FY2027-Q1 earnings growth was driven by the beverage manufacturing business, while broader revenue growth remains to be confirmed

In FY2027-Q1, consolidated revenue was ¥6,686 million, up just 0.1% year on year, while operating profit rose 55.9% to ¥469 million, ordinary profit rose 37.3% to ¥439 million, and net profit attributable to owners of the parent rose 76.9% to ¥311 million. Q1 progress against the full-year forecasts of ¥27,000 million in revenue, ¥1,150 million in operating profit, ¥1,500 million in ordinary profit and ¥1,000 million in net profit was 24.8%, 40.8%, 29.3% and 31.1%, respectively. Operating profit progress exceeded revenue progress, indicating that profit is weighted toward the first half.

By segment, the vending machine retail business generated revenue of ¥3,452 million and segment profit of ¥44 million, while the beverage manufacturing business generated revenue of ¥3,130 million and segment profit of ¥492 million. The real estate operations business generated revenue of ¥34 million and segment profit of ¥55 million, while other businesses generated revenue of ¥68 million and segment profit of ¥17 million. Segment profit in beverage manufacturing was close to company-wide operating profit, equivalent to approximately 105% of Q1 operating profit on a simple comparison, while vending machine operations accounted for only approximately 9%. The figures cannot simply be added because of intersegment adjustments, but it is clear that profit improvement is concentrated in beverage manufacturing.

For FY2026, the beverage manufacturing business generated revenue of ¥11,086 million and segment profit of ¥1,043 million, while the vending machine retail business generated revenue of ¥13,892 million and segment profit of ¥274 million. In FY2027-Q1, beverage manufacturing revenue rose 3.0% year on year and profit rose 48.2%, while vending machine operations posted a 2.3% revenue decline but a 17.2% increase in profit. Profit margins improved in beverage manufacturing, and profitability improved in vending machine operations despite lower revenue, but revenue growth was limited to beverage manufacturing. Based on FY2026-H1 segment profit of ¥612 million in beverage manufacturing and ¥209 million in vending machine operations, it will be important to see whether both businesses exceed the prior-year level on a cumulative H1 basis.

Within beverage manufacturing, higher production volumes for alcoholic and soft drinks contributed to profit improvement, while tea leaf processing saw lower profit because of surging domestic tea leaf prices. The four reportable segments in the earnings summary present beverage manufacturing as a single segment, so revenue, profit and the impact of raw material prices in tea leaf processing cannot be identified separately from the Q1 financial summary alone. Growth from capturing global demand for matcha and the deterioration in profitability caused by higher tea leaf prices are present within the same segment, so the focus at the next earnings release will be whether quantitative disclosure increases for sub-businesses including tea leaf processing.

For FY2027-H1, the minimum year-on-year comparisons to track are whether segment profit in beverage manufacturing exceeds ¥612 million and segment profit in the vending machine retail business exceeds ¥209 million. It will also be important to see whether the company discloses the effects of sales volume, production volume, tea leaf prices and price pass-through in monetary or volume terms. The assessment of the likelihood of achieving full-year operating profit of ¥1,150 million will change depending on whether profit growth remains dependent on certain beverage manufacturing products or has broadened across multiple businesses, including vending machines, logistics and tea leaf processing.