Kikkoman Q1 FY2027: Operating profit jumps 29% on overseas growth, weaker yen

Kikkoman delivered double-digit growth across all profit stages in the first quarter. Revenue rose 15.0% to ¥202,032 million, operating profit increased 29.0% to ¥24,627 million, and net profit attributable to shareholders climbed 24.3% to ¥19,017 million.

Business profit (revenue less cost of sales and SG&A) advanced 29.3% to ¥25,256 million, outpacing the operating profit gain. The operating profit margin widened to 12.2% from 10.9% a year earlier.

A sharply weaker yen provided a significant tailwind, with the average exchange rate at ¥160.51 to the dollar (vs. ¥145.19) and ¥185.45 to the euro (vs. ¥164.37). On a constant-currency basis, revenue grew 6.0% and operating profit 18.3%, indicating solid underlying expansion.

Overseas revenue jumped 17.7% to ¥159,139 million, accounting for 78.8% of the total, while domestic revenue edged up 5.8% to ¥44,780 million, supported by price revisions and high-value-added strategies. First-quarter figures represent 25.3% of the full-year revenue forecast and 31.3% of the operating profit target.

Kikkoman’s reportable segments consist of Domestic Food Manufacturing and Sales, Domestic Other, Overseas Food Manufacturing and Sales, and Overseas Food Wholesale.

Domestic Food Manufacturing and Sales
Revenue rose 5.1% to ¥42,033 million, and business profit increased 14.2% to ¥2,886 million. Soy sauce sales were boosted by the household 'Itsudemo Shinsen' series and steady demand in food service and industrial channels. In foods, 'Koidashi Hon Tsuyu' and the newly launched 'Yawarakano Buta no Tare' contributed to growth. Soymilk beverages such as 'Oishii Mu Chosei Tofu' recorded double-digit gains, while alcoholic beverages were roughly flat. Successful price increases and a premium-focused strategy drove the segment’s profit improvement.

Domestic Other
Revenue grew 10.5% to ¥5,970 million, and business profit surged 60.4% to ¥768 million, reflecting steady results in medical, chemical, and logistics operations.

Overseas Food Manufacturing and Sales
Revenue climbed 14.8% to ¥48,231 million, and business profit rose 16.1% to ¥12,810 million. In North America, household soy sauce and soy-based seasonings expanded further, with careful service to food-service clients. Europe and Asia/Oceania also saw solid soy sauce sales growth. Combined with the yen effect, the segment maintained a high profit margin of 26.6%.

Overseas Food Wholesale
Revenue advanced 18.1% to ¥117,119 million, and business profit jumped 46.8% to ¥9,395 million. Wholesale distribution of oriental foods grew across all regions (North America, Europe, Asia/Oceania), and the weak yen amplified the profit surge. The margin improved to 8.0%.

Total assets at the end of the quarter stood at ¥756,508 million, an increase of ¥4,848 million from the prior fiscal year-end. Current assets declined ¥5,705 million to ¥343,194 million, primarily due to lower cash and equivalents, while non-current assets rose ¥10,553 million to ¥413,314 million, led by tangible fixed assets.

Total liabilities decreased ¥8,586 million to ¥174,231 million. Interest-bearing debt stood at ¥70,910 million (compared with ¥66,746 million at the end of fiscal 2026), and the debt-to-equity ratio remained low at 0.12x.

Net assets grew ¥13,435 million to ¥582,277 million, driven by accumulation of retained earnings and an improvement in foreign currency translation adjustments. The parent shareholders’ equity ratio rose to 75.9% from 74.6%, underscoring the company’s strong financial health.

The annual dividend forecast remains unchanged at ¥25.00 per share (¥10 interim and ¥15 year-end). No share buybacks or large M&A were announced, but the company’s ample cash position suggests room for growth investments and enhanced shareholder returns.

The company flagged uncertainties in the global economic outlook, including signs of slowdown in certain regions and ongoing geopolitical risks such as tensions in the Middle East.

Key risks include:

• Foreign exchange volatility: The sharp yen depreciation has boosted results, but a sudden appreciation could pressure earnings.
• Raw material price fluctuations: Changes in international prices for soybeans, wheat, and energy could raise costs.
• Country risk in overseas operations: Political and economic developments, tax changes, and tighter regulations in North America, Europe, or Asia may affect performance.
• Intensifying competition: The global condiments market is becoming increasingly competitive, requiring sustained differentiation.

Kikkoman is addressing these risks through diversification of procurement, hedging with currency forwards, and a geographically diversified management approach.

Kikkoman kept its full-year FY2027 consolidated forecasts unchanged: revenue of ¥799,100 million (up 7.2% year on year), operating profit of ¥78,800 million (up 3.8%), and net income attributable to shareholders of ¥61,300 million (down 0.5%). The guidance assumes exchange rates of ¥155 to the dollar and ¥175 to the euro, both more appreciated than current spot levels.

At the operating profit level, the company still expects growth despite conservative currency assumptions; the slight decline in net income is due to the absence of a prior-year gain on sale of investment securities. Given the first quarter’s strong progress, there is potential for upward revisions as the year unfolds.