First-quarter losses narrowed, but further improvement is needed to achieve ¥160 million in full-year operating profit

First-quarter revenue was ¥5,824 million, down ¥64 million, or 1.1%, from ¥5,888 million in the year-earlier period. Meanwhile, the operating loss narrowed by ¥49 million, from ¥207 million to ¥158 million. Operating profitability therefore improved even as revenue declined. Operating margin also rose on a simple calculation from approximately negative 3.5% in the year-earlier period to approximately negative 2.7%, suggesting that the effects of cost reductions, improved yields, higher productivity and lower fixed costs have begun to emerge.

The company’s full-year forecast for the fiscal year ending March 2027 is revenue of ¥25,600 million, operating profit of ¥160 million, ordinary profit of ¥140 million and net income attributable to owners of the parent of ¥140 million. First-quarter revenue was approximately 22.8% of the full-year forecast, slightly below the 25% implied by an even quarterly allocation. Since the company posted an operating loss of ¥158 million in the first quarter, achieving full-year operating profit of ¥160 million will require a total ¥318 million improvement in operating income over the remainder of the year. Although seasonality and a bias toward the second half may be factors, the gap with the full-year plan will widen if the loss does not narrow in the second quarter.

The sources of earnings improvement are not uniform across the company. The processed foods business recorded higher profit despite lower revenue, while the meat business posted a larger loss despite higher revenue. There is therefore a limit to how far the processed foods business alone can support an improvement in company-wide operating income. The next results should consequently be assessed not only by absolute revenue, but also by whether profit improvement in processed foods continues and whether the impact of higher meat procurement prices and insufficient price pass-through eases.

In the next results, it will be important to check whether cumulative second-quarter revenue reaches approximately ¥12,800 million, the level implied by simple progress against the full-year plan, and whether the operating loss narrows from the first-quarter figure of ¥158 million. Disclosure of any revision to the full-year forecast, the actual amounts of cost reductions and fixed-cost savings, and the extent to which price revisions have taken effect would also make it easier to assess the likelihood of achieving a ¥318 million improvement in the second half.