Ajinomoto Posts Record Q1 Profit, Raises Full-Year Guidance Despite Middle East Cost Pressures
The Japanese food and chemical giant reported business profit up 127% year-over-year, revising upward its fiscal 2026 forecast while absorbing ¥25 billion in costs tied to regional tensions.
Record First Quarter Drives Forecast Revision
Ajinomoto Co., Inc. (TYO: 2802) reported a record first quarter for fiscal year 2027, with business profit surging 127% year-over-year and sales climbing 113%, the company disclosed in an earnings call on August 6, 2026. Profit attributable to owners rose 113% during the April-June period (earnings call, 2026-08-06).
The Tokyo-based food and specialty chemicals manufacturer raised its full-year forecast for fiscal 2026, increasing projected sales by ¥9 billion, business profit by ¥5 billion, and net profit by ¥3.5 billion. The upward revision reflects stronger-than-expected performance in functional materials, partially offset by cost pressures stemming from escalating tensions in the Middle East.
Middle East Impact Recalibrated
Executive Officer Masataka Kaji explained that the company has revised its estimate of annual cost increases related to the Middle East situation to approximately ¥25 billion, down from an initial projection of ¥30 billion made at the start of the fiscal year. The forecast assumes Dubai crude oil at $110 per barrel and an exchange rate of ¥150 to the dollar (earnings call, 2026-08-06).
"We will absorb the impact of the increased costs resulting from the situation in the Middle East by taking agile measures and aim to achieve the revised earnings forecast," Kaji stated (earnings call, 2026-08-06). The company plans to offset these pressures through price adjustments and cost reduction initiatives, though management acknowledged a "certain time lag" before the effects of price pass-throughs materialize, particularly in consumer segments.
Segment Performance Highlights
The Seasonings and Foods segment delivered a ¥4.7 billion profit increase during the quarter, though this included "a onetime positive impact of approximately several billions of yen" from decreased elimination of unrealized gains (earnings call, 2026-08-06). Domestic coffee sales rose significantly due to price revisions responding to higher bean costs, while overseas seasonings achieved 103% of prior-year sales levels.
The Healthcare and Other segment posted a ¥9.7 billion profit increase, with functional materials continuing strong performance across electronic materials, amino acids for pharmaceuticals, and contract development and manufacturing (CDMO) operations. Based on first-quarter momentum, the company raised its full-year business profit forecast for this segment by ¥5 billion (earnings call, 2026-08-06).
Frozen foods saw mixed results, with domestic sales rising but business profit declining ¥300 million due to raw material and logistics costs. International frozen food operations posted a ¥400 million profit decrease, reflecting delayed recovery from product recalls and rising costs.
Regional Market Dynamics
Among Ajinomoto's five key overseas markets, Vietnam grew 7% and Indonesia 6% during the quarter. Thailand achieved 1% overall growth with seasonings up in the mid-2% range. The Philippines remained flat year-over-year after temporary production issues with umami seasonings in April and May, though other categories grew 9% when umami products were excluded. Brazil faced inventory reduction pressures among wholesalers amid domestic inflation (earnings call, 2026-08-06).
Kaji opened the call by expressing sympathy for earthquake victims in Kumamoto, stating the company would "offer all the support that is necessary" (earnings call, 2026-08-06).
This article was generated by MarginX from the earnings call on 2026-08-06. It is not investment advice.