7698.T

• Long-Term Strategy:

  • ICECO has a 10-year vision (ICECO VISION 2030) with three core goals: unparalleled service, social contribution through food, and maximization of human capital. The company targets becoming the top frozen business in Japan by profitability, with 2030 targets of 100 billion yen in revenue, 2.5 billion yen in operating profit, and a 2.5% operating margin.
  • The company is currently executing its second medium-term management plan focused on thorough adaptation to environmental change, with three key priorities: implementation of human capital management, accelerated profit reform, and new business cultivation. A full company business continuity plan (BCP) has been drafted this year, with full operation set to launch next fiscal year, to support business continuity during disasters and emergencies.

• Logistics Network Expansion:

  • The new Yokohama Sales Office opened in April 2025 in Kanagawa Prefecture as a core logistics hub for the Kanto region, located in a prime area with good employee access. The hub covers Kanagawa Prefecture and parts of Tokyo, supports up to 660 pallets of storage with mobile racking, and uses Honeywell Voice voice recognition systems for hands-free, more accurate and efficient operations. The opening resolved prior Kanto region warehouse capacity constraints, improved overall logistics efficiency, and allowed for the closure of the outdated Yokosuka Sales Office. It will coordinate with the upcoming Kanto Mother Center to further improve regional logistics.
  • The Kanto Mother Center (provisional name) is the company's largest ever capital project at 4.2 billion yen, currently under construction in Moroyama-machi, Saitama Prefecture. Construction started in September 2025, with foundation work ongoing and operation scheduled to start in December 2026. The new automated frozen distribution hub will have capacity to handle 1 million cases per month, and will serve as the core of the company's new satellite hub model, which concentrates sorting functions at the mother center to allow faster, lower-cost expansion of coverage through small satellite facilities while maintaining the quality of the company's full-service route sales.

• New Business Development:

  • The 4th location of the company's frozen specialty retail chain FROZEN JOE'S, and first location in Tokyo, opened in September 2025 at Chofu Parco in Tokyo. The 21-tsubo store carries 400 SKUs focused on restaurant-developed items and local specialty products, aligned with growing consumer demand for convenient, high-quality frozen food that also supports food waste reduction in line with SDGs. The company plans to continue active new store expansion for the chain.

• Capital and Shareholder Returns:

  • The company strengthened its financial base in September 2025 by signing a 3 billion yen commitment line agreement to support flexibility for future growth investment and working capital needs, and secured a 10-year loan to fund Kanto Mother Center construction.
  • To improve stock liquidity (still low due to large majority holdings by major shareholders) and address retained earnings tax issues, the company plans to sell approximately 2% of outstanding shares held by major shareholders via off-exchange block sale. The company is increasing its annual dividend to 20 yen per share (1 yen increase year-over-year after accounting for prior stock split), and maintains a shareholder benefit program that gives 8 Haagen-Dazs gift vouchers per year to qualifying shareholders.

• Full year 2026 (ending March 2026) guidance is maintained with no revisions from prior estimates.
• Full year revenue is projected at 57 billion yen, a 4.2% increase year-over-year.
• Full year operating profit is projected at 656 million yen, a 4.6% increase year-over-year.
• Full year ordinary income is projected to hold flat year-over-year at 691 million yen, due to the impact of higher borrowing from large capital investments and rising interest rates.
• Full year net income is projected to decline 7.5% year-over-year to 445 million yen, driven by lower tax credits.
• No revisions to segment-level full year performance guidance for either segment.

1. フローズン事業 (Frozen Business): This segment contributes 87% of total company revenue. For the mid-term period, segment revenue grew driven by strong new store openings from key drug store clients and a full-year contribution from an October 2024 account consolidation change for a major drug store chain. Longer-than-usual hot weather and extended residual heat into September drove strong ice cream sales, which maintained sales volume despite price adjustments. Frozen food sales remained stable, supported by established at-home cooking demand and expanded in-store shelf space. Segment profit reached 674 million yen, a 24.2% increase year-over-year, driven by lower third-party trucking and dispatch costs from improved hiring and staffing stability due to the 3-day workweek policy, plus improved logistics efficiency. 2. スーパーマーケット事業 (Supermarket Business): This segment contributes 13% of total company revenue. There were no new store openings or closures in the quarter. Segment revenue reached 3.538 billion yen, a 3.1% increase year-over-year, driven by higher selling prices from inflation even as customer counts held steady year-over-year. Segment profit improved from 8 million yen year-over-year to 30 million yen, after management cost optimization absorbed overall cost increases.

• Persistent cost increases: Input purchase prices, labor costs, delivery fuel costs, and electricity costs have all remained elevated, creating pressure on profit margins.
• Slow volume growth: While average selling prices increased 5.3% year-over-year, sales volume only grew 1.3% year-over-year, showing slower-than-desired volume expansion.
• Low stock liquidity: Major shareholders hold over half of outstanding shares, leading to relatively low trading volume, which also creates exposure to higher tax rates via retained earnings taxation.
• Competitive pressure in retail: The supermarket industry operating environment remains extremely challenging, with ongoing inflation pushing strong consumer demand for lower prices that creates margin pressure.
• Large capital investment risk: The 4.2 billion yen Kanto Mother Center project is the company's largest ever investment, requiring careful monitoring of operational performance and profitability after launch.

Q: How is ICECO addressing persistent cost inflation across raw materials, labor, fuel and utilities for the frozen business, and how much cost increase is being passed through to selling prices? / A: Management confirms that persistent elevated costs are impacting the business, and is proactively implementing planned price pass-through. The company collaborates with major clients to implement incremental price adjustments aligned with market conditions and product characteristics. Beyond price increases, management is also improving profitability by optimizing product assortment, improving logistics efficiency, and adjusting procurement terms, and will continue to absorb cost increases without reducing customer value while implementing price policy steadily.

Q: Are there plans to open new sales or satellite hubs after the Kanto Mother Center is completed? / A: The Kanto Mother Center will act as the new core hub for the frozen business, and the company plans to gradually expand satellite hubs mainly in the greater Kanto region after the center launches. The company will increase small-to-medium satellite facilities, balancing with existing hubs while assessing demand and delivery efficiency, to improve wide-area delivery efficiency and service quality. Large new capital investments will be implemented gradually after assessing the Kanto Mother Center's operational performance and profitability.

Q: Does ICECO have plans to expand outside of its core Kanto and Tokai regions, specifically into the Kansai area? / A: Management confirms that Kansai area entry is under active consideration, as the region has large population size and high market potential that makes it a key growth area for the frozen business. Other new regions will be expanded incrementally, leveraging existing logistics networks. Any regional expansion will first assess logistics efficiency and profitability before launching via flexible formats including satellite hubs or partnerships with local firms.

Q: What is the status and outlook for frozen food export business to Asian markets? / A: There is no concrete business schedule for Asian exports at this point, though the company sees growing demand and inbound inquiries from Asian markets. Overseas expansion is listed as a long-term growth driver in the second medium-term plan, with Asian markets a priority for future development. However, current priority is stabilizing domestic supply due to stronger-than-expected domestic demand and ongoing labor shortages, with the first priority being to successfully launch and stabilize operations at the Kanto Mother Center to strengthen domestic logistics capacity. Full overseas expansion will be launched once domestic capacity and human resource foundations are solid.