Can the first-quarter earnings growth continue through the first half?

First-quarter net sales for the fiscal year ending March 2027 were ¥15,316 million, up 2.0% year on year. Operating profit was ¥936 million, up 33.6%, ordinary profit was ¥907 million, up 30.7%, and net profit attributable to owners of the parent was ¥623 million, up 87.1%. Profit improved substantially more than sales, with the operating margin rising approximately 1.4 percentage points to around 6.1% from approximately 4.7% a year earlier.

The company's full-year forecast for the fiscal year ending March 2027 is net sales of ¥65,400 million, operating profit of ¥3,900 million, ordinary profit of ¥3,800 million and net profit attributable to owners of the parent of ¥2,600 million. First-quarter progress was approximately 23.4% for net sales, 24.0% for operating profit and approximately 24.0% for net profit. Although this does not represent a significant delay compared with a simple even quarterly allocation, food manufacturers are affected by seasonality and the timing of promotions, so the likelihood of achieving the full-year forecast cannot be judged from these figures alone.

The company cites strong sales of high-value-added brands and long-selling products in Japan, improved yields and raw material costs resulting from closer monitoring of potato storage conditions and improved warehouse environments, and the expansion of overseas launch areas and sales channels as factors behind the first-quarter profit growth. However, the increase in profit by factor, sales volumes, average unit prices and changes in raw material usage have not been disclosed. It is therefore not possible at this point to determine whether the ¥936 million in operating profit resulted from price revisions and product mix, or from lower manufacturing costs due to improved yields.

The company did not prepare a quarterly consolidated cash flow statement for the first quarter, so it is also not possible to confirm whether the increase in operating profit was accompanied by improved operating cash flow or lower inventory burdens. In the next first-half results, it will be necessary to review not only progress in net sales and operating profit, but also the operating margin, gross margin, the effect of improvements in raw material costs and whether promotional expenses increased. In particular, if the operating margin falls below approximately 6.0% under the full-year forecast, the likelihood that the first-quarter improvement was temporary will increase. Conversely, whether sales also remain on plan while the margin is maintained at that level will be an important indicator.