Kagome H1 Business Profit Falls 19% to ¥8.44 Billion on Tomato Paste Price Cuts; Cuts FY26 Guidance

Kagome Co., Ltd. (TSE & NSE: 2811), Japan's dominant tomato-products and vegetable-beverage maker, reported consolidated results under IFRS for the first half of the fiscal year ending December 2026 — the six months from January 1 to June 30, 2026. Revenue rose 3.7% to ¥143,785 million, but business profit — the company's own measure of recurring operating performance — fell 18.6% to ¥8,436 million. Operating profit dropped 14.5% to ¥9,089 million and profit attributable to owners of the parent fell 24.2% to ¥4,683 million. Basic earnings per share came to ¥51.74, down from ¥66.81; diluted EPS was ¥51.68. Total comprehensive income swung to a positive ¥11,481 million from a negative ¥1,735 million a year earlier, driven by ¥3,493 million of favourable foreign-currency translation.

The shape of the half is unusual: revenue grew while every profit line shrank. Gross profit edged up to ¥46,946 million from ¥45,771 million, but selling, general and administrative expenses jumped to ¥38,510 million from ¥35,409 million as Kagome poured money into advertising and sales promotion to defend volumes after price increases. That ¥3,101 million SG&A increase more than swallowed the ¥1,175 million gross-profit gain.

Japan: prices up, volumes down

The Domestic Processed Food segment, which makes and sells beverages and seasonings, posted revenue of ¥73,077 million, down 0.2%, with business profit down 8.8% to ¥5,019 million. Persistently high agricultural-commodity costs forced Kagome to revise shipping prices on some household and food-service beverages in February; demand-stimulation campaigns failed to fully offset the resulting volume loss, and advertising and promotion spending rose on top.

Within the segment, Beverages — the "Yasai Seikatsu 100" range, tomato juice and "Yasai Ichinichi Kore Ippon" — generated revenue of ¥38,902 million, down 1.5%, and business profit of ¥2,765 million, down 10.7%. Tomato juice remained a bright spot, gaining new users on a marketing push aimed at consumers with elevated blood pressure, but the "Yasai Seikatsu 100" line shed volume after the price revision. Mail order slipped 0.6% to ¥6,018 million with business profit down 12.7% to ¥224 million, as strong soup sales were offset by weaker supplements. Food & Other — ketchup, tomato seasonings, sauces, gifts and frozen Mediterranean vegetables — was the only category to grow the top line, up 1.8% to ¥28,156 million, though rising manufacturing input costs pushed business profit down 5.7% to ¥2,029 million.

International: Silbury adds scale, paste pricing takes the margin

The International segment, which spans agricultural production, product development, processing and sales, delivered revenue of ¥68,576 million, up 11.9%, but business profit of ¥5,192 million, down 10.2% — the clearest illustration of the half's revenue-up, profit-down pattern. Tomato and other primary processing (paste, diced tomatoes, carrot juice) grew revenue 5.5% to ¥30,666 million while business profit collapsed 23.7% to ¥2,392 million: with global tomato-paste supply and demand loosening, Kagome cut selling prices at Ingomar Packing Company, LLC in the United States and across its European and Australian operations, so the category shrank in local-currency terms. A weaker yen added ¥2,550 million of translated revenue that masked the underlying decline.

Tomato and other secondary processing (pizza sauce, barbecue sauce, ketchup) was the group's growth engine, with revenue up 18.4% to ¥38,267 million and business profit up 10.4% to ¥2,776 million on pulled-forward intra-group shipments, strong food-service demand and the Silbury contribution, plus ¥2,793 million of favourable currency translation. Kagome acquired 100% of Silbury Marketing Ltd, a UK distributor of tomato and oil products, on January 5, 2026 for ¥5,524 million in cash, booking ¥2,717 million of goodwill; since acquisition Silbury has contributed ¥8,047 million of revenue and a ¥130 million loss. The Other segment — domestic agriculture, seeds and seedlings, real estate and new businesses — held revenue roughly flat at ¥11,848 million but saw business profit crumble 82.6% to ¥67 million.

