TOYO SUISAN KAISHA,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In Q1 of the fiscal year ending March 2027, revenue and earnings increased, with Operating Income and Ordinary Income in particular improving significantly by double digits. Revenue was ¥1356.7B (+7.8% year on year), Operating Income was ¥225.7B (+23.4%), Ordinary Income was ¥250.9B (+22.0%), and Net Income attributable to owners of the parent was ¥182.3B (+19.5%). An improvement in volume and product mix in the overseas instant noodle business, together with pricing measures, served as the primary drivers, resulting in higher revenue and earnings alongside expansion in both the gross margin and Operating Income margin.

Factors Affecting Results

【Revenue】Revenue was ¥1356.7B, an increase of +7.8% year on year. By segment, Overseas Instant Noodles was the largest driver at ¥643.7B (+15.6%, 47.5% of total revenue), while Domestic Instant Noodles also contributed to revenue growth at ¥252.4B (+6.4%). In contrast, Chilled Foods at ¥158.5B (-1.5%), Seafood Products at ¥81.5B (-1.1%), and Processed Foods at ¥52.1B (-2.2%) recorded revenue declines, resulting in mixed performance across businesses.

【Profit and Loss】Operating Income increased 23.4% to ¥225.7B, substantially exceeding the rate of revenue growth. The gross margin was 31.1%, improving +2.1pt from 29.0% in the prior year, while the SG&A ratio was 14.4%, virtually unchanged from 14.5% in the prior year. Improvement in the cost ratio was therefore the primary factor behind the expansion in the Operating Income margin to 16.6%, up +2.1pt from 14.5% in the prior year. Ordinary Income was ¥250.9B (+22.0%), with interest income of ¥18.4B accounting for the majority of non-operating income of ¥26.3B and boosting income at the ordinary income level. Extraordinary income was ¥0.9B and extraordinary loss was ¥1.2B, resulting in a slight net loss, and the impact of temporary factors was limited. The effective tax rate was 26.9%, slightly higher than 24.8% in the prior year, causing the growth in Net Income attributable to owners of the parent (+19.5%) to moderate somewhat compared with the +22.3% increase in Profit Before Tax. Overall, the company achieved higher revenue and earnings, with improved profitability at the operating level driven by pricing and product mix improvements serving as the primary catalyst.

Segment Analysis

The Overseas Instant Noodles business recorded revenue of ¥643.7B (+15.6%), Operating Income of ¥169.4B (+33.1%), and a 26.3% margin, demonstrating the highest profitability among all segments. It was the largest driver, accounting for 75.1% of total-company Operating Income of ¥225.7B. Domestic Instant Noodles continued to deliver higher revenue and earnings, with revenue of ¥252.4B (+6.4%), Operating Income of ¥24.2B (+13.8%), and a 9.6% margin. In contrast, Chilled Foods recorded revenue of ¥158.5B (-1.5%) and Operating Income of ¥16.8B (-27.3%), representing a significant decline in earnings, while Seafood Products also experienced deteriorating profitability, with revenue of ¥81.5B (-1.1%) and Operating Income of ¥3.5B (-17.2%). The Refrigerated Business remained solid, with revenue of ¥72.2B (+3.1%) and Operating Income of ¥9.4B (+14.1%). Processed Foods narrowed its operating loss to -¥0.2B (a +95.7% improvement year on year) despite revenue of ¥52.1B (-2.2%). The gap in profitability among segments was substantial, ranging from 4.3% for Seafood Products to 26.3% for Overseas Instant Noodles, indicating a structure in which earnings are heavily dependent on the Overseas Instant Noodles business.

Key Financial Metrics

【Profitability】The Operating Income margin was 16.6%, improving +2.1pt from 14.5% in the same period last year, while the Net Income margin, based on income attributable to owners of the parent, was 13.4%, improving +1.3pt from 12.1% in the prior year. The gross margin rose +2.1pt to 31.1% from 29.0% in the prior year, with price revisions and manufacturing efficiency improvements contributing to higher profitability.【Cash Quality】Cash and deposits were ¥2588.8B, accounting for 40.1% of total assets, indicating ample liquidity. Inventories increased to ¥220.9B (+11.3% year on year), while accounts receivable increased to ¥652.6B (+3.0%), indicating an expansionary trend in working capital.【Investment Efficiency】ROE was 3.3% (quarterly result, before annualization), and the Overseas Instant Noodles business accounted for 75.1% of Operating Income, indicating a high degree of dependence on this business from a capital efficiency perspective as well. Total assets were ¥6449.6B, remaining virtually flat year on year.【Financial Soundness】The Equity Ratio was 83.1%, a slight improvement from 82.6% in the prior year, while the current ratio remained high at 564.7% (current assets of ¥3782.0B/current liabilities of ¥669.7B). Interest-bearing debt consisted solely of short-term borrowings of ¥4.3B, indicating a financial structure close to being debt-free.

