Fuji Nihon Corporation (2114) — Company information

Business

Fuji Nihon Co., Ltd. traces its origins to a refined sugar manufacturer established in 1949, and currently operates three segments: the Sugar Business (47.3% of consolidated net sales), the Functional Materials Business (49.6%), and the Real Estate Business (2.2%). The Sugar Business manufactures and sells refined sugar, liquid sugar, and sugar-related products, while the Functional Materials Business manufactures and sells functional food ingredients centered on inulin, and also operates a procurement/sales and ODM business for natural additive materials such as pectin and collagen through Unitec Foods Co., Ltd. The company has a consolidated subsidiary, Fuji Nihon Thai Inulin Co., Ltd., in Thailand, and is advancing business expansion into Southeast Asia. In October 2024, the company changed its trade name from Fuji Nippon Seito Co., Ltd. to Fuji Nihon Co., Ltd., clearly signaling its transformation into a food science company.

Business Model

In the sugar business, the company procures raw sugar and manufactures and sells refined sugar, while also utilizing production outsourcing to Taiheiyo Seito Co., Ltd. and DM Mitsui Sugar Co., Ltd. to improve cost efficiency. In the functional materials business, in addition to in-house production of inulin, the company combines procurement and sales of natural additive materials with ODM operations to create added value. In the real estate business, long-term leasing of self-owned properties (such as Toyoko Inn Kayabacho Station) secures stable high profitability with an operating margin of 91.8%, complementing the earnings base of the group as a whole.

Company Strengths

In FY2026 (ending March 2026), the Functional Materials segment recorded net sales of ¥14,121 million (up 4.7% year on year) and operating income of ¥1,646 million (up 28.1% year on year), achieving both revenue and profit growth. In addition to increased domestic and overseas sales volume of inulin, Unitec Foods' collagen and ODM business performed well, functioning as a growth engine that offsets the decline in the Sugar segment.

Consolidated subsidiary Fuji Nihon Thai Inulin Co., Ltd. expanded sales to major users in Thailand and other Southeast Asian countries, achieving a substantial year-on-year increase in sales volume in FY2026 (ending March 2026). The company is expanding manufacturing capacity through a factory expansion (reflected in increased construction in progress), with capital expenditure in the Functional Materials segment alone reaching ¥1,003 million.

In FY2026 (ending March 2026), the Real Estate segment recorded net sales of ¥633 million against operating income of ¥581 million, achieving an operating margin of 91.8%. Stable rental income continues from the full-year operation of Toyoko Inn Kayabacho Station (opened September 2023), with a long-term lease agreement (a 39-year contract with Toyoko Inn) on a company-owned property underpinning the stability of earnings.

ENVALITH's Perspective

Net income attributable to owners of the parent for FY2026 (ending March 2026) was strong at ¥3,220 million (up 13.2% year on year), but one contributing factor was the recording of ¥518 million in gains on sales of investment securities. The forecast for FY2027 (ending March 2027) calls for a significant decline in net income to ¥2,500 million (down 22.4% year on year), and it should be noted that the disappearance of this extraordinary gain will make the apparent deterioration in performance more pronounced. Operating profit is also projected to decline, to ¥3,300 million (down 7.1% year on year), with cost-increase pressures such as rising logistics costs expected to weigh on earnings.

In FY2026 (ending March 2026), sales to Sojitz Foods Corporation totaled ¥10,786 million, accounting for approximately 37.9% of consolidated net sales of ¥28,443 million. Although this is a decrease from the prior period (¥11,046 million), the degree of concentration remains high, and the impact on business performance from changes in transaction terms with or deterioration in the relationship with this customer would be significant. The transactions span both the sugar and functional materials segments, and from a risk diversification perspective, it is necessary to continue monitoring progress in diversifying the customer base.

Construction in progress at the end of FY2026 (ending March 2026) surged to ¥709 million (from ¥92 million in the prior period), reflecting the full-scale progress of investment by Fuji Nihon Thai Inulin Co., Ltd. to expand inulin production capacity. Amid the external tailwind of growing demand for health foods in Southeast Asia, further margin improvement can be expected in the functional materials business (currently at an operating margin of 11.7%) once the expanded production system is established. On the other hand, this also carries inherent risks such as Thailand country risk (political, regulatory, and foreign exchange) and the potential emergence of compliance costs related to environmental regulations in various countries.

