Morinaga Q1 FY2027: Revenue up 5.6% on US M&A, operating profit down 13.7%

Morinaga posted a mixed start to fiscal 2027: revenue climbed 5.6% to ¥63.6 billion, but operating profit dropped 13.7% to ¥6.1 billion and net income attributable to owners of the parent declined 11.7% to ¥4.46 billion. The top-line lift came largely from the April 2026 consolidation of MyMo Holdco, Inc., which helped push overseas sales up 47.8% to ¥12.0 billion, lifting the overseas revenue share to **18.9%**. On the bottom line, however, M&A-related expenses (including ¥359 million in goodwill amortization) and persistent raw material and logistics cost inflation weighed on profits. Domestically, while price revisions supported margins in confectionery and food, unseasonably cool weather in June dampened demand for in-jelly and some frozen desserts. The operating margin shrank 2.2 percentage points to 9.6%.

The main Food Manufacturing segment reported revenue of ¥60.9 billion (+5.6%) and segment profit of ¥6.56 billion (–3.3%). Overseas operations surged on the M&A, while domestic performance was mixed.

Confectionery/Food: Revenue ¥21.04 billion (–0.6%), operating profit ¥2.26 billion (+3.6%). Biscuits recovered on weather factors, and Ramune sales grew 10% on functional messaging around glucose. Chocolate, however, saw lower sales for Carré de Chocolat and Dars due to SKU rationalization. An April price revision improved profitability.

Frozen Desserts: Revenue ¥15.11 billion (flat), operating profit ¥1.66 billion (+3.0%). The Jumbo group performed well on TV ad campaigns, but bar chocolate ice cream and Ice Box struggled against cool weather and a tough prior-year comparison. Higher raw material costs were absorbed through price adjustments.

In-brand: Revenue ¥7.81 billion (–3.1%), operating profit ¥1.60 billion (–11.0%). In-jelly sales suffered from low June temperatures despite an early-season launch aimed at summer heat; in-bar sales rose 4% by capturing meal-replacement demand.

Mail Order: Revenue ¥2.71 billion (+2.6%), operating profit ¥0.20 billion (+53.8%). Collagen drinks benefited from new customer acquisition and advertising efficiency improvements; green juice also performed well.

Subsidiaries: Revenue ¥2.33 billion (–12.8%), operating loss of ¥68 million. Ante Stella’s sales remained sluggish after a price hike, and theme park sales were weak.

US Business: Revenue ¥9.11 billion (+65.1%), operating profit ¥0.67 billion (+16.9%). HI-CHEW faced convenience store softness but expanded in mass retailers; MyMo’s mochi ice cream was strong. Results include ¥360 million in goodwill amortization.

China, Taiwan & Exports: Revenue ¥2.82 billion (+12.2%), operating profit ¥0.23 billion (+5.2%). HI-CHEW import sales were robust.

Other segments: Food Wholesale revenue edged up 4.5% to ¥2.0 billion, but operating profit tumbled 57.5% to ¥0.13 billion. Real Estate & Services revenue rose 7.5% to ¥0.5 billion, with operating profit of ¥0.23 billion (+13.2%).

Total assets at quarter-end stood at ¥250.5 billion, up ¥24.58 billion from the previous fiscal year-end, mainly reflecting the MyMo consolidation, which added ¥16.89 billion in goodwill and expanded receivables and tangible fixed assets. Liabilities increased ¥22.02 billion to ¥104.24 billion, with short-term borrowings surging to ¥25.0 billion to fund the acquisition. Net assets rose ¥2.57 billion to ¥146.26 billion, aided by foreign currency translation adjustments and retained earnings. The equity ratio fell 5.1 percentage points to 57.7%.

No cash flow statement was prepared, but depreciation totaled ¥2.57 billion and goodwill amortization was ¥359 million (provisional).

On shareholder returns, Morinaga plans a ¥70 annual dividend for fiscal 2027 (interim ¥35, year-end ¥35), up ¥5 from the prior year, marking a __dividend hike__ and underscoring management’s confidence. No share buybacks were mentioned.

Disclosed risks include:

• Antitrust investigation: The Japan Fair Trade Commission conducted an on-site inspection on June 16, 2026, regarding ice cream and frozen dessert shipment prices. The probe is ongoing, and any adverse outcome could damage the corporate image and future business activities.
• Elevated raw material and energy costs: Persistent cost pressure continues to squeeze margins, despite price revisions and cost-cutting efforts.
• Weak consumer sentiment: Inflation is reinforcing frugality, requiring heavier promotional spending to drive demand for snacks and frozen desserts, compounded by ever-present weather risk.
• Foreign exchange risk: Expanding overseas operations heighten exposure to earnings erosion from a stronger yen and potential exchange losses on foreign-currency borrowings.
• M&A integration risk: Full integration of MyMo carries goodwill impairment risk and the possibility of delayed synergy realization.

Morinaga left its full-year fiscal 2027 forecasts unchanged from the May 11, 2026 announcement: revenue ¥257.0 billion (+8.6%), operating profit ¥22.8 billion (+1.8%), and net profit attributable to owners of the parent ¥16.5 billion (–7.1%). First-quarter operating profit delivered 26.8% of the full-year target, roughly on track. The revenue forecast assumes a roughly ¥36.0 billion annual contribution from MyMo, while the modest operating profit growth reflects one-time acquisition costs and a higher tax burden that will keep net income in negative territory year-on-year.

The quarter’s defining event was the April 1, 2026, completion of the acquisition of MyMo Holdco, Inc., the largest U.S. mochi ice cream manufacturer, for $130 million (approximately ¥20.8 billion). The deal generated ¥17.25 billion in provisional goodwill, to be amortized over 12 years (annual charge of roughly ¥1.4 billion). The acquisition aims to build a U.S. frozen-dessert value chain under the 2030 management plan, complementing the existing HI-CHEW brand in a steadily growing ice cream market. First-quarter US segment revenue soared to ¥9.1 billion, and North America emerged as a new profit pillar. While the goodwill amortization will weigh on near-term profit, management expects synergies to absorb the cost over time.

Under its “2030 Management Plan,” Morinaga is accelerating investment in four focus areas: in-brand, frozen desserts, mail order, and US business. Combined revenue from these areas in the first quarter reached ¥35.4 billion (+10.5%), accounting for 55.7% of total consolidated revenue. The US business in particular is positioned as a future growth driver, buoyed by the MyMo acquisition. While specific capex and R&D figures were not disclosed, management continues to expand the global HI-CHEW brand and explore markets in Southeast Asia and Europe. The balance sheet remains healthy, with an equity ratio of 57.7%, providing a solid foundation for further strategic investments.