| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥923.5B | ¥917.0B | +0.7% |
| Operating Income / Operating Profit | ¥41.5B | ¥48.5B | -14.3% |
| Ordinary Income | ¥43.3B | ¥50.0B | -13.4% |
| Net Income / Net Profit | ¥30.4B | ¥28.6B | +6.2% |
| ROE | 7.3% | 7.2% | - |
For the fiscal year ended March 2026, Revenue was ¥923.5B (YoY +¥6.5B +0.7%), Operating Income was ¥41.5B (YoY -¥6.9B -14.3%), Ordinary Income was ¥43.3B (YoY -¥6.7B -13.4%), and Net Income attributable to owners of the parent was ¥30.4B (YoY +¥1.8B +6.2%), resulting in a slightly higher top line and lower profits. Although Revenue was essentially flat, gross margin improved to 22.6% (+0.2pt YoY). Selling, general and administrative expenses (SG&A) increased to ¥167.0B (YoY +¥10.1B +6.4%), significantly outpacing sales growth; SG&A ratio rose to 18.1% (+1.0pt YoY), compressing the operating margin to 4.5% (-0.8pt). Net income benefitted from a reduction in income taxes despite a shift from a net special gain in the prior year (net +¥0.14B) to a net special loss in this period (net -¥0.09B), securing an increase in final profit. Basic EPS decreased to ¥198.99 (prior ¥221.62, -10.2%), while BPS rose by ¥208.68 to ¥2,886.81.
Revenue: Revenue totaled ¥923.5B (+0.7%), remaining essentially flat. By segment, the core Condiments & Processed Foods business recorded ¥743.7B (+2.2%), Delicatessen-related business recorded ¥253.5B (-2.6%), and Others were ¥7.4B (-14.1%). The Condiments & Processed Foods segment accounted for 80.5% of consolidated sales (79.5% on an external-customer basis), driving overall growth. Delicatessen-related sales contracted slightly but maintained a 27.5% sales composition (19.7% on an external-customer basis), indicating internal sales relationships across segments. In the external environment, stabilization of raw material and input prices improved gross margin by +0.2pt YoY, but additional gross margin gains from price pass-through or product mix improvements were limited.
Profitability: Gross profit was ¥208.6B (gross margin 22.6%, +0.2pt YoY) with modest improvement, but SG&A rose to ¥167.0B (SG&A ratio 18.1%, +1.0pt YoY), leading to Operating Income of ¥41.5B (-14.3%) and an operating margin of 4.5% (prior 5.3%, -0.8pt). The SG&A increase of +¥10.1B (+6.4%) was primarily driven by structural rises in logistics and personnel costs. Non-operating income increased from interest income to ¥6M (prior ¥2M) and equity-method investment income to ¥84M (prior ¥47M), resulting in Ordinary Income of ¥43.3B (-13.4%) and an ordinary margin of 4.7% (prior 5.5%, -0.8pt), mirroring the operating-stage decline. Special items comprised special gains of ¥220M from sales of investment securities and ¥70M in subsidy income (total ¥300M) versus special losses of ¥180M impairment losses and ¥130M loss on disposal of fixed assets (total ¥390M), yielding a net special loss of -¥90M (prior net special gain +¥140M). Profit before income taxes fell to ¥42.4B (-17.6%), but income taxes decreased to ¥13.1B (prior ¥16.4B, -¥3.3B), lowering the effective tax rate to 31.0% (prior 31.9%), resulting in Net Income of ¥30.4B (+6.2%). In conclusion, modest revenue growth was offset by higher SG&A driving operating profit down, while one-off special losses and lower tax burden produced a higher net profit.
The Condiments & Processed Foods segment posted Revenue of ¥743.7B (+2.2%), Operating Income of ¥30.9B (-20.5%), and margin of 4.2% (prior 4.9%, -0.7pt): higher sales but lower profit and compressed margins. As the core segment representing 80.5% of sales, deterioration in its profitability was the main cause of consolidated operating profit decline. The Delicatessen-related segment recorded Revenue of ¥253.5B (-2.6%), Operating Income of ¥10.0B (+16.5%), and margin of 4.0% (prior 3.4%, +0.6pt), achieving higher profit and margin despite lower sales, likely aided by improvements in manufacturing/sales efficiency and a favorable mix in contract manufacturing. Others (shop business, etc.) had Revenue of ¥7.4B (-14.1%) and an operating loss of ¥0.3B (widened from prior operating loss of ¥0.0B). Total segment profit was ¥40.6B, reconciling with adjusted consolidated Operating Income of ¥41.5B. The contrast between margin deterioration in the core business and improvement in the Delicatessen segment indicates variability in portfolio profitability.
