| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1236.0B | ¥1138.4B | +8.6% |
| Operating Income | ¥28.3B | ¥18.2B | +55.1% |
| Ordinary Income | ¥31.9B | ¥19.2B | +66.5% |
| Net Income | ¥22.1B | ¥22.3B | -0.9% |
| ROE | 1.6% | 1.6% | - |
For the fiscal year ending March 2027 Q1, Revenue was ¥1236.0B (YoY +¥97.6B +8.6%), Operating Income was ¥28.3B (YoY +¥10.1B +55.1%), Ordinary Income was ¥31.9B (YoY +¥12.8B +66.5%), and Net Income was ¥22.1B (YoY -¥0.2B -0.9%). Gross margin improved to 11.2% (prior year 10.8%) — a 36bp improvement — driven by price pass-through and yield improvements in the core meat manufacturing & wholesale business. SG&A ratio was contained to 8.9% (prior year 9.2%), lifting operating margin to 2.3% (prior year 1.6%) — +69bp. While increases persisted through ordinary income, Net Income was flat due to a reduction in non-recurring gains (¥7.6B, prior year ¥14.4B) and a higher effective tax rate (43.2%). Progress against full-year plan stands at Revenue 24.7%, Operating Income 28.3%, Ordinary Income 29.0%, Net Income 31.7%, exceeding the standard quarterly pace (25%) for profit items and indicating a front-loaded trend. Cash declined to ¥277.6B (-¥99.9B -26.5%) due to increased working capital (Accounts Receivable +¥53.2B, Inventory +¥62.4B); short-term borrowings were increased to ¥148.4B (+¥62.5B +72.8%) to cover funding needs. Improving cash efficiency remains a key issue.
[Revenue] Revenue of ¥1236.0B (YoY +8.6%) was led by the core Meat Manufacturing & Wholesale business at ¥1164.3B (+8.9%). Meat Retail amounted to ¥62.3B (+0.2%) and Meat Dining (restaurants) ¥26.9B (+7.2%). Other activities such as refrigerated warehousing were ¥4.4B (+9.8%). Segmental revenue composition: Meat Manufacturing & Wholesale 94.2%, Retail 5.0%, Dining 2.2%, Other 0.4%, indicating high dependence on manufacturing & wholesale. The revenue increase was mainly due to penetration of price pass-through in manufacturing & wholesale and higher sales volumes. Gross profit was ¥138.3B (gross margin 11.2%, up 36bp from prior year 10.8%), demonstrating clear margin improvement.
[Profitability] Operating Income of ¥28.3B (+55.1%) rose significantly on improved gross margin and restrained SG&A growth (+4.7%). SG&A ratio fell to 8.9% (prior year 9.2%), enabling operating leverage. Non-operating income was ¥6.2B (dividends received ¥1.8B, interest income ¥1.1B, etc.), and non-operating expenses were ¥2.6B (interest paid ¥1.8B), yielding Ordinary Income of ¥31.9B (+66.5%) and an ordinary margin of 2.6% (prior year 1.7%, +90bp). Extraordinary gains contracted to ¥7.6B (primarily gain on sale of investment securities) from prior year ¥14.4B (primarily fixed asset sales). Extraordinary losses were minor at ¥0.6B (impairment losses ¥0.5B, prior year ¥0.1B). Profit before tax was ¥38.9B (+16.6%), but corporate taxes amounted to ¥16.8B (effective tax rate 43.2%), resulting in heavy tax burden. After deducting non-controlling interests of ¥1.5B, Net Income was ¥22.1B (-0.9%), slightly down. In summary, revenue and operating/ordinary income increased, but Net Income stagnated due to the drop in extraordinary gains and higher tax burden.
