| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥409.2B | ¥415.2B | -1.4% |
| Operating Income / Operating Profit | ¥20.9B | ¥12.8B | +63.0% |
| Ordinary Income | ¥21.5B | ¥13.4B | +59.7% |
| Net Income / Net Profit | ¥13.8B | ¥9.6B | +44.2% |
| ROE | 6.9% | 5.1% | - |
For the fiscal year ended February 2026, Revenue was ¥409.2B (YoY -¥6.0B -1.4%), a slight decline, while Operating Income was ¥20.9B (YoY +¥8.1B +63.0%), Ordinary Income was ¥21.5B (YoY +¥8.0B +59.7%), and Net Income was ¥13.8B (YoY +¥4.2B +44.2%), delivering substantial profit growth. Operating margin improved to 5.1% from 3.1% a year ago (+2.0ppt), driven by a gross margin improvement to 21.8% (up +2.1ppt from 19.7%) and contained SG&A at 16.7% (flat YoY). Cost of goods sold ratio declined to 78.2% from 80.3% (-2.1ppt) as stabilization of raw material and energy costs and the implementation of pricing measures contributed. Operating Cash Flow was ¥42.0B (YoY +404.9%), generating three times Net Income, and Free Cash Flow was ample at ¥37.7B, sufficiently covering dividend payments and debt repayments.
Revenue: Revenue was ¥409.2B (YoY -¥6.0B -1.4%), a slight decline. The Company operates a single segment of pickled vegetable manufacturing and sales, and does not disclose regional or product breakouts. Accounts receivable increased by ¥4.7B YoY, indicating signs of client expansion, while a decline in sales volumes or a change in product mix appears to be the driver of lower revenue. Gross margin improved to 21.8% from 19.7% (+2.1ppt), confirming stabilization of raw material and energy costs and the penetration of price revisions.
P/L: Operating Income was ¥20.9B (YoY +¥8.1B +63.0%), a substantial increase. Gross profit rose to ¥89.0B (from ¥81.9B, +¥7.1B +8.7%), outpacing revenue change significantly; improvement in cost of goods sold ratio was the main driver of margin expansion. SG&A was ¥68.2B (from ¥69.1B, -¥1.0B -1.4%), decreasing in absolute terms and demonstrating expense control despite lower sales. Non-operating income was ¥1.0B (including dividend income ¥0.1B, equity-method income ¥0.2B); non-operating expenses were ¥0.3B (interest expense ¥0.2B), both immaterial. Ordinary Income of ¥21.5B (YoY +59.7%) largely reflects the Operating Income improvement. Special losses of ¥0.6B (impairment losses ¥0.6B) were recorded but were limited in scale. Profit before tax was ¥20.9B (YoY +60.2%); after deducting income taxes of ¥7.1B, Net Income was ¥13.8B (YoY +44.2%). The effective tax rate rose to 34.0% from 26.8% due to the reversal of the prior year's large deferred tax asset recognition. In conclusion, this was a result of lower revenue but higher profits, with pricing/mix improvements and efficiency gains driving earnings.
Profitability: Operating margin improved to 5.1% (from 3.1%, +2.0ppt), mainly driven by the rise in gross margin to 21.8% (from 19.7%, +2.1ppt). Cost of goods sold ratio improved to 78.2% from 80.3%, reflecting stabilization of raw material and energy costs and penetration of pricing measures. SG&A ratio remained at 16.7% year-over-year, showing cost containment despite revenue decline. ROE improved to 6.9% (from 5.3%) but remains in single digits, around industry-average levels.
Cash Quality: Operating Cash Flow (OCF) of ¥42.0B is three times Net Income (¥13.8B), indicating a very high cash conversion rate. OCF/EBITDA (EBITDA = Operating Income + Depreciation = ¥32.3B) was 1.30x, showing good cash conversion. Working capital efficiency is high: inventory turnover days 4.4 days (Inventory ¥3.9B / COGS ¥320.2B × 365), accounts receivable days 41.2 days, accounts payable days 33.2 days, yielding a CCC of about 12 days and maintaining a short cash cycle.
