Kotobuki Spirits (2222): FY2025 Results Summary — Record Sales and Profits as Second-Half Measures Offset Cost Pressure

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Note: Kotobuki Spirits labels the fiscal year ended March 31, 2026 as “FY2026” and the year ending March 31, 2027 as “FY2027”; this site classifies the most recent completed fiscal year as FY2025 in article titles, while all figures and labels below follow the company’s own presentation. Kotobuki Spirits Co., Ltd. (2222), a premium gift-confectionery group, reported consolidated results for FY2026 (year ended March 31, 2026) on May 15, 2026. Net sales rose 8.9% year on year to 78,781 million yen and ordinary profit rose 5.9% to 18,733 million yen, with sales and profits at all levels reaching record highs. The company states that, whilst it faced difficulties in the first half due to rising manufacturing costs including soaring raw material prices, the second half saw a turnaround thanks to the implementation of proactive measures. For FY2027 the company forecasts net sales of 84,500 million yen and operating profit of 20,550 million yen.

Consolidated Results (Full-Year Actual)

Net sales increased 8.9% year on year and operating profit increased 5.6%. Profitability ratios eased slightly: the gross profit margin was 61.4% versus 61.9% a year earlier, the SG&A expense ratio was 37.8% versus 37.6%, and the ordinary profit ratio was 23.8% versus 24.4%. ROE was 28.5%, down 3.7 points from 32.2%. Amounts in the presentation are rounded down to the nearest million yen, and “Net profit” means net profit attributable to owners of parent.

Item	FY2026 (1Q-4Q)	FY2025 (1Q-4Q)	YoY (Change)	YoY (%)
Net sales	78,781	72,349	6,431	8.9
Gross profit	48,388	44,804	3,583	8.0
SG&A expenses	29,789	27,193	2,596	9.5
Operating profit	18,598	17,610	987	5.6
Ordinary profit	18,733	17,686	1,046	5.9
Net profit	12,557	12,122	434	3.6
EPS (Yen)	81.32	78.00	3.32	－
ROE (%)	28.5	32.2	△ 3.7	－

Against the FY2026 business forecast announced on May 13, 2025, net sales reached 98.9% of the target (79,670 million yen forecast versus 78,781 million yen actual, a shortfall of 888 million yen), operating profit 94.6% (19,650 million yen versus 18,598 million yen), ordinary profit 95.0% (19,720 million yen versus 18,733 million yen) and net profit 93.7% (13,400 million yen versus 12,557 million yen).

By sales channel, domestic wholesale rose 11.8% to 33,423 million yen on contributions from the Kotobukiseika Group and others, domestic retail rose 7.2% to 37,443 million yen and mail order rose 4.1% to 6,378 million yen, giving a domestic total of 77,258 million yen (+8.8%). Overseas sales totalled 1,522 million yen (+11.1%), of which Taiwan was 591 million yen, Singapore 323 million yen and Australia 307 million yen. Inbound sales (international terminal sales) grew 6.8% year on year to 10,701 million yen despite the observed impact of deteriorating Japan-China relations.

On the cost side, material costs were 18,033 million yen, or 22.9% of sales, an increase of 0.4 percentage points from the previous period, and cost of sales totalled 30,393 million yen (38.6% of sales). Within SG&A, promotion expenses rose 21.0% to 5,143 million yen, which the company attributes to new store openings, an increase in brand revamps, and higher staff deployment costs associated with intensified promotional activity targeting inbound travellers at international terminals.

Total assets stood at 60,142 million yen (up 8,162 million yen, or 15.7%) and net assets at 47,936 million yen (up 7,850 million yen, or 19.6%), with BPS of 310.37 yen. Cash flows from operating activities were 13,801 million yen and cash flows from investing activities were △5,451 million yen, giving free cash flow of 8,350 million yen. Cash and cash equivalents at the end of the period were 28,200 million yen, an increase of 3,119 million yen from the previous period.

Segment Results

Following organizational changes at the start of the first quarter of the fiscal year ended March 31, 2026, “Sucrey” and “Kujyukushima Group” were merged and the segment renamed “Sucrey Group,” and “Kotobuki Seika and Tajima Kotobuki” was renamed “Kotobukiseika Group”; prior-year segment information has been restated on the new basis. The Kotobukiseika Group posted the largest gains, with sales up 12.1% on strong expansion in the Okinawa market, where sales grew to 1,977 million yen. KCC was the only segment with lower operating profit.

Segment	Net sales FY2026	Net sales FY2025	YoY (%)	Operating profit FY2026	Operating profit FY2025
Sucrey Group	37,054	34,698	6.8	7,087	6,797
KCC	23,184	21,482	7.9	4,833	5,024
Kotobukiseika Group	16,298	14,545	12.1	3,823	3,240
Sales Subsidiaries	7,804	7,227	8.0	1,089	946
Others	674	692	△ 2.6	28	55
SEGMENT TOTAL	85,016	78,647	8.1	16,862	16,064
ADJUSTMENT	△ 6,235	△ 6,297	△ 1.0	1,735	1,546
TOTAL	78,781	72,349	8.9	18,598	17,610

The Sucrey Group opened a total of 10 new stores, including the first flagship store following the rebranding of “Tokyo Milk Cheese Factory” at NEWoMan TAKANAWA in September 2025, plus new brands “SALTRA” at Hanshin Umeda Main Store and “VANISTA” at Seibu Ikebukuro Main Store in November 2025 and “HELLO MAPLI” at JR Nagoya Takashimaya in February 2026. KCC, which operates the LeTAO brand, worked on new product development, launched a new tea category “&LeTAO,” and renewed the “LeTAO” points system in June 2025. Across the group, 11 new stores were opened and 9 closed during the year, the closures including 3 stores in January 2026 due to renovation work in the sales area inside Tokyo Station, 2 of which are scheduled to open in the fiscal year ending March 31, 2028.

