8043.T

• Mid-Term Management Plan 2025 Retrospective

  • All initiatives proceeded roughly on schedule across three core pillars: new business challenge, domestic business reform, sustainability and management base strengthening. Completed key milestones including acquisition of an Australian cattle feedlot and Singaporean sales company, development of east/west logistics and sales hubs in Japan, product rebranding, GHG reduction, and DX promotion.
  • All original targets for FY2026 (ending March 2026) are on track to be met: 450 billion yen revenue, 11 billion yen recurring profit, 12.6 billion yen EBITDA, and 8.8% ROE.
  • Core competitive advantage: In-house vertically integrated supply chain connecting producers directly to customers, including stable procurement of rare products like Wagyu, high-hygiene processing at on-site slaughterhouse plants, custom manufacturing expertise, and a nationwide 50-location in-house cold chain network that delivers unmatched product and service quality.

• Long-Term Vision & New Mid-Term Management Plan 2030

  • Long-term vision (10-year target): Build a global supply chain that meets customer needs worldwide, aligned with the corporate mission of connecting people to food by creating delightful eating experiences. The plan will feed customer demand upstream to improve products/services while preserving and delivering the value of producer expertise and artisan skills.
  • Mid-Term Plan 2030 theme: Further evolve core strengths and challenge the global market. Extended the plan period from 3 years to 5 years to allow enough time for growth investments to deliver returns and build long-term competitiveness. 5-year total investment planned at 70 billion yen: 24 billion yen for domestic market, 26 billion yen for overseas market, 6 billion yen for DX and efficiency, 14 billion yen for maintenance and renewal.

• Core Strategic Pillars

  1. Global Supply Chain Development (Overseas Market): Leverage tailwinds from rising Wagyu/Wagyu-style beef demand across Asia/North America and accelerating overseas expansion of Japanese food retail/restaurant groups. Three key initiatives: (1) Expand export capacity for Japanese Wagyu (via strengthened partnership with Mizosato Livestock Group in Kagoshima and expanded processing facilities) and Australian Wagyu (via scaling the newly acquired Australian feedlot); (2) Expand processed meat sales in Southeast Asia, using the newly fully acquired Addirect Singapore as a hub to offer custom-cut products matching local demand; (3) Strengthen collaboration with Japanese clients expanding overseas, using Starzen's 5,000 domestic client base and Mitsui & Co.'s global network to enter new markets together. Target to increase overseas recurring profit margin from 5% (FY2026 projection) to 15%.
  2. Domestic Sales Structure Optimization: Adapt to demographic change, shifting consumer lifestyles, rising cost-saving sentiment, and polarized consumption. Improve productivity by adjusting production facilities and lines, expand processed product assortment and quality, reconfigure sales hubs for efficiency, and drive collaboration with strong regional players to expand market share and improve profitability.
  3. Business Base Strengthening: (a) Logistics reform: Address rising logistics costs and environmental impact via three initiatives: network improvement, rule optimization, transport method improvement, including shifted to palletized transport and modal shift, data-driven efficiency to achieve sustainable logistics; (b) DX evolution (Zeus Project): Build custom core systems for the complex meat industry, target full system rollout for all core product order operations by FY2029 (ending March 2029), achieve 500 million yen annual labor cost reduction via AI-enabled efficiency, and improve group-wide profitability via data visibility and analysis; (c) Future-focused human resources strategy: Implement talent management for optimal placement, train personnel with end-to-end supply chain expertise, expand diversity hiring, support career autonomy, improve manager skills, build self-managing teams, revise evaluation/compensation systems, promote early promotion of young workers, and improve employee engagement; (d) Sustainability: Prioritize GHG reduction, human rights, and animal welfare, contribute to social problem solving and increase enterprise value via renewable energy adoption, efficiency-driven emissions cuts, and improved supply chain human rights awareness.

• Financial Strategy

  • Target to generate more than 700 billion yen in operating cash flow over 5 years. Actively use external financing to support core growth investments, allocate more than 200 billion yen to shareholder returns, target early achievement of the 3.0% DOE goal, and consider opportunistic share buybacks. Maintain equity ratio around 40% to boost financial leverage while controlling asset size via DX-driven inventory management and inefficient asset reduction.

