CHUBU SHIRYO CO.,LTD. Q4 FY2026 earnings call

• Overall Financial Results • Consolidated net sales reached 211.814 billion yen, up 19.77 billion yen YoY; operating profit hit 6.584 billion yen (up 2.302 billion yen YoY), ordinary profit 7.168 billion yen (up 2.353 billion yen YoY), and net income 5.551 billion yen (up 2.048 billion yen YoY), achieving record high profit across all metrics. • Total assets grew 7.3 billion yen to 108.9 billion yen; net assets grew 5.3 billion yen to 72.8 billion yen, for an equity ratio of 66.8% and debt-to-equity ratio of 0.13x, maintaining a solid balance sheet.

• Mid-Term Management Plan 2024 (3-year plan starting FY2025 March Term) Progress • In the second year of the plan, all key metrics (operating profit, ROE, ROIC) substantially exceeded plan targets; P/B improved to 0.77x from the prior year-end but remains below 1x. • Feed Segment Progress: Solid progress on environmentally-friendly feed development, cost reduction, productivity improvement, and ROIC tree deployment. Unmet goals include expanding differentiated feed sales, strengthening sales and R&D staffing, and integrating manufacturing, sales, and research teams, leading to sales volume missing plan. Aquafeed exceeded sales volume plan on successful new product development but has remaining challenges in expanding low/no fish meal feed and improving productivity. • Other Segments Progress: All segments exceeded overall segment profit plan, with each business making progress on core targets but retaining operational gaps (e.g. new product development, profit margin improvement, expanding into new product lines). • Sustainability Progress: Greenhouse gas emissions fell 11.1% in FY2024 versus 2020 levels, but the plan will be revised to meet the 30% reduction target by 2030. Additional work is needed to improve governance effectiveness and advance human capital investment.

• Shareholder Return for FY2026 March Term • Full-year dividend is planned at 65 yen per share (30 yen interim, 35 yen year-end 5 yen increase), meeting the 2.7% DOE target. A 1.5 billion yen share repurchase was completed.

1. Feed Segment:

• Livestock Feed: Sales volume reached 3.08 million tons, an increase year-over-year (YoY), though missed plan targets due to disease and farm fire impacts. Profit increased by 330 million yen from higher sales volume, offset by a 90 million yen decline from a lower differentiated feed revenue share. Environmentally-friendly feed sales grew sharply following a product renewal for nitrogen-reducing layer feed, but differentiated feed share dropped 1.4pp YoY due to generalization of broiler feed.
• Aquafeed: Sales volume reached 38,000 tons, exceeding both prior year and plan targets, driven by successful expansion of new eel feed and integrated manufacturing-sales systems for yellowtail feed. Profit increased 3 billion yen YoY, lifted by improved margins from formula optimization and lower prices for fish meal and soybean meal. Low fish meal environmentally-friendly feed sales exceeded YoY levels but missed plan targets.
• Overall Feed Segment Profit: Raw material position improvement drove a 2.82 billion yen YoY profit increase. Variable costs rose 180 million yen YoY, and fixed costs (including higher human capital investment and facility maintenance) rose 470 million yen YoY. Fund contribution expenses increased 160 million yen YoY to 5.4 billion yen.

1. Other Segments (comprising egg sales, livestock equipment, fertilizer, and insurance agency): Segment profit reached 1.21 billion yen, down YoY but above plan. By business: egg sales (led by specialty egg Goma Tamago) grew sales volume and profit YoY; livestock equipment unit sales rose but profit fell due to higher steel costs; organic blended fertilizer led to higher sales and profit YoY; insurance agency saw higher profit from solid livestock insurance sales.

• For FY2027 March Term, management forecasts net sales of 221 billion yen, operating profit of 59 billion yen, ordinary profit of 62 billion yen, and net income of 69 billion yen. All forecasts exceed the original mid-term plan's third-year targets. Net income is lifted by planned gains from fixed asset transfers, while operating profit is forecast to decline YoY due to cost increases from escalating Middle East tensions. • Positive drivers for profit include continued (though smaller magnitude after FY2026's large improvement) raw material position improvement and higher livestock feed sales volume. Negative drivers include higher variable (power, fuel) and fixed (maintenance) costs from Middle East-related energy and logistics price increases. • ROE is forecast to rise, while ROIC will fall YoY due to higher invested capital and lower operating profit. Depreciation expense is expected to increase YoY, and fund contribution unit prices will remain at elevated levels. • For segments: Livestock feed plans to grow sales volume and increase differentiated feed revenue share, despite an expected overall market volume decline. Aquafeed plans sales growth amid stable market volume, with an increase in environmentally-friendly feed sales. Other segments expect a profit decline from higher raw material and input costs, but will still exceed the mid-term plan's third-year target. • Shareholder return guidance: For FY2027 March Term, management targets a 3.0% DOE, with a planned full-year dividend of 76 yen per share (38 yen interim, 38 yen year-end). A share repurchase has not been finalized as of the call. • Key planned priorities for the coming term: Secure stable raw material supply and feed delivery as the top priority; leverage newly expanded research facilities for new product development and existing product improvement; strengthen sales via performance improvement through stress reduction initiatives; expand sales and R&D staffing; refresh product lines to improve productivity and use ROIC tree analysis for problem-solving; advance sustainability targets and human capital investment.

• 90% of compound feed raw materials are imported, so the business is highly exposed to foreign exchange fluctuations, global grain price volatility for corn (50% of raw material) and soybean meal (15% of raw material), and international logistics cost changes. • Outbreaks of avian influenza and African swine fever reduce livestock inventory and overall feed market demand, creating pressure on sales volume. The FY2026 term saw lower-than-planned sales volume partly due to residual impacts of prior disease outbreaks and farm fire incidents. • Escalating geopolitical tension in the Middle East is expected to push up energy and logistics costs in the coming term, leading to higher variable and fixed costs that are projected to outpace profit growth from other drivers. • The company is behind on meeting its 2030 greenhouse gas emission reduction target, requiring a full revision of its reduction plan to stay on track. • P/B remains below 1x, indicating the market has not fully priced in the company's improved earnings performance. • Multiple operational gaps remain across segments, including understaffed sales and R&D teams, slow progress on new product development for non-feed businesses, and unmet goals for expanding high-margin differentiated and environmentally-friendly product lines.

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