NICHIREI CORPORATION

Business Details

Engages in the manufacture, processing, and sale of cooked frozen foods (chicken products, cooked rice items, croquettes, Chinese-style prepared dishes, etc.), processed agricultural products, marine products, livestock products, retort foods, wellness foods, acerola, and packaged ice, as well as the raising and sale of broiler chickens. In addition to domestic household and commercial-use products, the company operates globally through overseas subsidiaries in the US, Thailand, Brazil, and elsewhere. The main sales customer is Mitsubishi Shokuhin Co., Ltd. (net sales of ¥86,742 million in the current fiscal year). Beginning in FY2026 (ending March 2026), the company began functional reorganization toward integration of its food businesses, consolidating the former three segments of Processed Foods, Marine Products, and Livestock Products into a single "Foods" segment.

Recent Overview

In the first year of Foods segment integration, net sales and profit declined due to structural reform impacts in Marine Products and Livestock Products; Processed Foods saw domestic sales growth but profit was squeezed by rising raw material costs

Beginning in FY2026 (ending March 2026), the reportable segment was integrated into "Foods" (consolidating the former Processed Foods, Marine Products, and Livestock Products segments). Net sales for the overall Foods segment were ¥426,674 million (down 1.7% versus the prior-year restated figure), and operating profit was ¥19,852 million (down 6.6%), representing decreases in both sales and profit. The mainstay domestic Processed Foods business saw increased sales due to the spread of price revisions and growth in chicken products, but operating profit declined slightly due to a sharp rise in raw material and procurement costs and increased sales promotion expenses. Overseas, profit declined due to the effect of a weaker US dollar and stronger Thai baht in Thailand. Marine Products and Livestock Products saw substantial declines in sales amid ongoing structural reforms. The change in depreciation method from the declining-balance method to the straight-line method (a profit-boosting effect of ¥1,360 million in the Foods segment) provided some support. As a subsequent event, on April 1, 2026, Nichirei Foods absorbed Nichirei Fresh through a merger, completing the functional integration of the food business.

Key Products

Growth Drivers

• Steady expansion of demand in the frozen food market driven by diversifying lifestyles and labor shortages, which are increasing the need for shorter cooking times
• Increased sales in domestic Processed Foods due to the spread of price revisions and expanded sales of chicken products and value-added products to major users
• Expansion of overseas sales through price revisions and development of new sales channels in the North American Innovasian business
• Realization of group synergies and strengthened earning power across the entire food business through the merger of Nichirei Foods and Nichirei Fresh (effective April 1, 2026)
• Improved profitability and progress in structural reform through reductions in low-margin products in Marine Products and Livestock Products
• Concentration of resources on strategic categories and improved capital efficiency under the new medium-term management plan "Compass×Growth 2027"
• Improved cost structure through unification of the depreciation method to the straight-line method and review of useful lives

Risks

• Continued rise in procurement costs due to soaring raw material and procurement prices and yen depreciation (squeezing profit in both domestic and overseas Processed Foods)
• Foreign exchange fluctuation risk (US dollar, euro, Thai baht, etc.) in the Thai export business, including a weaker dollar and stronger baht
• Impact on sales volume from increased consumer thrift amid rising prices across foods generally
• Risk of prolonged structural reform in the Marine Products and Livestock Products businesses and continued profit decline due to difficulty recovering fixed costs
• Risk of organizational restructuring and integration costs associated with the food business integration (merger of Nichirei Foods and Nichirei Fresh)
• Risk of declining consumption due to deteriorating local economic conditions and inflation at overseas subsidiaries in North America, Thailand, and elsewhere
• Risk of impairment losses (an impairment loss of ¥308 million was recorded in the Foods segment in the current consolidated fiscal year)

Business Details

Provides transportation and delivery services, distribution center functions, logistics consulting (3PL), storage services (cold storage warehouses), manufacture and sale of packaged ice, and construction and design work. Domestically, the company offers storage, transportation and delivery, retail, and 3PL services, while overseas it provides low-temperature logistics services in Europe (UK, Poland, etc.), ASEAN (Thailand, Malaysia, etc.), and North America. Nichirei Logistics Group Headquarters oversees the group of domestic and overseas subsidiaries that operate the business.

Recent Overview

Domestic operations achieved substantially higher profit, while overseas operations saw lower profit due to acquisition costs and other factors, but overall the segment achieved increased sales and profit

In FY2026 (ending March 2026), the Low-Temperature Logistics business achieved net sales of ¥300,991 million (up 8.2% year on year) and operating profit of ¥18,583 million (up 18.0% year on year), a substantial increase in profit. Domestically, all services—storage, transportation and delivery, retail, and 3PL—saw increased sales, and domestic operating profit expanded sharply to ¥17,955 million (up 24.7% year on year). The change in depreciation method from the declining-balance method to the straight-line method (impact of ¥2,341 million) also contributed to the profit increase. Overseas, profit declined due to delays in the start-up of a newly built warehouse in Poland and the recording of acquisition costs for a Malaysian subsidiary. As a subsequent event, the company plans to acquire a 51% equity stake in an Indonesian low-temperature logistics company (PT Mega Indo Logistik and others) in June 2026, aiming to strengthen its ASEAN business platform.

