Q1 revenue growth failed to reach earnings, with H1 testing the recovery in profitability

Q1 revenue rose 5.6% year on year to ¥40,729 million, but operating profit fell 16.9% to ¥800 million and ordinary profit fell 10.7% to ¥1,082 million. Net income attributable to owners of the parent was ¥601 million, with the decline limited to 0.6%. Although the company does not directly disclose its operating margin, a simple calculation from the reported figures gives a Q1 operating margin of 1.96%, approximately 0.54 percentage points below the approximately 2.50% calculated from the prior-year figures of ¥38,572 million in revenue and ¥963 million in operating profit.

The main source of earnings deterioration was the seafood wholesale business. Revenue from the business rose 5.6% year on year to ¥38,413 million, accounting for almost all of the growth in consolidated revenue, while segment profit fell 34.0% to ¥314 million. Sales to mass retailers and restaurants, higher unit prices and increased volumes supported revenue, but higher operating expenses weighed on profit, meaning that revenue growth did not translate directly into earnings.

The cold-storage business also reported higher revenue, up 5.2% year on year to ¥1,983 million, but segment profit fell 4.4% to ¥307 million. Revenue benefited from price increases for storage fees and other services, while higher electricity costs, labor costs and depreciation and amortization pressured profit. Q1 depreciation and amortization was ¥629 million, already approximately 26% of the ¥2,408 million recorded for the fiscal year ending March 2026. The extent to which fixed-cost burdens accumulated in H1 therefore needs to be monitored.

At the next earnings release, it will be necessary to assess not only how far consolidated operating profit recovers from Q1's ¥800 million on an H1 cumulative basis, but also to separate the effects of the seafood wholesale business's margin and the cold-storage business's price increases. If revenue continues to grow year on year while operating profit continues to decline, the company will still need to deliver greater improvement in the second half to achieve its full-year operating profit forecast of ¥3,000 million. It will also be important to see whether at least the H1 cumulative amounts or direction of change are disclosed for electricity costs, labor costs, operating expenses and depreciation and amortization.