| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1110.4B | ¥1089.1B | +2.0% |
| Operating Income / Operating Profit | ¥32.6B | ¥45.1B | -27.6% |
| Ordinary Income | ¥27.0B | ¥41.9B | -35.6% |
| Net Income / Net Profit | ¥9.0B | ¥12.3B | -27.2% |
| ROE | 3.4% | 5.8% | - |
For the fiscal year ended March 2026, revenue was ¥1,110.4B (YoY +¥21.3B +2.0%), a slight increase, while Operating Income was ¥32.6B (YoY -¥12.5B -27.6%), Ordinary Income was ¥27.0B (YoY -¥14.9B -35.6%), and Net Income attributable to owners of the parent was ¥9.0B (YoY -¥3.3B -27.2%), resulting in multi-stage profit declines. Operating margin fell to 2.9% (down -1.2pt from 4.1% last year), as higher raw material and energy costs eroded profitability despite higher sales. Declines in gross margin to 21.9% (down -1.2pt from 23.1% prior year) and SG&A of ¥210.2B (SG&A ratio 18.9%) were the primary drivers of weaker profitability. Non-operating costs included interest burden of ¥7.4B, leading to a larger drop in Ordinary Income than in Operating Income. Special losses of ¥2.7B (mainly impairments) and a high effective tax rate of 50.6% depressed Net Income, resulting in EPS of ¥48.16 (from ¥113.36 prior year, -57.5%). Meanwhile, Other Comprehensive Income included ¥40.1B of remeasurement gains on retirement benefit plans, leading to Comprehensive Income of ¥56.7B (2.3x prior year ¥24.8B), increasing shareholders’ equity to ¥264.4B (YoY +¥51.7B +24.3%) and strengthening the financial base.
[Revenue] Revenue of ¥1,110.4B (+2.0%) was supported by Domestic Food at ¥806.7B (+2.2%) and Food-related at ¥282.1B (+5.0%), while Overseas Food declined to ¥166.7B (-2.7%) due to FX impacts and weaker demand. By region, Domestic was ¥993.9B (+2.0%) and Overseas ¥116.4B (+1.4%), with sales composition Domestic 89.5%, Overseas 10.5%. Domestic Food achieved higher sales from price revisions and volume increases in processed marine products and prepared foods, but Overseas Food declined due to currency headwinds and intensified local competition. Food-related grew on expanded logistics and service demand.
[Profitability] Operating Income of ¥32.6B (-27.6%) was mainly driven by higher Cost of Sales of ¥867.5B (cost ratio 78.1%), lowering Gross Profit to ¥242.9B (Gross Margin 21.9%, down -1.2pt from 23.1%). Rising costs for raw materials, energy and packaging outpaced price pass-through, reducing gross profit by ¥19.4B YoY. SG&A was ¥210.2B (SG&A ratio 18.9%, flat YoY) with an absolute increase of ¥4.0B due to higher labor and logistics costs. By segment, Domestic Food Operating Income was ¥12.5B (-49.3%, margin 1.5%), Overseas Food ¥5.4B (-44.2%, margin 3.2%)—both major segments saw large declines—while Food-related posted ¥14.8B (+20.5%, margin 5.2%) and was the sole profit gainer. Non-operating items recorded net expense of ¥5.7B (worsening ¥2.5B from ¥3.2B prior year), driven by higher interest expense of ¥7.4B (up ¥1.5B from ¥5.9B). Interest income ¥0.3B, equity-method investment income ¥1.1B, and FX gains ¥1.7B partially offset interest burden, but could not prevent Ordinary Income falling to ¥27.0B (-35.6%). Special items recorded net expense ¥2.0B, primarily impairment losses ¥2.7B (up ¥1.7B from ¥1.0B prior year). Pre-tax income was ¥25.0B, with income taxes ¥12.7B (effective tax rate 50.6%) creating a heavy tax burden; after deducting non-controlling interests ¥1.4B, Net Income attributable to owners of the parent was ¥9.0B (-27.2%). In conclusion, this was a revenue-up, profit-down result: headline sales were firm but cost inflation and rising interest expense caused multi-stage profit deterioration.
The Domestic Food segment recorded revenue ¥806.7B (+2.2%) and Operating Income ¥12.5B (-49.3%, margin 1.5%). Sales grew from price adjustments and higher volumes, but margin halved from 3.1% last year due to higher raw material and energy costs. Lagging price pass-through and higher manufacturing costs pressured profitability, with segment profit down ¥12.2B from ¥24.7B prior year. The Overseas Food segment reported revenue ¥166.7B (-2.7%) and Operating Income ¥5.4B (-44.2%, margin 3.2%), declining on FX headwinds and intensified local competition; margin decreased by 2.4pt from 5.6% last year and profit declined ¥4.2B from ¥9.6B. The Food-related segment achieved revenue ¥282.1B (+5.0%) and Operating Income ¥14.8B (+20.5%, margin 5.2%) driven by expanded logistics demand and increased outsourcing of indirect operations; margin improved by 0.6pt from 4.6% last year, and it was the only segment to report profit growth. Consolidated Operating Income was ¥32.6B (Operating margin 2.9%); Food-related’s contribution limited the margin decline, but profitability deterioration in core Domestic and Overseas Food segments weighed on overall results.
