The H1 downward revision points to deteriorating prices and product mix rather than weaker demand

Under the revision announced on 23 October, the FY2027 H1 ordinary profit forecast was cut from the previous ¥340 million to ¥120 million, a reduction of ¥220 million, or approximately 64.7%. Revenue, however, was expected to increase 0.7% year on year, while operating profit was projected to decline 59.0%, ordinary profit 64.1% and net profit 64.9%. The picture is now clear: profit is being pressured by deterioration in selling prices and gross margins, rather than by lost sales volumes or selling opportunities.

This trend was already visible in the first quarter. Revenue was ¥6,011.823 million, up 0.2% year on year, while operating profit was ¥60.688 million, down 54.3%, ordinary profit was ¥51.043 million, down 58.3%, and quarterly net profit was ¥35.387 million, down 61.9%. The company said it expanded sales of competitively priced products such as boneless fish and Thai chicken, but the increase in sales of low-gross-margin products pushed the gross margin below its initial assumption. Freight and storage costs also rose slightly above plan as revenue and inventories increased.

Accordingly, the H1 results need to be assessed not only on revenue, but separately by selling price, discounts and product mix. The news information available does not show the absolute amounts of revised H1 revenue, operating profit or net profit, or how many millions of yen in profit were affected by the delay in price revisions. In addition to the actual results, key points to verify will be whether the company discloses the timing of price revisions, changes in average selling prices, the sales mix of low-gross-margin products and the year-on-year change in gross margin.

If H1 ordinary profit falls below ¥120 million, this would indicate that the pricing and product-mix issues have caused performance to fall further below the company’s plan, rather than merely reflecting seasonal factors. Conversely, even if the company achieves ¥120 million, a situation in which revenue increases but the operating margin remains around 1% would not yet confirm the earnings improvement needed to support a recovery in the second half.