FUKUTOME MEAT PACKERS (2291) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of the fiscal year ending March 2026, the Company reported lower revenue and an expanded operating loss, making the decline in core earnings power the most important point. Revenue was ¥18.41B (-4.0% YoY), while Operating Income was ¥-0.48B, representing an expansion of the loss from ¥-0.33B in the previous year. Ordinary Income was ¥-0.45B (¥-0.30B in the previous year), while Net Income was ¥-0.13B, an improvement from ¥-0.32B in the previous year. However, the reduction in the net loss was attributable to ¥0.45B in extraordinary income, including a gain on the sale of investment securities, contrasting with the deterioration at the operating level.

Factors Affecting Performance

【Revenue】Revenue was ¥18.41B, down -4.0% YoY. By segment, ProcessedFood (Processed Foods Business) secured higher revenue of ¥8.08B (43.9% of total, +2.1% YoY), while Meat (Meat Business) continued to report lower revenue at ¥10.33B (56.1% of total, -8.3% YoY), driving the decline in consolidated revenue.

【Profit and Loss】In addition to a high-cost structure, with a cost-of-sales ratio of 85.0%, selling, general and administrative expenses increased to ¥3.25B (SG&A ratio of 17.6%, compared with 16.6% in the previous year), causing Operating Income to decline to ¥-0.48B from ¥-0.33B in the previous year. ProcessedFood maintained profitability with Operating Income of ¥0.05B (margin of 0.7%, down from 2.4% in the previous year), but reported lower profit. Meat reported an operating loss of ¥0.06B, with the loss narrowing from ¥-0.09B in the previous year but remaining in the red. Ordinary Income also deteriorated to ¥-0.45B; however, extraordinary income of ¥0.45B, including a ¥0.16B gain on the sale of investment securities, exceeded ¥0.10B in impairment losses, reducing the net loss to ¥-0.13B. Accordingly, the results can be characterized as lower revenue and lower profit on a core operating basis.

Segment Analysis

ProcessedFood (Processed Foods Business) reported Revenue of ¥8.08B (+2.1% YoY) and Operating Income of ¥0.05B (margin of 0.7%). Despite higher revenue, its margin declined from 2.4% in the previous year, resulting in a substantial decline in profit. Meat (Meat Business) reported Revenue of ¥10.33B (-8.3% YoY) and an operating loss of ¥0.06B. Although the loss narrowed from the operating loss of ¥0.09B in the previous year, the segment remained unprofitable. The two segments were approximately breakeven in aggregate (-¥0.006B), but Company-wide expenses increased to ¥0.47B (+8.8% YoY), resulting in a consolidated operating loss of ¥-0.48B. The disparity in profitability between segments and the need to control increases in Company-wide expenses remain key challenges.

Key Financial Indicators

【Profitability】The Operating Margin deteriorated to -2.6% from -1.7% in the previous year, while the gross margin was 15.0%, broadly unchanged from 14.9% in the previous year. The high cost-of-sales ratio remains a factor weighing on profitability.【Cash Flow Quality】The divergence between Ordinary Income and Net Income was attributable to net extraordinary gains of ¥0.35B. The reduction in the net loss resulted from a temporary factor rather than an improvement in recurring earnings power.【Investment Efficiency】ROE (annualized) was -8.3%, indicating that returns on capital remained negative.【Financial Soundness】The Equity Ratio was 14.8%, broadly unchanged from 14.7% in the previous year. Against total assets of ¥13.69B, net assets remained limited at ¥2.03B. Cash and deposits declined to ¥1.24B from ¥1.87B in the previous year, while short-term borrowings increased, indicating a level at which funding conditions require monitoring.

Cash Flow Analysis

Because cash flow statement data have not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits declined by ¥0.63B to ¥1.24B from ¥1.87B in the previous year, while short-term borrowings increased by ¥0.93B YoY to ¥5.85B, suggesting that funding needs arising from operating losses are being covered through borrowings. Accounts receivable and notes receivable increased substantially YoY to ¥3.67B, potentially indicating that an increase in working capital is putting pressure on liquidity. Current liabilities of ¥9.13B exceed current assets of ¥6.44B, indicating limited short-term funding capacity.

