| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1711.3B | ¥1767.3B | -3.2% |
| Operating Income | ¥36.1B | ¥78.3B | -53.9% |
| Ordinary Income | ¥39.5B | ¥81.7B | -51.6% |
| Net Income | ¥25.9B | ¥59.0B | -56.0% |
| ROE | 2.4% | 5.5% | - |
This was a decline in both revenue and earnings, with a significant decrease in profit due to lower revenue and deteriorating profitability in the core Oils and Fats Business. Revenue was ¥1711.3B (前年比-3.2%), Operating Income was ¥36.1B (same -53.9%), Ordinary Income was ¥39.5B (same -51.6%), and Quarterly Net Income Attributable to Owners of the Parent was ¥25.6B (same -56.3%). The sharp -65.3% YoY decline in segment profit from the Oils and Fats Business, which accounts for 91.0% of Revenue, drove the deterioration in overall profitability.
【Revenue】Revenue was ¥1711.3B, representing a -3.2% YoY decline. By segment, the Oils and Fats Business, which accounts for 91.0% of sales, recorded ¥1557.8B (-2.9% YoY), while the Specialty Foods Business recorded ¥147.9B (same -4.9%); both segments reported lower revenue. Within the Oils and Fats Business, commercial-use oils and fats increased to ¥876.5B (+3.8% YoY), while meal products declined to ¥458.3B (same -13.3%) and household-use oils and fats declined to ¥223.0B (same -3.4%), with the decline in meal products becoming the main factor behind the decrease in revenue for the Oils and Fats Business as a whole.
【Profit and Loss】Operating Income of ¥36.1B (-53.9% YoY), Ordinary Income of ¥39.5B (same -51.6%), and Net Income attributable to owners of the parent of ¥25.6B (same -56.3%) all declined significantly. Segment profit for the Oils and Fats Business fell sharply to ¥25.9B (¥74.5B in the previous year, -65.3%), while the Specialty Foods Business returned to profit growth, reporting ¥8.8B (¥2.3B in the previous year, +278.0%), resulting in divergent performance across the businesses. The Gross Profit Margin declined to 15.2% from 16.8% in the previous year, indicating that the Company has been unable to fully pass higher raw material costs on to selling prices. Extraordinary losses of ¥4.0B (impairment losses of ¥1.0B, loss on disposal of fixed assets of ¥2.4B, and disaster losses of ¥1.5B) were partially offset by extraordinary income of ¥2.0B, causing Profit Before Tax to fall approximately ¥2.0B below Ordinary Income. In conclusion, this was a decline in both revenue and earnings, resulting from the combination of lower revenue and deteriorating profitability in the core business.
The Oils and Fats Business (91.0% of sales composition) reported Revenue of ¥1557.8B (-2.9% YoY) and segment profit of ¥25.9B (¥74.5B in the previous year, -65.3%), representing a significant decline in earnings. The Specialty Foods Business (8.6% of sales composition) reported lower Revenue of ¥147.9B (same -4.9%), but segment profit turned to growth at ¥8.8B (¥2.3B in the previous year, +278.0%). The deterioration in profit in the Oils and Fats Business was substantially greater than the decline in revenue, suggesting that a timing mismatch between raw material costs and the pass-through of selling prices may have placed pressure on the Oils and Fats Business, the Company’s earnings pillar.
【Profitability】The Operating Margin was 2.1%, down 2.3pt from 4.4% in the previous year, while the Gross Profit Margin also declined to 15.2% from 16.8% in the previous year, indicating that increases in costs have not been fully absorbed through price pass-through.【Cash Flow Quality】Comprehensive Income was ¥44.0B, ¥18.4B higher than Net Income of ¥25.6B; the main factors behind the difference were fair-value-related factors such as an increase in valuation difference on securities (+¥11.7B), rather than the Company’s cash-generating capacity from its core operations. Accounts receivable increased to ¥418.0B from ¥364.8B in the previous year, or +14.6%, while inventories declined to ¥177.9B from ¥196.1B in the previous year, or -9.3%, resulting in offsetting movements in working capital.【Investment Efficiency】ROE was 2.4%, remaining at a low level due to the decline in profitability. Investment securities increased to ¥210.0B from ¥197.5B in the previous year, reaching a level that requires monitoring from an asset-efficiency perspective.【Financial Soundness】The Equity Ratio increased to 65.3% from 62.2% in the previous year. Current assets of ¥962.5B versus current liabilities of ¥302.4B resulted in a current ratio of approximately 318%, indicating a stable financial foundation.
As the cash flow statement was not provided, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥33.1B, a slight increase from ¥32.5B in the previous year. Accounts receivable increased to ¥418.0B (¥364.8B in the previous year), while inventories declined to ¥177.9B (¥196.1B in the previous year) and accounts payable also declined to ¥138.0B (¥150.2B in the previous year). In terms of working capital, factors that tied up funds (an increase in accounts receivable) coexisted with factors that generated funds (inventory reduction). Long-term borrowings declined to ¥56.5B (¥58.5B in the previous year), while current portion of long-term borrowings also declined to ¥52.0B (¥63.9B in the previous year), indicating progress in reducing interest-bearing debt. Investment securities increased to ¥210.0B (¥197.5B in the previous year), suggesting continued investment activity. Retained earnings were largely unchanged at ¥594.7B (¥594.1B in the previous year), suggesting that external outflows, including dividend payments, were of a commensurate scale relative to Net Income of ¥25.6B.
