| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥963.0B | ¥955.8B | +0.8% |
| Operating Income | ¥69.0B | ¥87.2B | -20.9% |
| Ordinary Income | ¥77.0B | ¥94.2B | -18.2% |
| Net Income | ¥79.0B | ¥94.0B | -16.0% |
| ROE | 9.5% | 11.9% | - |
For the fiscal year ended March 2026, Riken Vitamin Co., Ltd. reported Revenue of ¥963.0B (YoY +¥7.2B, +0.8%), a slight increase, while Operating Income fell to ¥69.0B (YoY -¥18.2B, -20.9%), Ordinary Income to ¥77.0B (YoY -¥17.2B, -18.2%), and Net Income to ¥79.0B (YoY -¥15.0B, -16.0%), marking a significant profit decline. Gross margin was 30.9% (down 1.8ppt from 32.7%), Operating margin 7.2% (down 1.9ppt from 9.1%), and Net margin 8.2% (down 1.6ppt from 9.8%). Key drivers were a large increase in manufacturing depreciation and amortization (¥46.8B, +46.0% YoY), a turnaround to losses in the Overseas Business (Operating loss ¥4.4B), and one-off downward impacts from changes in segment cost allocation and revisions to asset retirement obligation estimates (total approx. ¥8.9B). Special gains of ¥28.4B (including ¥25.8B gain on sale of investment securities) supported Pre-tax Income of ¥102.4B, but this was lower than prior-year special gains of ¥45.0B, resulting in Net Income down 16.0% YoY. Operating Cash Flow was ¥59.6B (YoY -24.4%), pressured by inventory build (+¥19.4B) and accounts receivable increases (+¥6.8B). FCF was ¥77.1B (Operating CF + Investing CF) but includes ¥39.1B proceeds from sale of investment securities; after capital expenditures, underlying FCF is limited at roughly ¥11B. Financially, the company maintains a strong position with an Equity Ratio of 71.6% and Cash and Deposits of ¥200.7B, executed ¥20.0B share buybacks, and kept the dividend at 110円 (Payout Ratio 30.3%). Total Return Ratio is in the ~70% range. Full-year guidance is Revenue ¥1,000.0B and Operating Income ¥71.0B, with progress rates at 96.3% and 97.2%, respectively, implying near-achievement.
Revenue of ¥963.0B was a slight increase of ¥7.2B (＋0.8% YoY). By segment, Domestic Food Business was resilient at ¥663.6B (+2.4%) and drove overall performance. Domestic Chemical & Other Business achieved ¥86.9B (+9.1%)—double-digit growth. Conversely, Overseas Business declined to ¥228.9B (-5.4%). Segment-reported Overseas Business revenue including inter-segment sales was ¥228.9B (internal sales ¥16.4B), with external customer revenue around ¥212.5B. Despite FX tailwinds, weakness in volumes and profitability surfaced. Revenue composition: Domestic Food 68.9%, Domestic Chemical & Other 9.0%, Overseas 22.1%, indicating continued concentration on domestic core business.
Cost of sales was ¥665.3B (69.1% of sales), up ¥35.3B (+5.6% YoY), yielding a gross margin of 30.9% (down 1.8ppt YoY). The main drivers of cost increases were higher depreciation and amortization (¥46.8B, up from ¥32.0B, +46.0% YoY) and poor performance in Overseas Business. SG&A was ¥228.7B (23.7% of sales), up ¥3.2B (+1.4% YoY), with SG&A ratio largely unchanged (+0.1ppt). Consequently, Operating Income declined to ¥69.0B (Operating margin 7.2%), down ¥18.2B (-20.9% YoY). During the period, changes in segment cost allocation shifted costs mainly to Overseas Business, and a revision of asset retirement obligation estimates (asbestos removal and site restoration) reduced Operating Income by ¥8.54B in Domestic Food, ¥0.25B in Domestic Chemical & Other, and ¥0.10B in Overseas. Non-operating income totaled ¥11.1B (including dividend income ¥6.5B and interest income ¥1.7B) and non-operating expenses were ¥3.1B (including interest expense ¥1.1B and foreign exchange losses ¥1.3B), resulting in Ordinary Income of ¥77.0B (YoY -¥17.2B, -18.2%). After Special gains of ¥28.4B (including gain on sale of investment securities ¥25.8B, gain on sale of fixed assets ¥0.1B) and Special losses of ¥3.0B (including retirement loss on fixed assets ¥0.9B and loss on sale of fixed assets ¥1.0B), Pre-tax Income was ¥102.4B. Income taxes were ¥32.0B (effective tax rate 31.2%). Net Income attributable to owners of the parent was ¥79.0B (YoY -¥15.0B, -16.0%). In summary, despite slight top-line growth, higher depreciation, overseas losses, and one-off charges produced a material earnings decline.