Profitability: Operating margin was 4.5% (prior 5.3%, -0.8pt), Net margin was 3.3% (prior 3.8%, -0.5pt). ROE was 7.3% (prior 8.9%, -1.6pt), with the decline largely driven by lower net margin. Total asset turnover improved slightly to 1.445x (prior 1.431x), and financial leverage declined to 1.535x (prior 1.604x). EBIT margin was 4.5% and EBITDA margin 7.5% (EBITDA ¥69.1B, depreciation ¥27.6B). However, rising SG&A dampened operating efficiency. Cash quality: Operating Cash Flow / Net Income was 1.00x on the surface, but OCF/EBITDA was low at 0.43x, as deterioration in working capital (inventory increase -¥1.18B, accounts payable decrease -¥0.90B) impeded cash conversion. Investment efficiency: Capital expenditures / Depreciation was 0.97x, indicating maintenance/replacement-level investment with limited overinvestment risk. ROIC is estimated around 6.6% (Operating Income ¥41.5B / (Equity ¥415.6B + Interest-bearing debt ¥32.9B)), which is roughly neutral versus WACC. Financial soundness: Equity Ratio was 65.0% (prior 62.4%, +2.6pt), high and stable. Debt/EBITDA was 0.40x and interest coverage roughly 106x (EBIT ¥41.5B / interest expense ¥0.4B), indicating light debt burden. Current ratio was 197.7% and quick ratio 179.6%, providing ample liquidity and short-term payment capacity.
Operating Cash Flow was ¥29.4B (YoY -¥16.5B -36.0%), a substantial decline primarily due to working capital deterioration: inventory increase (-¥1.18B), accounts receivable increase (-¥0.32B), and accounts payable decrease (-¥0.90B). Starting from Profit before tax ¥42.4B (YoY -¥9.0B), depreciation ¥27.6B and other non-cash items were added, producing an operating cash subtotal of ¥47.1B, but working capital changes resulted in cash outflows of -¥15.4B. Income taxes paid were ¥18.8B, leaving Operating Cash Flow of ¥29.4B. Investing Cash Flow was -¥27.1B (prior -¥10.6B), mainly capital expenditure -¥26.6B (prior -¥5.2B) and intangible asset acquisitions -¥1.1B (prior -¥3.0B), partially offset by proceeds from sales of investment securities ¥2.8B (prior ¥1.6B). Free Cash Flow was ¥2.3B (prior ¥35.3B, -93.5%), a significant contraction. Financing Cash Flow was -¥24.8B (prior -¥35.3B), driven by dividends paid -¥7.0B (prior -¥6.2B), share buybacks -¥10.3B (prior -¥19.7B), and repayments of borrowings -¥5.2B (prior -¥5.1B). Cash and deposits fell to ¥134.9B (YoY -¥22.4B). Free cash flow did not cover dividends and buybacks, resulting in depletion of cash balances. While Operating CF/Net Income is 1.00x superficially, OCF/EBITDA at 0.43x is low, and normalizing working capital management is a key issue.
Most of Ordinary Income ¥43.3B was generated from Operating Income ¥41.5B, with non-operating income ¥2.4B (0.3% of sales) from interest income and equity-method gains making only minor contributions, indicating earnings are primarily core-business driven. Net special items were -¥0.9B (special gains ¥3.0B - special losses ¥3.9B): gains included ¥220M from sales of investment securities and ¥70M in subsidies, while temporary losses included ¥180M impairment and ¥130M loss on disposal of fixed assets, reversing from prior period’s net special gain of +¥140M. This caused Profit before tax ¥42.4B to fall below Ordinary Income ¥43.3B, pressuring final profit, though a decline in income taxes (¥13.1B vs prior ¥16.4B) led to Net Income attributable to owners of the parent of ¥30.4B, up +6.2% YoY. The accrual ratio is -0.0% (Operating CF ¥29.4B / Net Income ¥30.4B ≒ 1.00x), indicating accounting profit aligns with cash backing. However, OCF/EBITDA 0.43x reflects working capital deterioration from inventory increases and accounts payable decreases, leaving room to improve cash conversion efficiency. Comprehensive income was ¥33.0B: relative to Net Income ¥30.4B, valuation differences on available-for-sale securities +¥0.12B, adjustments related to retirement benefits +¥0.27B, and equity-method investee OCI share -¥0.02B yielded a modest divergence of +¥2.6B between Net Income and Comprehensive Income.
Full Year guidance: Revenue ¥970.0B (YoY +5.0%), Operating Income ¥40.0B (YoY -3.7%), Ordinary Income ¥41.5B (YoY -4.1%), Net Income attributable to owners of the parent ¥28.4B (YoY -6.6%). The company presents a conservative guidance assuming revenue growth with profit decline. An operating margin of roughly 4.1% (vs. current 4.5%, -0.4pt) is assumed, incorporating buffers against scenarios where SG&A containment and price/mix improvements do not progress as planned. Progress against the full-year forecast at the reporting date was: Revenue 95.2%, Operating Income 103.9%, Ordinary Income 104.3%, Net Income 107.0% — profits have already exceeded annual plan. Nevertheless, the company maintained its full-year guidance, likely cautious about second-half uncertainties (raw material/logistics cost resurgence, SG&A acceleration). EPS forecast is ¥193.09 (current ¥198.99), and dividend forecast is annual ¥35.00 (current ¥67.00), indicating a planned dividend cut to align with cash generation.
