| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥1397.8B | ¥1339.0B | +4.4% |
| Operating Income | ¥27.6B | ¥30.0B | -8.1% |
| Equity-Method Investment Gains (Losses) | ¥3.6B | ¥6.7B | -46.4% |
| Ordinary Income | ¥30.2B | ¥36.0B | -16.2% |
| Net Income | ¥11.3B | ¥14.1B | -19.4% |
| ROE | 3.3% | 4.7% | - |
For the fiscal year ended March 2026, Revenue was 1,397.8B (YoY +58.8B, +4.4%), Operating Income was 27.6B (YoY -2.4B, -8.1%), Ordinary Income was 30.2B (YoY -5.8B, -16.2%), and Net Income attributable to owners of the parent was 11.3B (YoY -2.8B, -19.4%), resulting in a topline increase with a decline in profit. Gross profit margin remained steady at 8.9%, but SG&A increased to 96.5B (YoY +4.6%), causing Operating Income margin to deteriorate from 2.2% to 2.0%. At the ordinary income level, Equity-method investment gains fell by half from 6.7B to 3.6B and interest expense rose to 4.9B (prior year 4.1B), weighing on results and lowering the Ordinary Income margin from 2.7% to 2.2%. At the bottom line, income taxes of 7.9B led to a double-digit decline in Net Income of -19.4%. Operating Cash Flow (OCF) was -11.6B (prior year -13.5B), marking the second consecutive year of negative OCF; the OCF/Net Income ratio was -0.53x versus Net Income of 21.8B, indicating weak cash realization of earnings. Free Cash Flow was -21.7B (prior year -33.3B). Combined with dividends of 8.7B, funding needs were met by a net increase in short-term borrowings of +75.6B and net increases in bonds and long-term borrowings.
Revenue totaled 1,397.8B (YoY +4.4%) and showed resilient performance. By segment, the core Food Business led growth with 907.0B (+6.5%, revenue mix 64.9%). Marine Business recorded 248.0B (+4.9%), Materials Business 95.7B (+2.5%), both firm. Biotics Business and Logistics Business were slightly down at 2.9B (-1.0%) and 23.2B (-2.8%) respectively. Conversely, Machinery Business declined double digits to 134.4B (-14.3%), weighing on overall growth. The revenue increase was primarily driven by volume expansion and price pass-through in the Food Business and demand recovery in the Marine Business; the Machinery Business declined due to fewer orders and delivery delays.
Gross profit was 124.0B (gross margin 8.9%), a slight increase of 1.8B (1.5%) YoY, leaving gross margin nearly flat from 9.1% a year earlier. SG&A was 96.5B (SG&A ratio 6.9%), up 4.2B (4.6%) YoY, leading Operating Income to fall to 27.6B (Operating margin 2.0%), a decline of 8.1%. The SG&A increase was driven by higher personnel and logistics costs; SG&A growth outpaced revenue growth, reversing operating leverage. Non-operating items included Equity-method investment gains of 3.6B (prior year 6.7B) halved, and interest expense increased to 4.9B (prior year 4.1B), reducing Ordinary Income to 30.2B (-16.2%). Extraordinary items comprised special gains of 2.6B (gain on sales of investment securities 1.4B and gain on sales of fixed assets 1.3B) against special losses of 3.0B (including impairment losses 1.3B and litigation settlement 1.9B), netting to a -0.4B burden. Profit before tax was 29.8B; after income taxes of 7.9B and non-controlling interests of 0.04B, Net Income attributable to owners of the parent was 11.3B (YoY -19.4%). One-off items were limited to the net special items of -0.4B; the primary drivers of the profit decline were the reduction in Equity-method gains and higher interest expense at the ordinary level. In conclusion, the result was higher revenue but lower profits.
Profitability: Operating margin 2.0% (prior year 2.2%), Net margin 0.8% (prior year 1.1%) remained at low levels. ROE 3.3% (prior year 4.7%) declined from historical company levels; ROA (Ordinary Income basis) was 1.3%, also low. Gross margin 8.9% indicates a thin-margin structure; combined with an SG&A ratio of 6.9%, Operating margin is constrained in the 2% range.
Cash quality: Operating Cash Flow was -11.6B (OCF/Net Income -1.03x), indicating weak cash generation. EBITDA-equivalent (Operating Income 27.6B + Depreciation 12.3B) was 39.9B; OCF/EBITDA was -0.29x, highlighting deterioration in working capital. Main drivers were inventory increase -36.5B, increase in advance payments -5.0B, and decrease in accounts payable -15.9B; inventory reached 306.9B (33.9% of total assets, 2.2 months of sales). The accrual ratio ((Net Income - OCF)/Total Assets) was 2.5%, indicating delayed cash realization of earnings.
Investment efficiency: Total asset turnover was 1.54x (prior year 1.61x), trending down. Inventory turnover was 4.55x (inventory days 80), showing room for inventory efficiency improvement. Tangible fixed asset turnover was 13.3x, indicating high capital efficiency.
