Berg Earth co.,ltd.

Business Details

The group's core business, engaged in the production and sale of grafted seedlings centered on fruit vegetables such as cucumbers, tomatoes, eggplants, and watermelons. The business targets vegetable-producing regions and mass retailers such as home centers nationwide as customers, with strengths in root-cutting grafting technology, closed-type seedling cultivation facilities, and a proprietary production management system. From the first half of FY2026 (ending March 2026), PSP Corporation was added to the scope of consolidation, and the company is also promoting business expansion utilizing seed coating processing technology. A division of labor system between nationwide directly-operated farms and partner farms achieves stable supply throughout the year.

Recent Overview

Achieved increased sales and a swing to profit through PSP consolidation and year-round operation of the Tsurusawa Farm.

In the first half of FY2026 (ending March 2026) (November 2025 to April 2026), production capacity improved due to the consolidation of PSP Corporation (effective December 31, 2025, acquisition cost of ¥1, provisional goodwill of ¥73,632 thousand amortized equally over 5 years) and the year-round operation of Berg Fukushima Co., Ltd.'s Tsurusawa Farm. The increased in-house production ratio improved the balance between quality and production, achieving net sales of ¥3,044 million (up 10.2% year-on-year). Growth was driven by watermelon seedlings (up 117.2% year-on-year) and tomato seedlings (up 112.5% year-on-year). Due to progress in appropriate price pass-through, operating profit improved significantly from an operating loss of ¥1 million in the same period of the prior year to an operating profit of ¥177 million. On the other hand, increases in raw material costs such as seeds and soil, higher personnel expenses due to expanded use of temporary staffing, and increased manufacturing expenses associated with the year-round operation of the Tsurusawa Farm continued.

Key Products

Growth Drivers

• Expanding demand for purchased seedlings due to progress in the division of labor and labor-saving in agriculture (spread of facility cultivation, aging of farmers, and increasing scale)
• Accelerating shift from self-cultivated seedlings to purchased seedlings, centered on watermelon seedlings (watermelon seedlings up 117.2% year-on-year in the first half)
• Expansion of production capacity in regions north of the Kanto area and promotion of in-house production through year-round operation of Berg Fukushima Co., Ltd.'s Tsurusawa Farm
• Improved unit prices and profit and loss through reconsideration of appropriate pricing and progress in price pass-through
• Higher value-added original products (Nude Make Seedlings, Virus Guard Seedlings, PeSP Seedlings, etc.) and strengthened sales activities to develop new customers
• Business expansion and synergy effects through utilization of seed coating processing technology following the consolidation of PSP Corporation as a subsidiary

Risks

• Risk of medium- to long-term market contraction due to the continuing decline in the number of agricultural business entities (2025 Census of Agriculture and Forestry: down 23.0% from the previous survey)
• Shrinking cultivation area for major items such as cucumbers and tomatoes, and intensifying order competition with competitors
• Increased manufacturing costs due to soaring raw material costs (higher prices for seeds and soil) and energy costs (heavy oil and electricity)
• Increased personnel expenses due to expanded use of temporary staffing amid growing difficulty securing workers during peak seasons
• Profit pressure from increased fixed costs (depreciation, labor costs, and other manufacturing expenses) associated with the year-round operation of the newly established Tsurusawa Farm
• Structural seasonal fluctuation losses due to seasonal demand decline in the first quarter (November to January) and increased winter fuel costs
• Instability in vegetable seedling demand due to yield fluctuations caused by abnormal weather (extreme heat, heavy rain, etc.)
• Future impairment risk associated with the incomplete purchase price allocation of PSP Corporation's goodwill (provisional ¥73,632 thousand)