Performance Trend

Consolidated results for FY2026 (ending March 2026) showed net sales of ¥28,443 million (up 0.8% year on year), operating profit of ¥3,554 million (up 9.9%), ordinary profit of ¥3,773 million (up 3.4%), and profit attributable to owners of parent of ¥3,220 million (up 13.2%), marking the fifth consecutive year of increased revenue and profit. While sales growth decelerated (from 9.0% growth in the prior period to 0.8%), the gross profit margin improved from 26.9% to 28.7%, reflecting a notable qualitative improvement in the earnings structure. As an external factor, domestic product market prices saw a price revision (the first decrease in about seven years) in November, but shipments of confectionery and food-service products benefited from robust inbound demand. On the other hand, logistics costs rose more than expected, weighing on profitability in the sugar business. In the functional materials business, a significant increase in sales in Southeast Asia drove overall performance. For FY2027 (ending March 2027), the company forecasts net sales of ¥29,700 million (up 4.4%) and operating profit of ¥3,300 million (down 7.1%), representing higher revenue but lower profit.

Growth Strategy

Under the five priority themes of "CHANGE 2028," transforming from a refined sugar-dependent business into a food science company

Advancing manufacturing capacity expansion through the factory expansion (construction in progress of ¥709 million) at the Thai subsidiary Fuji Nihon Thai Inulin Co., Ltd., and developing new sales markets across Southeast Asian countries. In FY2026 (ending March 2026), sales volume achieved a significant year-on-year increase, and the plan is progressing smoothly.

Advancing deeper penetration of existing customers and acquisition of new customers through new functionality appeals for inulin such as skin function benefits, prototyping and commercialization of new products such as liquid-form products, and expansion of Unitec Foods' ODM and product development consulting business. In FY2026 (ending March 2026), the functional materials business as a whole achieved a significant profit increase, with operating profit of ¥1,646 million (up 28.1% year on year).

Added Thai Wah Fuji Nihon Company Ltd. and Thai Nam Tapioca Co., Ltd. as equity-method affiliates, entering newly into the cassava starch manufacturing and sales business. Recognized goodwill equivalent of ¥209 million (amortization period of 9 years) during the current period. Advancing development and sales of value-added products in collaboration with Thai Wah Public Company Ltd.

Implemented an organizational change in April 2025, revising management classification categories. Transferred the business of FUJI NIHON (Thailand) Co., Ltd. to the functional materials business segment, and renamed the segment from "Refined Sugar Business" to "Sugar Business." Established a management structure that better reflects the actual state of the business portfolio.

Implemented a two-for-one stock split of common stock effective January 1, 2026, aiming to improve stock liquidity. Total dividends for FY2026 (ending March 2026) amounted to ¥924 million (payout ratio of 28.7%). The forecast annual dividend for FY2027 (ending March 2027) is ¥19 per share.

Fuji Nihon Corporation

Business

Business Model

Company Strengths

ENVALITH's Perspective

Despite five consecutive years of profit growth, net income is forecast to decline 22.4% in FY2027 (ending March 2027) as gains on sales of investment securities disappear

Sales concentration with Sojitz Foods (approximately 37.9% of net sales) remains a key customer concentration risk

Once the Thailand plant expansion investment becomes fully operational, there is significant room for earnings growth in the functional materials business

Performance Trend

Growth Strategy

Disclaimer

Fuji Nihon Corporation

Business

Business Model

Company Strengths

Functional Materials segment, a growth pillar accounting for approximately 50% of net sales

Southeast Asian manufacturing and sales network centered on the Thailand base

High-margin, stable cash flow from the Real Estate segment

ENVALITH's Perspective

Despite five consecutive years of profit growth, net income is forecast to decline 22.4% in FY2027 (ending March 2027) as gains on sales of investment securities disappear

Sales concentration with Sojitz Foods (approximately 37.9% of net sales) remains a key customer concentration risk

Once the Thailand plant expansion investment becomes fully operational, there is significant room for earnings growth in the functional materials business

Performance Trend

Growth Strategy

Business Expansion in Southeast Asia

Creation of New Business in the Food Science Domain

Growth Investment Centered on M&A

Building a Strong Organization to Realize the Vision

Strengthening IR and Shareholder Returns

Disclaimer