[Profitability] Operating margin 2.9% (down -1.2pt from 4.1%), Net Profit Margin 0.8% (down -1.6pt from 2.4%). Worsening Gross Margin 21.9% (down -1.2pt from 23.1%) combined with flat SG&A ratio 18.9% caused operating leverage to reverse. ROE 3.4% (down -9.7pt from 13.1%) fell sharply due to reduced Net Income, representing the lowest capital return in the past three years. DuPont decomposition: Net Profit Margin 0.8% × Total Asset Turnover 1.38 × Financial Leverage 3.04, with the fall in Net Profit Margin the primary driver. [Cash Quality] Operating Cash Flow (OCF) ¥14.4B is 1.60x Net Income ¥9.0B, indicating reasonable cash backing for profits, but includes Depreciation ¥22.1B so actual cash-generating capacity is limited. OCF subtotal ¥29.2B less working capital -¥11.1B (Accounts receivable increase -¥4.9B, Accounts payable decrease -¥10.6B, Inventory decrease +¥3.2B), taxes paid -¥8.8B and interest paid -¥7.3B resulted in OCF ¥14.4B. OCF/EBITDA ratio 0.26x (EBITDA approx. ¥54.7B) is low. Free Cash Flow was ¥4.1B (OCF - CapEx ¥12.3B), slightly below dividends of ¥4.6B, yielding dividend FCF coverage 0.89x. [Investment Efficiency] Total Asset Turnover 1.38x (down from 1.50x prior year). CapEx ¥12.3B equals 0.56x Depreciation ¥22.1B, indicating conservative, replacement-focused capital allocation. [Financial Soundness] Equity Ratio 32.9% (improved +3.5pt from 29.4%) and D/E ratio 2.04x (Interest-bearing debt ¥538.7B ÷ Equity ¥264.4B) show leverage is somewhat high but improved with higher equity. Debt/EBITDA 2.87x and Interest Coverage (EBIT / Interest Paid) 4.43x place interest burden near the lower bound of investment-grade. Current Ratio 121%, Quick Ratio 90.9% indicate neutral short-term liquidity, but with cash ¥82.9B versus short-term borrowings ¥38.7B + long-term borrowings due within 1 year ¥51.8B + short-term corporate bonds ¥11.4B, short-term interest-bearing debt totals ¥101.9B, making maturity management important.
OCF was ¥14.4B (down -62.7% from ¥38.6B prior year). OCF subtotal of ¥29.2B (Pre-tax income ¥25.0B + Depreciation ¥22.1B) was reduced by working capital deterioration -¥11.1B (Accounts receivable increase -¥4.9B, Accounts payable decrease -¥10.6B, Inventory decrease +¥3.2B), taxes paid -¥8.8B and interest paid -¥7.3B. In working capital, trade receivables increased ¥5.7B YoY causing cash outflow and trade payables decreased ¥10.2B YoY shortening payment cycles and causing outflow. Inventories decreased ¥3.1B YoY providing inflow, but overall working capital was a net outflow. Investing CF was -¥10.4B, mainly CapEx -¥12.3B, which is 56% of Depreciation ¥22.1B and indicates replacement-focused conservative capital spending. Intangible asset investment -¥1.1B and proceeds from sale of investment securities +¥2.8B resulted in net -¥10.4B outflow. Financing CF was -¥9.4B: long-term borrowings raised ¥56.9B and repayments -¥58.0B nearly offset, short-term borrowings increased +¥8.0B. Bonds issuance +¥10.0B and redemptions -¥10.9B net -¥0.9B, lease repayments -¥9.8B, dividends paid -¥4.6B, share buybacks -¥0.0B, resulting in net financing outflow. Free Cash Flow was OCF ¥14.4B - Investing CF ¥10.4B = ¥4.1B, insufficient to cover dividends ¥4.6B, and supplemented by increased short-term borrowings. Ending cash was ¥82.9B (down -¥4.2B YoY), reflecting reduced OCF and continued investing and dividend payments.
Operating Income ¥32.6B vs Ordinary Income ¥27.0B shows net non-operating expense ¥5.7B, mainly due to interest burden ¥7.4B. Pre-tax Income ¥25.0B includes special losses net ¥2.0B (impairment losses ¥2.7B, gain on sale of investment securities ¥0.7B), indicating one-off charges pressured earnings. Taxes of ¥12.7B on Pre-tax Income ¥25.0B (effective tax rate 50.6%) point to high tax burden and suggest erosion of tax benefits or constraints on recognizing deferred tax assets. There is a large gap between Net Income attributable to owners of the parent ¥9.0B and Comprehensive Income ¥56.7B, driven by Other Comprehensive Income ¥47.7B (mainly remeasurement gains on retirement benefits ¥40.1B). Pension asset valuation improvements temporarily boosted equity but are distinct from recurring operating performance. Non-operating income ¥3.7B includes FX gains ¥1.7B and is partly dependent on currency movements. The difference between OCF ¥14.4B (including Depreciation ¥22.1B) and Net Income ¥9.0B is ¥5.4B, indicating cash generation excluding depreciation is below Net Income. From an accrual perspective, working capital deterioration and high interest payments are impairing cash conversion and degrading earnings quality.
