FUJICCO CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Despite revenue remaining almost flat, the improvement in the SG&A ratio resulted in substantial increases in operating income, ordinary income, and net income attributable to owners of the parent, resulting in higher revenue and higher income. Revenue was ¥13.84B (+0.1% year on year), operating income was ¥0.38B (+55.3%; operating margin of 2.7%), ordinary income was ¥0.57B (+38.7%), and net income attributable to owners of the parent was ¥0.39B (+61.3%). While the gross profit margin declined by 1.1pt from the previous year to 29.1%, the 2.1pt decline in the SG&A ratio was the primary driver of the increase in income.

Factors Affecting Financial Results

【Revenue】Revenue was ¥13.84B, virtually unchanged at +0.1% year on year. As the Company operates as a single segment, the Processed Foods Business, it does not disclose factors contributing to changes by business. The gross profit margin declined to 29.1% from 30.2% in the previous year, while gross profit in absolute terms also decreased to ¥4.03B from ¥4.18B, suggesting the impact of raw material and packaging material costs, selling prices, and product mix.

【Profit and Loss】SG&A expenses were reduced to ¥3.65B (SG&A ratio of 26.4%, down 2.1pt from 28.4% in the previous year), and operating income improved to ¥0.38B (+55.3%; operating margin of 2.7%, up +97bp from 1.75% in the previous year). Adding non-operating income of ¥0.21B, including ¥0.16B in dividend income, ordinary income was ¥0.57B (+38.7%; ordinary income margin of 4.11%, +115bp), while extraordinary losses of ¥0.01B were minor. Net income attributable to owners of the parent was ¥0.39B (+61.3%), resulting in higher income through improvements in the cost structure despite revenue remaining almost flat.

Key Financial Metrics

【Profitability】Operating margin improved to 2.7% (1.75% in the previous year, +97bp), ordinary income margin to 4.11% (2.96% in the previous year, +115bp), and net profit margin, based on net income attributable to owners of the parent, to 2.85% (1.76% in the previous year, +108bp). In contrast, the gross profit margin declined to 29.1% (30.2% in the previous year, -110bp), indicating that the primary driver of the increase in income was the reduction in SG&A expenses.【Cash Quality】Cash and deposits were ¥9.96B (¥10.25B at the end of the previous year), accounts receivable were ¥9.94B (¥10.17B in the previous year), and inventories were ¥1.70B (¥1.54B in the previous year), indicating a slight increase in inventory. Dividend income accounted for ¥0.16B of ordinary income of ¥0.57B, indicating a meaningful degree of reliance on dividend income from investment securities.【Investment Efficiency】ROE remained at 0.5%, and the Company’s high equity ratio of 87.1% creates a structure that constrains asset efficiency.【Financial Soundness】The equity ratio was 87.1% (86.9% in the previous year), the current ratio was 421%, and interest paid was a negligible ¥0.002B, indicating an extremely robust financial foundation.

Cash Flow Analysis

As cash flow statement data has not been disclosed, cash trends are assessed based on changes in the balance sheet. Cash and deposits were ¥9.96B, a decrease of ¥0.29B from ¥10.25B at the end of the previous year, while total assets and net assets both contracted slightly to ¥79.37B (¥80.09B in the previous year) and ¥69.14B (¥69.69B in the previous year), respectively. Accounts payable increased to ¥4.41B (¥4.04B in the previous year), indicating greater use of payment terms, while accounts receivable decreased to ¥9.94B (¥10.17B in the previous year) and inventories increased to ¥1.70B (¥1.54B in the previous year). The provision for bonuses decreased by ¥0.375B from the previous year, contributing to the reduction in current liabilities. The decrease in net assets was primarily attributable to deterioration in the valuation difference on available-for-sale securities (-¥0.26B), indicating that changes in the market value of held securities, rather than business operations themselves, affected changes in capital.