Key Products

Growth Drivers

• Continued expansion of domestic storage and transportation/delivery demand (steady growth in the frozen food market and an upward trend in inventory levels)
• Expanded pickup volumes through new services such as "SULS" and "NL+LiNk"
• Earnings contribution from the European business through the effect of the UK forwarding company acquisition and collaboration with existing companies
• Expansion of the network through the acquisition of low-temperature logistics companies in ASEAN (Indonesia, Malaysia)
• Profit-boosting effect from unifying the depreciation method to the straight-line method and extending useful lives
• Forecast for the fiscal period ending December 2026: net sales of ¥272,200 million (9 months) and operating profit of ¥17,900 million (up 11.7% versus the prior 9-month period), continuing the trend of increased sales and profit
• Promotion of integrated domestic and overseas storage and transportation/delivery operations under the new medium-term management plan "Compass×Growth 2027"

Risks

• Continued sluggish movement of imported cargo due to yen depreciation and high raw material costs, which may restrain growth in storage demand
• Risk of delayed revenue recognition due to delays in the start-up of newly built overseas warehouses (e.g., Poland)
• Increased burden of acquisition costs and goodwill amortization associated with overseas subsidiary acquisitions (goodwill balance: ¥9,353 million)
• Continued cost increases in energy, labor, and other areas squeezing profitability of domestic operations
• Truck driver shortages (the "2024 problem") leading to rising transportation and delivery costs and difficulty securing labor
• Impact on overseas business earnings from foreign exchange rate fluctuations (particularly European and ASEAN currencies)
• Risk of increased interest burden, as indicated by the declining trend in the interest coverage ratio (46.8x → 42.5x)
• Intensifying competition in the cold storage warehouse market due to entry by companies from other industries

Business Details

Beginning in FY2026 (ending March 2026), the former three categories of "Processed Foods," "Marine Products," and "Livestock Products" were integrated into the "Foods" segment. The Marine Products division, centered on Nichirei Fresh, is responsible for the processing and sale of marine products such as shrimp, octopus, crab, shellfish, and fish roe, as well as processed marine materials. The division is advancing improvements to its earnings structure through planned reductions in low-margin products and a sales shift toward high-margin products and the mainstay shrimp products.

Recent Overview

Net sales decreased substantially due to reductions in low-margin products, but profit was maintained at roughly the prior-year level due to fish roe recovery and strong shrimp performance

In FY2026 (ending March 2026), the Marine Products division saw net sales decrease substantially to ¥50,139 million (down 14.5% year on year) as a result of planned reductions in low-margin products. On the profit side, however, the recovery of fish roe, whose profitability had been sluggish in the prior year, together with strong performance of high-margin products and the mainstay shrimp products, allowed the division to maintain operating profit at ¥1,387 million, roughly the same level as the prior year. As a subsequent event, Nichirei Foods and Nichirei Fresh merged effective April 1, 2026, completing the functional integration of the food business.

Key Products

Growth Drivers

• Improved earnings structure through planned reductions in low-margin products
• Sales shift toward high-margin products and the mainstay shrimp products
• Profit recovery in fish roe, which had been sluggish in the prior year
• Realization of group synergies through the merger of Nichirei Foods and Nichirei Fresh
• Strengthened earning power and improved capital efficiency based on the new medium-term management plan "Compass×Growth 2027"

Risks

• Risk of continued contraction in net sales due to reductions in low-margin products
• Rising procurement costs due to yen depreciation
• Deterioration of the procurement environment due to geopolitical risk and climate change
• Intensifying competition for raw material procurement amid rising global demand for marine products
• Increased complexity of business operations due to food business integration (merger of Nichirei Foods and Nichirei Fresh)

Business Details

Beginning in FY2026 (ending March 2026), functional reorganization toward food business integration began, and the Livestock Products business was integrated into the "Foods" segment. The company is working to improve profitability through substantial reductions in low-margin domestic and imported frozen products, but net sales and profit decreased as fixed costs could not be recovered. The business handles the processing and sale of chicken, beef, and pork, as well as the raising and sale of broiler chickens, with Nichirei Fresh as its core subsidiary. Nichirei Foods and Nichirei Fresh merged effective April 1, 2026, completing the functional integration of the food business.

