| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1247.0B | ¥1200.4B | +3.9% |
| Operating Income / Operating Profit | ¥78.1B | ¥57.9B | +35.0% |
| Ordinary Income | ¥86.8B | ¥65.2B | +33.1% |
| Net Income / Net Profit | ¥61.3B | ¥131.3B | -53.3% |
| ROE | 1.8% | 3.8% | - |
For Q1 of the fiscal year ending February 2026, Revenue was ¥1247.0B (YoY +¥46.6B, +3.9%), Operating Income was ¥78.1B (YoY +¥20.2B, +35.0%), Ordinary Income was ¥86.8B (YoY +¥21.6B, +33.1%), and Net Income was ¥61.3B (YoY -¥70.0B, -53.3%). Revenue growth was driven by the domestic Retail Market and Food Service segments, marking the third consecutive quarter of revenue increase. Gross margin improved to 29.6% (prior year 28.4%), up 1.2pt, and Operating Margin expanded to 6.3% (prior year 4.8%), up 1.4pt, supported by price revisions and stabilization of raw material costs. The large decline in Net Income is mainly due to the absence of last year’s ¥120.2B gain on disposal of fixed assets (special gain); this period recorded special gains of ¥2.3B, returning to normalized levels. Core earnings at the operating and above levels grew double digits across the board, indicating an improving trend in underlying profitability.
Revenue of ¥1247.0B (+3.9%) continued the growth trend. By segment: Retail Market ¥458.8B (+1.4%) benefited from price revision penetration and recovery in key categories; Food Service ¥472.0B (+8.6%) was supported by recovery in dining-out demand and new customer acquisition; Overseas ¥242.9B (+1.4%) saw benefits from yen depreciation and solid local sales; Fruit Solutions ¥39.6B (+3.2%), Corporate / Common ¥51.6B (+4.8%), Fine Chemical ¥32.3B (+1.1%) — all segments posted revenue growth. Cost of sales was ¥878.2B (70.4% of sales), improving by 0.2pt YoY, with gross margin expanding to 29.6% (+1.2pt YoY). Stabilization in market prices for key raw materials (eggs, vegetable oils) and elimination of timing differences in price pass-through contributed. SG&A was ¥290.7B (23.3% of sales), improving 0.3pt from 23.6% a year earlier, aided by logistics efficiencies and operating leverage from higher sales. Operating Income ¥78.1B (+35.0%), Operating Margin 6.3% (prior year 4.8%, +1.4pt) showed material improvement. Ordinary Income ¥86.8B (+33.1%) was supported by dividend income ¥3.1B, interest income ¥1.8B, and equity-method income ¥4.5B; interest expense was minor at ¥0.8B. Net Income ¥61.3B (-53.3%) was derived from Pre-tax Income ¥87.3B less corporate taxes ¥26.0B (effective tax rate 29.8%) and Net Income attributable to Non-controlling Interests ¥7.4B. Last year’s Net Income benefited from a ¥120.2B special gain on disposal of fixed assets, yielding Net Income ¥131.3B; this period recorded special gains ¥2.3B (gain on sale of investment securities ¥2.2B) and special losses ¥1.8B (loss on disposal of fixed assets ¥0.8B), returning to ordinary levels—loss of one-off items is the main reason for the YoY decline in Net Income. Comprehensive Income was ¥127.2B, with positive currency translation adjustments ¥49.8B and valuation difference on securities ¥19.5B offsetting the Net Income decline. Conclusion: revenue and operating/ordinary income increased, Net Income decreased due to the drop-off of one-off items, but core earning power is improving.
Retail Market posted Revenue ¥458.8B (+1.4%), Operating Income ¥34.5B (+94.2%), Margin 7.5% (prior year 3.9%, +3.6pt), a significant profit increase driven by price revision penetration and improved promotional efficiency. Food Service posted Revenue ¥472.0B (+8.6%), Operating Income ¥30.8B (+68.5%), Margin 6.5% (prior year 4.3%, +2.2pt), supported by recovery in eating-out demand and new client wins. Overseas posted Revenue ¥242.9B (+1.4%), Operating Income ¥27.9B (-27.0%), Margin 11.5% (prior year 16.0%, -4.5pt), seeing revenue benefit from yen depreciation but profit impacted by rising local costs and translation effects. Fruit Solutions Revenue ¥39.6B (+3.2%), Operating Income ¥1.8B (+431.5%), Margin 4.5% (prior year -1.4%, +5.9pt) achieved profitability. Corporate / Common posted Revenue ¥51.6B (+4.8%), Operating Income ¥1.9B (-35.1%), Margin 3.6% (prior year 5.8%, -2.2pt). Fine Chemical posted Revenue ¥32.3B (+1.1%) but an Operating Loss of ¥5.7B (same loss as prior year), remaining in deficit with Margin -17.6%, weighing on consolidated margins. Segment adjustments (corporate expenses) were ¥13.1B, in line with prior year. Overall, strong profit increases in Retail Market and Food Service offset Overseas profit decline and Fine Chemical losses, resulting in consolidated operating profit growth.