Financial soundness: Equity Ratio was 37.9% (prior year 36.4%), slightly improved but moderate. Current ratio 172.8%, Quick ratio 85.3% indicate liquidity dependent on inventory. Cash and deposits were 68.7B versus short-term borrowings of 153.4B and current liabilities of 350.6B, resulting in cash/short-term liabilities ratio of 19.6%, indicating thin liquidity. Interest-bearing debt (short-term borrowings + bonds maturing within 1 year + long-term borrowings + bonds) was 342.2B, with Debt/EBITDA 8.6x and Net Debt/EBITDA 6.9x showing high leverage. Interest coverage (EBITDA / interest expense) was 8.2x, acceptable at present but vulnerable to rising interest rates.
Operating Cash Flow was -11.6B (prior year -13.5B), marking two consecutive years of negative OCF. Profit before tax of 29.8B plus depreciation 12.3B, adjusted for equity-method gains -3.6B and dividends received -2.6B, produced an OCF subtotal of -3.1B, indicating weak cash generation even before working capital movements. In working capital, inventory increased by -36.5B; while trade receivables improved by +10.4B, payables decreased by -15.9B and advance payments increased, resulting in a net working capital outflow of -8.5B. After income tax payments of -7.6B, OCF was -11.6B. Investing CF was -10.1B: acquisitions of tangible and intangible fixed assets -14.6B were partly offset by proceeds from disposals 4.4B and subsidies received 0.07B, and included acquisition of investment securities -0.07B, yielding a net outflow of -10.1B. Free Cash Flow (OCF + Investing CF) was -21.7B (prior year -33.3B). Together with dividend payments of 8.7B, total funding need was 30.4B. Financing CF provided +30.3B, funded by net increase in short-term borrowings 75.4B, long-term borrowings raised 17.0B, and bond issuance 39.4B, while repaying long-term borrowings -45.1B, bond redemptions -7.6B, lease repayments -1.5B, treasury stock purchases -0.5B, and dividend payments -8.7B. Cash and cash equivalents increased from 55.1B at the beginning of the period to 64.2B at the end (+9.0B), largely due to increased short-term borrowings, and not due to operating cash generation.
Earnings this period were primarily from recurring business activities. Of non-operating income 8.7B (0.6% of revenue), dividends received 2.6B and Equity-method investment gains 3.6B were the main items; one-off income was limited. Net special items were -0.4B (special gains 2.6B vs special losses 3.0B). The gap between Ordinary Income 30.2B and Net Income 11.3B is mainly due to income taxes of 7.9B (effective tax rate 26.5%); the impact of unusual tax burdens and non-controlling interests (0.04B) is minor. Comprehensive income was 48.2B, significantly exceeding Net Income 11.3B; other comprehensive income (after tax) 26.4B was driven by valuation gains on available-for-sale securities 20.4B, deferred hedge gains/losses 0.3B, pension adjustments 2.4B, foreign currency translation adjustments 1.7B, and OCI attributable to equity-method affiliates 1.6B. Valuation gains on investment securities of 179.2B (19.8% of total assets) bolstered comprehensive income, indicating sensitivity to market movements. The divergence between OCF -11.6B and Net Income 11.3B (accrual ratio 2.5%) was mainly due to inventory increase -36.5B and decrease in payables -15.9B, signaling concern over working capital conversion and earnings quality.
For FY March 2027, management forecasts Revenue 1,450.0B (YoY +3.7%), Operating Income 32.0B (+16.0%), Ordinary Income 36.0B (+19.3%), Net Income attributable to owners of the parent 26.0B (+130.1%), and EPS ¥310.31 (prior year ¥260.23), expecting both revenue and profit growth. Results through the first half were Revenue 1,397.8B (96.4% of full-year plan), Operating Income 27.6B (86.3%), Ordinary Income 30.2B (83.9%), Net Income 11.3B (43.5%). Progress is steady at the revenue, operating, and ordinary stages, but Net Income progress is low due to prior-year special items. To achieve the full-year plan, the company needs additional Revenue of 52.2B (+3.7%) and Operating Income uplift of 4.4B in the second half, assuming Operating margin recovery to 2.2% for the full year. Key levers include gross margin improvement and SG&A containment in the Food Business, and expansion of the high-margin Marine and Machinery businesses. If working capital normalizes, OCF turns positive, and inventory is reduced from 306.9B, financial soundness would improve. The company projects EPS of ¥310.31 (+19.2% YoY) and plans to maintain annual dividend at ¥100 (year-end ¥50).
