TOYO SUISAN KAISHA (2875) FY2026 Q3 Earnings Report

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Executive Summary

This was a strong earnings result, with higher revenue and profits, as well as operating income growth exceeding the rate of revenue growth, indicating high-quality profit growth. Revenue was ¥4026.4B (+3.6% YoY), Operating Income was ¥645.7B (+6.1%), Ordinary Income was ¥708.1B (+4.9%), and Net Income attributable to owners of the parent was ¥534.3B (+5.0%). The Operating Income margin improved to 16.0% from 15.7% in the same period of the previous year, driven mainly by improved profitability in the overseas instant noodle business. Progress toward the full-year forecast was 75.3% for Revenue and 80.7% for Operating Income, exceeding the standard progress rate of 75%.

Factors Affecting Earnings

【Revenue】Revenue was ¥4026.4B, representing a 3.6% YoY increase. By segment, overseas instant noodles was the largest at ¥1811.2B (45.0% of total), followed by domestic instant noodles at ¥802.2B (19.9%) and frozen and chilled foods at ¥471.8B (11.7%). Overseas instant noodles is a highly profitable segment with a 25.2% profit margin and drove overall revenue growth. Meanwhile, processed foods recorded ¥176.8B in revenue and an Operating Loss of ¥4.4B, with losses continuing.

【Profit and Loss】Operating Income was ¥645.7B (+6.1% YoY), exceeding the revenue growth rate, while the Operating Income margin improved to 16.0% from 15.7% in the same period of the previous year. Ordinary Income was ¥708.1B (+4.9%), with the ¥62.4B increase from Operating Income consisting primarily of non-operating income, including ¥47.7B in interest income and ¥8.1B in dividend income. Special gains and losses comprised a gain of ¥7.7B and a loss of ¥2.0B, for a net temporary gain of ¥5.7B, and their impact on profit before tax was limited. Overall, the Company can be assessed as achieving growth accompanied by higher revenue, higher profits, and improved margins.

Segment Analysis

Overseas instant noodles is the core earnings segment, with revenue of ¥1811.2B and a profit margin of 25.2%, followed by domestic instant noodles with revenue of ¥802.2B and a profit margin of 10.8%, and frozen and chilled foods with revenue of ¥471.8B and a profit margin of 14.0%. Low-temperature logistics (cold storage) was stable, with revenue of ¥211.0B and a profit margin of 11.3%. In contrast, processed foods recorded an Operating Loss of ¥4.4B on revenue of ¥176.8B (profit margin of △2.5%), while the seafood business had a relatively low profit margin of 5.1% on revenue of ¥260.1B, indicating a bifurcated earnings structure.

Key Financial Indicators

【Profitability】The Operating Income margin of 16.0% (15.7% in the same period of the previous year), Net Income margin of 13.3%, and Gross Profit margin of 30.7% either improved or remained at high levels.【Cash Flow Quality】Of the ¥66.5B in non-operating income, ¥47.7B in interest income was the primary component, with financial income supported by ¥2334.2B in cash and deposits underpinning Ordinary Income.【Investment Efficiency】ROE was 10.4%. The relatively low total asset turnover ratio and a capital structure characterized by abundant cash and deposits and low leverage are factors limiting capital efficiency.【Financial Soundness】The Equity Ratio was 82.2%, and interest-bearing debt consisted solely of ¥4.5B in short-term borrowings. The Company has a net financial income structure in which interest income exceeds ¥1.5B in interest expense.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is limited, the balance sheet confirms ample financial capacity. Cash and deposits of ¥2334.2B substantially exceeded current liabilities of ¥812.5B, ensuring sufficient liquidity relative to short-term borrowings of ¥4.5B. Retained earnings had accumulated to ¥4450.0B, and the expansion of equity through the retention of Net Income of ¥537.9B continued. Property, plant and equipment increased from the previous year to ¥2074.7B, indicating continued growth in fixed assets through capital investment.

