Morinaga Milk Industry Co (2264) investor relations material

Executive summary

• Net sales for 1Q FYE March 2027 reached ¥147.1 billion, up 2.4% year-over-year, driven by high value-added products and overseas business, despite domestic volume declines.

• Operating profit increased 12.9% year-over-year to ¥10.0 billion, a record high, with gains from price revisions, product mix, and cost controls offsetting higher raw material and operational costs.

• Global Business contributed ¥5.2 billion in operating profit (+¥2.3 billion YoY), benefiting from higher whey protein prices, probiotics, and yen depreciation, while Domestic Business operating profit fell to ¥4.8 billion (-¥1.2 billion YoY) due to cost pressures and lower volumes.

• Profit attributable to owners of parent declined 3.4% year-over-year to ¥6.7 billion, reflecting higher extraordinary losses and increased costs.

• Extraordinary income in 1Q included a ¥0.7 billion gain on sale of a business segment.

Financial highlights

• Net sales: ¥147.1 billion (+2.4% YoY); Operating profit: ¥10.0 billion (+12.9% YoY); Ordinary profit: ¥10.6 billion (+11.3% YoY); Profit attributable to owners: ¥6.7 billion (-3.4% YoY, due to lower extraordinary income compared to prior year).

• Gross profit improved to ¥36,143 million from ¥34,734 million year-over-year.

• Comprehensive income surged to ¥6,747 million, up 162.7% year-over-year.

• Basic earnings per share was ¥20.69, adjusted for a 4-for-1 stock split effective July 1, 2026.

• Operating profit to net sales ratio improved to 6.8% from 6.1% YoY.

Outlook and guidance

• Full-year net sales forecast revised to ¥580.0 billion (+1.5% YoY), operating profit to ¥34.0 billion (-1.4% YoY, but +¥2.0 billion vs. initial target), with Global Business outlook revised upward and Domestic Business downward.

• Global Business full-year operating profit forecast raised to ¥20.2 billion (+¥4.2 billion vs. target), while Domestic Business forecast lowered to ¥13.8 billion (-¥2.2 billion vs. target).

• Global Business sales ratio projected to reach 17.4% for the year.

• Dividend payout ratio target raised to 40%, with flexible treasury share acquisitions planned.

• Ongoing cost pressures from the Middle East situation and yen depreciation expected to persist, with further price revisions announced for key categories.