AHJIKAN CO.,LTD. Q4 FY2025 earnings call

Company & Business Overview

• Ajikan operates three core business segments: Business Use Food, Health Food, and Overseas Business, as a Japanese food manufacturer.
• Business Use Food holds top market share for processed egg products and rolled sushi ingredients, serving the food service and ready-to-eat markets, with differentiated bundled product and menu offering services to alleviate customer labor shortages.
• Health Food is anchored by functional burdock tea, which has grown to ~3.5 billion yen in cumulative sales over 15 years, with near 100% adoption across Japanese drugstores and 40% adoption across supermarkets.
• Overseas Business sells Japanese food ingredients globally, with two production factories in China (for domestic Chinese sales) and a US local subsidiary established in 2021 to expand North American sales, leveraging growing global demand for Japanese cuisine.

Consolidated Full-Year FY2025 Results

• Achieved 4 consecutive years of revenue growth and 2 consecutive years of net profit growth, with all-time record consolidated results: total revenue of 51.045 billion yen (+1.6% YoY), net profit of 1.548 billion yen (+2.6% YoY).
• Operating cash flow hit 3.455 billion yen, ending cash balance was 2.255 billion yen, net equity totaled 17.388 billion yen, and the equity ratio reached 64.6%, strengthening operational stability.
• ROE was 9.3% (above the firm's 8% target), and ROIC was 6.5% (above the firm's estimated 5% cost of capital).

Operational Milestones

• Health Food launched three new products: Roasted Burdock Tea Gobo no Okage W (dual functional claim for improved bowel movement and reduced visceral fat), MelBurd/GOVOCE (a roasted burdock chocolate-style food ingredient that has won industry awards), and the first ready-to-drink PET bottled burdock tea (launched November 2024), all of which performed well in early market reception.
• Business Use Food grew demand for processed egg products via strengthened promotional activities and menu solution offerings, which offset the impact of bird flu-related market disruptions from prior periods.

Capital Allocation & Shareholder Return

• For FY2025, the annual dividend was increased to 30 yen per share (25 yen regular + 5 yen special dividend), with a DOE of 1.4%. The firm targets increasing DOE to 2.2% for FY2026, 2.5%+ by FY2027, and 3.0%+ by FY2030, with a planned 52 yen regular dividend for FY2026. The firm also maintains twice-yearly shareholder product gift programs for qualifying holdings.
• The firm is executing investment plans under its long-term vision V30 ver.2.0, with 3.0 billion yen in planned investment for FY2026 focused on sales office efficiency system investments, production capacity expansion and rationalization, and environmental compliance investments. From FY2027 to FY2030, 11.0 billion yen in total investment is planned, focused on logistics capability strengthening, production line automation and robotization for cost reduction.

Sustainability Initiatives

• Key initiatives include: effective utilization of burdock processing byproducts (turning residual material into recycled paper for packaging), food education and rolled sushi cultural promotion, food bank donations for community social impact.
• Public targets: 50% reduction in factory processing food loss (currently at 45.8% reduction on track to meet target), increased renewable energy adoption, energy and fuel use reduction across facilities, and plastic packaging reduction (currently progressing as planned).

1. Business Use Food Segment: Revenue of 47.0 billion yen, a 583 million yen increase year-over-year (101.3% YoY). This segment represents 92.1% of total consolidated revenue. Segment profit was 3.652 billion yen, with year-over-year profit growth. 2. Health Food Segment: Revenue of 3.585 billion yen, a 239 million yen increase year-over-year. This segment represents 7.0% of total consolidated revenue. Segment profit was 214 million yen, a year-over-year decrease driven by strategic upfront investments in advertising and new product launches. 3. Overseas Business Segment: No standalone revenue or profit figures were explicitly reported in the transcript; its revenue is included within the Business Use Food segment results, with expansion reported in North American, Hong Kong, and other international markets.

• For the FY2026 March term, consolidated revenue is guided to 52.0 billion yen, a 1.9% year-over-year increase, driven by price adjustments and new product launches.
• Consolidated operating income is guided to 1.75 billion yen, a 10.9% year-over-year decrease; ordinary income is guided to 1.85 billion yen (16.7% YoY decrease); net income is guided to 1.22 billion yen (21.2% YoY decrease). The projected decline is driven by broad-based cost increases for raw materials (especially eggs), labor, and logistics, which offset revenue growth.
• For segment guidance: Business Use Food is projected to deliver revenue growth to 47.45 billion yen, but lower segment profit due to cost pressures; Health Food is projected to deliver both revenue and profit growth as prior year investments begin to generate returns.
• ROE and ROIC are projected to decline slightly in FY2026, and management will work to maintain ROE near the 8% target.

• Large-scale avian influenza outbreaks resulted in the culling of 8.59 million laying hens in FY2025 (the third largest culling volume in recent history), leading to sharp volatility in egg prices: prices were low and stable through summer-autumn 2024, then spiked to very high levels from late autumn 2024 onward, creating input cost uncertainty for the core processed egg business.
• Broad-based commodity and input cost inflation has impacted multiple core inputs: energy (electricity and gas) costs, labor costs (from ongoing wage increases), rice, nori, and cooking oil prices have all increased significantly, with nori prices doubling over the past three years, squeezing margins across the core Business Use Food segment.
• Upfront investments in new Health Food product launches and advertising are expected to only generate financial returns starting from FY2026, leading to near-term margin pressure for the segment.

No Question and Answer section was included in the provided transcript.