2540.T

• Overall Financial Results
  • Total company net sales decreased 0.7% YoY to 4.679 billion yen
  • Operating income increased 77.8% YoY to 126 million yen
  • Ordinary income increased 48.1% YoY to 470 million yen
  • Interim net income increased 24.9% YoY to 297 million yen
  • The primary driver of profit growth was a 463 million yen reduction in advertising costs from promotional review, which offset headwinds including higher cost of goods sold from Kurasuwa no Mori expansion, increased depreciation, and higher labor costs
• Balance Sheet and Cash Flow
  • Total assets increased 2.151 billion yen from fiscal year-end 2025 to 55.67 billion yen, driven mainly by higher mark-to-market valuations of held equity securities
  • Total liabilities increased 649 million yen to 8.106 billion yen, driven mainly by higher deferred tax liabilities
  • Total net assets increased 1.502 billion yen to 47.564 billion yen, driven mainly by higher valuation differences on available-for-sale securities
  • Net cash from operating activities was +654 million yen; net cash used in investing activities was -118 million yen; net cash used in financing activities was -625 million yen; ending cash balance decreased 89 million yen YoY to 2.961 billion yen
• Completed Operational Initiatives
  • Domestic Yomeishu: Implemented revised newspaper and internet advertising, enhanced in-store promotions with wholesalers and drug stores, and expanded distribution to dispensing pharmacies, but sales declined due to the impact of rising prices on consumer behavior
  • Yomeishu Alcohol & Food: Focused on growth products including craft gin, herbal liqueur, Yomeishu Seizo Kuromoji throat lozenges, and Goyo porridge, with overall sales growing despite a decline in fruit and herbal liqueur
  • Overseas: Executed market-adapted promotions for core Yomeishu, advanced business development for alcohol and food products in new and existing markets, but overall sales declined due to lower Yomeishu export volumes
  • Kurasuwa Related: Held 1st anniversary promotional events for Kurasuwa no Mori (including a customer campaign and the Mori-1 Grand Prix event to drive visitor traffic); new store openings and growth in direct-to-consumer sales of core products drove overall segment growth, though results missed targets
• Sustainability Initiatives
  • Identified five core priority issues: health, environment, local community, human rights & diversity, and governance
  • Achieved 100% recycling of manufacturing residual waste in fiscal 2024, with compost used for trial medicinal herb cultivation to advance a circular manufacturing model
  • Other initiatives include hosting health-focused events at Kurasuwa no Mori, created local employment at Kurasuwa no Mori, held mandatory anti-harassment training for all employees, and publicly endorsed the Partnership Construction Declaration

• Management reissued full-year 2026 March fiscal year guidance after revision on October 10:
  • Full-year net sales guidance is 9.63 billion yen, representing a 3.9% decrease year-over-year
  • Full-year operating income guidance is 140 million yen, representing a 9.1% increase year-over-year
  • Full-year ordinary income guidance is 760 million yen, representing a 21.3% increase year-over-year
  • Full-year net income guidance is 840 million yen, representing a 23.6% increase year-over-year
  • Yomeishu Related Business full-year revenue guidance: 8.17 billion yen, 6.8% decrease YoY. Breakdown: Domestic Yomeishu 6.41 billion yen (-8.4% YoY), Alcohol & Food 1.05 billion yen (-1.0% YoY), Overseas 300 million yen (-4.2% YoY), Real Estate Rental & Solar Power 380 million yen (+4.3% YoY)
  • Kurasuwa Related Business full-year revenue guidance: 1.45 billion yen, 16.6% increase YoY
• Key planned second-half strategic initiatives aligned with guidance targets:
  • Yomeishu Related Business: Run TV-centric advertising for Yomeishu during the peak winter demand season; strengthen direct customer communication to acquire new users; expand distribution for growth alcohol and food products; improve profitability of external sales
  • New direct communication initiatives completed ahead of peak season: Renovated the Komagane factory visitor center into the Yomeishu Museum Komagane (linked with Kurasuwa no Mori to drive customer loyalty); opened the experiential pop-up store Yomeishu Wellness Terrace SHIBUYA in Tokyo to introduce new customers to the brand
  • Launched test sales of 300mL trial-size Yomeishu in select company-owned stores to assess consumer demand for smaller packaging
  • Kurasuwa Related Business: Focus on efficient operations for existing stores including Kurasuwa no Mori; conduct pop-up events in Tokyo; invest in efficient advertising for core direct-to-consumer products to grow sales; launched a new mail-order exclusive medicinal bath salt product, Yawaragi Giyoju

For the 2026 March fiscal year interim period:

1. Yomeishu Related Business: Total revenue of 3.911 billion yen, a 6.6% decrease year-over-year. This segment accounts for 83.6% of total company revenue. Breakdown:
   • Domestic Yomeishu: 3.166 billion yen, 7.5% decrease YoY
   • Alcohol and Food Products: 465 million yen, 6.7% increase YoY
   • Overseas Business: 86 million yen, 36.3% decrease YoY
2. Kurasuwa Related Business: Total revenue of 768 million yen, a 46.4% increase year-over-year. This segment accounts for 16.4% of total company revenue. Growth was driven by the grand opening of Kurasuwa no Mori and new Tokyo bakery openings, though revenue did not meet internal targets.

• Rising consumer prices have negatively impacted domestic Yomeishu consumer demand, leading to lower than expected sales in the first half
• Kurasuwa Related Business revenue from new openings (including Kurasuwa no Mori and new Tokyo bakeries) missed internal first-half targets, and the segment's expansion has driven higher cost of goods sold, depreciation, and labor costs that pressured overall operating profit in the first half
• Core Yomeishu export volumes declined sharply year-over-year in the first half, creating headwinds for the overseas business segment

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