| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥7202.2B | ¥6993.7B | +3.0% |
| Operating Income / Operating Profit | ¥105.6B | ¥85.0B | +24.2% |
| Equity-method Investment Gains (Losses) | ¥0.6B | ¥12.9B | -95.1% |
| Ordinary Income | ¥125.9B | ¥112.8B | +11.6% |
| Net Income / Net Profit (attributable to owners of parent) | ¥82.8B | ¥82.1B | +0.9% |
| ROE | 6.6% | 7.1% | - |
For the cumulative period to Q2 of the fiscal year ending March 2026, Itochu Shokuhin Co., Ltd. achieved Revenue of ¥7,202.2B (YoY +¥208.5B +3.0%), Operating Income of ¥105.6B (YoY +¥20.6B +24.2%), Ordinary Income of ¥125.9B (YoY +¥13.1B +11.6%), and Net Income attributable to owners of parent of ¥82.8B (YoY +¥0.7B +0.9%), recording both top-line and bottom-line growth. At the operating level, accumulation of gross profit and restrained SG&A drove the Operating Income margin to 1.5% (prior year 1.2%), with revenue growth and strict cost control proving effective. However, recognition of impairment losses of ¥11.2B as special losses constrained the growth of final profit, leaving Net Income effectively flat.
[Revenue] Revenue of ¥7,202.2B represents a YoY increase of +3.0%, continuing a two-period trend of revenue growth. Gross profit increased to ¥431.9B (prior year ¥411.7B), up +4.9%, and the gross margin improved by approximately +11bp to 6.0% (prior year 5.9%). The gross profit growth (+4.9%) outpacing revenue growth (+3.0%) can be attributed to sourcing optimization, effective pass-through of pricing, and improved product mix. The reporting segment is a single Food Wholesale Business, so no segmental breakdown is disclosed and analysis is performed at the consolidated level.
[Profitability] SG&A amounted to ¥326.2B (prior year ¥326.6B), a slight decrease of -0.1%, improving the SG&A-to-sales ratio by about -16bp to 4.5% (prior year 4.7%). The accumulation of gross profit together with flat expenses led to Operating Income of ¥105.6B, a substantial YoY increase of +24.2%, and an Operating Income margin improvement of about +25bp to 1.5% (prior year 1.2%). Non-operating income was ¥22.6B (mainly dividend income ¥11.6B and interest income ¥4.5B), which provided support from financial income. Ordinary Income was ¥125.9B (+11.6%), which grew less than Operating Income; non-operating expenses of ¥2.3B were minor and at a healthy level. In extraordinary items, despite recording gain on sale of fixed assets of ¥8.6B, impairment losses of ¥11.2B and valuation losses on investment securities of ¥1.2B were recognized, resulting in a net special loss of ¥3.4B. Profit before income taxes was ¥122.5B (+8.7%), and after income taxes of ¥39.7B (effective tax rate 32.4%), Net Income attributable to owners of parent was ¥82.8B (+0.9%), effectively flat, with Net Income margin declining by about -2bp to 1.1% (prior year 1.2%). The impact of special items—approximately 24% of Net Income—was the primary reason for the muted growth in final profit. Overall, while both revenue and operating profit increased, one-off items limited growth in Net Income.
[Profitability] Operating Income margin improved to 1.5% from 1.2% last year (≈+25bp), and gross margin improved to 6.0% (prior year 5.9%) (≈+11bp). ROE was 6.6% (prior year 7.3%), affected by stagnation in Net Income growth and increased equity leading to reduced financial leverage. ROA improved to 4.5% (prior year 4.1%), indicating slightly better asset efficiency. [Cash Quality] Operating Cash Flow / Net Income was 1.30x (Operating Cash Flow ¥107.7B / Net Income ¥82.8B), showing strong cash backing of profits. OCF/EBITDA was 0.87x (Operating Cash Flow ¥107.7B / EBITDA ¥123.2B), slightly below the 0.9x benchmark, primarily due to mid-period working capital movements (increase in accounts receivable -¥22.7B, decrease in inventories +¥12.0B, increase in accounts payable +¥10.3B). [Investment Efficiency] Total Asset Turnover was 2.50x (annualized Revenue ¥7,202.2B ×2 / Total Assets ¥2,878.7B), indicating high turnover. CapEx/Depreciation was 0.30x (Capital expenditures ¥5.2B / Depreciation ¥17.6B), a low level reflecting continued restraint on replacement investments. [Financial Soundness] Equity Ratio improved to 43.9% (prior year 42.6%), with current ratio 146.7% and quick ratio 132.3%, indicating solid short-term liquidity. Interest coverage was 167.7x (Operating Cash Flow ¥107.7B / Interest paid ¥0.6B), showing extremely high resilience to interest burden.