• FY2026 (ending March 2026) full-year guidance maintained: 450 billion yen revenue, 9.4 billion yen operating profit, 11 billion yen recurring profit, 8 billion yen net income attributable to parent shareholders. The guidance already includes cost increases from goodwill amortization for the Australian farm acquisition, base wage increases, and higher logistics costs. Management expects higher gross profit from expanded sales of high-value-added products (especially processed food) and full pass-through of costs to selling prices, which will absorb cost increases and deliver YoY growth in operating and recurring profit. The projected YoY decline in net income is only due to the absence of the prior year's special gain from fixed asset sales.
• Dividend guidance maintained: 43 yen per share post-stock split (129 yen pre-split), which equals 2.7% DOE, balanced between the 3.0% DOE target, growth investment needs, and the current operating environment of rising labor and logistics costs.
• Mid-Term Management Plan 2030 targets (for FY2031 ending March 2031): 550 billion yen revenue, 16 billion yen recurring profit, 21 billion yen EBITDA, minimum 6.0% ROIC, minimum 10.0% ROE. Target to increase recurring profit by 5 billion yen total from FY2026: 2.5 billion yen from domestic market, 1.9 billion yen from overseas market, 0.6 billion yen from domestic sales optimization and improved product offering.

Total interim revenue: 220 billion yen, +3.1% YoY.

1. Domestic Meat: +5.2 billion yen YoY increase. Domestic beef handling volume declined slightly, but strong high-value cut export growth drove revenue gain; domestic pork handling volume increased due to consumer cost-saving shift, supporting additional revenue growth. Revenue contribution share: ~26% of total interim revenue.
2. Imported Meat: +4 million yen YoY increase (flat overall YoY). All meat types faced weak retail sales due to rising import costs, but relatively low-cost imported pork had steady demand, and general market price increases lifted selling prices, keeping revenue flat at prior year levels. Revenue contribution share: ~X% (exact share not provided, small absolute change).
3. Processed Food: +1.9 billion yen YoY increase, +5.1% YoY growth. Strong sales growth for hamburgers, sliced products, and food service products drove the gain. Revenue contribution share: ~10.4% of total interim revenue.
4. Ham & Sausage: -500 million yen YoY decrease. Ongoing price adjustments and product portfolio review led to lower handling volume, the main cause of the decline. Revenue contribution share: negative, pulling total growth down slightly.

• Volatile foreign exchange markets and soaring global meat prices have increased input costs, squeezing operating margins.
• High general inflation and market uncertainty have shifted consumer demand toward lower-priced products, leading to weak overall meat consumption demand.
• Rising labor and logistics costs have outpaced gross profit growth in the interim period, leading to a YoY decline in operating profit.
• Imported meat prices face high uncertainty from combined yen depreciation and rising global producer prices, creating forecasting challenges.
• The domestic beef market faces sluggish domestic demand, requiring flexible pricing and sales adjustments for lower-value cuts.

Q: The Mid-Term Management Plan 2030 targets total operating cash flow of 70 billion yen or more over 5 years, up from 19 billion yen under the prior Mid-Term Management Plan 2025. Is this target achievable? / A: Management expects the target to be delivered from two key drivers: improving profitability and better working capital efficiency. For profitability, EBITDA is projected to exceed 20 billion yen in the final year of the plan (FY2031), with steady growth each period. Rising profitability from existing businesses and the staged realization of returns from strategic priority investments will expand the base for operating cash flow. For working capital efficiency, Starzen will improve receivable and inventory turnover, optimize inventory levels even as business scales, and prevent excessive working capital accumulation. Combined improvements in both profitability and asset efficiency will deliver sustained operating cash flow growth to hit the 70 billion yen target.

Q: The year-end holiday sales season is coming in a very different market environment than usual. What initiatives is Starzen pursuing, and what segments will it prioritize? / A: Overall meat prices are currently at very high, elevated levels, especially for imported meat which faces double pressure from high global producer prices and yen depreciation that makes foreign currency-denominated prices highly unpredictable. Starzen began preparing early for this environment. The priority segment is beef: domestic beef faces sluggish domestic sales, but export growth is extremely strong, with steady sales of loin cuts even despite US tariff policy changes, and flexible pricing adjustments for other cuts to keep them accessible to consumers. Beyond beef, Starzen is pushing its proprietary differentiated products: while high beef prices have made roast beef difficult to sell, its newly promoted roast pork has received strong customer acclaim and will be a key focus for the season. It will also push differentiated products like its Hyokukan-aged pork to strengthen its unique product portfolio for the holiday season.