Cash Flow Analysis

As cash flow statement items have not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥2588.8B, down ¥29.0B from ¥2617.8B at the end of the same period last year, indicating a slight decrease in cash on hand despite earnings growth. While inventories increased by ¥22.4B and accounts receivable increased by ¥19.2B, accounts payable increased by only ¥5.0B, suggesting that the accumulation of working capital may have constrained cash generation. Construction in progress increased by ¥21.5B, indicating that capital investment has continued, while treasury stock increased by ¥38.3B, suggesting that share repurchases are underway. Overall, the expansion of working capital and the allocation of funds to capital investment and share repurchases appear to have reduced cash levels despite profit growth. Progress in reducing inventories and accounts receivable will therefore be an important factor determining future cash-generation capacity.

Quality of Earnings

The majority of current-period earnings arose from recurring business activities. Extraordinary income of ¥0.9B and extraordinary loss of ¥1.2B resulted in a slight net loss, and their impact on Profit Before Tax was limited. Interest income of ¥18.4B accounted for the majority of non-operating income of ¥26.3B. This reflects the company’s ample cash balance and the interest-rate environment and should be viewed as recurring income reflecting the current funding structure rather than a one-time factor. The effective tax rate was 26.9% (income taxes of ¥67.5B/Profit Before Tax of ¥250.6B), slightly higher than 24.8% in the prior year, contributing to the slight moderation in the growth of Net Income attributable to owners of the parent to +19.5% compared with the +22.0% increase in Ordinary Income. Comprehensive income was ¥225.8B (¥224.8B attributable to owners of the parent), exceeding Net Income of ¥182.3B, with foreign currency translation adjustments of +¥38.4B being the primary reason for the difference. If inventories and accounts receivable continue to increase, a divergence may arise between the timing of profit recognition and cash generation. From an accrual perspective, working capital trends therefore warrant attention when evaluating earnings quality.

Earnings Forecast and Guidance

Progress against the full-year plan was 24.2% for Revenue (¥1356.7B/¥5600.0B), 27.5% for Operating Income (¥225.7B/¥820.0B), 28.4% for Ordinary Income (¥250.9B/¥885.0B), and 27.8% for Net Income (¥182.3B/¥656.0B), with earnings progress exceeding the simple 25% benchmark. At the same time, the full-year plan itself anticipates declines of -4.4% in Operating Income and -5.9% in Ordinary Income year on year, indicating that the initial plan was set conservatively. Q1 results are progressing ahead of plan, but neither the earnings forecast nor the dividend forecast has been revised. Whether the high margin of the Overseas Instant Noodles business can be sustained will be key to maintaining the full-year pace of progress.

Shareholder Returns

The dividend forecast is ¥220 per share, and the Payout Ratio based on forecast EPS of ¥676.17 is approximately 32.5%, indicating a dividend policy that retains substantial internal reserves. Treasury stock increased by ¥38.3B compared with the end of the same period last year, suggesting that share repurchases are underway. No revision has been made to the dividend forecast, and given the ample cash and deposits of ¥2588.8B, there appears to be limited financial constraint on pursuing both dividends and share repurchases.

Risk Factors

1. Changes in working capital efficiency: While inventories increased +11.3% year on year to ¥220.9B and accounts receivable increased +3.0% to ¥652.6B, accounts payable increased only +1.6% to ¥327.4B, and cash and deposits decreased -1.1% from the end of the same period last year to ¥2588.8B. The expansion of working capital may delay cash generation relative to earnings growth.

2. Segment earnings concentration risk: The Overseas Instant Noodles business accounts for 75.1% of total-company Operating Income (¥169.4B/¥225.7B), and its 26.3% margin significantly exceeds those of other segments (4.3%~13.0%). The company has a high degree of earnings dependence on a specific region and business.

3. Impact of foreign exchange fluctuations: Foreign currency translation adjustments in comprehensive income were +¥38.4B, representing a significant amount relative to Net Income attributable to owners of the parent of ¥182.3B. Earnings and asset valuations in overseas businesses are therefore susceptible to foreign exchange movements.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (food_beverage)

Profitability and Returns

Both the Operating Income margin and Net Income margin significantly exceed the industry median, placing profitability among the higher levels within the industry.

Growth and Capital Efficiency

The Revenue growth rate is slightly above the industry median but does not reach the upper bound of the IQR; the growth rate itself is therefore not exceptionally high within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The Operating Income margin improved +2.1pt from 14.5% in the prior year to 16.6%, with the Overseas Instant Noodles business, which has a 26.3% margin, driving an increase in total-company profitability. The full-year plan assumes a decline in earnings year on year and is set at a conservative level. A key point to monitor is how the Q1 progress, which is in the high 27% range on an earnings basis, develops over the coming quarters.

2. The gap in margins among segments has widened, with a substantial difference between Overseas Instant Noodles (26.3%) and Processed Foods (-0.3%) and Seafood Products (4.3%). The earnings structure’s dependence on a specific segment is a structural characteristic evident from the earnings data.

3. Working capital expanded due to increases in inventories and accounts receivable, while cash and deposits decreased slightly. Treasury stock increased by ¥38.3B, indicating that funds are being allocated to capital investment and share repurchases.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly available data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥6,058–¥6,418 at Cost of Equity ±1%; ¥6,220–¥6,255 at ω±0.1.

Notes:

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

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value 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 available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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