2907.T

Core Business Overview

• Ajikan operates two distinct business segments: the Business Use Food segment focused on supplying processed egg products, sushi ingredients to the domestic and overseas ready-to-eat and food service markets, and the Health Food segment centered on functional burdock-based health products.
• Business Use Food (Domestic): Ajikan holds top-tier market share for core products including rolled tamagoyaki and sushi ingredients, and differentiates via integrated wholesale capabilities that support combined menu and store display planning for clients.
• Business Use Food (Overseas): Ajikan exports processed egg products, sushi ingredients, and Japanese side dishes globally, operates two production facilities for domestic sales in China, and established a local subsidiary in California, U.S. in 2021 to expand North American sales.
• Health Food: Ajikan launched its first consumer-facing product, burdock tea, in 2010; it has grown to cumulative 3.5 billion yen in total sales, and was the first burdock tea approved as a functional labeled food in Japan for bowel movement improvement. The segment is expanding beyond tea into soups and chocolate-flavored confectionery to increase burdock consumption occasions.

Interim Period Operational Performance

• Domestic Business Use Food: Faced severe market headwinds: avian influenza reduced egg production that failed to recover amid an extreme heatwave, pushing average Tokyo M-grade egg prices to a record high 328.8 yen from April to September, far exceeding initial forecasts; labor and logistics costs also rose sharply. On the sales side, rising rice and nori prices led clients to reduce ingredient ratios in sushi, cutting demand for core products including tamagoyaki, crab-flavored kamaboko, and dried gourd, alongside an overall decline in sushi retail sales. However, sales promotion to new client segments like major hotel chains has grown, with increased adoption in hotel breakfast buffets.
• Overseas Business Use Food: California's Prop 12 animal welfare regulations restricted the use of non-cage-free eggs for products sold in the state, leading to stagnant tamagoyaki sales in the U.S. market. Sales grew in Hong Kong and Singapore, and the company strengthened promotion via expanded product assortment (including processed vegetables and halal-certified products) and trade show participation.
• Health Food: Even with high burdock raw material prices, aggressive advertising and promotion drove strong sales growth for new burdock tea products launched in 2024: the first ready-to-drink PET bottled burdock tea "Oishii! Goboucha" and the functional labeled product "Kokusan Baikan Goboucha Gobou no Okage W". The PET bottled variant expanded the consumer base to younger generations and male buyers due to its convenience.

• The full-year 2026 March fiscal year consolidated forecast maintains an expected total revenue of 51.0 billion yen. It forecasts 1.1 billion yen in operating profit (down from prior expectations due to raw material and general cost inflation), 1.3 billion yen in ordinary profit (including expected foreign exchange impacts), and 0.9 billion yen in net profit attributable to parent company shareholders.
• Key performance target forecasts for full-year 2026 March fiscal year are: EBITDA of 2.4 billion yen, ROIC of 3.5%, and ROE of 5.1%. The company targets ROIC of 5.0% or higher and ROE of 6.0% or higher for the 2027 March fiscal year.
• The full-year dividend forecast is 52 yen per share, corresponding to a DOE (dividend on equity) of 2.2%. The company plans to gradually raise dividend levels alongside improvements to its profit structure, targeting a DOE of 2.5% or higher for the 2027 March fiscal year.
• For the second half of the current fiscal year, management outlines growth plans: the Business Use Food segment will pursue cost reduction via labor-saving production efficiency and yield improvements, strengthen sales to new segments like food service and accommodation tied to sushi promotion activities to grow sales; the Health Food segment will continue aggressive advertising to expand sales of functional burdock tea, and launch new products including the new GOVOCE Milk burdock-based chocolate-style confectionery to build a new revenue pillar.

1. Business Use Food Segment: Total segment revenue is 22.796 billion yen, a 1.5% decrease year-over-year, accounting for 91.4% of total consolidated revenue. Within this segment, domestic revenue is 21.562 billion yen, down 2.0% year-over-year; overseas revenue is 1.234 billion yen, up 9.2% year-over-year. Segment profit is 0.952 billion yen, down 52.9% year-over-year due to cost inflation. 2. Health Food Segment: Segment revenue is 1.918 billion yen, up 10.9% year-over-year, accounting for 7.7% of total consolidated revenue. Segment profit is 0.124 billion yen, up 1.6% year-over-year. Segment profit margin is 6.5%, a 0.6 percentage point decrease year-over-year. Total consolidated revenue for the interim period is 24.943 billion yen, down 0.6% year-over-year.

• Domestic Business Use Food: Persistently high egg prices driven by avian influenza production declines and slow recovery from extreme heat have pushed raw material costs far above initial forecasts. Rising labor and logistics costs are also compressing margins. Additionally, high rice and nori prices have reduced client demand for core sushi ingredients, cutting segment sales.
• Overseas Business Use Food: U.S. California's Prop 12 animal welfare regulations have restricted sales of non-compliant processed egg products, leading to stagnant sales growth in the key North American market as the company works to adjust its supply chain to meet new requirements.
• Health Food: High raw material costs for burdock compress margins, and increased advertising spending to drive growth has also reduced the segment's profit margin even as sales grow.

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