Ajinomoto (2802) forecasts record profit, positive outlook spurs buying interest
Ajinomoto Co., Inc. shares advanced 4.4% today, trading at ¥5,253, after the company's forecast for record-high profit for the fiscal year ending March 2026 was well-received by the market. The company announced at its earnings briefing on 7 May that it expects revenue of ¥1,583.7 billion and business profit of ¥197 billion.
This positive performance assessment is primarily attributed to the expansion of its overseas seasoning and food business, alongside a significant increase in sales of ABF functional materials used in AI servers. Bernstein analysts responded by raising their target price to ¥7,400, reflecting the market's prioritisation of growth expectations. Conversely, the risk of business profit being reduced by ¥30 billion due to rising crude oil prices and a weaker yen (assuming crude oil at $110 per barrel and ¥158 to the dollar) amid worsening Middle East tensions has also been noted.
Ajinomoto's share price attracted strong market buying today following the report of its record-high profit forecast.
A New Path for Corporate Growth Indicated by Performance Outlook
Ajinomoto Co., Inc. is a company that operates across a wide range of businesses, from familiar household products like seasonings, processed foods, and frozen foods that brighten our tables, to amino acids used as pharmaceutical ingredients, and even special materials indispensable for enhancing semiconductor performance. While supporting people's food and health around the world, the company also applies its technology to advanced fields, building diverse revenue streams.
Today's share price increase was driven by the company's announcement that it expects to achieve record-high profits for the fiscal year ending March 2026. The market reacted positively to this announcement, particularly noting the robust expansion of its seasoning and food businesses overseas, alongside a sharp increase in sales of ABF functional materials for AI servers. This signifies not merely strong performance in existing businesses, but also the clear emergence of new growth drivers. Bernstein analysts raising their target price to ¥7,400 also reflects these growth expectations. On the other hand, the risk of rising crude oil prices and a weaker yen due to the deteriorating situation in the Middle East potentially pushing down operating profit by approximately ¥30 billion was also noted, but the positive news today had a greater impact.
Following this positive development, Ajinomoto's share price rose 4.4% from yesterday's close of ¥5,030, and is currently trading at ¥5,253.
This is much like a restaurant that has built a stable customer base with its traditional, popular dishes, but simultaneously sees an innovative new menu item, incorporating the latest trends, become a huge hit, significantly boosting overall sales and reputation. It could be said that, in addition to existing strengths, a new pillar that captures market needs is accelerating growth.
Ajinomoto Co., Inc.
Ajinomoto Co., Inc. (2802) operates a diversified portfolio across consumer defensive sectors in Japan and globally. Its core Seasonings and Foods segment manufactures a wide array of sauces, seasonings, and instant noodles under brands such as AJI-NO-MOTO, HON-DASHI, and Knorr Cup Soup. This segment also supplies solutions and ingredients to the food service industry and offers coffee products like Birdy and Blendy. The company's Frozen Foods division produces various items including Chinese dumplings, cooked rice, and desserts. Furthermore, Ajinomoto's Healthcare and Other segment provides amino acids for pharmaceutical, food, and cosmetic applications, alongside sports nutrition, personal care ingredients, and contract manufacturing services for pharmaceutical intermediates. This segment also develops specialised materials such as Ajinomoto Build-up Film for semiconductor packages. Established in 1909, the company is headquartered in Tokyo, Japan.