Will the earnings improvement seen in Q1, with profit growth despite lower revenue, continue into FY2027-H1?

FY2027-Q1 revenue was ¥10,498 million, down 4.9% year on year, while operating profit was ¥696 million, up 12.5%. The operating margin rose 1.02 percentage points, from approximately 5.61% a year earlier to approximately 6.63%. Revenue declined due to consumers’ cost-consciousness, lower sales to convenience stores and a narrower product range aimed at improving profitability, while stable raw vegetable prices and greater efficiency and automation in the production system lifted profit.

This improvement extends the recovery in profitability seen in the previous fiscal year. FY2026 full-year revenue was ¥40,923 million, down 1.4% year on year, but operating profit increased 63.0% to ¥2,085 million, and the operating margin rose from 3.1% to 5.1%. However, the rate of revenue decline in FY2027-Q1 was greater than the full-year result, while the rate of profit growth was lower, suggesting that the pace of improvement may have slowed.

In the previous-year FY2026-H1, revenue was ¥22,321 million and operating profit was ¥1,569 million. The FY2027 full-year plan calls for revenue of ¥41,000 million and operating profit of ¥1,820 million. At the H1 stage, at least ¥20,500 million of revenue and ¥910 million of operating profit would represent 50% of the full-year plan. Given the seasonality of the first half, the validity of the full-year plan should be assessed not only by whether 50% is achieved, but also by whether revenue and operating profit can be maintained at the previous-year H1 levels.

At present, the company has not disclosed the effect by factor or the volume effect of price revisions, optimisation of sales terms such as discounts, stable raw material prices or automation-driven efficiency gains. At the next results announcement, we will assess whether the impact of narrowing the product range on sales volume and the profit improvement from pricing, mix and cost restraint can be explained separately. In particular, even if sales to convenience stores continue to decline, it will be important to see whether price revisions and manufacturing efficiency can sustain the operating margin.