Megmilk Snow Brand Q1 Net Profit Jumps 62% on ¥17.6 Billion Asset-Sale Gain as Operating Profit Rises 5.8%

A one-off gain carries the bottom line

Megmilk Snow Brand Co., Ltd. (TSE: 2270), the dairy group whose shares are also listed on the Sapporo Securities Exchange, published consolidated results for the first quarter of FY3/2027 — the three months from April 1 to June 30, 2026 — on August 7, 2026 under Japanese GAAP. Net sales rose 1.8% to ¥155,129 million and operating profit 5.8% to ¥3,678 million, but ordinary profit fell 6.4% to ¥4,026 million. Net profit attributable to owners of the parent jumped 62.0% to ¥14,539 million, for earnings per share of ¥240.58 against ¥137.32.

The company attributes the net-profit increase mainly to gains on the sale of fixed assets tied to its head-office relocation. Extraordinary income came to ¥17,615 million, of which ¥17,590 million was gain on the sale of fixed assets, against just ¥2 million a year earlier. The prior-year quarter also carried a large one-off — ¥8,490 million from the sale of investment securities, within extraordinary income of ¥8,550 million — so the 62.0% compares one gain with another. Extraordinary losses rose to ¥602 million, including ¥179 million of factory reorganisation costs, and pre-tax profit of ¥21,039 million (+68.0%) bore ¥6,457 million of income taxes.

Price revisions lift operating profit; lower dividend income trims ordinary profit

All three reportable segments grew revenue. Cost of sales rose 1.8% to ¥129,119 million, in line with sales, so gross profit gained 1.6% to ¥26,009 million; SG&A expenses rose only 0.9% to ¥22,330 million, leaving operating profit up 5.8% and the operating margin at 2.4% against 2.3%. The company credits price revisions it made last year to offset a range of cost increases.

Ordinary profit nonetheless fell. The filing gives no reason, but the income statement shows non-operating income dropping to ¥594 million from ¥1,110 million: dividends received fell to ¥92 million from ¥469 million, and the share of profit of equity-method affiliates to ¥322 million from ¥437 million.

Cheese and drinks grow, butter and fats weaken

Dairy Products — cheese, butter, powdered milk, fats and oils, functional foods and infant formula — grew revenue 1.5% to ¥64,957 million, but segment profit fell 20.7% to ¥1,380 million. Butter fell against a temporary rise in demand a year earlier ahead of last July's price revision, and fats and oils fell on weak market demand; cheese grew on promotions and stronger in-store visibility, led by its flagship pull-apart string cheese. Despite active promotion, sales volumes fell more than the company expected and fixed costs rose, which it gives as the reasons profit fell.

Beverages & Desserts — milk drinks, fruit juices, yogurt, desserts and fresh cream — grew revenue 1.8% to ¥66,686 million and posted the strongest profit gain, up 42.0% to ¥915 million. The MBP Drink series of foods with function claims rose sharply and supply of school-lunch milk expanded into new areas. Yogurt grew overall even though the flagship Megumi Gasseri SP yogurt series fell against last year's post-relaunch promotions, as family-size and small-format products sold well; desserts also grew. The company credits last year's price revisions and strong core products for the profit increase.

Feed & Seeds — cattle feed, forage and vegetable seeds, and landscaping — grew revenue 4.9% to ¥13,859 million as price revisions outweighed lower compound-feed volumes, but profit fell 11.4% to ¥530 million on those lower volumes and higher expenses. The Other segment, which covers joint distribution centres and property leasing, saw revenue slip 0.8% to ¥9,625 million while profit rose 89.0% to ¥863 million; the filing gives no reason for that increase. Segment sales are to external customers.

Tax payments push operating cash flow negative

Operating cash flow swung to an outflow of ¥10,592 million from an inflow of ¥951 million. Income taxes paid rose to ¥11,892 million from ¥1,810 million, and the ¥17,211 million net gain on sales and disposals of fixed assets is deducted as a non-cash item, with the sale proceeds shown under investing activities. Investing cash flow was an inflow of ¥14,028 million, including ¥21,261 million of proceeds from sales of property, plant, equipment and intangibles against ¥6,735 million of capital expenditure. Financing used ¥7,904 million, mainly ¥5,980 million of dividends and ¥1,504 million of share buybacks (¥12,437 million a year earlier). Cash and equivalents ended June at ¥9,612 million.

Total assets fell 1.2% from March 31 to ¥421,598 million. Land dropped by ¥5,922 million to ¥41,219 million and cash and deposits by ¥4,384 million to ¥9,656 million, while merchandise and finished goods rose by ¥4,682 million to ¥51,380 million. Liabilities fell to ¥174,316 million from ¥186,078 million as income taxes payable came down to ¥5,417 million from ¥12,828 million. Net assets rose 2.7% to ¥247,282 million, lifting the equity ratio to 57.9% from 55.7%.

Under a board resolution of May 14, 2026 the company bought back 427,000 shares in the quarter, raising treasury stock by ¥1,503 million to ¥9,671 million. Average shares outstanding fell to 60,436,091 from 65,365,265, which is why earnings per share rose 75.2%, faster than net profit.

Guidance unchanged

Guidance published on May 14, 2026 was left unchanged. For FY3/2027 the company expects net sales of ¥645,000 million (+4.7%), operating profit of ¥21,000 million (+15.0%), ordinary profit of ¥21,800 million (+6.4%) and net profit of ¥24,500 million (−25.5%), with earnings per share of ¥413.03 reflecting the buyback. First-half targets are net sales of ¥323,000 million (+4.5%), operating profit of ¥9,700 million (+5.7%), ordinary profit of ¥10,100 million (−4.7%) and net profit of ¥17,400 million (+54.2%).

The first quarter delivered 17.5% of the full-year operating-profit target and, because of the asset-sale gain, 59.3% of the net-profit target. The dividend forecast is ¥100.00 per share, the same as for FY3/2026. The quarter falls in the second year of the company's Next Design 2030 management plan, announced in May 2025.

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.