Earnings Quality

The earnings structure for the current period clearly distinguishes recurring earnings power from temporary factors. Ordinary Income was a loss of ¥-0.45B, representing the level of the Company’s core earnings power. Meanwhile, extraordinary income of ¥0.45B, including a ¥0.16B gain on the sale of investment securities, exceeded extraordinary losses of ¥0.10B, consisting of impairment losses, reducing the net loss to ¥-0.13B. As a result, there was an approximately ¥0.32B divergence between Ordinary Income and Net Income, and the improvement in the net loss was attributable to temporary gains from asset sales rather than an improvement in operating activities. Comprehensive income was positive at ¥0.18B, with a divergence of ¥0.31B from the net loss of ¥-0.13B due to the contribution of valuation differences on securities. This indicates that changes in the market value of held shares affected the quality of earnings and should be noted.

Performance Forecasts and Guidance

Against the full-year Revenue forecast of ¥24.00B, cumulative Q3 Revenue of ¥18.41B represents a progress rate of 76.7%, slightly exceeding the standard progress rate of 75%. Against the full-year operating loss forecast of ¥-0.70B, the cumulative Q3 loss was ¥-0.48B, implying a plan to limit the Q4 operating loss to approximately ¥-0.22B. The full-year Net Income forecast assumes a profit of ¥0.41B, but cumulative Q3 results showed a net loss of ¥-0.13B, requiring Net Income of approximately ¥0.54B in Q4. Although revenue progress is broadly in line with the plan, the full-year return to profitability depends more on the realization of extraordinary gains and losses than on the accumulation of core operating earnings.

Shareholder Returns

The Q2 dividend was ¥0 per share, with no dividend paid, and the full-year forecast is also a dividend of ¥0 per share. As operating and net losses continue, the Payout Ratio is effectively not calculable. In light of the financial position, including cash and deposits of ¥1.24B and short-term borrowings of ¥5.85B, capital allocation appears to be focused for the time being on maintaining liquidity and managing debt.

Risk Factors

1. Business Profitability Risk: The Meat Business reported revenue down -8.3% YoY and an operating loss of ¥0.06B, with losses continuing. Although the Processed Foods Business increased revenue, its segment profit margin declined from 2.4% to 0.7%; improving the profitability of both businesses remains a challenge.

2. Liquidity and Financial Structure Risk: Current assets of ¥6.44B compare with current liabilities of ¥9.13B, leaving the current ratio in the 70% range. Short-term borrowings increased to ¥5.85B (+18.8% YoY), while cash and deposits declined to ¥1.24B (-33.6% YoY), requiring continued monitoring of funding conditions.

3. Earnings Quality Risk: The primary reason for the reduction in the net loss was extraordinary income of ¥0.45B, including a gain on the sale of investment securities, while Ordinary Income remained a loss of ¥-0.45B. Achievement of the full-year Net Income plan depends substantially on the timing and scale of temporary gains and losses.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (food_beverage)

Profitability and Returns

Both the Operating Margin and Net Profit Margin are substantially below the industry median, placing the Company in the lower tier within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate also falls below the industry median, indicating that the Company is underperforming its industry peers in terms of top-line growth.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The operating loss expanded from ¥-0.33B in the same period of the previous year to ¥-0.48B, with an increase in SG&A expenses (+2.1% YoY) amid declining revenue indicating a decrease in fixed-cost absorption capacity.

2. The net loss narrowed to ¥-0.13B, but this was attributable to ¥0.45B in extraordinary income, including a gain on the sale of investment securities. This must be distinguished from the Company’s core earnings power, as indicated by Ordinary Income of ¥-0.45B.

3. The Processed Foods Business achieved higher revenue but reported a substantial decline in profit, while the Meat Business narrowed its loss despite lower revenue. The results indicate that rebuilding the earnings structure of both businesses is a key focus.

Theoretical Share Price (Reference Value)

Sensitivity: 793円–843円 for ±1% in the Cost of Equity, and 812円–826円 for ±0.1 in ω.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-08 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings flash report data. It does not recommend investment in any specific issue. 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 responsibility, after consulting with professionals as necessary.

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