Company Overview

1. Business Description

Kenko Mayonnaise <2915> mainly develops a Condiment and Processed Food business manufacturing and selling salad, side dishes, mayonnaise, dressing, and egg processed products. It also operates subsidiaries involved in the manufacturing and sales of perishable side dishes and store operations.

Looking at the revenue trends by business segment over the last five periods, the core Condiment and Processed Food business fell sharply during the fiscal year ending March 2021, when the restaurant industry was significantly impacted by the COVID-19 pandemic. However, since the fiscal year ending March 2022, it has shown signs of recovery. Meanwhile, the subsidiary's related businesses in side dishes have been benefiting from changes in market conditions, such as the advancement of women into the workforce and the demand for individual meals, resulting in revenue growth for 12 consecutive periods up to the fiscal year ending March 2024. Other businesses (store operations) have struggled to grow in recent years, partly due to a decrease in the number of operating stores.

In the fiscal year ending March 2025, the revenue composition ratio by sales channel shows that the restaurant industry accounts for 29.2%, large retailers 28.0%, and convenience stores 21.9%, together comprising about 80% of the total. The remainder consists of business to bakeries and catering providers. Compared to the composition ratio in the fiscal year ending March 2020, the restaurant industry's share increased by 1.6 points, and the large retailer share rose by 3.4 points due to the expansion of side dish demand and efforts to develop new businesses, such as drug stores. On the other hand, the share for convenience stores decreased by 4.7 points due to a shortage of chicken eggs caused by the outbreak of highly pathogenic Bird Flu in the first half of 2023, which temporarily limited the supply of the main product, egg processed goods.

2. Characteristics and Business Environment

The company's characteristics include a nationally established production system that consistently supplies high-quality products, and the segmentation of various fields by business type. The integration of sales, product development, production, and menu development teams demonstrates comprehensive capabilities to meet customer needs through product development and meticulous sales responsiveness.

Taking the restaurant industry as an example, the company's sales to restaurants increased by 23.2% compared to the pre-COVID fiscal year ending March 2020, rising from 20,556 million yen to 25,339 million yen in the fiscal year ending March 2024. According to the Japan Food Service Association's "Restaurant Industry Market Trend Survey," overall revenue in the restaurant industry in 2023 was up 7.7% compared to 2019. Although there are differences between the fiscal year and calendar year, it can be inferred that the company has expanded its Share in the restaurant industry. The demand for "simplification" in cooking is increasing due to labor shortages in the restaurant industry, and it is expected that the demand for salads and side dishes is also growing. As the working population continues to decrease, labor shortages are likely to remain a challenge, and there is considerable potential for revenue growth through product development focusing not only on taste and quality but also on "simplification.

3. Production System, Group Subsidiaries

The company operates domestic production at 7 factories in the headquarters and 9 factories across 7 consolidated subsidiaries. The subsidiaries mainly produce fresh food products (related to prepared dishes) for supermarkets, establishing a production system closely tied to the Region. For 24-hour convenience stores, just-in-time responses are essential, and some factories have a flexible production system that can quickly respond to fluctuations in quantity throughout the year.

The subsidiary Salad Cafe Co., Ltd. operates 12 salad specialty stores (as of November 2024). They are located in department stores and shopping malls in the Tokyo metropolitan area and Kansai region, also serving as a place for disseminating information such as new proposals for salad menus.

The Overseas business established a joint venture, PT. Intan Kenkomayo Indonesia, with a local food manufacturer in Indonesia in 2012 (with a stake of 49%). In addition to manufacturing and selling mayonnaise and sauces, they also sell liquid eggs. Although overseas revenue is still low, the medium to long-term management plan aims for expansion in overseas operations, including M&A as one of the growth strategies.

(Written by FISCO guest analyst, Jo Sato)