Quality of Earnings

Recurring earnings capacity comprises operating income of ¥0.38B, supplemented by non-operating income of ¥0.21B, including dividend income of ¥0.16B, which lifted ordinary income to ¥0.57B. Non-operating income was equivalent to 1.5% of revenue and made a non-negligible contribution at the ordinary income level. Extraordinary items consisted solely of extraordinary losses of ¥0.01B and were immaterial. The difference between ordinary income of ¥0.57B and net income attributable to owners of the parent of ¥0.39B reflects income taxes of ¥0.18B and profit or loss attributable to non-controlling interests, with the tax burden within a reasonable range. Comprehensive income was only ¥0.07B, substantially below net income attributable to owners of the parent of ¥0.39B. The primary factors were deterioration in the valuation difference on available-for-sale securities (-¥0.26B) and deterioration in foreign currency translation adjustments (-¥0.04B); both resulted from changes in the market value of held assets and should be distinguished from the Company’s core earnings capacity.

Earnings Forecast and Guidance

Progress against the full-year plan was 24.3% for revenue (¥13.84B/¥57.00B), 25.1% for operating income (¥0.38B/¥1.50B), 31.6% for ordinary income (¥0.57B/¥1.80B), and 31.8% for net income attributable to owners of the parent (¥0.39B/¥1.24B). Compared with the quarterly progress benchmark of 25%, operating income was almost in line with the standard pace, while ordinary income and net income were progressing ahead of the standard pace. Although the full-year plan anticipates a 5.3% year-on-year decline in ordinary income, ordinary income increased 38.7% in Q1. The sustainability of this progress pace toward the full year will be a key focus going forward. The earnings forecast was revised during Q1, while the dividend forecast was not revised.

Shareholder Returns

The full-year dividend forecast is ¥46.00. The payout ratio against the full-year forecast EPS of ¥43.55 is approximately 105.6%, representing a dividend plan that exceeds forecast net income. Given the financial foundation of cash and deposits of ¥9.96B and an equity ratio of 87.1%, near-term payment obligations are unlikely to pose a problem; however, the sustainability of earnings growth and cash generation will be the premise for medium-term shareholder returns. Treasury shares totaled 1,574 thousand shares, equivalent to 5.2% of the 30,051 thousand issued shares.

Risk Factors

1. Decline in gross margin: The gross profit margin was 29.1%, down 1.1pt from 30.2% in the previous year, and gross profit in absolute terms also decreased to ¥4.03B from ¥4.18B in the previous year. The impact of raw material and packaging material costs, prices, and product mix is suggested.

2. High payout ratio: Against the full-year dividend forecast of ¥46, forecast EPS is ¥43.55, resulting in a payout ratio of approximately 105.6% and a return plan exceeding the level of earnings. If results fall below plan, the Company’s ability to secure funds for shareholder returns will require attention.

3. Reliance on non-operating income: Dividend income accounted for ¥0.16B of ordinary income of ¥0.57B, indicating a meaningful degree of reliance on dividend income from investment securities. If non-operating income fluctuates due to market conditions, ordinary income could be affected.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Both the operating margin and net profit margin were below the industry median, placing the Company’s profitability in the lower tier of the industry.

Growth and Capital Efficiency

The revenue growth rate was substantially below the industry median, placing top-line growth in the lower tier of the industry.

※Source: Compiled by the Company

Key Points in the Financial Results

1. The improvement in the SG&A ratio (-2.1pt) drove increases in operating income, ordinary income, and net income. Progress in cost structure efficiency is therefore a key point in the financial results.

2. On the other hand, the gross profit margin declined by -1.1pt. The fact that the primary driver of the increase in income was the containment of SG&A expenses provides an important point for assessing the sustainability of earnings growth if it is not accompanied by a recovery in gross profit.

3. The payout ratio based on the full-year dividend forecast was approximately 105.6%, confirming the level of the shareholder return plan relative to earnings.

Theoretical Stock Price (Reference Value)

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

Sensitivity: ¥1,887–¥1,991 at ±1% in the cost of equity, and ¥1,923–¥1,947 at ±0.1 in ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing gap relative to the full-year forecast).
• As 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 forecast or guarantee the future stock 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 responsibility, after consulting a professional as necessary.

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