The Meat Manufacturing & Wholesale business reported Revenue ¥1164.3B (+8.9%), Operating Income ¥26.1B (+55.4%), with margin improving to 2.2% (prior year 1.6%). Price pass-through and yield improvements contributed to margin expansion. Meat Retail reported Revenue ¥62.3B (+0.2%), Operating Income ¥3.7B (+5.1%), margin 5.9% (prior year 5.7%) — slight improvement. Meat Dining reported Revenue ¥26.9B (+7.2%), Operating Income ¥1.6B (+38.1%), margin 6.1% (prior year 4.7%) — substantial profitability improvement. Other segments reported Revenue ¥4.4B (+9.8%), Operating Income ¥0.4B (0.0%), margin 9.8% — stable. Margins vary across segments, with Retail and Dining showing higher profitability that complements the low-margin Manufacturing & Wholesale. All segments achieved revenue and profit growth, supporting the company-wide operating profit improvement trend.
[Profitability] Operating margin 2.3% (prior year 1.6%, +69bp), Ordinary margin 2.6% (prior year 1.7%, +90bp) — profitability at operating stage improved. Net margin 1.8% (prior year 2.0%, -16bp) declined due to reduced extraordinary gains and a higher effective tax rate of 43.2% (prior year 33.1%). Gross margin 11.2% (prior year 10.8%, +36bp) reflects price pass-through and yield improvements; SG&A ratio 8.9% (prior year 9.2%, -30bp) reflects contained SG&A growth. [Cash Quality] Days Inventory Outstanding 121 days (prior year 96 days, +25 days), DSO 165 days (prior year 162 days, +3 days) — longer cash conversion. CCC 199 days, indicating deterioration in working capital efficiency and a slow cash conversion cycle. Cash and deposits ¥277.6B (prior year ¥377.6B, -26.5%) decreased due to working capital build and investment outflows. [Investment Efficiency] ROE 1.6% (annualized) remains low; Total Asset Turnover 0.483x (prior year 0.453x) improved. Construction in progress (WIP) ¥346.6B accounts for 39.6% of tangible fixed assets of ¥874.5B; timing of investment commercialization is key for ROIC improvement. [Financial Soundness] Equity ratio 54.5% (prior year 55.9%), D/E 0.84x — conservative. Current ratio 201.5% (prior year 220.2%), Quick ratio 151.4% (prior year 172.5%) — adequate liquidity. Interest coverage 16.1x (prior year 13.4x) indicates good interest resilience. Increase in short-term borrowings to ¥148.4B (+72.8%) reflects higher funding needs for working capital; long-term borrowings ¥379.4B (-6.0%) slightly down, limiting refinancing risk.
Cash flow statement details are not disclosed. From balance sheet movements, cash and deposits decreased by ¥99.9B to ¥277.6B; Accounts Receivable increased by ¥53.2B to ¥559.9B; Inventory increased by ¥62.4B to ¥363.6B, indicating working capital absorption tied to revenue growth. Accounts Payable increased by ¥60.4B to ¥360.4B, showing some extension of payment terms, but not sufficient to fully cover the increases in receivables and inventory, leading to a ¥62.5B increase in short-term borrowings to ¥148.4B. Construction in progress remains high at ¥346.6B, indicating continued cash outflows for investment. Investment securities sold generated a gain of ¥7.6B, while investment securities on the balance sheet declined to ¥157.5B (-¥36.2B). Free cash flow is constrained by the dual burden of working capital build and capital expenditure; inventory reduction and stronger credit control are key to restoring cash generation.
Core recurring earnings are centered on Operating Income ¥28.3B. Non-operating income ¥6.2B (dividends received ¥1.8B, interest income ¥1.1B, foreign exchange gains ¥0.5B, etc.) is limited at about 0.5% of Sales. One-off items consist of Extraordinary Gains ¥7.6B (mostly gain on sale of investment securities), down from prior year Extraordinary Gains ¥14.4B which included fixed asset sale gains of ¥13.4B. Extraordinary losses were minor at ¥0.6B (impairment losses ¥0.5B). Despite improvements at operating and ordinary stages, Net Income remained flat due to the fall in extraordinary gains and a high effective tax rate of 43.2%. The gap between Operating Income and Net Income is mainly explained by higher tax burden and variability in one-off gains; underlying earning power shows an improving trend. However, the buildup in working capital (DSO 165 days, DIO 153 days, CCC 199 days) suggests increased reliance on accruals and warrants cautious monitoring from a cash conversion perspective.
