MEIJI Holdings Co.,Ltd.

Business Details

The Food segment, operated primarily by Meiji Co., Ltd., consists of five businesses: Dairy (yogurt, milk), Cacao (chocolate, gummies), Nutrition (infant formula, sports nutrition), Food Solutions (BtoB, cheese, frozen desserts), and Others (dairy raw materials, independent subsidiaries). In addition to domestic consumer products, the segment is expanding its BtoB business and overseas operations (China, US, Asia). It is the core segment, accounting for approximately 80% of consolidated net sales.

Recent Overview

Achieved a 6.4% increase in full-year operating profit driven by the effect of price revisions and increased profit in Dairy and Food Solutions

For FY2026 (ending March 2026) full year, Food segment net sales were ¥942,879 million (up 1.9% year on year), and operating profit was ¥68,746 million (up 6.4%). The increase in net sales (+¥29.0 billion) exceeded the increase in raw material costs (-¥21.8 billion, cacao and domestic raw milk, etc.) and increased expenses (-¥4.1 billion), resulting in higher profit. The Dairy Business achieved a significant increase in operating profit of +22.8% due to the effect of price revisions and reduced manufacturing overhead. The Food Solutions Business also saw profit increase by 18.7%. On the other hand, the Cacao Business (-6.4%) and Nutrition Business (-5.5%) saw profit decline due to increased raw material costs, among other factors. In China, an impairment loss of ¥22,522 million was recorded for the Food segment as a whole, but the loss is trending toward narrowing due to cost improvements from the revival plan. The plan for FY2027 (ending March 2027) targets operating profit of ¥74,000 million (+7.6%).

Key Products

Growth Drivers

• Continuation of the effect of domestic price revisions (contributed to increased profit in Dairy, Cacao, and Food Solutions businesses; Food segment net sales increase of +¥29.0 billion)
• Expansion of the US chocolate snack business (expanded sales channels for "Hello Panda" and others, leveraging enhanced US production lines)
• Strong growth of the domestic BtoB (Food Solutions) business (BtoB cream, cacao, cheese; enhanced proposals of proprietary technology products tailored to customer needs)
• Narrowing of losses through the China revival plan (progress in cost improvement in overseas Dairy and Food Solutions; aiming for profitability of the overall China business in FY2027, ending March 2027)
• Strengthened chocolate deployment, including exports outside the Asia region (Asia region overseas net sales up 6.2% in FY2026, ending March 2026)
• 2026 Medium-Term Management Plan target: Food segment operating profit of ¥83.0 billion (original FY2027, ending March 2027 target), revised plan now at ¥74.0 billion

Risks

• Soaring raw material costs for cacao and domestic raw milk, etc. (Food segment cost variance of -¥21.8 billion for full-year FY2026, ending March 2026; -¥8.9 billion also expected in the FY2027, ending March 2027 plan)
• Declining competitiveness of the Nutrition Business (decreased inbound demand for infant formula, burden of overseas upfront investment; full-year operating profit -5.5%)
• Continued weakness in personal consumption in China and execution risk of the revival plan (impairment loss of ¥22,522 million recorded for the Food segment)
• Foreign exchange fluctuation risk (expanding impact due to rising proportion of overseas net sales, uncertainty over geopolitical risk and trade policy)
• Impact on sales volume from continued frugal consumer sentiment in Japan amid price increases
• Profit pressure in Other Businesses from decreased sales of contract-manufactured products and overseas upfront investment costs (full-year FY2026, ending March 2026 operating profit -47.3%)
• The original 2026 Medium-Term Management Plan target (Food operating profit of ¥83.0 billion) has already been revised downward to ¥74.0 billion, mainly due to soaring and persistently high raw material prices and the slowdown of the Chinese economy

Business Details

The Pharmaceuticals segment is centered on the Meiji Seika Pharma Co., Ltd. group and consists of three businesses: Domestic business (infectious disease, immunology, CNS, Generic Pharmaceuticals), Overseas business (overseas direct sales, CMO/CDMO, global products), and Vaccine/Animal Health business (vaccines, animal health products, newborn mass screening). The segment regards the stable supply of antibacterial drugs, plasma-derived products, and vaccines as a social mission, and is also advancing the development of global products.

Recent Overview

The Pharmaceuticals segment achieved a significant increase in profit, with net sales up 1.1% and operating profit up 23.1%

For FY2026 (ending March 2026) full year, net sales were ¥232,218 million (up 1.1% year on year), and operating profit was ¥30,463 million (up 23.1%). In the overseas business, operating profit expanded rapidly, up 187.9% year on year, due to decreased R&D expenses, royalty income, and increased profit at subsidiaries in India and Thailand. The Vaccine/Animal Health business turned profitable due to the reversal of the Costaive valuation loss, among other factors. On the other hand, in the domestic business, operating profit declined significantly by 27.0% year on year due to drug price revisions (impact of -¥3.0 billion) and increased promotional expenses for newly launched products. Production of antibacterial drug raw materials began at the Gifu Plant in December 2025, strengthening the company's response to economic security concerns.

Key Products

Growth Drivers

• Expansion of Rezurock Tablets (selective ROCK2 inhibitor) sales (up 214.5% year on year to ¥9,000 million for full-year FY2026, ending March 2026) and accelerated expansion into South Korea, Taiwan, and Thailand
• Establishment of domestic production system for antibacterial drug active pharmaceutical ingredients (production of antibacterial drug raw materials began at the Gifu Plant from December 2025), addressing economic security and ensuring stable supply
• Vaccine/Animal Health business turned profitable (reversal of the Costaive valuation loss factor disappeared; achieved operating profit of ¥4,300 million due to increased Quintvac sales)
• Significant increase in overseas business profit (operating profit up 187.9% year on year due to decreased R&D expenses, royalty income, and increased profit at India/Thailand subsidiaries)
• Establishment of Meiji Pharma Asia in Singapore to advance business expansion in Southeast Asia, with steady progress in pipeline development including dengue fever vaccine
• Completion of preparations toward realizing the consortium concept in the generic pharmaceuticals industry, strengthening supply stability and profit base
• Advancement of Japanese and overseas clinical trials for OP0595 (Nacubactam), toward future commercialization of antimicrobial resistance countermeasure products

Risks

• Regular impact of drug price revisions (domestic business operating profit down 27.0% year on year for full-year FY2026, ending March 2026; drug price revision impact of -¥3.0 billion for the full year)
• Profit pressure on domestic business from increased promotional expenses for newly launched products such as Rezurock Tablets (domestic business operating profit of ¥15,700 million for full-year FY2026, ending March 2026, down 27.0% year on year)
• Sluggish antibacterial drug market (infectious disease field net sales down 17.0% year on year to ¥40,700 million due to changes in the prevalence of bacterial infectious diseases)
• Supply instability issues in the generic pharmaceuticals industry (an ongoing structural challenge; the consortium concept is still at the implementation preparation stage)
• Risk from changes in demand trends and vaccination environment for the COVID-19 vaccine "Costaive" (the FY2027, ending March 2027 plan expects the impact of drug price revisions to turn positive, but uncertainty remains)
• Impact of foreign exchange fluctuations on the performance of overseas business subsidiaries (India, Thailand, Spain, etc.)
• Risk of cash flow pressure from a significant increase in capital expenditures (¥49,900 million for full-year FY2026, ending March 2026, up 219.9% year on year)