Q1 improved, but full-year FY2027 earnings recovery depends on Q2 onward

For Q1 of the fiscal year ending March 2027, total revenue under IFRS was ¥10,202 million, up 15.4% year on year. Revenue from contracts with customers was ¥7,983 million, up 9.6%, of which the mushroom business contributed ¥7,873 million and other businesses ¥110 million. However, operating loss was ¥433 million, loss before tax was ¥471 million and loss for the quarter attributable to owners of the parent was ¥306 million. Revenue growth therefore did not translate directly into a return to profitability at the bottom line.

Improvement is evident in the core metrics that the company emphasizes. Core operating profit was ¥246 million, core EBITDA was ¥831 million and the core EBITDA margin was 10.4%. Core EBITDA increased by ¥256 million, or 44.4%, from ¥575 million in the prior-year quarter. One reason reported operating loss remained was the net profit and loss impact of applying agricultural accounting, which was negative ¥760 million. There is therefore a substantial gap between reported earnings and underlying earning power. At the next results announcement, it will be necessary to assess how much of this accounting impact remains in Q2.

The full-year forecasts are total revenue of ¥56,910 million, revenue from contracts with customers of ¥39,640 million, operating profit of ¥4,140 million, profit before tax of ¥3,950 million and profit for the year attributable to owners of the parent of ¥2,540 million. Q1 actual total revenue represents 17.9% of the full-year forecast, while revenue from contracts with customers represents 20.1%. The full-year forecasts are core operating profit of ¥3,960 million and core EBITDA of ¥6,450 million, only slightly above the prior-year core EBITDA of ¥6,422 million. In other words, the company plan is cautious: it forecasts revenue growth while reported operating profit remains below the prior-year ¥4,319 million.

The mushroom business is seasonal, with demand expanding from Q3 to Q4 and Q1 being the period of lowest demand for the full year. It is therefore inappropriate to judge that the full-year target will be missed based solely on the Q1 loss, or to conclude that recovery is assured based solely on Q1 revenue growth. The earnings presentation provides full-year forecasts, but does not disclose progress against those forecasts or the company’s overall assessment. In FY2027-H1, it will be necessary to assess not only revenue accumulation, but also the return to operating profitability, core EBITDA growth and the repeatability of underlying performance excluding the impact of agricultural accounting.