KITOKU SHINRYO CO., LTD.

Business Details

This segment centers on the manufacture and sale of milled rice (for household and commercial use) and brown rice, and also handles minimum access rice and processed rice-meal rice, among others. It maintains a broad sales network spanning mass merchandisers, supermarkets, consumer co-ops, convenience stores, and restaurant chains, and operates proprietary brands such as "Junzukuri," "Togazuni Takeru Musenmai" (no-wash rice that can be cooked without rinsing), and "e-come." Leveraging domestic and overseas procurement networks, its major customers include the Ministry of Agriculture, Forestry and Fisheries, the Japan Delica Foods Cooperative, and Ito-Yokado. Note that, following an organizational change, the Food Products business has been transferred into this segment as of the current first quarter.

Recent Overview

Net sales increased, but operating profit fell sharply by 53.4% year on year due to declining gross margin amid intensifying price competition

In Q1 FY2026 (January–March), consumption declined, particularly in the household segment, amid continued high rice prices, resulting in weak sales to mass merchandisers. As a sense of excess inventory intensified across the industry, companies engaged in sales competition prioritizing inventory reduction, leading to increased price-based measures aimed at securing sales volume. Although efforts were made to strengthen sales and improve manufacturing efficiency through the use of blended rice and other measures, the decline in gross margin resulting from stronger promotional and pricing measures weighed on earnings. Commercial-use sales and Japanese rice exports remained solid but were not sufficient to offset the household-use downturn. Net sales were ¥36,328 million (up 13.7% year on year), and operating profit was ¥903 million (down 53.4% year on year).

Key Products

Growth Drivers

• Support to sales from solid performance in commercial-use sales
• Solid profitability in Japanese rice exports
• Efforts to strengthen sales and improve manufacturing efficiency through the use of blended rice, among other measures
• Diversification of earnings through expanded handling of peripheral items such as rice bran and husks
• Business synergy through the integration of the Food Products business into the Rice Business following the organizational change

Risks

• Prolonged decline in household consumption and weak sales to mass merchandisers amid continued high rice prices
• Further decline in gross margin due to intensifying price competition amid a sense of excess inventory across the industry
• Changes in the profit environment due to easing supply-demand conditions from a significant increase in the 2025 rice harvest and continued high levels in negotiated transaction prices
• Increased uncertainty in the procurement and sales environment due to falling spot market prices and a widening gap versus negotiated prices
• Concerns over material supply and rising material/logistics costs amid Middle East tensions
• Rising cost of imported raw materials due to yen depreciation
• Risk of fluctuations in yield and quality due to climate change and heat damage
• Risk of a shrinking domestic rice procurement base due to accelerating farmer attrition from an aging population