FY2027 Forecast

For FY2027 (year ending March 31, 2027) the company forecasts net sales of 84,500 million yen, up 7.3% year on year, and operating profit of 20,550 million yen, up 10.5%. The gross profit margin is planned at 62.2% and the SG&A expense ratio at 37.8%. Capital investment is planned at 4,000 million yen, mainly for renewal and acquisition of plant facilities.

Item	FY2027 (Forecast)	FY2026 (Actual)	YoY (Change)	YoY (%)
Net sales	84,500	78,781	5,718	7.3
Gross profit	52,520	48,388	4,131	8.5
SG&A expenses	31,970	29,789	2,180	7.3
Operating profit	20,550	18,598	1,951	10.5
Ordinary profit	20,610	18,733	1,876	10.0
Net profit	13,810	12,557	1,252	10.0
EPS (yen)	89.42	81.32	8.10	10.0
Dividend/stock (yen)	35.00	35.00	–	–
CAPEX	4,000	2,570	1,429	55.6
Depreciation	1,750	1,691	58	3.5

Segment	Net sales FY2027 (Forecast)	Net sales FY2026	YoY (%)	Operating profit FY2027 (Forecast)	Operating profit FY2026
Sucrey Group	39,700	37,054	7.1	7,760	7,087
KCC Group	24,800	23,184	7.0	5,350	4,833
Kotobukiseika Group	17,550	16,298	7.7	4,267	3,823
Sales Subsidiaries	8,310	7,804	6.5	1,198	1,089
Others	700	674	3.8	28	28
SEGMENTS TOTAL	91,060	85,016	7.1	18,603	16,862
ADJUSTMENT	△ 6,560	△ 6,235	5.2	1,947	1,735
TOTAL	84,500	78,781	7.3	20,550	18,598

Supplementary points for the FY2027 forecast: inbound sales are planned at 11.5 billion yen, a 7.5% increase year on year, with measures strengthened at the main international terminals on the expectation that the impact of deteriorating Japan-China relations will continue for the foreseeable future. In April 2026 “Hakonetokinomi Co., Ltd.,” a wholly owned subsidiary of KCC, was established, and the reportable segment previously named “KCC” was renamed “KCC Group”; the former Hakone Ashinoyu Flower Center is to be renovated and opened under a new brand in July 2026 (planned). The company plans to open a total of 7 stores and close 1 store in FY27/3. The new plant in Miyakojima City, Okinawa is scheduled to start operation in June 2027, with planned investment of 2.9 billion yen (excluding the factory building to be leased) to be recorded in FY28/3.

Shareholder Returns

The company’s basic policy is to return profits by comprehensively taking into account internal reserves, performance levels, payout ratio and other factors so that it can return profits stably over the long term. For the period from the fiscal year ending March 31, 2026 to the fiscal year ending March 31, 2030, the policy is to increase dividends in line with profit growth and implement flexible share buybacks, with an eye to a total return ratio of 50% or more. The dividend per share was 32.00 yen for FY2025 and 35.00 yen for FY2026, and the forecast dividend per share for the fiscal year ending March 2027 is 35.00 yen.

Medium- and Long-Term Management Objectives

Under “Value Up Vision 2030,” the group promotes human capital management by thoroughly practising “ultra field-oriented management with all-employee participation.” Target indicators are an ordinary profit rate of 30% in FY2030, ordinary profit of 35 billion yen in FY2030, an average five-year sales growth rate of 10%, and ROE of 30% or more. Priority measures are value up of product appeal, sales floor appeal and sales power; value up inbound measures; and value up of human resources. Ordinary income was 17.6 billion yen with an ordinary profit ratio of 24.4% in FY2025 and 18.7 billion yen with a ratio of 23.8% in FY2026, and the FY2027 forecast is 20.6 billion yen with a ratio of 24.4%.

Under the cash allocation policy for the five years from FY2026 to FY2030, the company plans to direct 30%-40% of cash to growth investment, 50%-60% to shareholder returns, and to maintain liquidity on hand of approximately 30% of sales. On capital efficiency, the cost of shareholders’ equity calculated using CAPM is 5.99% for FY2026, and ROE of 35.1% for the fiscal year ended March 31, 2024, 32.2% for the fiscal year ended March 31, 2025 and 28.5% for the fiscal year ended March 31, 2026 significantly exceeded it. PBR at the end of the fiscal year ended March 31, 2026 was 5.90x, well above 1x, and PER was 22.51.

Company Overview

Kotobuki Spirits Co., Ltd. is listed on the Tokyo Stock Exchange Prime Market under securities code 2222 and is headquartered at 2028, Hatagasaki, Yonago-shi, Tottori. It was established on April 25, 1952, has capital of 1.26324 billion yen, and is led by President Seigo Kawagoe. As of March 31, 2026 the group had 1,801 employees in total (7 at Kotobuki Spirits) and 18 consolidated subsidiaries (17 domestic and 1 overseas), with net sales of 78.7 billion yen for FY2026. The total number of issued shares was 155,658,402 and the number of shareholders was 93,272, up 35,971 from the previous year.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.