KAGOME CO.,LTD.

Business Details

Comprises three categories: Beverage Category (Yasai Seikatsu 100 series, tomato juice, etc.), Mail Order Category (Kenko Chokuso Bin), and Food & Other Category (tomato ketchup, seasonings, frozen Mediterranean vegetables, etc.). The segment's core value proposition is to provide consumers of all generations with opportunities for daily vegetable intake and to contribute to extending healthy life expectancy. From 1Q FY2026, Vegitalia S.p.A. was transferred from the International Business to the Food & Other Category of this segment as part of an organizational restructuring.

Recent Overview

1Q revenue and profit declined due to reduced sales volume following price revisions and higher promotional spending

In 1Q FY2026 (January to March), the Domestic Processed Foods Business posted revenue of ¥33,399 million (down 0.2% year on year) and business profit of ¥1,721 million (down 23.5% year on year), representing a decline in both revenue and profit. Against a backdrop of continued high prices for agricultural raw materials, the company revised shipping prices for household- and commercial-use beverages, but sales volume of the Yasai Seikatsu 100 series and other products declined following the price revision. In addition, increased sales promotion and advertising expenses aimed at stimulating demand weighed on profit. Meanwhile, tomato juice remained strong, supported by expanding habitual consumption driven by blood pressure-related appeals. In the Mail Order Category, business profit improved to 2.0 times the prior-year level due to more efficient advertising expenditure.

Key Products

Growth Drivers

• Acquisition of new users and expansion of habitual consumption of tomato juice through appeals to its functional benefits (blood pressure)
• Improved profitability in the Mail Order Category through more efficient advertising spending (strong soup sales)
• Top-line boost from price revisions for household- and commercial-use beverages (offsetting volume declines)
• Strong sales of frozen vegetables and tomato ketchup in the Food and commercial-use categories
• Category diversification through expansion of new domains such as plant-based milk and vegetable soup
• Strengthened procurement base and cost reduction through the new domestic tomato plant in Hokkaido (scheduled to begin operations in 2028)

Risks

• Profit pressure from continued rises in manufacturing costs, including agricultural raw material costs
• Risk of declining sales volume following price revisions (e.g., Yasai Seikatsu 100 series)
• Market contraction pressure due to Japan's declining and aging population
• Increasing difficulty in stably procuring domestic vegetables and fruits due to the declining number of farmers
• Relative decline in the position of existing domains due to diversification of health-related products and services
• Competitive entry from other industries (innovation in each field)
• Insufficient penetration among younger generations and weak price competitiveness in commoditized markets

Business Details

Through bases in the United States, Portugal, Australia, Taiwan, India, and other locations, the segment operates an integrated business spanning agricultural production, product development, primary processing (tomato paste, etc.), secondary processing (pizza sauce, barbecue sauce, etc.), and sales. Main customers are seasoning manufacturers and foodservice companies, with BtoB business conducted in the United States, Europe, Australia, and elsewhere. In January 2026, Silbury Marketing Ltd (UK) was made a consolidated subsidiary, integrating European marketing and sales functions. The segment accounts for a high proportion of consolidated business profit and is positioned as a key driver of group growth.

Recent Overview

Silbury consolidation boosted secondary processing revenue, but weaker primary processing market conditions led to a rise in revenue but a decline in profit

In January 2026, the company acquired all shares of Silbury Marketing Ltd (a UK-based food distributor, acquisition price ¥5,524 million), making it a consolidated subsidiary. Goodwill of ¥2,717 million and intangible assets of ¥1,572 million were recorded (provisional accounting). Secondary processing grew, supported by the Silbury contribution and strong foodservice sales, with revenue of ¥19,301 million (up 14.4% year on year) and business profit of ¥1,684 million (up 25.0% year on year). On the other hand, primary processing declined due to lower sales prices in the United States, Europe, and Australia amid a global easing of supply and demand for tomato paste, with revenue of ¥15,285 million (down 1.8% year on year) and business profit of ¥1,231 million (down 26.1% year on year). As a result, the International Business as a whole saw an increase in revenue (¥34,257 million, up 5.8% year on year) but a decline in profit (¥2,894 million, down 6.1% year on year).

Key Products

Growth Drivers

• Expansion of sales of secondary processed products to the foodservice sector (targeting North America, Europe, and India)
• Integration of European marketing and sales functions and strengthened competitiveness in the European market through the consolidation of Silbury Marketing Ltd (UK)
• Strengthened procurement base and synergy creation in tomato primary processing through the consolidation of Ingomar
• Building the foundation for a vertically integrated tomato business in India (the world's second-largest tomato-producing market)
• Expanding share as a trusted supplier by leveraging the group's procurement and supply network

Risks

• Earnings volatility associated with fluctuations in the tomato paste market (sales prices and profit decline significantly during periods of supply-demand easing; primary processing business profit fell 26.1% year on year in 1Q FY2026)
• High dependence on certain customers with large purchase volumes
• Risk of manufacturing process issues (which actually occurred in FY2025 (ending December 2025) and affected results)
• Impact of weather risks such as abnormal weather on the yield and quality of processing tomatoes
• Difficulty securing employees and rising labor costs at bases in each country, and risk of supply chain disruption
• Possible cost increases due to geopolitical risks such as worsening conditions in the Middle East (referenced by the company as a note to its earnings forecast)
• The purchase price allocation for Silbury has not yet been finalized (provisional accounting), and financial figures may change once finalized

Business Details

The "Others" segment comprises the Domestic Agriculture Business (production and sale of fresh tomatoes, baby leaf vegetables, etc.), the Seedling Business (production and sale of seedlings and R&D on new varieties and cultivation technology), the Real Estate Business (management and leasing), and New Business, among others. It serves as the agricultural technology and research foundation supporting the two main segments (Domestic Processed Foods Business and International Business), and is positioned to contribute to strengthening the group's overall value chain. Revenue of ¥5,133 million in 1Q FY2026 (ending December 2026) accounted for approximately 7.6% of the group total.

Recent Overview

Both revenue and business profit deteriorated, resulting in a business loss

In 1Q FY2026 (ending December 2026) (January to March 2026), revenue in the "Others" segment was ¥5,133 million, down 5.0% year on year, and the segment posted a business loss of ¥126 million (compared with business profit of ¥70 million in the prior-year period). This represents a profit deterioration of ¥197 million year on year. While the specific factors behind the swing to a loss have not been disclosed, it is thought to reflect rising agricultural production costs and upfront investment in new businesses. There were no material subsequent events to report.

Key Products

Growth Drivers

• Capturing intra-group demand through progress in developing new varieties and cultivation technology in the Seedling Business
• Resource allocation to new value domains such as the "Agriculture and Food Well-being Business" under Kagome Group Plan 2028
• Expansion of sales of fresh tomatoes, baby leaf vegetables, and other products in the Domestic Agriculture Business

Risks

• Pressure on business profit from rising costs (agricultural production costs and manufacturing expenses), with business profit deteriorating from ¥70 million in the prior-year period to a business loss of ¥126 million
• Risk to production stability from the declining number of domestic agricultural workers and climate change
• Risk that monetization of new business domains (such as the well-being business) will take time
• A shrinking trend in revenue, down 5.0% year on year, limiting overall growth potential for the segment
• Limited growth potential in mature businesses such as the Real Estate Business