Morinaga Milk Q1 FY2027: Operating profit rises 12.9% but full-year outlook trimmed

Morinaga Milk (Morinaga Milk Co., Ltd.) reported consolidated results for the first quarter of FY2027 (April-June 2026) on August 7, 2026. Revenue rose 2.4% year-on-year to ¥147,099 million, and operating profit increased 12.9% to ¥9,977 million, achieving both top and bottom line growth. However, net profit attributable to owners of the parent decreased 3.4% to ¥6,678 million. The overseas business was a key driver, with MILEI GmbH benefiting from higher whey protein market prices, pushing overseas revenue up 25.4%. Domestically, yogurt and chilled beverages like “Mount Rainier” performed well, but falling milk volumes and rising raw material and logistics costs weighed on domestic operating profit, which declined by ¥1,151 million year-on-year. For the full year, the company lowered its forecasts: operating profit is now expected at ¥34.0 billion, down 1.4% from the previous year.

Under the mid-term plan, the growth businesses (yogurt, probiotics, overseas infant formula) generated revenue of ¥34,413 million (+7.2% YoY) and operating profit of ¥4,254 million (+¥223 million). Probiotics and infant formula sales in Pakistan (NutriCo Morinaga) posted strong growth. Ice cream sales declined due to unfavorable weather. The core businesses (MILEI, milk, beverages) recorded revenue of ¥91,085 million (+1.0% YoY) and operating profit of ¥5,026 million (+¥547 million). MILEI in Germany drove the increase, while domestic milk volumes fell sharply. The Food segment (external revenue) reported ¥140,687 million in revenue and ¥12,841 million in operating profit; the Other segment had ¥6,411 million revenue and ¥884 million profit.

For the full FY2027, Morinaga Milk now forecasts revenue of ¥580,000 million (+1.5% YoY), operating profit of ¥34,000 million (-1.4%), ordinary profit of ¥35,000 million (-5.7%), and net profit of ¥21,000 million (-7.1%). The downgrade reflects struggles in the domestic business. Overseas revenue is projected to reach ¥100,851 million, up 15.3%, but not enough to offset cost increases from raw materials and currency fluctuations.

Total assets at the end of Q1 rose ¥26,133 million from the prior fiscal year-end to ¥573,250 million, mainly due to higher cash and receivables. Net assets increased ¥2,273 million to ¥282,023 million, with the equity ratio slipping to 48.3% (from 50.2%). Interest-bearing debt grew, pushing total liabilities to ¥291,226 million. The company plans an annual dividend of ¥25 per share (after the stock split), with an interim dividend of ¥12 and a year-end of ¥13. The previous year’s dividend was ¥100 per share on a pre-split basis. Under the mid-term plan, Morinaga Milk targets a 40% payout ratio and will consider flexible share buybacks, having already executed a ¥10 billion buyback and cancellation in FY2026.

The earnings report cites risks including higher packaging material and raw material costs due to Middle East tensions, along with rising logistics and labor costs. The structural decline in domestic milk demand remains a headwind. Currency volatility also poses a risk to the recovery of overseas operations. Key challenges include: persistent elevated raw material and energy costs, sluggish growth in domestic dairy product volumes, foreign exchange risk (particularly in whey protein transactions), and political and economic risks in overseas markets such as Pakistan. The company is shifting toward higher value-added products and restructuring production to contain costs, but uncertainty persists in the second half.