Full Year / FY guidance projects Revenue ¥1,168.7B (+5.3%), Operating Income ¥52.1B (+59.5%), Ordinary Income ¥43.4B (+60.8%), and Net Income attributable to owners of the parent ¥25.6B (+184.4%). This assumes Operating margin recovery to ~4.5% (up +1.6pt from current 2.9%) predicated on price pass-through, stabilization of raw material and energy costs, and margin correction in Domestic Food. Progress rates to date: Revenue 95.0%, Operating Income 62.6%, Ordinary Income 62.2%, Net Income 35.1%—profitability lags sales but the full-year plan is maintained based on seasonality in H2 and anticipated margin improvements. EPS forecast ¥112.09 (from ¥48.16 actual, +132.8%) expects significant Net Income recovery. Dividend forecast ¥0 (actual this period ¥20) indicates suspension of dividend, signaling priority given to strengthening the financial base over resuming payouts. Achievement of guidance depends on execution of price pass-through, progress on cost reduction measures, and margin improvements in Domestic and Overseas Food segments.
Dividend was paid as a year-end lump sum ¥20 (Payout Ratio 41.5%, DPS/EPS = 20/48.16). Total dividends ¥4.6B vs Free Cash Flow ¥4.1B yielded dividend FCF coverage 0.89x, a slight shortfall funded in the short term by retained earnings or borrowings. Next fiscal year dividend forecast is ¥0 (no dividend), prioritizing profit recovery over distributions. Payout Ratio 41.5% rose substantially from 17.6% prior year, primarily because Net Income declined while dividend per share remained unchanged at ¥20. No share buybacks were conducted (-¥0.0B), and Total Return Ratio equals the Payout Ratio. Given Debt/EBITDA 2.87x and Interest Coverage 4.43x, the no-dividend forecast indicates management’s focus on preserving financial soundness and allocating resources to profitability recovery. If profit recovery materializes, resumption of dividends and normalization of payout ratio to the 20–30% range could be expected.
Raw material & energy cost risk: Gross Margin 21.9% (down -1.2pt from 23.1%) has declined and sustained high prices for raw materials, energy and packaging are pressuring margins. Continued delay in price pass-through risks loss-making in Domestic Food (margin 1.5%).
High leverage & interest burden risk: D/E ratio 2.04x, Debt/EBITDA 2.87x, Interest Paid ¥7.4B (22.7% of Operating Income) create a heavy interest burden; Interest Coverage 4.43x is near the lower bound of investment-grade. Rising rates or worse borrowing conditions could strain finances and constrain dividends and investment capacity.
Cash conversion & working capital risk: OCF/EBITDA 0.26x is low, and working capital deterioration (AR increase, AP decrease) is pressuring liquidity. With short-term interest-bearing debt ¥101.9B vs cash ¥82.9B, insufficient maturity matching could crystallize liquidity risk if not managed.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.9% | 5.0% (3.3%–8.4%) | -2.1pt |
| Net Profit Margin | 0.8% | 3.2% (1.9%–6.6%) | -2.4pt |
Both Operating Margin and Net Profit Margin are over 2pt below industry medians, placing profitability in the lower tier within the food industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.0% | 5.4% (1.0%–8.6%) | -3.4pt |
Revenue growth lags the industry median of 5.4%, indicating below-average growth.
※ Source: Company compilation
Normalizing the profit structure is the top priority: Declines in Operating Margin to 2.9% (from 4.1%) and Gross Margin to 21.9% (from 23.1%) leave profitability well below the industry median (Operating Margin 5.0%). The next fiscal year’s plan targets recovery to Operating Margin 4.5%, but execution of price pass-through and progress on cost reduction are critical. Delays in margin correction in Domestic Food (margin 1.5%) would further pressure consolidated results.
Managing leverage and interest burden is essential for financial stability: D/E ratio 2.04x, Debt/EBITDA 2.87x, and Interest Paid ¥7.4B (22.7% of Operating Income) indicate persistently high leverage and interest costs. Interest Coverage 4.43x is near the lower bound of investment-grade; rising rates or declining OCF would weaken finances. With short-term interest-bearing debt ¥101.9B vs cash ¥82.9B, rigorous maturity management and strengthening FCF generation (OCF/EBITDA 0.26x → >0.4x) are needed.
Dividend sustainability depends on profit recovery: Next fiscal year dividend forecast ¥0 (current period ¥20) signals suspension of payouts to prioritize financial strengthening. Payout Ratio 41.5% (from 17.6%) rose due to falling Net Income while dividend per share remained ¥20; dividend sustainability is fragile with FCF coverage 0.89x. If Net Income plan ¥25.6B (+184.4%) is achieved, dividend resumption and normalization of payout ratio to the 20–30% range could be expected.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It does not constitute 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; please consult a professional advisor as needed.