Operating CF was ¥59.6B, down 24.4% YoY. Pre-tax profit before adjustment was ¥102.4B; adding back D&A ¥46.8B and other adjustments yields a subtotal of ¥81.1B, but working capital increases (Inventory +¥19.4B, Accounts Receivable +¥6.8B, Accounts Payable -¥2.9B) produced approx. ¥29B cash outflow. Interest and dividends received totaled ¥8.3B, and income taxes paid were -¥28.4B, resulting in Operating CF of ¥59.6B. DSO (Days Sales Outstanding) was about 81 days, DIO (Days Inventory Outstanding) about 121 days, DPO (Days Payable Outstanding) about 41 days, leading to CCC of about 161 days—lengthening. Investing CF was +¥17.5B, due to proceeds from sale of investment securities ¥39.1B and subsidies received ¥2.4B exceeding capital expenditures -¥48.6B, intangible asset purchases -¥1.3B, and fixed asset retirements -¥1.8B. Capex was essentially flat YoY (+¥0.2B), balancing capacity expansion and maintenance. Financing CF was -¥80.4B, driven by dividend payments -¥32.4B, share buybacks -¥20.0B, long-term borrowings repayments -¥25.7B, and net short-term borrowing reduction -¥2.0B. While long-term borrowings of ¥50.0B were raised, repayments exceeded proceeds. As a result, FCF (Operating CF + Investing CF) was ¥77.1B, but excluding proceeds from sale of investment securities, post-capex FCF is about ¥11B. Comprehensive income, including foreign currency translation adjustments of ¥19.5B, was ¥95.5B, adding to Net Income ¥79.0B via FX and valuation gains/losses on securities.
Against Ordinary Income of ¥77.0B, non-operating income of ¥11.1B (dividends received ¥6.5B, interest received ¥1.7B) was mainly stable income from financial assets. FX losses ¥1.3B reflect Overseas Business effects but are limited. Of Special gains ¥28.4B, gain on sale of investment securities ¥25.8B is temporary and unlikely to recur. Special losses ¥3.0B are small. The asset retirement obligation revision reduced Operating Income by approx. ¥8.9B (Domestic Food ¥8.54B, Domestic Chemical & Other ¥0.25B, Overseas ¥0.10B), a one-off accounting effect. Change in segment cost allocation allocated approx. ¥5.2B additional cost to Overseas YoY, but this is a managerial accounting change and does not materially affect cash flow. From an accrual perspective, Operating CF ¥59.6B is below Net Income ¥79.0B due to non-cash special gains (proceeds from investment securities sale ¥39.1B) and working capital deterioration. Operationally, considering non-cash D&A ¥46.8B, EBITDA is ¥115.8B, but working capital increases keep cash conversion at 0.51x. Earnings sustainability is supported by stability in Domestic Food, but Overseas losses and working capital management are key to improving quality.
Full-year guidance: Revenue ¥1,000.0B (YoY +3.8%), Operating Income ¥71.0B (YoY +2.9%), Ordinary Income ¥76.0B (YoY -1.4%), Net Income ¥75.0B (YoY -20.2%). Cumulative results through Q3: Revenue ¥963.0B (progress 96.3%), Operating Income ¥69.0B (progress 97.2%), Ordinary Income ¥77.0B (progress 101.3%), indicating Operating and Ordinary Income roughly on track. Reported Net Income of ¥79.0B (progress 105.3%) exceeds the annual target of ¥75.0B, but this is largely driven by Special gains of ¥28.4B (mainly gain on sale of investment securities ¥25.8B), not by improvements in recurring earnings power. Full-year EPS guidance is 256.96円, dividend guidance is 55.00円 (interim and year-end each 55円, annual 110円), unchanged. The guidance assumes Revenue up 3.8% YoY but includes a drop in Net Income driven by the disappearance of prior special gains. The company assumes Q4 standalone contributions of roughly Revenue ¥370.0B and Operating Income ¥20.0B, but profit margin improvement may be limited due to continued Overseas losses and cost allocation impacts. Overall progress toward guidance is sound, but remediation of Overseas profitability and working capital improvements are prerequisites for sustainable growth beyond the forecast.
