These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1798.1B | ¥1818.3B | -1.1% |
| Operating Income | ¥89.5B | ¥46.9B | +90.9% |
| Profit Before Tax | ¥75.8B | ¥31.9B | +137.2% |
| Net Income | ¥56.8B | ¥31.8B | +78.7% |
| ROE | 2.3% | 1.3% | - |
This quarter saw a significant increase in operating income despite a decline in revenue, with improved profitability driving an increase in earnings quality. Revenue was ¥1,798.1B (¥1,818.3B in the same period of the previous year, -1.1%), operating income was ¥89.5B (¥46.9B, +90.9%), profit before tax was ¥75.8B (¥31.9B, +137.2%), and profit for the quarter attributable to owners of the parent was ¥55.7B (¥31.3B, +78.0%). The primary driver of the earnings increase was an improvement in gross margin. Gross margin improved to 16.7% (12.9% in the previous year) due to a decrease in cost of sales, absorbing the increase in SG&A expenses. As the Company applies IFRS, “profit before tax” is used instead of “ordinary income.”
【Revenue】Revenue was ¥1,798.1B, a 1.1% year-on-year decline. By segment, Plant-Based Fats and Oils grew to ¥718.7B (+13.7%), while Industrial Chocolate declined significantly to ¥753.6B (-14.0%), serving as the main factor behind the overall revenue decline. Emulsified and Fermented Ingredients generated ¥235.1B (+4.6%), while Soy-Processed Ingredients generated ¥90.6B (+6.6%), with both maintaining revenue growth despite their smaller scale.
【Profit and Loss】Operating income increased significantly to ¥89.5B (+90.9% year-on-year). Gross margin improved to 16.7%, supported by a pause in raw material price increases and improvements in pricing and product mix. Meanwhile, the SG&A ratio increased to 11.7% (10.7% in the previous year), suggesting higher logistics and personnel costs. By segment, Plant-Based Fats and Oils accounted for the majority of total segment profit at ¥83.6B, while Industrial Chocolate also improved to ¥4.8B (+114.4% year-on-year), continuing its recovery from a loss-making structure. Financial expenses of ¥20.1B were broadly in line with the previous year, but the expansion of EBIT improved the Company’s capacity to absorb the burden. In conclusion, the Company achieved higher profit despite lower revenue.
Plant-Based Fats and Oils posted revenue of ¥718.7B (40.0% composition ratio, +13.7%) and operating income of ¥83.6B (93.4% composition ratio, -5.7%). Despite higher revenue, its profit margin declined to 11.6%, making the extent to which the revenue increase was driven by both pricing and volume, as well as the degree to which cost increases were absorbed, key points of focus. Industrial Chocolate recorded revenue of ¥753.6B (41.9% composition ratio, -14.0%), making it the largest contributor to the revenue decline; however, operating income increased to ¥4.8B (+114.4%), expanding its profit and demonstrating continued progress in improving its earnings structure. Emulsified and Fermented Ingredients (revenue of ¥235.1B, profit of ¥1.1B) and Soy-Processed Ingredients (revenue of ¥90.6B, profit of ¥7.0B) are smaller businesses, but Soy-Processed Ingredients has a relatively high profit margin of 7.7%. Overall, the Company continues to have a structure with a high degree of dependence on Plant-Based Fats and Oils for profit.
【Profitability】The operating margin improved to 5.0% (2.6% in the previous year), while gross margin also increased to 16.7% (12.9% in the previous year). Net profit margin improved to 3.1% (1.7% in the previous year), but remained relatively low compared with industry levels.【Cash Flow Quality】Cash flow from operating activities was ¥28.9B, representing approximately 0.5x quarterly profit of ¥55.7B (attributable to owners of the parent). Cash generation has therefore not kept pace with the improvement in earnings. The decrease of ¥121.4B in trade payables offset the positive effects from inventory (+¥30.6B cash inflow) and trade receivables (+¥41.5B cash inflow).【Investment Efficiency】ROE was 2.3%, indicating limited asset efficiency relative to total assets of ¥6,437.6B and net assets of ¥2,517.2B. Total asset turnover remained low, while substantial inventory of ¥1,808.1B and trade receivables of ¥1,125.5B continued to weigh on asset efficiency.【Financial Soundness】The equity ratio improved slightly to 38.5% (37.7% in the previous year), while long-term borrowings increased to ¥905.7B (+14.7% year-on-year), indicating a shift toward longer-term debt. Cash and cash equivalents were ¥433.1B, and with free cash flow at -¥44.4B, part of the funding requirement was covered through borrowings.
Cash flow from operating activities improved significantly year-on-year to ¥28.9B (−¥126.1B in the same period of the previous year), but its generation capacity remained limited relative to quarterly net income of ¥55.7B. Within working capital, the decrease in inventory (+¥30.6B) and the decrease in trade receivables (+¥41.5B) contributed to cash inflows, while the decrease in trade payables (−¥121.4B) was a significant source of outflow and weighed on the overall result. Cash flow from investing activities was −¥73.4B, primarily reflecting capital expenditures of ¥63.3B. Investment outlays decreased following the absence of the previous year’s acquisition of shares in a subsidiary (−¥167.3B). Cash flow from financing activities was ¥16.4B, mainly comprising proceeds from long-term borrowings of ¥150B, repayments of long-term borrowings of ¥177.8B, and dividend payments of ¥22.4B. As a result, free cash flow was −¥44.4B, and cash and cash equivalents decreased to ¥433.1B (¥461.1B at the end of the previous year).
