Hokuryo Co., Ltd.

Business Details

The company operates as a single-segment enterprise whose sole business is the production and sale of hen eggs. It operates five laying hen farms and five GP (grading and packing) plants within Hokkaido, achieving a 96% direct-sales ratio within the prefecture by selling directly to customers without going through wholesalers. Outside Hokkaido, it maintains three farms and three GP plants in Iwate and Miyagi prefectures. The company enforces thorough food safety measures, including FSSC22000-certified GP plants, windowless poultry houses, Salmonella vaccination, and use of plant-based feed. It also focuses on expanding sales of differentiated eggs such as PG eggs and cage-free eggs.

Recent Overview

Egg market prices remained at high levels amid two consecutive years of expanding avian influenza outbreaks, with both net sales and operating profit reaching record highs

Highly pathogenic avian influenza outbreaks expanded for two consecutive years, from autumn 2024 to spring 2025 and from autumn 2025 to spring 2026, keeping the egg market firm throughout the fiscal year under review. The average Hokkaido M-size price was ¥332.19 per kilogram (up ¥67.54 year on year), while the average Tokyo M-size price was ¥327.53 per kilogram (up ¥68.54 year on year). Price revisions and expanded sales of differentiated eggs also contributed to results, with the company achieving net sales of ¥23,107 million (up 19.1% year on year) and operating profit of ¥4,965 million (up 157.8% year on year). The year-end dividend was raised to ¥130 from the initially planned ¥120. For the following fiscal year (FY2027, ending March 2027), the company expects the market to decline as supply recovers following the reintroduction of hens previously culled due to avian influenza, and forecasts net sales of ¥22,500 million (down 2.6% year on year) and operating profit of ¥3,330 million (down 32.9% year on year).

Key Products

Growth Drivers

• Sustained high egg market prices driven by nationwide culling of laying hens due to highly pathogenic avian influenza (the market remained firm throughout the fiscal year amid two consecutive years of expanding outbreaks)
• Improved average selling prices and enhanced resilience to market fluctuations through price revisions and expanded sales of differentiated eggs (PG eggs, cage-free eggs, etc.)
• Ongoing efforts to reduce costs through productivity improvements at farms and plants
• Increased sales volume through expansion of sales regions and channels for cage-free (aviary) eggs
• Expansion of fermented chicken manure fertilizer exports to Southeast Asia and continuation of egg exports to Hong Kong
• Strengthening of production capacity and quality control systems through capital expenditure (¥3,686 million in the current fiscal year, funded internally)

Risks

• Risk of highly pathogenic avian influenza infection at the company's own farms (an outbreak actually occurred at the Chitose farm in April 2023; nationwide outbreaks have continued for two consecutive years through spring 2026)
• Risk of fluctuations in the egg market. For the following fiscal year, the company expects a market price decline from summer onward as supply recovers due to the reintroduction of culled hens, and forecasts operating profit of ¥3,330 million, down 32.9% year on year
• Risk of feed price fluctuations. Difficulty in forecasting Chicago grain market prices and foreign exchange rates due to the trade policy of the second Trump administration and Middle East conditions (feed accounts for roughly half of egg production costs)
• Cost pressure from continued increases in logistics and labor costs
• Difficulty securing personnel due to a declining working-age population, particularly in Hokkaido
• Risk of long-term contraction in domestic egg demand due to Japan's declining birthrate and population, particularly in Hokkaido, the company's core market