Quality of Earnings

The majority of profit derives from recurring business activities, and the net contribution of special gains and losses was limited to ¥5.7B (gain of ¥7.7B and loss of ¥2.0B), indicating good earnings quality. Of the ¥66.5B in non-operating income, ¥47.7B in interest income and ¥8.1B in dividend income were the primary components, with financial income supported by abundant cash and deposits continuously supplementing Ordinary Income. Comprehensive Income was ¥672.6B, of which the portion attributable to owners of the parent was ¥666.5B, exceeding Net Income of ¥534.3B by ¥132.2B. This was mainly attributable to increases in other comprehensive income, including ¥88.3B in foreign currency translation adjustments and ¥43.4B in valuation differences on securities. These are highly volatile items linked to foreign exchange and market fluctuations, and it should be noted that the divergence from Net Income includes temporary valuation factors.

Earnings Forecast and Guidance

The full-year forecast is Revenue of ¥5350.0B (+4.4% YoY), Operating Income of ¥800.0B (+4.6%), and Ordinary Income of ¥875.0B (+2.7%). Cumulative Q3 progress was 75.3% for Revenue, 80.7% for Operating Income, and 80.9% for Ordinary Income, exceeding the simple progress rate of 75% and indicating progress ahead of plan on the profit front. Based on the Company’s forecast, the required Operating Income for Q4 is ¥154.3B, corresponding to a profit margin of 11.7%. This is expected to be below the cumulative margin of 16.0%, making future cost trends and seasonality key points for assessing the final results.

Shareholder Returns

The Q2 dividend was ¥80.00 per share, while the full-year dividend forecast is ¥200.00. The forecast Payout Ratio against forecast EPS of ¥668.29 is approximately 29.9%, indicating that the dividend burden relative to the profit level is limited. With retained earnings of ¥4450.0B and cash and deposits of ¥2334.2B, the Company has ample funds available for dividends, and its financial foundation supports dividend sustainability. As no record of share repurchases can be confirmed from the available data, this section evaluates only the Payout Ratio as an indicator.

Risk Factors

1. Rising raw material, energy, and logistics costs: The Cost of Sales ratio is high at 69.3%, and delays in passing costs through to prices could put pressure on the Gross Profit margin of 30.7% and the Operating Income margin of 16.0%.

2. Dependence on financial income: Non-operating income of ¥66.5B, including interest income of ¥47.7B, contributed to Ordinary Income of ¥708.1B. Changes in interest rate and foreign exchange environments may therefore affect future fluctuations in Ordinary Income.

3. Segment profitability disparity: Processed foods recorded an Operating Loss of ¥4.4B, while the seafood business had a profit margin of only 5.1%, resulting in an earnings structure highly dependent on the highly profitable overseas instant noodle business, which has a profit margin of 25.2%.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin significantly exceeded the industry median, demonstrating top-tier profitability within the industry.

Growth and Capital Efficiency

The revenue growth rate was roughly in line with the industry median, suggesting that the Company’s profitability advantage stems not from a difference in growth rates but from the structure of its profit margins.

※Source: Compiled by the Company

Key Points in the Earnings Results

1. The Operating Income margin of 16.0% significantly exceeded the industry median of 5.0% and improved by approximately 38bp YoY, confirming the high quality of the earnings structure centered on the overseas instant noodle business.

2. While progress toward the full-year forecast was ahead of the standard rate at 80.7% for Operating Income, the required Q4 Operating Income margin implied by the Company’s forecast is 11.7%, below the cumulative margin. Cost trends in the second half will therefore be a factor determining the final results.

3. With an Equity Ratio of 82.2% and interest-bearing debt consisting solely of ¥4.5B in short-term borrowings, the Company has a strong net cash position. Together with a Payout Ratio of approximately 29.9%, this confirms stable capacity for shareholder returns supported by its financial foundation.

Theoretical Share Price (Reference Value)

Sensitivity: 5,773円〜6,118円 at ±1% for the Cost of Equity, and 5,926円〜5,965円 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end are used (there is a timing discrepancy with the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price.)

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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 discretion and responsibility, after consulting a professional where necessary.

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