Kikkoman Earnings: Business Profit Broadly in Line as Near-Term Headwinds Remain; Retain Valuation

Wide-moat Kikkoman reported fiscal 2025 (ending March 2025) third-quarter results, where revenue was 2.4% above our estimates but business profit was 60 basis points below our expectations. We maintain our fourth-quarter projections and continue to expect business profit to be slightly lower than management guidance (JPY 75.3 billion versus JPY 76.9 billion). We think the company still faces challenges in top-line growth of wholesale business in the US, as competition weighs on selling prices. Domestically, rising raw material costs and operating expenses continued to weigh on profit margins, which may only be reversed if the company implements further price hikes.