Profitability: Operating Margin 6.3% (prior year 4.8%, +1.4pt), Gross Margin 29.6% (prior year 28.4%, +1.2pt). ROE 1.8% (annualized) is low compared with historical performance and improving capital efficiency remains a challenge. EPS ¥38.96 (prior year ¥91.92, -57.6%) was affected by the loss of special gains. Cash quality: DSO (Days Sales Outstanding) 201 days, DIO (Days Inventory Outstanding) 109 days, DPO (Days Payable Outstanding) 94 days, resulting in CCC (Cash Conversion Cycle) 216 days — long and indicating substantial scope for working capital improvement and strengthening cash generation. Interest coverage is excellent at Operating Income ¥78.1B ÷ Interest Expense ¥0.8B ≈ 101x, indicating minimal debt burden. Investment efficiency: Total Asset Turnover 0.258x/year (annualized) is low, with heavy inventory and receivables weighing on asset efficiency. ROIC estimate = Operating Income ¥78.1B ÷ Invested Capital (Net Assets ¥3,496.6B + Interest-bearing Debt ¥170.0B) ≈ 2.1% (annualized), low. Financial soundness: Equity Ratio 67.2% (prior year 67.4%, -0.2pt), Current Ratio 255.8%, Quick Ratio 222.8% — all high. Interest-bearing Debt ¥170.0B (short-term borrowings ¥20.4B, bonds maturing within 1 year ¥100.0B, long-term borrowings ¥150.0B, bonds ¥100.0B total less bonds maturing within 1 year) versus Cash and Deposits ¥680.4B yields net cash of approximately ¥510B. D/E ratio 0.05x (Interest-bearing Debt ¥170.0B ÷ Net Assets ¥3,496.6B) is extremely conservative. Defined benefit liabilities ¥20.3B versus pension assets ¥466.4B indicate a surplus of pension assets and limited future burden risk.
Operating Cash Flow: Inventories increased by ¥9.3B (to ¥262.1B), Accounts Receivable decreased by ¥68.7B to ¥686.5B indicating collection progress, Accounts Payable decreased to ¥414.9B (down ¥446.6B) reflecting payments. Working capital efficiency is weak with DSO 201 days, DIO 109 days, DPO 94 days and CCC 216 days — significant room to compress inventory and receivables. Investing Cash Flow: tangible fixed assets ¥1,484.9B (prior year ¥1,479.5B) slightly increased; investment securities ¥586.4B (prior year ¥555.7B) increased ¥30.7B. Financing Cash Flow: short-term borrowings ¥20.4B (prior year ¥72.0B, -71.7%) were substantially reduced; bonds maturing within 1 year ¥100.0B matured shifting to longer-term liabilities. Free cash flow generation can be strengthened through working capital optimization; inventory optimization and faster receivables collection are key. Cash and deposits ¥680.4B (prior year ¥655.9B, +3.7%) maintain liquidity and financial flexibility.
