House Foods Group Inc.

House Foods Group reported on August 4 its first-quarter results for the fiscal year ending March 2027, with net sales of 75.139 billion yen (down 0.7% year on year), operating profit of 4.001 billion yen (up 17.1%), ordinary profit of 4.494 billion yen (up 22.6%), and quarterly net profit of 5.136 billion yen (up 185.3%). The sharp rise in net profit was a one-off factor stemming from a gain on the sale of investment securities, while the decline in net sales reflected the transfer of the prepared food subsidiary Delica Chef in the fourth quarter of the previous fiscal year. The spice and seasoning business, the largest of the five business segments in both net sales and operating profit, performed strongly with net sales of 31.327 billion yen (up 5.3%) and operating profit of 1.630 billion yen (up 39.7%). Meanwhile, the restaurant business, centered on Ichibanya, which operates Curry House CoCo Ichibanya, posted net sales of 16.972 billion yen (up 7.8%) but operating profit of 752 million yen (down 19.3%), a decline in profit. The company revised its full-year forecast for the fiscal year ending March 2027, citing higher costs due to the situation in the Middle East. It left net sales unchanged at 322.5 billion yen, but cut its operating profit forecast to 17.5 billion yen, down 5.4% from the previous 18.5 billion yen, and its ordinary profit forecast to 18.7 billion yen, down 5.1% from the previous 19.7 billion yen, while keeping its net profit forecast at 17 billion yen. The downward revision was concentrated in the spice and seasoning business, whose operating profit forecast was lowered to 11.4 billion yen, down 8.1% from the previous 12.4 billion yen, with forecasts for the other four segments left unchanged.

On August 31, the Nikkei average on the Tokyo stock market fell, dropping more than 1,500 points at one point due to hawkish comments from the U.S., but it showed signs of recovering. Among the stocks in focus, House Foods Group announced that it is considering selling its subsidiary Ichibanya, and Ichibanya shares surged on expectations of a takeover premium. Additionally, Nifco announced a share buyback of up to 8.3 million shares, equivalent to 8.88% of its total issued shares, for up to 40 billion yen, and its stock price rose. Nihon Gas announced a 1-for-3 stock split and an increase in its year-end dividend, attracting investor interest.

House Foods Group, the owner of Japan's largest curry chain CoCo Ichibanya, is considering selling the business, including the option of taking the company private, causing shares of Ichibanya Co. to surge 16% in trading on the Tokyo Stock Exchange. House Foods holds a 51% stake in Ichibanya, which had a market value of approximately 174.2 billion yen, or about $1.1 billion, as of Monday. Both companies confirmed a Nikkei report and stated they are considering various options, including going private. Analyst Tsutomu Yamada of Mitsubishi UFJ eSmart Securities said that a change in major shareholders could be a good opportunity for growth and expects the stock price could rise another 30% if the sale materializes. CoCo Ichibanya has nearly 1,500 stores both in Japan and overseas, including the U.S., the U.K., and India.