Full-year plan: Revenue ¥5000.0B (+5.9%), Operating Income ¥100.0B (-4.5%), Ordinary Income ¥110.0B (-6.2%), Net Income ¥65.0B (EPS ¥205.22), Dividend ¥55. Q1 progress rates: Revenue 24.7%, Operating Income 28.3%, Ordinary Income 29.0%, Net Income 31.7% (quarterly EPS ¥65.03), showing profit items ahead by +3–+7 points versus the standard 25% pace. The front-loading in Operating and Ordinary results is attributable to improved gross margin, controlled SG&A growth, and cross-segment margin improvement. Full-year guidance still projects declines in Operating and Ordinary Income, but if Q1 momentum persists there is upside potential. Conversely, expansion of working capital and the timing of amortization/transition of Construction in Progress are key to meeting the plan. No earnings revisions were announced during the quarter.
Annual dividend plan is ¥55 (year-end lump sum, payout ratio 26.8%), an increase of ¥3 from prior year ¥52. Annualizing Q1 Net Income ¥22.1B gives an annualized ¥88.4B; total dividends of approximately ¥17.4B imply a payout ratio of about 19.7% on that basis, indicating conservative capacity. Dividend policy is not specified, but based on the full-year Net Income plan of ¥65.0B, total dividends of ¥17.4B correspond to a 26.8% payout ratio and are maintainable. However, cash flexibility depends on investment progress and success in inventory reduction given the working capital and large WIP. No share buyback was disclosed, so Total Return Ratio equals the payout ratio. The payout ratio is below the industry average (30–40%), indicating continued conservative capital allocation.
Deterioration in working capital efficiency: CCC 199 days, DSO 165 days, DIO 153 days indicate prolonged receivables and inventory. Risks of inventory valuation losses and credit losses are rising, which may impair cash generation.
Low gross margin structure and price pass-through risk: Gross margin 11.2% is well below industry benchmark (25–40%), representing a low-margin structure. If raw material costs rise or competition intensifies and price pass-through is constrained, margins could deteriorate rapidly.
Recovery risk on large construction in progress: WIP ¥346.6B accounts for 39.6% of tangible fixed assets, representing heavy investment burden. Construction delays or failure to achieve expected post-operation revenue could increase depreciation and depress ROIC.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.3% | 5.2% (1.2%–6.4%) | -2.9pt |
| Net Margin | 1.8% | 3.7% (0.3%–4.9%) | -1.9pt |
Both Operating and Net margins are below industry medians, placing the company in the lower tier on profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.6% | 6.5% (3.8%–10.4%) | +2.1pt |
Revenue growth exceeds the industry median, indicating top-line expansion at an above-average pace.
※ Source: Company compilation
The improvement at operating and ordinary stages appears sustainable. Gross margin +36bp and SG&A ratio -30bp reflect effective price pass-through and cost control, contributing to a +3–+4pt front-loaded pace in Operating and Ordinary income relative to the full-year guidance. Continued inventory reduction and pricing policy execution could result in upside to the full-year plan.
Deterioration in working capital efficiency constrains cash generation. CCC 199 days, DSO 165 days, DIO 153 days led to a ¥99.9B reduction in cash and a ¥62.5B increase in short-term borrowings to shore up liquidity. Timing of amortization and revenue realization from Construction in Progress ¥346.6B is critical for ROIC improvement. Improvement in working capital via inventory compression and tighter credit control is a key monitoring point.
This report was automatically generated by AI analyzing XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are compiled by the company from public financial statements and are for reference only. Investment decisions are your responsibility; consult a professional advisor as needed.