The dividend is planned at ¥100 per share annually (interim ¥50, year-end ¥50 forecast), continuing stable dividends compared with the prior year (interim ¥45, year-end ¥55). Relative to Net Income attributable to owners of the parent 11.3B and EPS ¥260.23, the Payout Ratio is 30.3% (on an annualized ¥78.63 basis), a reasonable level. Total dividends amount to approximately 8.7B (including interim dividends of about 4.2B). FCF-based dividend coverage is -2.49x versus Free Cash Flow of -21.7B, indicating dividends are not covered by FCF and were funded through increased short-term borrowings and issuance of bonds/long-term borrowings. The company repurchased treasury stock of 0.5B during the period (financing CF). The Total Return Ratio was 31.9%. For FY March 2027, the dividend is forecast to be maintained at ¥100 (year-end ¥50); the forecast Payout Ratio versus full-year Net Income 26.0B is 32.2%. While the dividend policy emphasizes stability, sustainability depends on restoring cash generation via inventory reduction and profitability improvement given two consecutive years of negative OCF and deteriorating working capital.
Working capital risk: Inventory has risen to 306.9B (33.9% of total assets), driving OCF to -11.6B and creating two consecutive years of negative OCF. Inventory days are 80 and prolonged, posing risks of write-downs/obsolescence and higher storage costs. Trade receivables are 153.5B (about 1.1 months of sales) and relatively healthy, but a decline in trade payables to 101.8B contributed to a net working capital outflow of -8.5B, pressuring cash generation. Delays in normalizing inventory would affect both liquidity and profitability.
Financial leverage risk: Short-term borrowings increased sharply to 153.4B (YoY +97.3%), and together with bonds maturing within one year 5.2B, long-term borrowings 88.4B, and bonds 89.0B, interest-bearing debt reached 342.2B. Debt/EBITDA 8.6x and Net Debt/EBITDA 6.9x indicate high leverage; in a rising-rate environment interest expense (current period 4.9B) could increase further. Cash and deposits are 68.7B versus short-term liabilities 350.6B, leaving thin liquidity buffer and non-negligible refinancing risk.
Business portfolio risk: The Food Business accounts for 64.9% of revenue but is low-margin (Operating margin 1.8%) and recorded a YoY profit decline of -15.0%. Concentration in Food exposes the company to demand volatility, delayed price pass-through, and cost increases. While Machinery is high-margin (10.6%), its revenue is contracting (-14.3%), and Marine’s revenue share is limited (17.7%), so they are not large enough to materially lift consolidated profitability. Equity-method gains halved to 3.6B (prior year 6.7B), raising concerns about the stability of external income sources.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.0% | 3.4% (1.4%–5.0%) | -1.4pt |
| Net Margin | 0.8% | 2.3% (1.0%–4.6%) | -1.5pt |
Both Operating and Net margins are below industry medians, indicating pronounced low-margin structure within the wholesale sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.4% | 5.9% (0.4%–10.7%) | -1.4pt |
Revenue growth is slightly below the median but within the first quartile, indicating growth roughly in line with the industry average.
※ Source: Company compilation based on public financial statements
Continued revenue growth with thin margins: Revenue grew +4.4% but Operating margin 2.0% and Net margin 0.8% remain well below industry medians. The core Food Business accounts for 64.9% of revenue but has low margin (1.8%) and a YoY profit decline of -15.0%. High-margin Machinery (10.6%) and Marine (4.3%) underpin consolidated profits but Machinery’s revenue is down -14.3% and has not expanded its share. The FY March 2027 plan targets Operating Income 32.0B (+16.0%), but achieving this depends on gross margin recovery and SG&A control in Food and expansion of Marine and Machinery.
Worsening working capital and weak cash generation: OCF was -11.6B and FCF -21.7B. The main cause was inventory increase of -36.5B (inventory 306.9B, 2.2 months of sales), with inventory days at 80. A reduction in payables by -15.9B also contributed to a net working capital outflow of -8.5B. Against EBITDA-equivalent 39.9B, OCF/EBITDA was -0.29x, indicating extremely low cash conversion. Dividends of 8.7B were funded by increased short-term borrowings +75.4B and bond/long-term borrowings, resulting in FCF-based dividend coverage of -2.49x. Without inventory compression and working capital normalization, financial sustainability is unstable.
Rising financial leverage and liquidity risk: Short-term borrowings rose to 153.4B (YoY +97.3%), raising interest-bearing debt to 342.2B. Debt/EBITDA 8.6x and Net Debt/EBITDA 6.9x indicate high leverage; interest expense increased to 4.9B. Cash and deposits 68.7B versus short-term liabilities 350.6B leave thin liquidity buffer, cash/short-term liabilities ratio 19.6%. Quick ratio 85.3% reflects inventory-dependent liquidity. In a rising-rate environment, interest burden and, in an economic downturn, inventory write-downs could tighten liquidity. Interest coverage 8.2x is acceptable now, but continued negative OCF and rising reliance on short-term borrowings raise medium-term financial health concerns.
This report was automatically generated by AI analyzing XBRL financial statement disclosure data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional as needed.