Comprehensive Income was ¥44.0B, ¥18.4B higher than Net Income of ¥25.6B. The main factors behind the difference were other comprehensive income items subject to fair-value fluctuations, including an increase of ¥11.7B in valuation difference on securities, deferred hedge gains or losses of ¥3.3B, and foreign currency translation adjustments of ¥1.2B. These are temporary factors associated with market fluctuations and should be distinguished from recurring earnings capacity. In extraordinary gains and losses, extraordinary income of ¥2.0B comprised a gain on sale of investment securities of ¥0.9B and a gain on sale of fixed assets of ¥1.0B, while extraordinary losses of ¥4.0B comprised impairment losses of ¥1.0B, loss on disposal of fixed assets of ¥2.4B, and disaster losses of ¥1.5B, resulting in a net reduction of approximately ¥2.0B in Profit Before Tax. However, relative to the decline in earnings this period (Operating Income -53.9%), the scale of these extraordinary gains and losses was limited. The primary cause of the deterioration in earnings was not extraordinary factors but the deterioration in core-business profitability, as reflected in the decline in the Gross Profit Margin to 15.2% from 16.8% in the previous year.
Progress against the full-year Company forecast was 75.7% for Revenue (¥1711.3B/¥2260.0B), while progress was 72.2% for Operating Income (¥36.1B/¥50.0B), 64.8% for Ordinary Income (¥39.5B/¥61.0B), and 62.4% for Net Income attributable to owners of the parent (¥25.6B/¥41.0B). Profit-related indicators were therefore below the 75% benchmark at the nine-month point. In particular, progress toward the Ordinary Income and Net Income forecasts is significantly behind schedule. To achieve the full-year forecasts, the fourth quarter alone would need Ordinary Income of ¥21.5B (+63% versus the quarterly average profit of ¥13.2B for the nine-month period) and Net Income of ¥15.4B (+80% versus ¥8.5B), indicating that the pace of earnings improvement in the second half will be the key to achieving the plan.
The interim dividend was ¥30 per share (paid), and the Company’s announced full-year dividend forecast is ¥35 per share. Compared with the previous fiscal year’s annual dividend of ¥70 (interim ¥30 + year-end ¥40), this represents a plan for a substantial reduction in the full-year dividend. Based on forecast EPS of ¥123.84, the Payout Ratio is 28.3% at a dividend of ¥35, down from the previous fiscal year’s actual result of 39.5% (dividend of ¥70/EPS of ¥177.26).
Profitability deterioration risk: The Operating Margin declined to 2.1% from 4.4% in the previous year, and the Gross Profit Margin declined to 15.2% from 16.8% in the previous year. Segment profit in the core Oils and Fats Business fell sharply by -65.3% YoY. Fluctuations in raw material costs and mismatches in the timing of pass-through to selling prices may continue to affect earnings.
Recognition of extraordinary losses: The Company recognized total extraordinary losses of ¥4.0B this period, comprising impairment losses of ¥1.0B, loss on disposal of fixed assets of ¥2.4B, and disaster losses of ¥1.5B. Although partially offset by extraordinary income of ¥2.0B, the occurrence of one-time asset-related losses warrants attention.
Level of shareholder returns: The full-year dividend forecast is ¥35, representing a planned reduction from the previous fiscal year’s annual dividend of ¥70, while the Payout Ratio based on forecast EPS is 28.3%, down from 39.5% in the previous fiscal year. Changes in the earnings level are reflected in the dividend plan.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.1% | 5.0% (4.1%–7.3%) | -2.9pt |
| Net Profit Margin | 1.5% | 3.7% (2.8%–6.1%) | -2.2pt |
Both the Operating Margin and Net Profit Margin are below the industry median, placing the Company’s profitability at a low level within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.2% | 3.4% (-0.3%–4.8%) | -6.6pt |
The Revenue Growth Rate is also substantially below the industry median, indicating that the Company is relatively behind its industry peers in both top-line growth and profitability.
※Source: Compiled by the Company
The deterioration in profitability in the core Oils and Fats Business has weighed on overall profit, with segment profit declining sharply by -65.3% YoY, while the Specialty Foods Business showed contrasting performance with earnings growth of +278%. Changes in the earnings structure within the business portfolio warrant monitoring.
Full-year progress for Revenue is 75.7%, broadly in line with the plan, while progress for Ordinary Income (64.8%) and Net Income (62.4%) is below the 75% nine-month benchmark. The extent to which earnings improve in the second half will be a key factor in assessing whether the full-year plan can be achieved.
Comprehensive Income (¥44.0B) exceeds Net Income (¥25.6B), but the difference is attributable to fair-value-related factors such as valuation difference on securities. Accordingly, trends in Operating Income and Net Income, which reflect the Company’s core earnings power, will remain key areas of focus.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.
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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.