Ajinomoto Q1 FY2027: Business profit surges 27%, full-year outlook raised

Ajinomoto's first-quarter results showed a robust expansion across top-line metrics. Consolidated revenue rose 13.2% year on year to ¥412.1 billion, while IFRS operating profit increased 13.2% to ¥55.9 billion. The company's preferred metric, business profit, climbed 27.3% to ¥60.1 billion. Net profit attributable to shareholders was up 13.1% to ¥36.4 billion. The strong performance was fueled by seasonings and foods, as well as a surge in electronic materials for AI and server applications within the Healthcare & Others segment.

Reflecting this momentum, Ajinomoto raised its full-year revenue forecast by ¥9 billion to ¥1,732 billion and business profit by ¥5 billion to ¥202 billion. The first-quarter progress rate against the revised business profit target reached 29.8%. The assumed exchange rate is ¥150 per U.S. dollar, with a weaker yen providing a tailwind to overseas earnings translation. The gap between operating and business profit stemmed from net other operating expenses of ¥4.2 billion. The lower growth rate of net profit compared with business profit reflects the absence of large one-off gains that boosted the prior-year period.

All figures are year-on-year comparisons unless noted.

Seasonings & Foods: Revenue grew 11.9% to ¥238.7 billion, and business profit rose 13.0% to ¥41.0 billion. In Japan, nutrition and processed foods such as coffee and soups contributed to the increase, while overseas operations benefited from currency effects and volume growth. Profit growth was supported by higher sales and reduced domestic selling, general, and administrative expenses, which more than offset higher strategic spending abroad.

Frozen Foods: Revenue edged up 5.6% to ¥72.5 billion, but business profit fell 23.2% to ¥2.1 billion. Intensifying competition and cost increases in North America and Japan weighed on profitability.

Healthcare & Others: This segment was the standout performer, with revenue surging 22.8% to ¥97.0 billion and business profit soaring 63.3% to ¥25.1 billion. The functional materials business, centered on Ajinomoto's ABF™ insulating material for high-performance semiconductor packaging, saw strong demand from AI and data center servers, delivering a sharp increase in both revenue and profit. The bio-pharma services and ingredients business also posted higher revenue, driven by pharmaceutical- and food-grade amino acids.

Other: Revenue rose 29.8% to ¥3.7 billion, but business profit declined 14.0% to ¥1.6 billion. Corporate expenses increased by ¥9.9 billion, mainly due to higher head office costs, which were fully absorbed by the aggregate segment profits.

At the end of the first quarter, total assets stood at ¥1,940.4 billion, an increase of ¥128 billion from the prior fiscal year-end, largely due to a ¥90.3 billion rise in cash and cash equivalents. Interest-bearing debt climbed by ¥141 billion to ¥623.7 billion following commercial paper issuance, but liquidity remained ample, with undrawn committed lines of ¥200 billion and US$100 million.

Cash flow from operating activities was a ¥18.4 billion inflow (down from ¥30.4 billion a year earlier), while financing activities generated a ¥93.6 billion inflow from CP issuance. End-of-quarter cash and cash equivalents stood at ¥196.9 billion.

For shareholder returns, Ajinomoto plans an annual dividend of ¥50 per share for fiscal 2027, up ¥2 from the prior year, with an interim and year-end payment of ¥25 each. The company also executed share buybacks totaling approximately ¥19.3 billion during the first quarter, underscoring a commitment to improving total shareholder return and capital efficiency.

Ajinomoto highlighted the following key risks:

• Geopolitical tensions in the Middle East: The company incorporated the potential impact into its full-year forecast, but further escalation could pose downside risks.
• Currency fluctuations: The full-year forecast assumes ¥150 per dollar. A stronger yen would erode overseas revenue and profit when translated.
• Frozen Foods profitability: Intensifying competition and higher costs have depressed earnings, requiring prompt corrective action.
• Raw material and energy costs: Persistently elevated resource prices could squeeze margins, making continued strategic price adjustments and cost reduction essential.
• Electronic materials demand volatility: A slowdown in AI or server-related investment could decelerate the rapid growth in the Healthcare & Others segment.

Riding the strong first-quarter showing, Ajinomoto raised its consolidated forecasts for fiscal 2027. The main driver was a significant upward revision in the Healthcare & Others segment, reflecting robust electronic materials sales.

Revised forecasts: revenue raised by ¥9 billion to ¥1,732 billion (up 9.4% year on year), business profit raised by ¥5 billion to ¥202 billion (up 11.5%), and net profit attributable to shareholders raised by ¥3.5 billion to ¥123.5 billion (down 8.3% from the prior year, due to the reversal of one-off special gains recorded in fiscal 2026). The first-quarter progress rate of 23.8% for revenue and 29.8% for business profit points to a healthy trajectory toward full-year targets.

A standout feature of these results is Ajinomoto's electronic materials business, which is successfully capturing AI and data center demand and emerging as a new earnings pillar. Built on the company's long-standing amino acid technology, the ABF™ high-performance material is essential for IC package substrates in advanced semiconductor chips, and it is expanding its global market share. The explosion of generative AI has sparked a surge in demand for high-multilayer substrates used in servers and networking gear, driving a sharp increase in ABF™ sales volumes.

Management views this growth trend as structural, not transitory, as evidenced by the upward revision after just one quarter. The group is increasingly attractive to investors because its stable food-manufacturing franchise is now complemented by a high-value B2B materials business that is firing as a second growth engine.