Kikkoman Earnings: Currency Tailwinds Fueled Profit Growth; Retain Fair Value Estimate

Wide-moat Kikkoman reported fiscal 2025 (ending March 2025) first-quarter results with revenue broadly consistent with our estimates, but business profit exceeded our projections by 4%. The domestic business delivered decent top-line growth, but overseas sales, on a local currency basis, were dragged by softening trends in the US market. That said, the company was able to reduce operating expenses in overseas markets and expanded operating margins. The recent strong rally of the Japanese yen should pose headwinds to the company’s fiscal second-quarter revenue growth. Therefore, we lowered our revenue growth projection for fiscal 2025 and only raised net profit estimates by 1% despite the first-quarter beat.