Can the full-year plan be maintained after absorbing the first-quarter earnings decline?

Consolidated revenue in the first quarter of the fiscal year ending March 2027 was ¥7,880 million, down 4.2% year on year. Operating profit was ¥555 million, down 37.9%, ordinary profit was ¥556 million, down 38.2%, and net income attributable to owners of the parent was ¥379 million, down 39.8%. Operating margin was approximately 7.0% on revenue of ¥7,880 million, down approximately 3.8 percentage points from approximately 10.9% in the same quarter of the previous year. Although the decline in revenue was limited, the substantial drop in profit is the first point to check in the first-half results.

The full-year forecasts remain unchanged at revenue of ¥33,376 million, operating profit of ¥2,913 million, ordinary profit of ¥2,887 million and net income of ¥2,024 million as of the first quarter. First-quarter progress was 23.6% for revenue, 19.1% for operating profit and 18.7% for net income, indicating that profit is progressing more slowly than revenue. To maintain the full-year forecasts, the company must generate the remaining ¥25,496 million of revenue, ¥2,358 million of operating profit and ¥1,645 million of net income over the remaining 3 quarters after the first quarter. Reaching 50% in the first half is only a mechanical benchmark that does not account for seasonality, but securing operating profit of around ¥1,456.5 million will provide one measure of the likelihood of achieving the full-year plan.

The company explained that sales volume of liquid eggs decreased 3.0% year on year, while the market price of eggs remained approximately 7.4% lower, or ¥25/kg lower in absolute terms, resulting in a decline in the corresponding selling price of liquid eggs. In addition, insufficient price pass-through for increases in depreciation, personnel expenses, consumables, energy prices, materials costs and logistics costs contributed to the earnings decline. As the company indicates that price pass-through and liquid egg sales volume will recover from around autumn onward, the first-half results will need to confirm whether volume turns positive year on year and whether the improvement in selling prices is reflected in a margin exceeding the 7.0% operating margin.

The company did not prepare a quarterly consolidated statement of cash flows for the first quarter, and did not disclose cash flow from operating, investing or financing activities or the period-end cash balance. It also did not prepare supplementary earnings materials. Accordingly, the first-half results will be important not only for whether the full-year forecasts are maintained, but also for how specifically the company explains progress in revenue and operating profit, the actual level of price pass-through, the increase in fixed costs such as depreciation, and the basis for leaving the full-year forecasts unchanged.