CHUBU SHIRYO CO.,LTD. Q2 FY2026 earnings call

Overall Consolidated Performance

• First half net sales decreased 454 million yen year-over-year to 102.991 billion yen, with higher livestock feed volume offset by lower average selling prices.
• Operating profit increased 227 million yen year-over-year to 2.414 billion yen; recurring profit rose 293 million yen to 2.725 billion yen; net profit rose 277 million yen to 2.082 billion yen, resulting in lower revenue but higher profit for the first half.
• Total assets increased 700 million yen from the prior period end to 102.3 billion yen; net equity increased 1.6 billion yen to 69.1 billion yen. Debt-to-equity ratio hit 0.13x, equity ratio rose 1.1 percentage points to 67.5%, and current ratio rose to 297%, indicating a strong balance sheet.

External Business Environment

• Corn Chicago prices trended down after April 2025, rose from August, and ended nearly flat year-over-year. The yen appreciated against the dollar year-over-year despite gradual weakening in the current term, resulting in lower customs-cleared corn prices year-over-year.
• Market circulation of livestock feed was lower than the prior year period from April to August. The feed price stabilization fund reserve unit price rose 20 yen to 1,840 yen after 12 consecutive quarters of payout that depleted fund resources.
• Compound feed prices have declined gradually since peaking in July 2022. Livestock product prices are mostly in high ranges, with beef prices roughly flat.

Shareholder Return

• An annual dividend of 60 yen per share (30 yen interim, 30 yen year-end) is planned, representing a 2.7% DOE.
• A share repurchase program is ongoing with a cap of 1.15 million shares or 1.5 billion yen; 450,000 shares worth 740 million yen had been repurchased as of the end of the first half.
• Annual shareholder benefits are provided twice per year: interim benefit is Toyama Prefecture Koshihikari rice grown with the company's organic fertilizer, and year-end benefit is an original QUO card with value based on shareholding amount and holding period.

1. Feed Segment:

• Livestock Feed: First half sales volume reached 1.51 million tons, 102.9% of the prior year period, in line with plan. Higher sales volume added +200 million yen in profit, but a 1.3 percentage point drop in differentiated feed revenue share reduced profit by 60 million yen. Eco-friendly feed sales grew sharply driven by a renewed low-nitrogen laying hen feed product line.
• Raw material position (margin spread between raw material costs and selling prices): Improved year-over-year, adding +370 million yen in profit, with no large gap between raw material cost changes and selling price adjustments.
• Variable & Fixed Costs: Fund contribution expenses increased 110 million yen year-over-year to 2.65 billion yen due to higher reserve unit prices. Excluding fund contributions, variable cost per unit rose year-over-year due to higher transportation costs, but electricity and fuel costs stayed flat. Fixed costs rose due to planned factory aging countermeasures (higher depreciation and repair costs), progressing in line with plan.
• Fisheries Feed: Total sales volume came in at 18,700 tons, below both plan and prior year, due to large declines in red sea bream feed demand from weak live fish sales. Eco-friendly fisheries feed sales (for land-based aquaculture) rose year-over-year despite missing plan. Profit increased 220 million yen year-over-year due to improved margins from product formulation adjustments and lower prices of fish meal and soybean meal.

1. Other Segment (composed of egg sales, livestock equipment, fertilizer, insurance agency): Segment profit reached 480 million yen, below prior year but above plan. Egg sales beat both prior year and plan on strong specialty egg sales amid high market prices. Livestock equipment saw lower profit due to pullback after prior period rush demand for subsidies, but still hit plan. Fertilizer beat both prior year and plan on in-line volume and cost reduction efforts. Insurance agency hit profit plan on steady livestock insurance sales.

• Full-year revenue and profit guidance is maintained with no revisions from the original plan.
• Livestock feed sales are expected to stay steady: broiler and swine feed will continue strong performance, laying hen feed will grow via expansion of animal welfare-aligned products, and cattle feed is expected to recover despite ongoing price competition.
• Management will target a recovery in differentiated feed share via targeted sales of health-focused broiler feed and methane-reducing cattle feed.
• Raw material position is expected to improve year-over-year in Q3 and remain on track for the full year, though exposed to swings in grain and currency markets.
• Fisheries feed: eel and yellowtail feed will remain steady, red sea bream feed sales are expected to recover from November 2025, and full-year sales volume will miss the original plan but show a second half recovery. Fisheries feed margins are expected to decline due to selling price cuts despite falling fish meal prices.
• Variable cost per unit will rise from the first half due to the expiration of electricity and fuel subsidies, but will still stay in line with full-year plan. Fixed costs will rise due to higher depreciation, but also remain on plan.
• All businesses in the Other segment are expected to hit full-year sales and profit plans. Management aims to deliver the full-year plan by fully executing all ongoing first half initiatives in the second half.

• Livestock feed sales face downside risk from animal disease outbreaks (such as avian influenza) and producer business closures.
• Raw material position (profit margins) can experience large fluctuations from unexpected changes in grain market prices, foreign exchange rates, and shipping costs.
• Fisheries feed raw material prices are exposed to volatility from foreign exchange and ocean freight rate swings.
• Cattle feed is facing ongoing pressure from increased customer price sensitivity that has reduced differentiated feed share and pressured profitability.

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