Feed One Q1 Operating Profit Leaps 45% to ¥2.14 Billion on Feed Price Rises; Full-Year Guidance Held

Feed One Co., Ltd. (TSE: 2060), Japan's largest producer of compound animal feed and an operator in livestock, egg and marine products, reported consolidated results for the first quarter of the fiscal year to March 2027 — the three months ended June 30, 2026 — under Japanese GAAP. Net sales rose 9.0% to ¥78,443 million, operating profit jumped 45.0% to ¥2,140 million, ordinary profit rose 26.7% to ¥2,360 million, and net profit attributable to owners of the parent increased 7.6% to ¥1,761 million. Basic earnings per share came to ¥46.03, up from ¥42.85 a year earlier. EBITDA, which the group has adopted alongside ROIC as a headline management indicator, climbed 20.2% to ¥3,448 million.

Price revisions, not just volume, drive the operating beat

The profit surge came from pricing and cost discipline rather than volume alone. Corn, the group's principal raw material, traded softly through the quarter on healthy planting and crop conditions in the United States and expectations of larger South American supply — but higher ocean freight rates and a persistently weak yen led Feed One to raise livestock compound feed prices for the April–June quarter against the preceding one. Cost of sales rose 8.9% to ¥69,818 million, marginally slower than the top line, nudging the gross margin up to 11.0% from 10.9%. The decisive item was overhead: selling, general and administrative expenses grew just 1.6% to ¥6,484 million against a 9.0% sales gain, and that operating leverage is what turned a ¥764 million rise in gross profit into a ¥664 million rise in operating profit.

Livestock feed carries the quarter; fishmeal bites marine feed

Livestock feed, the core business, lifted external sales 4.6% to ¥59,012 million and segment profit 16.6% to ¥2,702 million on higher sales volumes plus the average price increase. Marine feed was the growth engine on the top line — external sales surged 50.1% to ¥7,818 million on sharply higher volumes — but segment profit fell 30.4% to ¥210 million as the price of fishmeal, its main input, spiked. The food business returned to the black, with external sales up 12.2% to ¥11,610 million and segment profit of ¥110 million against a ¥14 million loss a year earlier: the egg division benefited from higher volumes and from egg prices running below last year as avian-influenza supply tightness eased, while the meat division held earnings roughly flat with pork carcass prices elevated after reduced hog shipments following the extreme heat of summer 2025. The small "Other" bucket — overseas affiliates and property rental — contributed ¥33 million, up 92.7%. Note that Feed One reconciles segment profit to ordinary profit rather than operating profit; unallocated corporate costs of ¥696 million, down from ¥760 million, bridge the ¥3,056 million segment total to the reported ¥2,360 million.

Why a 45% operating gain became 7.6% at the bottom line

Every line below operating profit gave something back. Non-operating income fell to ¥302 million from ¥513 million, almost entirely because equity in earnings of affiliates collapsed to ¥51 million from ¥288 million, while interest expense edged up to ¥67 million from ¥56 million — that step alone cut the growth rate from 45.0% to 26.7% at the ordinary line. Below that the direction reversed: a ¥216 million gain on the sale of investment securities lifted extraordinary income to ¥219 million from ¥91 million, and extraordinary losses shrank to ¥4 million from ¥44 million, so pre-tax profit rose 34.9% to ¥2,575 million. Tax then reset the bottom line. Total income taxes tripled to ¥795 million from ¥263 million, an effective rate of 30.9% against just 13.8% a year earlier, when a ¥219 million deferred-tax credit flattered the base (this year's credit was only ¥56 million). Net profit attributable to owners therefore advanced just 7.6%, and comprehensive income actually fell 6.6% to ¥1,816 million as other comprehensive income dropped to ¥37 million from ¥300 million on a swing in securities valuation differences.

Guidance untouched despite a fast start

Feed One left the full-year FY3/2027 forecast exactly as issued on May 8, 2026: net sales of ¥317,000 million (+9.1%), operating profit of ¥8,500 million (+5.1%), ordinary profit of ¥8,800 million (+2.2%), net profit attributable to owners of ¥6,500 million (+1.9%) and EPS of ¥169.85. The first quarter has already banked 25.2% of the operating-profit target and 27.1% of the net-profit target while growing operating profit 45%, so the unchanged guide implies a materially flatter remaining nine months. That is consistent with a feed business whose selling prices are revised quarter by quarter against grain, freight and currency costs that can move either way — and with the fishmeal inflation now sitting on marine feed margins. Fiscal 2027 is the final year of the group's "Medium-Term Management Plan 2026 — 1st STAGE for NEXT 10 YEARS," under which management is steering the model away from volume expansion toward higher value-added, solution-based business.

Dividend guided to ¥52.00, with a commemorative caveat

The FY3/2027 dividend forecast is unchanged at ¥52.00 per share (¥26.00 interim, ¥26.00 year-end), against ¥45.50 paid for FY3/2026. That headline comparison needs care: the prior year's ¥21.00 interim included a ¥5.00 commemorative dividend on top of a ¥16.00 ordinary dividend, so the ordinary FY3/2026 payout was ¥40.50. On a like-for-like ordinary basis the guided ¥52.00 is a 28.4% increase, not the 14.3% the reported totals imply. Against guided EPS of ¥169.85 the payout ratio works out at about 30.6%.

Balance sheet steady; no quarterly cash flow statement

Total assets ended June at ¥135,783 million, up ¥2,763 million from the March year-end, as trade notes and accounts receivable grew ¥2,437 million and cash and deposits ¥737 million, while raw materials and supplies fell ¥570 million. Liabilities rose ¥1,894 million to ¥72,529 million, with trade payables up ¥2,718 million and income taxes payable down ¥1,110 million. Net assets were ¥63,254 million, up ¥868 million as the quarter's ¥1,761 million profit outweighed ¥942 million of dividends paid; the equity ratio eased to 46.1% from 46.4% as the balance sheet expanded. Feed One does not prepare a quarterly consolidated cash flow statement; depreciation and goodwill amortisation for the three months was ¥1,021 million, against ¥951 million a year earlier.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.