World market leader in soy sauce defies Corona

KIn many countries today, ikkoman is what Tempo is for handkerchiefs. The small bottles with the spicy brew can be found in more than 100 countries. Founded in 1917 in Noda, north of Tokyo, the group today sells soy sauce, spice mixes, alcoholic beverages, soy milk and biochemical products such as enzymes. Kikkoman also owns the Del Monte brand, which sells ketchup and canned fruits and vegetables. The company also operates restaurants in Japan and other countries. The group, headed by CEO Noriaki Horikiri, employs a total of around 7,600 people and, in the past financial year, which ended in March 2020, had a turnover of 468 billion yen (around 3.8 billion euros) a good 3 percent more than in the previous year. International wholesale accounted for 42.6 percent of sales.

The operating result rose by 3.7 percent to 320 million euros. The American market, in which Kikkoman has been active since 1957, is one of the Group’s most important sales regions. With the equivalent of 1.6 billion euros, the company made 42 percent of its group sales there in the 2020 financial year, more than on the domestic market with 1.5 billion euros. In addition to Great Britain, Germany is one of the main markets in Europe.

Lowest level since 2017

In the current financial year, Kikkoman originally wanted sales of the equivalent of 3.8 billion euros and an operating profit of 346 million euros with a margin of 9 percent. However, due to the current developments of the corona pandemic, the management had to adjust the forecasts. Most recently, Kikkoman expected sales of 3.7 billion euros and an operating profit of 318 million euros. Overall, sales in the first half of the financial year from April to September fell by 1.8 percent compared to the same period of the previous year. “In the overseas markets, sales in the food production and sale sector increased compared to the previous year,” however, it says in the annual report. However, this could not compensate for the declines in the Japanese market and in international wholesale.

Just like the Nikkei share index, the Kikkoman share price also fell sharply in March and slipped to its lowest level since 2017. Since then, it has recovered hesitantly and reached its pre-crisis level in early August. When it became known on November 5 that the expected consolidated sales of 3.7 billion euros for the current financial year would exceed analyst estimates, the share gained 21.4 percent in value and climbed to an all-time high of 6830 yen by November 16, the equivalent of 55 euros. Since then the price has moved sideways. The share currently costs 51 euros. “The stable volume growth, which is supported by a shift to products with high added value in Japan and by an expansion of sales in the high-margin soy sauce business overseas, speaks in favor of investing in Kikkoman,” says analyst Ritsuko Tsunoda of JP Morgan.

The Group’s market capitalization is 10.1 billion euros and the equity ratio is 72.1 percent. The largest single shareholder is the investment bank Nomura with 7.7 percent, followed by the state pension fund of Japan with 6.4 percent. 56.5 percent of the shares are currently in free float. With a price-earnings ratio (P / E) of 49, Kikkoman shares are considered expensive. As a rule, stocks of companies that are expected to grow strongly have a high P / E ratio. In addition to the current rate, the analysts’ earnings estimates are included in the calculation, usually those for the next twelve months. On October 28, Kikkoman announced that, as in previous years, a semi-annual dividend of EUR 0.17 per share would be distributed on September 30. Three analysts are currently recommending buying the shares, two to hold them, and five to sell.


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