Annual dividend this period was ¥67.00 per share (interim ¥23.00, year-end ¥44.00), unchanged from prior year. Total dividends were approximately ¥699M (year-end dividend only about ¥632M; total including interim estimated), giving a payout ratio relative to Net Income attributable to owners of the parent ¥30.4B of about 23.0% (based on EPS ¥198.99 the payout ratio is 33.7%), which is within a sustainable range. However, Free Cash Flow was only ¥230M, and dividend FCF coverage was roughly 0.33x, insufficient; together with share buybacks of ¥1,030M, total returns were about ¥1,730M (dividends + buybacks), reducing FCF coverage to about 0.13x and indicating reliance on cash balance drawdown to fund returns. Future sustainability depends on improving OCF. For the next fiscal year, a substantial dividend reduction to ¥35.00 annually is planned (-¥32.00 -47.8%), lowering the payout ratio to 18.1% on forecast EPS ¥193.09, reflecting a conservative policy prioritizing alignment with cash generation. Share repurchases in the period totaled ¥1,034M (approximately 1.03M shares), increasing treasury stock to -¥3,757M (prior -¥2,755M), showing a proactive stance on capital efficiency; however, purchases exceeding FCF relied on cash reserves, so future repurchase pace depends on Operating CF recovery.
Risk of deteriorating operating leverage from rising SG&A ratio: SG&A totaled ¥167.0B (YoY +¥10.1B +6.4%), far outpacing sales growth of +0.7%, and SG&A ratio rose to 18.1% (prior 17.1%, +1.0pt). Structural increases in logistics and labor costs are the main drivers; if these pressures persist, operating margin faces further downside risk. Next period’s plan already assumes an operating margin around 4.1% (-0.4pt), making the effectiveness of cost containment measures critical.
Risk of cash flow pressure from worsened working capital: Inventory increased to ¥3.10B (prior ¥2.53B, +22.3%), and accounts payable decreased to ¥10.35B (prior ¥10.62B, -2.5%), leading to Operating CF of ¥29.4B (YoY -36.0%). OCF/EBITDA at 0.43x is low; without inventory normalization and improved accounts payable terms, FCF generation will remain limited. Continuation of dividends and buybacks depends on Operating CF recovery, and there is latent risk of inventory valuation losses.
Concentration in the core segment and margin deterioration risk: The Condiments & Processed Foods business accounts for 80.5% of revenue and, despite higher sales this period, saw Operating Income decline -20.5% and margin fall to 4.2% (prior 4.9%, -0.7pt). Profitability deterioration in this segment directly impacts consolidated results; the ability to pass through costs, improve product mix, and manage raw material costs will materially affect performance. The Delicatessen-related segment improved but remains 27.5% of sales, limiting diversification benefits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.5% | 5.0% (3.3%–8.4%) | -0.5pt |
| Net Margin | 3.3% | 3.2% (1.9%–6.6%) | +0.1pt |
Operating margin is 0.5pt below the industry median, indicating weaker price pass-through capacity or efficiency relative to peers amid cost increases. Net margin is roughly in line with the median, with lower tax burden contributing to final profit.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.7% | 5.4% (1.0%–8.6%) | -4.7pt |
Revenue growth lags the industry median by 4.7pt, placing the company in a relatively low-growth position. Expanding the core business and developing new channels are key future tasks.
※ Source: Company compilation
Structural issue of rising SG&A ratio and weakening operating leverage: SG&A ratio rose to 18.1% (+1.0pt YoY), compressing operating margin to 4.5% (prior 5.3%, -0.8pt). Structural rises in logistics and personnel costs have outweighed gross margin improvement (+0.2pt) from price/mix, creating headwinds. Next fiscal year guidance already assumes operating margin of about 4.1%, and the effectiveness and progress of cost reduction measures (logistics efficiency, optimization of promotional spending, etc.) will be pivotal to restoring profitability.
Improving cash conversion efficiency is a precondition for sustainable shareholder returns: Free Cash Flow was limited to ¥2.3B, insufficient to cover dividends ¥699M and share buybacks ¥1,030M (total ~¥1,730M), leading to cash depletion. OCF/EBITDA at 0.43x is low; inventory increases (+¥0.56B) and accounts payable decreases (-¥0.27B) worsened working capital. Normalizing inventory and improving payable terms to recover Operating CF are essential for sustainable dividends and buybacks. The company plans a dividend cut to annual ¥35.00 (-47.8%) next fiscal year to better align returns with cash generation.
This report was autogenerated by AI analyzing XBRL financial statement data to produce an earnings analysis. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.