Revenue declined in 1Q, but profit progress led, making H1 the period to assess sustainability

Consolidated revenue in FY2027-Q1 was ¥45,332 million, down 3.3% from ¥46,874 million in the same quarter of the previous year. Operating profit was ¥3,883 million, up 8.9% from ¥3,565 million, ordinary profit was ¥4,163 million, up 5.3%, and net income attributable to owners of the parent was ¥2,936 million, up 9.8%. Although revenue declined, profit increased at the operating profit level and below, suggesting that pricing, raw material procurement and expense management, rather than simple volume expansion, supported 1Q earnings.

Progress against the full-year forecast was 25.0% for revenue, calculated as ¥45,332 million ÷ ¥181,000 million, 29.9% for operating profit, calculated as ¥3,883 million ÷ ¥13,000 million, and 38.1% for net income attributable to owners of the parent, calculated as ¥2,936 million ÷ ¥7,700 million. Operating profit was approximately 4.9 percentage points ahead of revenue, indicating solid progress based on profit alone. However, the first half may be affected by seasonality, so reaching 50% of the full-year forecast cannot simply be treated as the benchmark. In the first half, we will check the distance to the simple half-year benchmarks of ¥90,500 million in revenue and ¥6,500 million in operating profit.

The first-quarter operating margin was approximately 8.6%, an improvement of approximately 1.0 percentage point from approximately 7.6% in the same quarter of the previous year. The company explained that, although lower shipping prices in the sugar business reduced the selling price, stable procurement of raw materials absorbed elevated ocean freight, packaging materials and logistics costs. Advertising initiatives, new product launches, new customer acquisition and higher repeat rates in the Life Energy business also contributed to the increase in profit. However, no factor-by-factor monetary bridge was disclosed showing how many millions of yen the changes in unit prices, sales volume, raw material costs, logistics costs and advertising expenses each added to or deducted from profit.

In FY2027-H1, it will be necessary to check whether the operating margin can remain in the 8% range and whether the margin can be protected even if price declines in the sugar business continue. Special income of ¥98 million and special losses of ¥154 million in the first quarter were relatively small, making it difficult to attribute the increase in operating profit to major special factors. Meanwhile, no quarterly consolidated cash flow statement was prepared, and the contribution of operating cash flow and working capital was not disclosed. In the first-half results, we will consider together whether the increase in profit is translating into actual cash generation, whether the full-year forecast is maintained, and whether the gap between revenue and profit progress narrows.