The performance for the second quarter of fiscal year ending March 2025 for Kewpie Corporation <2933> showed revenue of 47,759 million yen (a 0.8% increase compared to the same period last year), operating profit of 546 million yen (an increase of 405.4% year-on-year), ordinary profit of 440 million yen (an increase of 510 million yen compared to an ordinary loss of 69 million yen in the previous year), and a net loss attributable to shareholders of parent company of 55 million yen (compared to a net loss attributable to shareholders of parent company of 658 million yen in the previous year). Significant revenue growth was observed leading toward the busy third quarter, resulting in very strong performance. Additionally, the method for converting revenue and expenses for overseas subsidiaries, etc., has been changed from conversion based on the spot exchange rate on the settlement date to conversion based on the average exchange rate during the period. As a result, compared to before applying retroactively, there was a decrease of 327 million yen in revenue for the same period last year, an increase of 62 million yen in operating profit, a decrease of 23 million yen in ordinary profit, and a decrease of 18 million yen in net profit attributable to shareholders of the parent company.

While the Japanese economy maintains a moderate recovery trend, individual consumption remains weak due to a savings-oriented mindset brought about by rising prices of various goods, leading to an uncertain outlook. In this environment, the company aims to establish a robust corporate structure that can sustain growth according to the newly formulated 'Medium-term Management Plan 2026' this spring, ensuring solid growth in existing businesses and expanding business areas, while also working on improving capital efficiency and strengthening the management foundation to ensure growth. As a result, revenue has increased, and profits have grown significantly at all stages. However, since the main products, fish paste products and ready-made dishes, see a rise in demand for oden and nabemono in the winter season, and sales of osechi-related products concentrate in December, revenue and profits tend to be biased toward the third quarter, leading to lower performance progress in the second quarter.

The performance trends by segment are as follows. The domestic food business struggled with noodle products and imported agricultural, livestock, and aquatic products due to prolonged high temperatures compared to previous years and intensified promotional competition; however, health-conscious items like core fish paste products and stable egg processing products driven by chicken egg supply led sales. On the profit side, by stabilizing raw material prices, improving business mix, and reducing costs and efficiency, there was significant profit growth. As a result, the revenue of the domestic food business was 32,170 million yen (a 1.6% decrease year-on-year) with a segment loss of 289 million yen (compared to a segment loss of 502 million yen in the same period last year). The overseas food business saw a decrease in sales to retail trade amidst economic slowdown, and fluctuations in foreign exchange also impacted agricultural product exports; however, sales increased thanks to strong performance in fish paste products centered around crab sticks. In terms of profits, although costs such as freight rates increased, profits grew due to increased sales of self-produced fish paste products leading to improved profit margins. Consequently, the revenue of the overseas food business was 5,771 million yen (a 1.9% increase year-on-year) and segment profit was 489 million yen (an 87.6% increase year-on-year). The food-related business saw increased volumes due to new orders and expanded delivery areas in the core logistics business, as well as growth in the information business supported by the introduction of biometric authentication systems. Profitability also improved due to rate revisions and efforts toward mechanization and delivery efficiency. As a result, revenue in the food-related business reached 9,817 million yen (an 8.9% increase year-on-year) and segment profit was 309 million yen (a 20.9% increase year-on-year).

Regarding the performance outlook for the fiscal year ending March 2025, the company expects revenue of 110,951 million yen (a 4.2% increase compared to the previous term), operating profit of 4,727 million yen (a 0.2% increase), ordinary profit of 4,221 million yen (a 3.9% decrease), and net profit attributable to shareholders of parent company of 2,855 million yen (a 0.9% increase). In the domestic food and food-related businesses, efforts will continue to capture autumn and winter demand for revenue expansion, while in the overseas food business, attention will be given to the trends of macroeconomics and geopolitical risks in various countries and regions. Additionally, in the domestic food business, efforts for concentration and strengthening of functions are being advanced in line with the 'Medium-term Management Plan 2026', with plans to merge Kewpie Corporation West Japan on April 1, 2025, and merge Kitashoku Corporation on January 1, 2025, to ensure proper distribution and efficient utilization of management resources. Since this merger is with the company's wholly-owned subsidiaries, the impact on consolidated performance is expected to be minimal.

(Author: FISCO guest analyst Nobumitsu Miyata)