CHUBU SHIRYO CO.,LTD. Q4 FY2025 earnings call

Overall Financial Position

• Total assets decreased 2.2 billion yen year-over-year to 101.5 billion yen. Interest-bearing debt increased 2.1 billion yen to 9.8 billion yen, and net assets increased 1.8 billion yen to 67.5 billion yen. The debt-to-equity ratio is 0.14x, and the equity ratio increased 3.2 percentage points to 66.4%.
• The current ratio remains above 200%, indicating strong liquidity.

Mid-Term Management Plan 2024 Progress

The 3-year plan starting from the 2025 March fiscal year has three core strategic goals: 1) improve profitability and scale of the feed segment, 2) accelerate growth of the other segment, 3) advance sustainability-oriented management to support the revenue base.

• Overall Progress: Operating profit exceeded plan; ROE and DOE were nearly on plan; ROIC was slightly below plan due to higher average invested capital. P/B improved to 0.59x at period-end, but remains below 1x.
• Feed Segment Progress: Progress was made on cost reduction and environmentally-friendly feed development, but underperformance in sales volume growth, expansion of differentiated feed, and staffing for sales and R&D leave room for improvement. Full ROIC tree implementation is incomplete.
• Other Segment Progress: Segment profit greatly exceeded plan, but all sub-segments have open improvement priorities, including demand-aligned product development, profitability improvement for equipment, and sales structure strengthening for insurance.
• Sustainability Progress: Greenhouse gas emissions fell 12.6% from 2020 levels by 2023, but the plan will need to be revised to hit the 30% reduction target by 2030. Further work is needed to improve governance effectiveness and expand human capital initiatives.

Capital Initiatives

• The company raised the year-end dividend to 27 yen per share (a 2 yen increase), bringing full-year 2025 March fiscal dividend to 52 yen, for a DOE of 2.3% in line with plan.
• The company completed large-scale investments in new research facilities for pork, cattle, and aquaculture, which will be used to drive product development and improve proposal capabilities.
• For the 2026 March fiscal year, the company plans to acquire 1.15 million shares of treasury stock for 1.5 billion yen.

Chubu Shiryo's consolidated net sales for the 2025 March fiscal year decreased 24.39 billion yen year-over-year to 209.837 billion yen. Operating profit increased 0.349 billion yen to 4.281 billion yen, ordinary profit increased 0.35 billion yen to 4.815 billion yen, and net income increased 0.176 billion yen to 3.503 billion yen.

1. Feed Segment: The feed segment includes livestock feed, differentiated feed, and fisheries feed:
   • Livestock Feed: Sales volume reached 3.02 million tons, which beat the prior year volume and overall market growth, with a 0.1 percentage point increase in market share to 12.6%. Profit increased 90 million yen year-over-year.
   • Differentiated Feed: The proportion of differentiated feed in total feed sales increased to 45.9% (above the prior year, slightly below plan). Profit increased 100 million yen year-over-year. Environmentally-friendly feed sales volume grew 24% year-over-year, driven by strong demand for greenhouse gas-reducing cattle feed and nitrogen emission-reducing layer chicken feed.
   • Fisheries Feed: Sales volume fell to 35,000 tons (below both plan and prior year, due to high water temperature and red tide reducing stock volumes for sea bream and yellowtail). Environmentally-friendly fisheries feed sales grew 21% year-over-year, and improved pricing and product mix lifted profit 60 million yen year-over-year.
   • Overall feed segment profit saw net improvement from improved raw material positioning (adding 1.01 billion yen in profit), offset partially by increased fund contribution costs (up 1.17 billion yen) and higher fixed costs.
2. Other Segment: This segment is composed of egg sales, fertilizer, livestock equipment, and insurance agency. Segment profit reached 1.4 billion yen, far exceeding both prior year and plan, with all four sub-segments delivering increased sales and profit. Livestock equipment led the growth on sharply higher domestic and international unit sales.

• For the 2026 March fiscal year, management forecasts net sales of 212 billion yen, operating profit of 5.2 billion yen, ordinary profit of 5.6 billion yen, and net income of 4.1 billion yen, representing year-over-year profit growth. The forecast is slightly below the original mid-term plan for the second year of the plan, due to trailing 2025 sales volume underperformance and rising general price inflation lifting costs.
• ROE and ROIC are expected to improve year-over-year but remain slightly below the original mid-term plan target; DOE is expected to meet the mid-term plan target. Capital expenditure is projected to be lower than the prior year, and feed price stabilization fund contribution costs are expected to be in line with the original mid-term plan.
• For livestock feed, sales volume growth and an increased proportion of differentiated feed are planned, but both targets are below the original mid-term second-year plan. For fisheries feed, sales volume growth is planned, also below the original mid-term target. The other segment is expected to deliver profit roughly in line with the original mid-term plan, with a slight year-over-year decline driven by lower expected profit from livestock equipment.
• For the 2026 March fiscal year, management targets a full-year dividend of 60 yen per share (30 yen interim, 30 yen year-end), consistent with a target DOE of 2.7%.

• Volatility in global grain prices (notably corn) and foreign exchange rates creates gaps between raw material costs and adjusted selling prices, which can compress profit margins even with the company's proactive positioning management.
• Outbreaks of avian influenza and African swine fever reduce livestock populations and feed demand, while extreme heat increases production pressure and reduces demand for cattle and pig feed. Red tide and high water temperatures also reduce aquaculture stock volumes and demand for fisheries feed.
• The feed price stabilization fund was depleted after 12 consecutive quarters of compensation payouts, leading to a significant increase in fund contribution costs that reduced profit by 1.17 billion yen in 2025, with further modest cost increases expected in 2026.
• The company is not on track to meet its 2030 greenhouse gas emission reduction target without revising its current reduction plan, which could create regulatory and reputational risks.
• Multiple business units face unresolved challenges, including insufficient staffing for sales and R&D in the feed segment, incomplete implementation of ROIC-based management, and unaddressed operational improvement needs across all other segment sub-businesses that could limit growth and profitability.

No question and answer section was included in the provided earnings call transcript.