Annual dividend maintained at 110円 (interim 55円, year-end 55円), unchanged from prior year. Payout Ratio is 30.3% (Dividends ¥32.4B / Net Income ¥79.0B), at an appropriate level. With total dividends ¥32.4B and FCF ¥77.1B, FCF coverage of dividends is 2.38x, indicating sustainability. Excluding proceeds from sale of investment securities ¥39.1B, underlying FCF is approx. ¥38B, reducing coverage to ~1.17x. Share buybacks of ¥20.0B were executed; combined with dividends ¥32.4B, total shareholder returns were ¥52.4B, implying a Total Return Ratio of about 66% (Total returns ¥52.4B / Net Income ¥79.0B). On a financing CF basis, shareholder returns comprised share buybacks -¥20.0B and dividend payments -¥32.4B, totaling -¥52.4B. Treasury shares increased to 1,517 thousand shares (4.9% of outstanding shares), and the weighted average shares outstanding during the period were 29,538 thousand shares. Book Value per Share (BPS) was 2,855.29円, up from 2,649.95円 (+7.7%), supported by share buybacks. DOE (Dividend on Equity) is about 3.9% (Dividends ¥32.4B / Beginning equity ¥833.8B), steady. If working capital efficiency improves and underlying FCF expands, the capacity for returns would increase. Dividend policy is profit-linked, so EPS recovery will determine room for higher dividends, but with Cash ¥200.7B and Equity Ratio 71.6%, the balance sheet is very strong and return sustainability is high.
Overseas Business profitability deterioration and earnings volatility: Overseas Business swung to an Operating loss of ¥4.4B (prior Operating Income ¥11.2B), with segment margin deteriorating to -1.9%. The change in segment cost allocation added approx. ¥5.2B of costs YoY to Overseas, compounding revenue decline and margin deterioration. Continued losses in Overseas, which accounts for Revenue ¥228.9B (22.1% of company revenue), pose downside risk to consolidated profits. FX assumptions and rising costs at overseas sites add uncertainty.
Working capital deterioration and weakened cash conversion: This period saw Inventory increase +¥19.4B, Accounts Receivable +¥6.8B, Accounts Payable -¥2.9B, totaling approx. ¥29B working capital deterioration. DSO 81 days, DIO 121 days, CCC 161 days—lengthening, and Operating CF / EBITDA 0.51x is low. Post-capex underlying FCF is about ¥11B, limited; without improvements in working capital management, cash generation recovery will be difficult. Inventory buildup may reflect demand variability but includes risk of excess or aged stock.
Raw material & energy cost inflation and higher depreciation pressures compress margins: Gross margin at 30.9% (down 1.8ppt) was driven mainly by higher D&A (¥46.8B, +46.0% YoY) and raw material/energy cost increases. The asset retirement obligation revision reduced Operating Income by approx. ¥8.9B as a one-off. Increased D&A linked to asset base expansion (Total fixed assets ¥278.3B, +9.0% YoY) will likely continue to burden margins for the near term. Delayed price pass-through or intensified competition could slow margin recovery.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 7.2% | 5.0% (3.3%–8.4%) | +2.2pt |
| Net margin | 8.2% | 3.2% (1.9%–6.6%) | +5.0pt |
Profitability materially exceeds the industry median and ranks in the upper tier.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 0.8% | 5.4% (1.0%–8.6%) | -4.6pt |
Revenue growth lags the industry median, indicating weaker growth performance.
※ Source: Company compilation
One-offs rolling off could open room for margin recovery. The asset retirement obligation revision (~¥8.9B Operating Income drag) and the segment cost allocation change (approx. ¥5.2B additional burden on Overseas) are largely period-specific; normalization could provide >¥10B upside to Operating Income. While increased D&A of ¥46.8B will persist, EBITDA of ¥115.8B suggests capacity to generate pre-depreciation profits, and if Overseas loss correction and price pass-through progress, Operating margin recovery to the 8–9% range is attainable.
Working capital improvement is the immediate priority. Optimizing inventory and strengthening receivables collection to shorten DSO 81 days, DIO 121 days, and CCC 161 days could raise Operating CF / EBITDA from ~0.5x to >0.7x, expanding post-capex underlying FCF and boosting resources for returns and growth investment. Watch for inventory valuation loss risks and aging inventory, though ample cash ¥200.7B and Equity Ratio 71.6% mitigate short-term liquidity concerns.
Timing and magnitude of Overseas turnaround will drive mid-term share-price momentum. Recovery from a -1.9% segment margin requires price adjustments, production efficiency improvements, and stabilization of cost allocation; successful execution could lift consolidated Operating margin above 9% and restore ROE to double digits. With a Payout Ratio 30.3% and Total Return Ratio 66%, return capacity is robust; improved earnings could enable higher dividends or further buybacks.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document, not a recommendation to invest in any specific security. Industry benchmarks are company-compiled references based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.