Investment Efficiency: Capital expenditure was ¥3.9B / Depreciation ¥11.4B = 0.34x, a low level suggesting a slowdown in investment rhythm. Total asset turnover was 1.36x (Revenue ¥409.2B / Total Assets ¥302.0B), indicating high efficiency; fixed asset turnover was 2.40x.
Financial Soundness: Equity Ratio was 66.4% (from 62.4%), indicating a solid balance sheet. Interest-bearing debt totaled ¥31.5B (short-term borrowings ¥4.0B + long-term borrowings ¥23.1B + current portion of long-term borrowings ¥4.4B). Debt/EBITDA was 0.98x, and interest coverage (Operating Income / Interest Paid) was 95.0x, showing negligible interest burden. Current ratio was 175.2% and quick ratio 169.4%, indicating ample liquidity.
Operating Cash Flow was ¥42.0B (from ¥8.3B, +¥33.7B), a large improvement, generating three times Net Income of ¥13.8B. Pre-working-capital subtotal of OCF was ¥44.7B, with non-cash charges such as Depreciation ¥11.4B, Impairment losses ¥0.6B, and Goodwill amortization ¥1.0B added back to profit. In working capital, increases in accounts receivable -¥4.7B (due to expanded customer base) and decreases in accounts payable -¥0.6B were modest headwinds, while inventory was roughly flat, maintaining a CCC of about 12 days. Other operating activities contributed +¥9.8B (from -¥4.4B prior year), including increases in retirement benefit obligations of ¥0.6B and receipt of subsidies. Income taxes paid were ¥2.8B (from ¥6.7B), reflecting lower tax burden vs. prior year. Investing Cash Flow was -¥4.3B, with capital expenditures -¥3.9B (down significantly from -¥46.9B prior year), reflecting a step-down after large prior investments. Free Cash Flow was ample at ¥37.7B, and Financing Cash Flow was -¥25.3B (dividend payments -¥3.6B, long-term borrowings repayments -¥15.7B, short-term borrowings repayments -¥6.0B, etc.), resulting in cash and deposits rising to ¥62.1B (from ¥49.7B, +¥12.4B).
Ordinary Income of ¥21.5B versus Net Income of ¥13.8B indicates tax burden at an effective rate of 34.0% is the primary difference, and earnings quality is stable. Non-operating income of ¥1.0B comprised dividend income ¥0.1B, equity-method income ¥0.2B, and other ¥0.3B, with limited one-off elements. Non-operating expenses of ¥0.3B were mainly interest paid ¥0.2B, indicating minimal financial cost. Special items included special gains ¥0.1B (subsidies, etc.) and special losses ¥0.6B (impairment losses ¥0.6B); the impairment appears temporary and small in scale. Comprehensive income was ¥14.8B, ¥1.0B above Net Income, with unrealized gain on securities ¥0.8B and actuarial gain/loss adjustments ¥0.2B contributing positively. OCF/Net Income = 3.0x indicates excellent cash conversion and high accrual quality. Since recurring income is driven by Operating Income improvement and dependence on one-off items is low, earnings sustainability is assessed as high.
Full Year guidance: Revenue ¥410.0B (YoY +0.2%), Operating Income ¥18.2B (YoY -12.7%), Ordinary Income ¥18.6B (YoY -13.4%), Net Income ¥12.3B (YoY -10.9%) — projecting revenue up slightly but profit down. H1 results were Revenue ¥409.2B (99.8% of full-year guidance) and Operating Income ¥20.9B (114.8% of full-year guidance), indicating very high progress rates; revenue is nearly achieved and Operating Income exceeded expectations. H2 assumptions include Revenue ¥0.8B (YoY +¥7.4B) and Operating Income -¥2.7B (YoY deterioration of -¥10.8B), reflecting a conservative plan factoring in rises in raw material, energy, and labor costs and front-loaded promotional spending. Forecast EPS is ¥98.33, versus H1 realized ¥110.70; dividend forecast is ¥15.00 (payout ratio 15.3%), unchanged from the ¥15 H1 dividend. While H1’s large profit increase is assumed to be offset by higher costs in H2, the high progress rate suggests potential for upward revision to full-year guidance.
