7413.T

Overall Financial Results:

• For FY2025 March Term, consolidated net sales totaled 4.95 billion yen, up 1.4% YoY (an increase of 67 million yen). Gross profit was 1.245 billion yen, for a gross margin of 25.2%.
• Gross profit grew significantly after price pass-through was finally achieved, following two years of absorbing raw material cost increases internally. Operating profit reached 65 million yen, ordinary profit 71 million yen, profit before tax 69 million yen, and net income attributable to parent shareholders 47 million yen, delivering both top-line and bottom-line growth.
• 40% of all private brand (PB) products (133 SKUs) received price increases of 5-6%, driven by raw material shortages (eggs for mayonnaise, cacao for chocolate), rising freight and logistics costs, higher imported input costs from yen depreciation, and increasing labor costs. Sales volume declined across most products due to consumer pullback after price increases, offsetting most of the top-line gain from price hikes. Selling, general and administrative expenses fell 7 million yen YoY, driven by lower logistics costs from bulk shipments of the top-selling Yuseiran Mayonnaise.

Balance Sheet & Cash Flow:

• Large year-over-year changes in current assets, current liabilities, and cash flow are almost entirely due to the difference in the fiscal year end date (March 31 was a Sunday in FY2024, a Monday in FY2025), which impacted the timing of receivable and payable payments. No material operational changes drove these swings.

Strategic Initiatives:

• Sustainability: Expanding organic and plant-based product lines as a top priority; target to convert 50% of Sokensha brand packaging to low-environmental-impact materials (biomass-based, recycled paper, plastic-to-paper switches, non-petroleum ink) by FY2026 March Term, up from 33.5% as of March 2025. Communicate sustainability efforts via clear labeling of eco-certifications (MSC, organic JAS, RSPO, FSC) on packaging.
• Market Expansion: Pursue new market growth with new high-priced, functionally-oriented products positioned as "food-adjacent health foods," focused on high-interest categories for women such as femtech. Expand commercial food service sales and organic/plant-based exports to Southeast Asia and the U.S., with plans to exhibit at a Denver trade show in August 2026.
• E-commerce Growth: Sokensha's direct EC site hit 13.554 million yen in revenue (+10.6% YoY) in FY2025; set a FY2026 target of 34 million yen. The company will launch on Rakuten Market, distribute limited sample products for new launches, participate in direct-to-consumer events, use the accessible Meissy-chan confectionery series to drive traffic and conversions, and highlight product craftsmanship on-site.
• Brand & Marketing: Grow Instagram follower count gradually to build a core fan base (currently ~16,000 followers) via recipe content, ambassador programs, and story features. Expand the Girolomoni line of Italian organic products, leveraging the supplier's 2024 EU Organic Award for best organic processing SME, with new product launches (white grape vinegar) and line refreshes (balsamic vinegar, pasta sauces). Expand the Meissy-chan confectionery series with seasonal gift boxes to drive brand awareness as an entry point for new customers.
• New Product Development: Established the New Product Development Department in April 2023, with cross-functional participation from female employees (reflecting that women are the primary buyers for the company's products) to develop products aligned with women's life stages, including temperature support and menopause supplements and functional labeled foods.

• For the full FY2026 March Term (final year of the current 3-year mid-term management plan), Sokensha projects net sales will grow 3.4% YoY, gross profit will grow 2.6% YoY, with a slight decline in gross margin. The company expects further raw material price hikes, and a slight sales decline for top product Yuseiran Mayonnaise due to raw material constraints.
• Profit projections for FY2026 March Term: Operating income of 30 million yen (less than half of FY2025 levels), ordinary income of 33 million yen, and net income attributable to parent shareholders of 16 million yen.
• Channel projections: Mass retailer sales are expected to decline slightly due to Yuseiran Mayonnaise constraints; natural food stores will continue steady growth; co-op sales will be nearly flat; the large FY2025 e-commerce sales figure is irregular, and sales will return to a normal growth trajectory in FY2026.
• PB sales as a percentage of total revenue is projected to reach 64% in FY2026.
• The company targets to grow organic and plant-based product revenue to 16% of total net sales in FY2026, with organic reaching 473 million yen (from 382 million yen, expanding from 55 to 77 SKUs) and plant-based reaching 303 million yen (adjusting the SKU count to 51 from 56, focusing on growing sales of existing strong products).

By product category (product segment):

1. Oils & Fats, Dairy Products: Sales grew overall, despite declines in safflower and perilla oil; odorless coconut oil drove growth as a priority segment.
2. Seasonings: Sales grew, led by the top-selling product Yuseiran Mayonnaise (fertile egg mayonnaise), which accounts for the majority of segment revenue.
3. Processed Side Foods: Sales grew, driven by strong demand for directly imported organic whole and diced canned tomatoes from Italy.
4. Luxury Goods & Beverages: Overall sales declined sharply, due to the termination of a large soybean milk distribution contract with a major client. The Meissy-chan series of confectionery posted sales growth within the segment.

By channel segment:

1. Mass Retailers: Sales grew by 130 million yen, driven almost entirely by Yuseiran Mayonnaise.
2. Natural Food Stores: Steady moderate growth, led by multi-location chains.
3. Co-op Home Delivery: Growth stalled after a temporary pandemic-driven boost, remaining flat year-over-year.
4. E-commerce: Recorded the strongest growth, with third-party marketplace sales growing faster than Sokensha's direct-to-consumer e-commerce site. The FY2025 e-commerce revenue of 697 million yen is irregular, driven by bulk transfer of old 300g Yuseiran Mayonnaise inventory, with a normal trend of growth from 293 million yen to 340 million yen expected.

• Persistent raw material cost inflation and supply shortages: Continued upward pressure on raw material prices is expected, with a confirmed shortage of fertile eggs for the company's top-selling, highest-margin Yuseiran Mayonnaise, forcing a product downsize from 300g to 200g and leading to projected sales declines.
• Post-price-increase consumer demand weakness: Price increases driven by cost pressures led to lower sales volume across most products, with consumer pullback limiting top-line growth and creating ongoing pressure on demand.
• Imported input cost exposure: Yen depreciation has driven up costs for directly imported raw materials and finished goods, creating ongoing margin pressure that requires continued price adjustments.
• General cost inflation: Rising logistics costs and labor costs add persistent margin pressure that cannot be fully absorbed internally, requiring continued price pass-through that risks further demand erosion.

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