Morinaga Milk Industry Co., Ltd.

Business Details

This is the reportable segment engaged in the manufacture and sale of market milk, dairy products, ice cream, and beverages. The Company manufactures and sells these products directly, while also leveraging contract manufacturing and sales networks through group subsidiaries to achieve nationwide reach. The segment comprises growth areas (yogurt, ice cream, cultured microorganisms, overseas infant formula), core areas (beverages, cheese, dairy products for commercial use), and overseas business (MILEI GmbH, cultured microorganism exports, etc.). In FY2026 (ending March 2026), Food Business net sales were ¥547,661 million (up 1.8% year on year), and operating income was ¥45,807 million (up 15.1% year on year).

Recent Overview

Driven by a substantial profit increase in the overseas business, Food Business operating income rose 15.1% year on year to ¥45,807 million

In FY2026 (ending March 2026), overseas business operating income increased substantially by ¥9,521 million year on year to ¥16,997 million, driven mainly by persistently high whey protein market prices and increased sales volume from inventory at MILEI GmbH. Domestically, cost increases in raw materials, logistics, and labor continued, and although price revisions were implemented, the decline in sales volume exceeded expectations, resulting in lower profit. The start-up of new ice cream manufacturing equipment and a substantial decrease in goodwill amortization expense (from ¥1,152 million to ¥33 million) also contributed to the improvement in profit.

Key Products

Growth Drivers

• Substantial profit increase in the overseas business driven by persistently high whey protein market prices and increased sales volume at MILEI GmbH (operating income up +¥9,521 million year on year in FY2026 (ending March 2026))
• Higher per-unit sales prices resulting from price revision effects and improved product mix for yogurt, ice cream, beverages, and other products
• Expanded production capacity and response to increased sales volume through the start-up of new ice cream manufacturing equipment (FY2026 (ending March 2026))
• 5.2% increase in net sales in growth areas resulting from the concentration of management resources on high-value-added growth areas such as cultured microorganisms and overseas infant formula (Medium-Term Management Plan 2025-28)
• Continued solid demand for commercial dairy products in the BtoB business and expanded sales of functional ingredients such as cultured microorganisms
• Profit-boosting effect from a substantial decrease in goodwill amortization expense (from ¥1,152 million in the prior period to ¥33 million in the current period)

Risks

• Continued increases in operating costs such as raw material prices, logistics costs, and labor costs, including domestic raw milk transaction price increases (June and August 2025)
• A challenging demand environment across the food business overall and a decline in sales volume (continuing at a level exceeding the initial forecast)
• In FY2027 (ending March 2026 [March 2027]), a decrease reflecting the rebound from the current period's sales volume increase at MILEI GmbH and cost increases due to higher raw material costs, among other factors (an impact of approximately -¥1.5 billion is factored in as a factor affecting overseas subsidiaries)
• Further cost increase impacts stemming from the situation in the Middle East (a negative impact of ¥4.0 billion on operating income through the end of September has already been factored into the earnings forecast for FY2027 (ending March 2027))
• Pressure on profit in growth areas due to increased manufacturing fixed costs (depreciation) associated with the start-up of new ice cream manufacturing equipment
• Risk of changes in the business environment at overseas subsidiaries (Pakistan, the United States, Vietnam, etc.) and risk of impairment losses (an impairment loss of ¥3,553 million was recorded in FY2026 (ending March 2026) as well)