Annual dividend is H1 ¥15 and H2 ¥14, total ¥29, representing a Payout Ratio of 26.2% (Dividend ¥29 / EPS ¥110.70). Prior-year dividend was ¥12, so this fiscal year saw a substantial increase of +¥17. Total dividend payout was ¥3.6B, a level well supported by Net Income ¥13.8B. Free Cash Flow ¥37.7B / Total Dividends ¥3.6B = 10.5x, indicating dividends are well covered by cash generation and sustainability is very high. H1 dividend of ¥29 already exceeds the full-year forecast of ¥15. Therefore, H2 is likely to be maintained or possibly increased. No share buyback disclosure has been made; shareholder returns remain dividend-focused. With Equity Ratio 66.4% and cash and deposits ¥62.1B, financial capacity is ample, supporting continued stable dividends and scope for further increases.
Raw Material Price Volatility Risk: Inventory is ¥3.9B (raw materials ¥2.8B, finished goods ¥3.9B) and is limited in size, but price volatility of raw materials (vegetables, seasonings) that constitute a large portion of COGS (¥320.2B; 78.2%) and harvest variability due to adverse weather directly affect costs. Although gross margin improved by +2.1ppt YoY, part of this improvement depends on cyclical stability in cost conditions; next fiscal year guidance builds in potential increases in raw material and energy costs.
Capex Shortfall Risk: CapEx ¥3.9B / Depreciation ¥11.4B = 0.34x is low; although this reflects a step-down after prior-year large investment (CapEx ¥46.9B), if the low investment rhythm continues, delayed renewal of aging equipment and stagnation of automation could impair medium- to long-term productivity and competitiveness. Depreciation of fixed assets (¥170.6B, down from ¥177.9B, -¥7.3B) suggests increasing asset age.
Slowing Revenue Growth Risk: Revenue declined YoY -1.4%, underperforming the industry median +5.4% by 6.8ppt. Market maturity, intensified price competition, and penetration of retailer private brands are contributors. Accounts receivable increased (+¥4.7B), but if sales volume decline continues, operating leverage could reverse and pressure margins. Next fiscal year guidance assumes flat revenue; restoring growth momentum is a challenge.
Profitability / Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.1% | 5.0% (3.3%–8.4%) | +0.1pt |
| Net Profit Margin | 3.4% | 3.2% (1.9%–6.6%) | +0.2pt |
Profitability is roughly in line with industry medians; gross margin improvement and cost control support industry-average level margins.
Growth / Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.4% | 5.4% (1.0%–8.6%) | -6.8pt |
Revenue growth trails the industry median by 6.8ppt, reflecting market maturity and intensified competition; reversing this trend is a priority.
※Source: Company compilation
Large profit improvement due to gross margin expansion and cost containment: Despite slight revenue decline, Operating Margin improved to 5.1% (from 3.1%, +2.0ppt). Stabilization of raw material and energy costs and price measure implementation are confirmed. OCF of ¥42.0B (3.0x Net Income) indicates very high cash-generating ability; Free Cash Flow of ¥37.7B fully covers dividends and debt repayments, with cash and deposits rising to ¥62.1B. Financials are conservative with Equity Ratio 66.4% and Debt/EBITDA 0.98x; dividend sustainability is high with Payout Ratio 26.2% and Free Cash Flow coverage 10.5x.
Delayed capex rhythm and slowing growth: CapEx ¥3.9B / Depreciation ¥11.4B = 0.34x is low; although a post-large-investment reaction, if prolonged it could lead to asset aging and slower automation, impacting medium- to long-term competitiveness. Revenue growth of -1.4% is well below the industry median +5.4%, reflecting market maturity and pricing pressure. Guidance for next fiscal year assumes higher revenue but lower profits, incorporating increases in raw material/labor costs and promotional investments; however, high H1 progress suggests room for upward revisions. Selective acceleration of equipment renewal and automation investment, together with product development and channel expansion to restore growth momentum, will be key to improving ROE and achieving sustainable growth.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed before making any investment decisions.