Operating Cash Flow was ¥107.7B, a substantial improvement of +388.6% YoY, demonstrating cash generation exceeding Net Income of ¥82.8B. The subtotal of operating CF was ¥128.1B, with non-cash items such as depreciation ¥17.6B and impairments ¥11.2B added back; working capital movements were accounts receivable increase -¥22.7B, inventory decrease +¥12.0B, accounts payable increase +¥10.3B, resulting in a modest net increase, and after income tax payments of -¥35.2B, ample cash was retained. Investing CF was +¥1.6B, as proceeds from fixed asset sales ¥14.9B (including gain on sale of fixed assets ¥8.6B) exceeded capital expenditures -¥5.2B and intangible asset investments -¥6.9B, resulting in net inflow. Free Cash Flow was very strong at ¥109.2B. Financing CF was -¥25.4B (mainly dividend payments -¥20.3B and lease liability repayments -¥5.0B), and cash and cash equivalents increased by ¥83.9B during the period to end the period at ¥210.3B. Cash and deposits balance was ¥27.3B (prior year ¥14.5B), up +89.1%, substantially increasing short-term liquidity buffer. Signs of working capital manipulation are limited; movements in receivables, payables and inventories are assessed as within business volume and seasonality ranges.
Recurring earnings consist of Operating Income ¥105.6B and Non-operating income ¥22.6B (mainly dividend income ¥11.6B and interest income ¥4.5B), with non-operating income representing 0.31% of sales and indicating a healthy earnings structure. One-off items included special gains of ¥9.0B (gain on sale of fixed assets ¥8.6B, gain on sale of investment securities ¥0.4B) and special losses of ¥12.4B (impairment losses ¥11.2B, valuation losses on investment securities ¥1.2B), resulting in a net special loss of ¥3.4B. The impact of one-off items on Net Income was sizable at roughly 24%, and the divergence from Ordinary Income ¥125.9B to Net Income ¥82.8B is mainly due to special losses and tax burden (effective tax rate 32.4%). With Operating CF exceeding Net Income, accrual quality is high, and Comprehensive Income of ¥128.0B (including other comprehensive income on investment securities ¥37.5B and actuarial gains/losses on retirement benefits +¥6.4B) exceeding Net Income ¥82.8B by +54.7% indicates qualitative improvement in shareholders’ equity due to unrealized gains on investment securities.
An interim dividend of ¥80 was paid, and no year-end dividend was declared, resulting in an annual dividend planned at ¥80. The payout ratio was 21.6% (total dividends ¥20.3B / Net Income ¥82.8B), at a conservative level. Dividend payments of ¥20.3B against Free Cash Flow of ¥109.2B represent a coverage ratio of 5.4x, indicating ample sustainability from a cash perspective. However, due to the tender offer for the Company’s shares by Itochu Corporation announced on April 28, 2026, delisting is planned, and dividend forecasts for FY2027 are not disclosed. Dividend discipline as a listed company is expected to be inapplicable, and future shareholder return policy will be linked to the parent company’s capital policy.
Low gross-margin structural risk: With a gross margin of 6.0% and a low-margin structure, resurgence of inflation in logistics or labor costs could exert SG&A pressure and compress profitability. Although SG&A ratio improved to 4.5%, tolerance to cost inflation is limited.
Risk of loss of competitiveness due to suppressed investment: CapEx/Depreciation of 0.30x indicates very low replacement investment; deterioration of IT and logistics infrastructure or operational efficiency could make it difficult to maintain competitiveness over the medium term. Software investment is increasing, but tangible fixed asset renewal is limited.
Volatility risk from one-off items: The coexistence of gain on sale of fixed assets ¥8.6B and impairment losses ¥11.2B means one-off items affected Net Income by roughly 24%. Future frequency of asset disposals or impairments could cause volatility in final profit. Market movements affecting valuation of investment securities (increase in valuation difference ¥38.8B) also impact stability of shareholders’ equity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 1.5% | 3.4% (1.4%–5.0%) | -1.9pt |
| Net Income Margin | 1.1% | 2.3% (1.0%–4.6%) | -1.1pt |
Both Operating Income margin and Net Income margin are below the industry median, indicating relative profitability in food wholesale is below the industry average.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.0% | 5.9% (0.4%–10.7%) | -2.9pt |
Revenue growth rate is below the industry median, indicating top-line expansion pace lags the industry average.
※Source: Company compilation
Operating improvement and strengthened cash generation: Improvements in gross margin (+11bp) and Operating Income margin (+25bp) with essentially flat SG&A led to Operating Income growth of +24.2%. Free Cash Flow of ¥109.2B is ample, and interest coverage of 167.7x indicates very high financial resilience. The short-term improvement trend in profitability and cash generation is positively viewed.
Capital efficiency and constrained investment challenge: ROE of 6.6% declined from 7.3% last year and is below industry levels. CapEx/Depreciation of 0.30x and low replacement investment mean resuming appropriate IT and logistics investments is necessary to maintain medium-term competitiveness. Sustainability of operational improvements depends on normalization of investment levels.
Changes to capital policy due to delisting: With the planned delisting following the tender offer by Itochu Corporation, performance and dividend forecasts are undisclosed. Future capital policy will follow the parent company’s direction, and exemptions from minority shareholder protections and disclosure discipline should be noted as structural changes.
This report is an earnings analysis document automatically generated by AI analysing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions are your own responsibility; please consult a professional as necessary.