The key FY2027-H1 question is whether Sugar can continue to improve profitability despite lower sales

Consolidated revenue in the first quarter of the fiscal year ending March 2027 was ¥28,601 million, down 5.1% from ¥30,154 million in the same period of the previous year. Operating profit, meanwhile, increased 21.5% from ¥2,532 million to ¥3,077 million. On a simple calculation, the operating margin rose by approximately 2.4 percentage points, from approximately 8.4% in the same period of the previous year to approximately 10.8%, indicating that profit-focused sales, rather than pursuing sales volume, contributed to earnings.

In the Sugar segment, revenue was ¥24,549 million and segment profit was ¥3,227 million. Revenue decreased 5.3% year on year, while profit increased 18.4%. The segment margin reached approximately 13.1%. In FY2026-H1, the comparison period, Sugar's revenue was ¥49,563 million, segment profit was ¥5,377 million and the margin was approximately 10.8%. Accordingly, at the next interim results, the key question will be whether the company can maintain at least this margin even if revenue remains weak year on year.

The company explained that, in FY2027-Q1, lower selling prices in response to the decline in overseas raw sugar prices were offset as an earnings factor by the continuation of profit-focused sales. It also stated that sales volumes of commercial and household products were below the same period of the previous year. Previous disclosures have repeatedly indicated that raw sugar prices, foreign exchange rates, and energy and logistics costs affect profit, and that Sugar's profit can fluctuate significantly when price pass-through is delayed.

The first-quarter disclosure did not provide a quantitative bridge separating changes in selling prices, changes in sales volumes and the impact of raw sugar prices. In FY2027-H1, even if Sugar's revenue falls below the ¥49,563 million recorded in the previous interim period, it will be necessary to assess whether the company can maintain segment profit of ¥5,377 million and a margin of approximately 10.8%, as well as which of commercial or household products was the main cause of the decline in volumes.