The improvement in earnings this quarter was primarily attributable to the recovery in gross margin, with limited dependence on temporary extraordinary gains or losses. In the reconciliation from business profit in the segment information to operating income, non-recurring items such as a loss on disposal of property, plant and equipment of ¥2.3B were recorded; however, the amount was small and did not materially impair earnings quality. Outside operating income, the burden continued, with financial expenses of ¥20.1B compared with financial income of ¥4.9B, and the impact on profit before tax of ¥75.8B remained significant. Comprehensive income was ¥112.6B (¥112.3B attributable to owners of the parent), substantially exceeding quarterly profit of ¥55.7B. The primary factors were valuation gains from foreign currency translation adjustments for foreign operations (+¥37.7B) and cash flow hedges (+¥15.5B). Accordingly, the divergence between net income and comprehensive income resulted from non-recurring factors related to foreign exchange and hedge valuation. For assessing the earnings power of the core business, an evaluation based on net income and operating income more accurately reflects the underlying condition.
Progress against the full-year earnings forecast was approximately 23.8% for revenue, at ¥1,798.1B/¥7,540.0B, and approximately 28.6% for net income attributable to owners of the parent, at ¥55.7B/¥195.0B. Compared with the quarterly progress benchmark of 25%, revenue is progressing at a slightly slower pace, while profit is progressing at a faster pace. The trend toward higher earnings is therefore supporting achievement of the full-year forecast. The Company made no revisions to either its earnings forecast or dividend forecast during the quarter.
The Company’s full-year dividend forecast is ¥62 per share. Based on an estimated average number of shares outstanding during the period of approximately 85.98 million shares, the estimated annual total dividend is approximately ¥5.3B, resulting in a payout ratio of approximately 27% against the full-year forecast of net income attributable to owners of the parent of ¥195.0B. Dividend payments during the quarter amounted to ¥2.24B. Although free cash flow was −¥44.4B during the quarter, meaning that dividends and investments were not fully funded internally, assuming the full-year earnings outlook, there are no significant concerns regarding dividend sustainability.
Working Capital and Cash Conversion Risk: Cash flow from operating activities of ¥28.9B was only approximately 52% of quarterly profit of ¥55.7B, while the ¥121.4B decrease in trade payables constrained cash generation. If the substantial asset balances of inventory of ¥1,808.1B and trade receivables of ¥1,125.5B persist, weak cash conversion may continue going forward.
Interest-Bearing Debt Structure and Interest Burden Risk: Debt levels are substantial, comprising short-term borrowings of ¥1,522.9B and long-term borrowings of ¥905.7B. Financial expenses remained broadly unchanged from the previous year at ¥20.1B. Financial expenses represented approximately 22% of EBIT of ¥89.5B, requiring attention to the impact of changes in the interest-rate environment on earnings.
Segment-Specific Demand Volatility Risk: Revenue from Industrial Chocolate declined significantly by 14.0% year-on-year, and the revenue decline may continue depending on demand trends. In addition, approximately 94% of profit is dependent on Plant-Based Fats and Oils, creating a structure in which changes in the profitability of this segment have a significant impact on overall earnings.
Profitability and Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.0% | 5.5% (1.4%–6.7%) | -0.5pt |
| Net Profit Margin | 3.2% | 3.7% (0.5%–4.9%) | -0.6pt |
The Company’s profitability is slightly below the industry median but remains within the IQR.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year-on-Year) | -1.1% | 5.4% (3.6%–10.3%) | -6.5pt |
The revenue growth rate is significantly below the industry median and is also below the lower bound of the IQR.
※Source: Company analysis
The improvement in gross margin (16.7%, compared with 12.9% in the previous year) drove the recovery in operating margin to 5.0%. Improvements in pricing and product mix, together with a pause in the raw material price environment, represent a turning point in the earnings structure. The sustainability of this improvement depends on continued favorable raw material prices and pricing policies.
Cash flow from operating activities was ¥28.9B, with a conversion rate relative to quarterly profit of approximately 52%, primarily due to the decrease in trade payables. The gap between earnings improvement and cash generation will serve as an indicator of the effectiveness of working capital management going forward.
By segment, Industrial Chocolate improved operating income to ¥4.8B (+114.4%) despite lower revenue, confirming progress in structural reforms. On the other hand, the high concentration of approximately 94% of profit in Plant-Based Fats and Oils is a structural characteristic under which the performance of this segment determines overall results.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear (bearish) | ¥2,745 |
| base (base case) | ¥2,799 |
| bull (bullish) | ¥2,836 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥2,879 |
| Adjusted Forecast EPS | ¥239.0 |
| Cost of Equity r | 9.27% (10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Residual Income Persistence Coefficient ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 27.3% |
| Forecast EPS Confidence Adjustment | ×1.054 (based on the track record of peer companies in achieving guidance) |
| Implied PBR / PER |
Sensitivity: ¥2,720–¥2,881 at ±1% for the cost of equity, and ¥2,796–¥2,801 at ±0.1 for ω.
Notes:
(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future share price)
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 responsibility, after consulting with a professional as necessary.
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| 0.97x / 11.7x |