Read the comparison with care: IFRS 18 restated the base year

Kagome early-adopted IFRS 18 "Presentation and Disclosure in Financial Statements" from the first quarter of this fiscal year, applying it retrospectively. The prior-year comparatives for business profit and operating profit are therefore restated figures, not the numbers originally published. The most consequential change is that share of profit of equity-method investees is no longer included in business profit or operating profit — it now sits below operating profit as investment income. On the restated basis, H1 FY12/2025 business profit became ¥10,361 million (from ¥10,400 million as reported under IAS 1) and operating profit became ¥10,626 million (from ¥10,563 million). Because of the restatement the company declines to publish a year-on-year percentage for the prior period's own business and operating profit. Kagome also notes that the restated full-year FY12/2025 business profit and operating profit figures are pre-audit, and the interim report itself is not subject to auditor review. A separate organisational change moved Vegitalia S.p.A. from International into Domestic Processed Food, with prior-period segment data restated on the new basis.

Full-year guidance cut on Middle East costs

Kagome revised its FY12/2026 guidance downward from the forecast issued on February 2, 2026. Revenue guidance is unchanged at ¥310,000 million (+5.3%), but business profit is cut ¥4,000 million to ¥19,000 million (−15.1% year on year, −17.4% versus the previous forecast), operating profit is cut ¥3,500 million to ¥19,500 million (−12.6%), and profit attributable to owners of the parent is cut ¥2,900 million to ¥10,500 million (−29.1%). Forecast EPS falls to ¥116.04 from ¥147.47.

Management attributes roughly ¥2.8 billion of the business-profit hit to the deteriorating situation in the Middle East, which it expects to push up packaging costs (film, plastic bottles), raw materials and energy across both the domestic and international businesses mainly in the second half, and to reduce seed sales to the region at United Genetics Holdings LLC in the Other segment. On top of that, volume recovery in some domestic beverage lines after February's price revision has run below plan. Revenue forecasts were trimmed for Domestic Processed Food and Other but offset by currency effects in International, leaving the consolidated top line intact. By segment, full-year business profit guidance is ¥14.5 billion for Domestic Processed Food, ¥8.0 billion for International and negative ¥3.5 billion for Other and adjustments.

Dividend raised; balance sheet lighter after the seasonal drawdown

Despite the profit cut, Kagome left its dividend forecast unchanged at a year-end-only ¥58.00 per share for FY12/2026, a ¥10 increase on the ¥48.00 paid for FY12/2025. The company pays no interim dividend.

Total assets fell ¥18,869 million from the December year-end to ¥356,950 million. Current assets dropped ¥23,611 million as cash and cash equivalents fell ¥12,312 million to ¥14,531 million on the Silbury purchase and debt repayment, inventories fell ¥10,629 million to ¥108,808 million as tomato-product sales progressed, and trade receivables fell ¥1,562 million on seasonality. Non-current assets rose ¥4,741 million, mostly ¥3,182 million of goodwill and ¥1,902 million of intangibles from Silbury. Liabilities fell ¥21,592 million on seasonal working-capital reductions at overseas subsidiaries. Equity rose ¥2,722 million to ¥217,613 million, lifting the ratio of equity attributable to owners of the parent to 54.1% from 50.7%; book value per share was ¥2,133.46. Operating cash flow was a net inflow of ¥21,803 million (¥24,443 million a year earlier), against a ¥9,093 million investing outflow (including ¥4,327 million for Silbury and ¥5,806 million of capital expenditure) and a ¥25,291 million financing outflow reflecting ¥12,632 million of long-term debt repayment, a ¥10,853 million reduction in short-term borrowings and ¥4,359 million of dividends.

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.