1Q operating profit growth far outpaced revenue growth, with H1 set to test the sustainability of the improvement in profitability

FY2027 1Q revenue was ¥26,291 million, up ¥2,138 million from ¥24,153 million in the prior-year quarter. Operating profit increased ¥175 million from ¥131 million to ¥306 million, while the operating margin on revenue rose approximately 0.62 percentage points, from approximately 0.54% to approximately 1.16%. Profit growth exceeded revenue growth, indicating that the improvement in margin was driven not simply by higher sales, but by one or more of product mix, sales volume and costs.

At the non-operating and bottom-line levels, ordinary profit rose 86.8% from ¥212 million in the prior-year quarter to ¥397 million, while profit attributable to owners of the parent increased 128.5% from ¥137 million to ¥313 million. Ordinary profit and profit before income taxes were both ¥397 million, and no extraordinary income or extraordinary losses were identified in 1Q. Accordingly, the increase in 1Q net profit appears to have been driven mainly by improvement at the operating level rather than a temporary boost from extraordinary items.

The company said volumes increased for salmon, greater amberjack and farmed yellowtail in fresh fish, and for salmon and trout, salted mackerel, dried young sardines and whitebait, and fish roe in salted and frozen products. Frozen fish for overseas markets, including surimi, mackerel and sardines, also performed well. However, the company did not indicate how many millions of yen in additional revenue came from higher volumes by product, or the extent of the effects of prices and foreign exchange. In the cold-storage and other business, lower manufacturing costs were cited as a factor behind the improvement in profit, but the amount of the decrease was not disclosed.

For H1, the minimum comparison benchmark is the prior-year standalone Q2 operating profit of ¥131 million, calculated by subtracting 1Q operating profit of ¥131 million from prior-year cumulative 2Q operating profit of ¥262 million. For revenue, we will look to see whether standalone Q2 revenue exceeds the prior-year ¥25,396 million, calculated by subtracting prior-year 1Q revenue of ¥24,153 million from cumulative 2Q revenue of ¥49,549 million. If Q2 revenue grows but operating profit falls below ¥131 million, the likelihood will increase that the 1Q margin improvement depended on temporary product-mix or cost factors.