YAMAZAKI BAKING CO., LTD.

Business Details

This segment manufactures and sells bread (loaf bread and sweet buns), Japanese and Western confectionery, prepared bread and rice products, and confectionery/rice crackers, among other items. In addition to Yamazaki Baking Co., Ltd. on a standalone basis, consolidated subsidiaries including YK Baking Company, Fujiya Co., Ltd., Yamazaki Biscuits Co., Ltd., Tohato Co., Ltd., and Sun-Delica Co., Ltd. participate in this segment. Major sales channels include mass merchandisers, convenience stores, and the company's own directly operated store formats, supplying products widely both domestically and overseas. In Q1 FY2026 (ending March 2026), net sales to external customers were ¥310,575 million, accounting for 93.1% of consolidated net sales.

Recent Overview

All six categories achieved year-on-year sales growth; the Food Business overall recorded higher sales (+4.9%) and higher operating income (+10.3%).

In Q1 FY2026 (ending December 2026) (January to March 2026), Food Business net sales were ¥310,575 million (104.9% year on year), and operating income was ¥17,771 million (110.3% year on year). The introduction of new quality improvement technology into "Royal Bread" in January 2026 contributed to growth in the loaf bread category. The confectionery/rice crackers and other products category (+8.0%), Japanese confectionery category (+7.1%), and prepared bread/rice products category (+6.3%) showed particularly high growth. It has also been announced that price revisions on some loaf bread, sweet bun, and Japanese/Western confectionery products will be implemented for shipments from July 1, 2026.

Key Products

Growth Drivers

• Progressive rollout of a new quality improvement technology (an advanced version of the Double Soft technology) into flagship products such as "Royal Bread," driving quality appeal and sales volume growth
• Price revisions on some loaf bread, sweet bun, and Japanese/Western confectionery products for shipments from July 1, 2026 (accompanied by quality improvements, expanded specifications, and strengthened price-tier product offerings)
• Balancing expansion of low-priced products with development of value-added products under a bifurcation/trifurcation strategy (responding to thrift-oriented, low-price-seeking consumer sentiment)
• Increased transactions with convenience store chains and mass merchandisers at Sun-Delica (contributing to +6.3% growth in the prepared bread and rice products segment)
• Growth of flagship snack and confectionery products at Group companies including Fujiya, Yamazaki Biscuits, and Tohato (+8.0% in confectionery/rice crackers segment)
• Promotion of value-added product development centered on female product development staff

Risks

• Sustained high raw material prices for eggs and fats/oils, and continued price increases for flour, packaging materials, etc.
• Risk of surging packaging material costs, logistics costs, and utility costs against the backdrop of the situation in the Middle East
• Continuation of a market environment marked by persistent consumer thrift and preference for low prices
• Upward cost pressures from labor and logistics expenses
• Risk to sales volume associated with the planned price revision (to take effect in July 2026)
• Ongoing costs of responding to bifurcated/trifurcated product development and increasing complexity of product lineup management

Business Details

The Company's Daily Yamazaki Business Division operates a franchise-based convenience store business (Daily Yamazaki, New Yamazaki Daily Store, and Yamazaki Daily Store). Stores purchase and sell Group products, and coordination with the Food Business is a distinguishing feature of this business. Net sales account for approximately 5.7% of the consolidated total, but operating losses have continued amid rising costs such as labor expenses.

Recent Overview

Net sales increased slightly to 101.5% year on year, but the operating loss expanded due to rising labor costs.

In the Distribution Business for Q1 FY2026 (ending December 2026) (January to March 2026), both chain-wide store sales and total operating revenue exceeded the prior-year period, with net sales of ¥19,200 million (101.5% year on year). However, due to rising costs such as labor expenses, the operating loss expanded to ¥475 million from an operating loss of ¥237 million in the prior-year period. The Company continues to pursue the Osaka dominant-area project and develop original products in cooperation with the strategic merchandise development promotion team, but profitability has yet to improve.

Key Products

Growth Drivers

• Maintaining and expanding sales scale through chain-wide store sales and total operating revenue exceeding the prior-year period
• Expansion of the successful Matsudo and Suginami dominant-area project model into the Osaka area
• Improved quality and competitiveness of Daily Hot products through use of frozen dough enabled by new technology
• Development of original Yamazaki products in cooperation with the strategic product/merchandise development promotion team
• Promotion of a distinctively Yamazaki store experience through store renovations and sales floor design

Risks

• Expansion of operating losses due to rising costs such as labor expenses (a structural challenge)
• Downward pressure on average customer spending from continued consumer thrift and preference for low prices
• Intensifying competition from other formats such as drugstores and small-format supermarkets
• Difficulty maintaining market share amid intensifying competition with major convenience store chains
• Risk of franchisee store closures and withdrawals due to deteriorating franchisee profitability

Business Details

The Other Business segment comprises the logistics business operated by Yamazaki Logistics Co., Ltd. and Sun Logistics Co., Ltd.; the design, supervision, and construction contracting for food manufacturing equipment operated by Yamazaki Engineering Co., Ltd.; the non-life insurance agency business operated by Yamazaki Co., Ltd.; the manufacture and sale of cleaning agents for food manufacturing machinery and equipment operated by Yamazaki Clean Service Co., Ltd.; and administrative/outsourcing services, among others. The majority of sales are intra-Group transactions, and this segment plays a role in supporting the Group's overall manufacturing and logistics infrastructure.

Recent Overview

Q1 FY2026 (ending December 2026) saw higher sales and profit, with net sales at 107.1% and operating income at 111.3% year on year.

In Q1 FY2026 (ending December 2026) (January to March 2026), the Other Business segment posted net sales to external customers of ¥3,895 million (107.1% year on year) and segment operating income of ¥900 million (111.3% year on year), achieving both higher sales and higher profit. Total segment sales, including intersegment transactions, were ¥15,689 million (versus ¥14,944 million in the prior-year period). This appears to reflect steady growth in intra-Group demand for logistics and engineering services, underpinned by robust production activity in the Food Business.

Key Products

Growth Drivers

• Increased demand for intra-Group logistics and engineering services accompanying expanded production in the Food Business
• Sales growth effect from a 7.1% year-on-year increase (up ¥256 million) in net sales to external customers
• Improvement in operating income accompanying the sales increase (up 11.3% year on year)

Risks

• Since most sales are intra-Group transactions, revenue is linked to the performance trends of the Food Business and Distribution Business
• Upward cost pressures from labor and logistics expenses, among others (identified as a Group-wide challenge)
• A structural risk in that the Distribution Business continues to post operating losses, making it harder for a portion of intra-Group demand to contribute to profitability