Recent Overview

Profitability improved through substantial reductions in low-margin products, but net sales and profit decreased due to unrecovered fixed costs

In FY2026 (ending March 2026), the Livestock Products business (within the Foods segment) improved profitability through substantial reductions in low-margin domestic and imported frozen products, but was unable to recover fixed costs, resulting in a substantial decline in both net sales, at ¥50,867 million (down 24.5% year on year), and operating profit, at ¥588 million (down ¥493 million, or 45.6%, year on year). As a subsequent event, Nichirei Foods absorbed Nichirei Fresh through a merger effective April 1, 2026, completing the functional integration of the food business.

Key Products

Growth Drivers

• Portfolio shift toward highly profitable processed products and high-value-added products
• Improved profit margins through planned reductions in low-margin products such as imported frozen products
• Realization of food business integration synergies through the merger of Nichirei Foods and Nichirei Fresh (April 1, 2026)
• Strengthened earning power and improved capital efficiency through full integration of functions from procurement to sales

Risks

• Rising chicken procurement prices and supply uncertainty due to the spread of avian influenza
• Soaring feed and imported raw material costs due to yen depreciation
• Downward pressure on demand for livestock products due to growing consumer thrift
• Risk of continued profit pressure from difficulty recovering fixed costs after reductions in low-margin products
• Execution risk related to organizational restructuring and functional transfer associated with food business integration (merger)

Business Details

Nichirei itself leases office buildings and parking lots and manages real estate. Although this segment accounts for only about 0.7% of the group's total net sales, it maintains a high operating margin of 37.9% in FY2026 (ending March 2026). The company has maintained profitability through active tenant recruitment and rent increases, offsetting a decline in sales resulting from the absence of large-scale move-in/move-out construction orders that had occurred in the prior year.

Recent Overview

Net sales decreased due to the absence of large-scale construction orders, but profit was maintained at roughly the prior-year level due to rent increases

In FY2026 (ending March 2026), the Real Estate business saw net sales decrease to ¥5,000 million (down 3.6% year on year) due to the absence of large-scale move-in/move-out construction orders that had occurred in the prior year. On the other hand, active promotion of tenant recruitment and rent increases allowed operating profit to be maintained at roughly the prior-year level, at ¥1,896 million (down 0.2% year on year), and the operating margin improved to 37.9% from 36.6% in the prior year. For the next fiscal period (the 9-month period ending December 2026), the company forecasts net sales of ¥3,600 million and operating profit of ¥1,500 million.

Key Products

Growth Drivers

• Improved occupancy rates through active tenant recruitment
• Improved profitability through rent increases
• Strengthened competitiveness through investment to enhance asset value

Risks

• The segment's small scale, accounting for only about 0.7% of the group's net sales, limits its impact on overall performance
• Fluctuations in office demand (structural changes in office demand due to the spread of telework, etc.)
• Risk of sales volatility depending on the presence or absence of temporary orders such as large-scale move-in/move-out construction
• The fiscal period ending December 2026 will be an irregular 9-month period due to a change in fiscal year-end, making year-on-year comparison difficult

Business Details

The "Others" segment is centered on the Bioscience Business (manufacture and sale of diagnostic reagents, medical devices, etc.), and also includes HR & Payroll-Related Business Services and Environmental & Administrative Support Services. It consists of a group of function companies that support the group's core businesses (Foods and Low-Temperature Logistics) as well as operating companies in the healthcare field. This segment accounts for a small share of consolidated net sales, at approximately 0.6%.

Recent Overview

Net sales and profit decreased due to a decline in sales of Bioscience Business products for medical institutions

In FY2026 (ending March 2026), in sales of combined COVID-19 and influenza antigen test kits, sales volume for the over-the-counter (OTC) channel increased, but sales volume for the medical institution channel decreased due to the impact of accumulated inventory in the market. As a result, net sales decreased substantially to ¥5,255 million (down 18.8% year on year), and operating profit decreased substantially to ¥471 million (down 56.7% year on year).

Key Products

Growth Drivers

• Diversification of the earnings base through expanded sales volume in the over-the-counter (OTC) test kit channel
• Capturing demand for combined antigen test kits during periods of infectious disease prevalence and maintaining a stable supply system
• Strengthening reagent development and promoting global sales expansion in the Bioscience Business under the medium-term management plan "Compass×Growth 2027"

Risks

• Risk that the performance of the Bioscience Business is significantly affected by seasonality and uncertainty depending on the prevalence of infectious diseases
• Risk of decreased demand due to accumulated market inventory in the test kit market for medical institutions (which materialized in FY2026, ending March 2026)
• Risk of a sharp deterioration in performance if demand weakens simultaneously in both the OTC and medical institution channels
• Intra-group shared services (HR/payroll, cleaning, etc.) are susceptible to changes in the scale and policies of the group's overall business