NH Foods Q1 FY2027: Sales Rise 8.7%, Operating Profit Up 19.5%, but Net Income Down

NH Foods delivered 8.7% top-line growth to ¥384.9 billion in the April–June quarter, as strong pricing and stable volumes in the imported meat division offset headwinds. Operating profit (business profit) jumped 19.5% to ¥19.4 billion, and the operating margin improved from 4.6% to 5.0%.

However, revenue growth could not prevent a net profit decline. Attributable net income fell 5.6% to ¥10.7 billion, dragged down by rising import costs, a weaker yen, and a higher tax charge. Pre-tax profit was roughly flat (up 0.6%).

Processed Foods: Core domestic brands (Schau Essen, Irodori Kitchen) and expanded North American manufacturing output lifted sales 3.6%, but raw material cost inflation, partly triggered by Middle East supply disruptions, crushed segment profit by 13.9% to just ¥746 million.

Meat Business: The division that generates roughly 80% of group profit benefited from strong Australian beef sales and successful pass-through of higher import prices. Branded products such as “Sakurahime” and “Hokkaido-born beef” supported value-added sales. Revenue rose 11.5%, business profit surged 20.4%, and the margin widened to 5.8%.

Sports & Entertainment: ES CON FIELD Hokkaido continued to attract strong spectator numbers, boosting ticket, advertising, and food & beverage income. Revenue grew 14.2%, while business profit leaped 29.2%, keeping the segment margin at an exceptional 41.4%.

Total assets at quarter-end stood at ¥1,019.6 billion, up 2.2% from the fiscal year-end. Inventories swelled 13.7% to ¥174.4 billion, but cash and equivalents fell 15.1% to ¥58.3 billion, reflecting working capital needs and share buybacks.

Total liabilities rose 5.3% to ¥469.6 billion. Short-term borrowings increased by ¥25.8 billion, pushing total interest-bearing debt to ¥252.9 billion (+10.7%). The equity ratio attributable to owners of the parent slipped 1.4 points to 52.4%, still a healthy level.

Operating cash flow was a slim ¥1.9 billion positive: a ¥20.6 billion inventory build was a drag, but ¥11.0 billion in depreciation and an ¥8.2 billion increase in payables provided support. Investing cash flow was an outflow of ¥10.5 billion, mainly for capital expenditure. Financing activities netted a ¥2.7 billion outflow after ¥15.1 billion in dividends and ¥10.0 billion in share repurchases were partly offset by short-term borrowings.

On shareholder returns: the annual dividend forecast was raised by ¥20 to ¥180 per share. The company repurchased ¥10.0 billion of its own shares during the quarter and canceled 4.85 million shares (roughly 5% of outstanding), enhancing per-share value.

• Persistent raw material inflation: Geopolitical tensions and weather-related grain price hikes keep livestock feed costs elevated, pressuring processed-food margins.
• Foreign exchange risk: A weaker yen directly inflates import costs. NH Foods’ large operations in Australia and North America mean sustained yen weakness will test pricing power.
• Changing consumption patterns: Although domestic meat demand is firm, price sensitivity and population decline pose medium-term headwinds; premiumization is unavoidable.
• Large-project payback uncertainty: ES CON FIELD’s profitability relies on tourism and baseball popularity; economic downturns or seasonal disruptions could hurt attendance.

The company aims to counter these risks through procurement diversification, brand reinforcement, and expansion in food-service and export channels.

Management left full-year FY2027 forecasts unchanged. Revenue is seen at ¥1,500.0 billion (+2.9% YoY), business profit at ¥61.0 billion (-10.7%), and attributable net income at ¥38.0 billion (+8.4%). The profit decline reflects the high base of one-off gains last year plus planned increases in R&D and digital transformation spending, while net income benefits from the share cancellation.

For the first half, sales of ¥745.0 billion (+3.1%) and business profit of ¥34.0 billion (-6.4%) are projected, implying a second-half recovery is needed to hit full-year targets. Raw material trends and the pace of price adjustments will be critical.