Ishii Food Co.,Ltd. Q4 FY2025 earnings call

Company Milestone & Strategic Direction

• The company celebrates its 80th founding anniversary in 2025, and currently operates in its fourth founding phase focused on building a circular business model co-created with regional producers.
• Long-term vision "ISHII VISION 2030" aims to transition from a pure food manufacturer to a company shaping food lifestyles, with the mission of connecting agriculture to consumers and supporting child-rearing.
• The 2022-2026 medium-term management plan follows a 6-pillar framework: stabilizing profitability via deepening existing business while actively investing in new business exploration and infrastructure building to drive long-term margin improvement.

2025 March Fiscal Year Full-Year Financial Results

• Consolidated revenue of 10.869 billion yen, gross profit of 3.627 billion yen, operating profit of 0.267 billion yen, ordinary profit of 0.309 billion yen, net income of 0.287 billion yen, and EBITDA of 0.657 billion yen, maintaining the 600 million yen (0.6 billion yen) EBITDA level consistent with prior periods.
• Revenue grew 3.6% year-over-year, but operating profit declined 145 million yen (0.145 billion yen) year-over-year due to increased investment costs for future growth, including higher personnel costs, depreciation, and energy costs.
• Net assets increased 159 million yen (0.159 billion yen) year-over-year, and equity ratio rose 4.5 percentage points to 46.8%.

Profit Change Drivers

• The higher personnel cost increase comes from salary level improvements, hiring for generational turnover at manufacturing sites, and production stabilization initiatives. Overtime reduction efforts began delivering cost savings starting January 2025, with larger reductions expected in the coming fiscal year.
• Higher depreciation costs stem from the completed core system renewal across all three factories, a strategic investment with depreciation controlled to maintain stable EBITDA.
• Results beat the November 2024 downward revised forecast: raw material and energy costs were lower than projected, Q1 2025 (Jan-Mar) sales outperformed expectations, and overtime reductions delivered greater-than-expected personnel cost savings, bringing results in line with initial forecasts.

Mid-Term Management Plan Progress & Operational Highlights

• Investment is progressing on schedule, with growth in fixed and intangible fixed asset acquisition; the multi-year core system renewal across all three factories is complete, and depreciation has begun.
• Branding and marketing: The 50th anniversary of meatballs and factory tours drove fan building, with a total of 14,000 visitors across the three factories.
• New sales channel development: Distribution expansion for ambient and allergy-friendly products is progressing, and the company's subsidiary-run direct-to-consumer EC store is growing steadily.

1. Meatballs: 105% revenue growth year-over-year, supported by successful 50th anniversary marketing campaigns. The March 2025 price adjustment resulted in volume declines within expected ranges, while overall revenue increased. 2. Regional Products: 107% revenue growth year-over-year, though growth momentum has slowed gradually amid industry-wide inflation and price adjustments. 3. New Year dishes: Revenue reached 95% of the prior year level; higher raw material costs pushed up product prices, leading to reduced sales volumes. 4. Other TOPIX ambient temperature products: Total segment revenue reached 240 million yen (0.24 billion yen). This category includes extended shelf-life ambient products, allergy-friendly products, and the newly launched Hyaku Onigiri rice ball line, which is already showing strong growth.

• For the 2026 March fiscal year full year, the company forecasts revenue growth driven by the effects of the March 2025 price adjustment, with a conservative operating profit forecast of 150 million yen (0.15 billion yen), ordinary profit of 200 million yen (0.2 billion yen), net income of 150 million yen (0.15 billion yen), and EBITDA of 614 million yen (0.614 billion yen), maintaining the 600 million yen (0.6 billion yen) EBITDA range.
• The conservative forecast accounts for expected cost increases in raw materials, energy, and logistics, which are projected to offset price adjustment gains, as well as increased depreciation from medium-term investments, planned exit from low-growth categories, and ongoing investment spending for new growth businesses.
• Management will disclose any forecast revisions promptly once greater visibility on energy and raw material cost trends is obtained.

• Persistent volatility in raw material and energy costs creates uncertainty for profitability, with current input cost levels remaining unpredictable.
• Growth of the regional product segment has slowed amid broader industry inflation, requiring renewed marketing efforts to communicate product value and restore growth momentum.
• New Year dish sales face sustained pressure from high product prices driven by raw material cost inflation, leading to ongoing volume declines.

Q: Which product categories does management see as having the strongest potential for future growth, particularly regarding the new Hyaku Onigiri line? / A: Management identifies two high-priority growth categories. First, Torisoboro, a long-standing rice-topping product with even higher repeat rates than meatballs among existing customers, relies on the company's legacy tsukudani (simmered preserve) manufacturing expertise and established chicken supply chain strengths. It currently has uneven regional sales penetration, so expanding awareness and distribution will drive significant growth. Second, the ambient temperature product category including the new Hyaku Onigiri line, which offers extended shelf life and does not require refrigeration. This allows distribution to new retail channels that do not have refrigerated display space, and adds new use cases including home storage, travel, and on-the-go meals for children. Management is currently testing optimal retail placement strategies and sees strong long-term growth potential for this segment once the right distribution model is established.