisions were made to the earnings forecast. Against full-year growth plans of +6.6% for operating income and +5.9% for ordinary income, improvement in profitability from the second half onward will be a prerequisite for achieving the plan. The dividend forecast was also unchanged, with the annual dividend maintained at ¥80 per share.

Shareholder Returns

The full-year dividend forecast is ¥80 per share, implying an expected payout ratio of approximately 30.0% against forecast EPS of ¥266.8. Dividend payments in Q1 were ¥16.3B (¥11.7B in the previous year), an increase from the previous year reflecting the dividend increase in the preceding fiscal year. The Company conducted ¥7.8B in treasury stock repurchases and continues shareholder returns in combination with dividends. However, as free cash flow was negative at -¥25.4B in the quarter, the fact that the funding for shareholder returns was primarily supplemented by short-term borrowings and other financing requires monitoring.

Risk Factors

1. Raw Material and Cost Inflation and Profitability Decline Risk: The gross profit margin declined to 15.5% from 16.3% in the previous year, while the operating margin of 2.2% was 3.3pt below the industry median of 5.5% (based on the Company’s analysis). Strengthening the ability to pass through increases in raw material and logistics costs will be a key focus going forward.

2. Working Capital Expansion and Cash Generation Risk: Inventories increased to ¥142.7B from ¥127.0B in the previous year, and accounts receivable increased to ¥275.8B from ¥259.6B. OCF deteriorated to -¥8.5B from +¥34.3B in the previous year. The pace of reductions in inventories and accounts receivable will influence future cash flow trends.

3. Reliance on Short-Term Funding Risk: Short-term borrowings increased by +364.8% to ¥48.8B from ¥10.5B in the previous year, creating a funding structure that uses borrowings to cover free cash flow of -¥25.4B. Sensitivity to changes in the interest-rate environment may have increased.

Industry Benchmark (Reference; Based on the Company’s Analysis)

Industry Benchmark (food_beverage)

Profitability and Returns

Both the operating margin and net profit margin were below the industry median, placing profitability at a relatively low level within the industry.

Growth and Capital Efficiency

The revenue growth rate was also below the industry median, indicating that top-line growth was relatively moderate within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The operating margin declined to 2.2% from 3.4%, falling 3.3pt below the industry median of 5.5% (based on the Company’s analysis). The decline in the gross profit margin (15.5%, compared with 16.3% in the previous year) coincided with an increase in the SG&A ratio (13.2%, compared with 12.9% in the previous year), and revenue growth (+1.9%) was insufficient to absorb the increase in costs.

2. OCF was -¥8.5B, below net income of ¥10.2B, as increases in inventories and accounts receivable delayed cash conversion. Free cash flow was negative at -¥25.4B, with cash management supplemented by an increase in short-term borrowings (+364.8%).

3. Progress against the full-year plan was broadly standard for revenue at 24.7%, but profit progress was a slow start, with operating income at 16.8% and net income at 15.9%. Both the earnings and dividend forecasts remained unchanged, and progress in improving profitability in the second half will be a key point to monitor.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥2,950–¥3,123 at cost of equity ±1%; ¥3,032–¥3,036 at ω±0.1.

Notes:

• 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 were used (there is a timing difference from the full-year forecast).

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings report data. It does not recommend investment in any specific security. 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 you should consult a professional adviser as necessary.

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