Operating Income ¥78.1B versus Ordinary Income ¥86.8B indicates non-operating net income +¥8.7B. Breakdown: dividend income ¥3.1B, interest income ¥1.8B, equity-method income ¥4.5B, other non-operating income ¥1.4B totaling ¥10.8B in non-operating income; interest expense ¥0.8B, fees ¥0.6B, other ¥0.6B totaling ¥2.0B in non-operating expenses. Non-operating income represents 0.9% of sales and is modest and recurring. The decline from Ordinary Income ¥86.8B to Net Income ¥61.3B reflects Pre-tax Income ¥87.3B (including special gains ¥2.3B – special losses ¥1.8B), corporate taxes ¥26.0B (effective tax rate 29.8%), and Net Income attributable to Non-controlling Interests ¥7.4B. Last year’s Net Income ¥131.3B included a ¥120.2B special gain on disposal of fixed assets; this period’s special gains ¥2.3B (gain on sale of investment securities ¥2.2B, gain on sale of fixed assets ¥0.1B) and special losses ¥1.8B (loss on disposal of fixed assets ¥0.8B) are modest, so the drop in Net Income is driven by disappearance of one-off items. Comprehensive Income ¥127.2B consists of Net Income ¥61.3B plus Other Comprehensive Income ¥65.9B (currency translation adjustments ¥49.8B, valuation difference on securities ¥19.5B, deferred hedges -¥0.9B, retirement benefit adjustments -¥3.9B, equity-method OCI ¥1.4B). With operating-level margin improvements and normalization of special gains/losses, the quality of earnings is reverting to recurring sources.
Full Year / FY forecast: Revenue ¥5,300.0B (YoY +3.2%), Operating Income ¥380.0B (+9.7%), Ordinary Income ¥400.0B (+7.0%), Net Income ¥255.0B, EPS ¥184.95, Annual Dividend ¥32.00. Q1 progress ratios: Revenue 23.5% (standard 25% -1.5pt), Operating Income 20.6% (-4.4pt), Ordinary Income 21.7% (-3.3pt), Net Income 24.0% (-1.0pt; however on an ex-special-gain basis last year the progress is favorable), which are generally within expected seasonal ranges. If the trend of Operating Margin improvement continues, there is upside potential in H2; raw material market conditions and FX trends are key. No revisions to guidance have been made; full-year plan remains unchanged.
Annual dividend forecast ¥32.00 (prior year ¥32.00) maintains the dividend. Based on average outstanding shares during the period of 138,416 thousand shares, total dividends amount to approximately ¥4.43B; the dividend payout ratio relative to full-year forecast Net Income ¥255.0B is approximately 17.4%, conservative. Treasury stock purchases amount to ¥13.71B (prior year ¥7.91B, +73.3%), suggesting share buyback activity and an expanding Total Return Ratio via dividends plus buybacks. Given the low payout ratio and net cash of approximately ¥510B, dividend sustainability is very high. Going forward, strengthening Operating Cash Flow and Free Cash Flow generation could expand room for dividend increases and share buybacks. A footnote on dividends indicates inclusion of a ¥10 commemorative dividend for the 100th anniversary of the mayonnaise launch; excluding this special factor the base dividend is estimated at around ¥22.
Industry positioning (reference — company analysis): Company's Operating Margin 6.3% is within the industry median range of 5–7% for major domestic food companies, a roughly average level. Equity Ratio 67.2% is among the industry upper tier (median 50–60%) and indicates financial strength. ROE 1.8% is well below the industry median 5–8%, underscoring the need to improve capital efficiency. Working capital efficiency (CCC 216 days) significantly exceeds the industry average 120–150 days, indicating notable scope to compress inventory and receivables versus peers. Although long-term EPS trend is limited by single-year data, the current gross margin improvement +1.2pt and Operating Margin improvement +1.4pt suggest relatively strong improvement momentum within the industry, driven by price revision penetration and stabilization of raw material markets. Payout Ratio 17.4% is below the industry median 30–40% and conservative, indicating substantial room for dividend increases. Very low financial leverage (D/E 0.05x) is exceptionally conservative within the industry and suggests opportunities to reduce capital cost and enhance shareholder returns.
Three key points to watch in the earnings: First, improvement in Gross Margin +1.2pt and Operating Margin +1.4pt clearly reflect the effects of price revisions and stabilization in raw material markets; provided key raw materials (eggs, vegetable oils) remain stable to slightly down, sustained profitability improvement is expected. Second, there is substantial potential to improve working capital efficiency (DSO 201 days, DIO 109 days, CCC 216 days); inventory optimization and accelerated receivables collection could materially strengthen Operating Cash Flow. Third, net cash of approximately ¥510B and conservative payout ratio 17.4% indicate room to boost dividends and buybacks; improving capital efficiency (ROE 1.8%, ROIC ≈2.1%) together with enhanced shareholder returns will be a focal point. Early improvement in Overseas profitability and elimination of Fine Chemical losses would be key leverage to expand consolidated margins and influence upside to the full-year Operating Income target ¥380.0B.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial analysis document. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; please consult a professional as needed.