2117.T

• M&A and Consolidation Activities

  • Completed the absorption merger of group company Daiichi Sugar Industry on October 1, 2025, with Wellneo Sugar as the surviving company
  • Scheduled to absorb and merge group company Toyo Seito targeting October 1, 2026
  • Post-merger, the Sugar segment will operate under a nationwide 5-factory system (including Kyushu Factory, Toyo Seito facilities, and joint venture Pacific Sugar), and will flexibly optimize production bases amid industry restructuring
  • The Food & Wellness segment will add Toyo Seito's functional polyphenol ingredients (rutin, hesperidin) to its existing portfolio of flora design ingredients, and will pursue synergies by combining complementary ingredient technologies
  • The acquisition of Toyo Seito has already been completed as a full subsidiary, with 1.246 billion yen in additional share acquisition costs recorded in the period

• Product and Operational Updates

  • In the Sugar segment, the flagship proprietary product "Kibi Sugar" maintained strong sales, and the new convenient granular sugar product "Sassato! Sugar" was launched in late September 2025 through regional retailers and online channels
  • In the Food & Wellness segment, "Okinawa/Amami Kibi Oligo" maintained strong shipments; full-scale production of "Cup Oligo" started at the Mihama Bio Plant (Chiba Factory) in April 2025, and capacity expansion for full-scale cyclodextrin production (planned for next fiscal year) is underway
  • In the fitness business, management is prioritizing profitability and strengthening children's school programs at full-scale locations to drive early earnings recovery

• Financial and Cash Flow Updates

  • Investing cash flow includes capital expenditures for cyclodextrin production facilities at the Mihama Bio Plant
  • Financing cash flow reflects a net 2.93 billion yen reduction in short-term borrowings from debt repayment
  • Finalized provisional accounting for the Toyo Seito business combination, resulting in retrospective adjustments to 2025 March Fiscal Year figures, including a 181 million yen increase in retained earnings

• Full-year 2026 March Fiscal Year guidance is maintained unchanged from the August 5, 2025 announcement, with no upward or downward revision
  • Forecast full-year sales revenue of 114 billion yen, operating profit of 8.5 billion yen, profit before tax of 8.5 billion yen, and profit attributable to owners of the parent of 5.9 billion yen, representing year-over-year revenue and profit growth excluding pre-tax profit
  • The Sugar segment is forecast to see a 704 million yen year-over-year decrease in operating profit, due to increased DX and other general expenses, and accounting impacts from the finalized business combination accounting for prior period acquisition
  • The Food & Wellness segment is forecast to see a 716 million yen year-over-year increase in operating profit, driven primarily by the absence of prior-year impairment losses in the fitness business
  • The company maintains its dividend policy of paying the higher amount between a 60% consolidated payout ratio (DPR) or 3% equity return (DOE); full-year 2026 March Fiscal Year dividend is forecast at 108 yen per share, with an approved interim dividend of 54 yen per share (as of the September 30, 2025 record date)

For the 2026 March Fiscal Year Interim Period: 1. Sugar Segment: Driven by the new consolidation of Toyo Seito, the segment achieved a 369 million yen year-over-year increase in operating profit, and delivered significant year-over-year revenue growth. 2. Food & Wellness Segment: While strong sales of "Kibi Oligo" and passing through cost increases at Tsukioka Film Pharma contributed to earnings, the segment recorded a 19 million yen year-over-year decrease in operating profit due to costs for expanding production capacity for "Cup Oligo" and cyclodextrin at the Mihama Bio Plant, and lingering impacts from prior-year store closures in the fitness business. Total consolidated sales revenue for the interim period was 57.772 billion yen, with total operating profit of 5.19 billion yen (a 361 million yen year-over-year increase), and profit attributable to owners of the parent company of 3.573 billion yen.

• The Sugar segment forecasts continued unclear and challenging market conditions going forward
  • Costs are still rising across the Sugar business, requiring continued efforts to pass higher costs through to selling prices
  • The Food & Wellness fitness business has yet to return to profitability, requiring targeted restructuring and performance improvement efforts

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