SEIHYO CO.,Ltd.

Business Details

Comprised of four divisions: the Ice Cream division (approximately 74% of net sales), the Wholesale Trading division, the Wagashi division, and the Logistics & Storage division. The company operates the Niigata, Sanjo, Toyosaka, Sado, and Toyama plants, with a dual focus on in-house brand products (ice pops such as Momotaro, Sasa Dango, etc.) and OEM contract manufacturing. Major customers include Morinaga Milk Industry Co., Ltd. (approximately 24.5% of net sales), AEON TOPVALU Co., Ltd., and Nippon Access, Inc. It is a non-consolidated standalone business entity operating solely in the domestic market.

Recent Overview

Net sales increased 8.8% year on year, but cost increases and a special loss resulted in a quarterly net loss of ¥38 million

Net sales for the first quarter of FY2027 (ending February 2027) (March to May 2026) were ¥1,456 million (up 8.8% year on year), securing revenue growth. Sales of the mainstay shaved ice cups performed well. On the other hand, manufacturing costs rose due to higher prices for raw materials and packaging materials, persistently high energy costs, and increased labor costs. Selling, general and administrative expenses such as transportation and storage costs also increased due to the buildup of product inventory based on sales plans, resulting in an operating loss of ¥19 million. Furthermore, as a result of recording a loss of ¥30 million on disposal of fixed assets as an extraordinary loss due to the removal of existing equipment based on the equipment renewal plan at the Toyama plant, the company posted a quarterly net loss of ¥38 million. On the financial side, short-term borrowings increased by ¥800 million to ¥1,250 million, and the equity ratio declined from 37.6% at the end of the previous fiscal year to 29.6%. The full-year earnings forecast remains unchanged, maintaining net sales of ¥6,000 million and operating profit of ¥126 million. As a subsequent event, the company implemented a stock compensation plan under which 2,300 shares of restricted stock (disposal price of ¥2,186 per share, total disposal value of ¥5,027,800) were issued to 23 employees, with payment due on July 15, 2026.

Key Products

Growth Drivers

• Capturing OEM orders and increasing production capacity following the completion of equipment renewal at the Toyama plant
• Expansion of Ice Cream division sales driven by continued strong sales of the mainstay shaved ice cups
• Significant increase in net sales due to concentrated summer demand (Q2) (the majority of the full-year net sales forecast of ¥6,000 million is concentrated in the second quarter)
• Steady growth in OEM sales to Morinaga Milk Industry
• Strong performance of commercial-use products for hotels and restaurants driven by the recovery of tourism demand on Sado Island

Risks

• Continued rise in manufacturing costs due to persistently high raw material prices, logistics costs, energy costs, and labor costs (SG&A expenses increased significantly in Q1 from ¥212 million to ¥290 million year on year)
• Occurrence of one-time expenses such as loss on disposal of fixed assets associated with equipment renewal at the Toyama plant (¥30 million recorded in Q1) and risk related to stabilizing operations
• Difficulty in passing on price increases due to consumers' increasingly frugal spending habits
• Risk of seasonal slowdown in frozen confection sales due to unfavorable weather such as rainfall from August onward (the majority of sales are concentrated in the second quarter)
• Risk of sales concentration among major customers (Morinaga Milk Industry, AEON TOPVALU, and Nippon Access) (the top three customers account for approximately 49% of net sales)
• Continued decline in the equity ratio (from 37.6% to 29.6%) and deterioration of financial soundness due to a sharp increase in short-term borrowings (from ¥450 million to ¥1,250 million)