Steady progress with profits, growth strategy yet to take shape: We expect company to be able to deal with rising costs, including due to Middle East situation, but expectations for its North American growth strategy remain subdued

Research evidence excerpt

Global Markets Research

Calbee

18 August 2026

2229.T 2229 JP / EQUITY: JAPAN FOOD, BEVERAGES & TOBACCO

Steady progress with profits, growth strategy yet to take shape

Rating

Remains

We expect company to be able to deal with rising costs, including due to Middle East

situation, but expectations for its North American growth strategy remain subdued

Target price

Neutral

Remains

We keep our Neutral rating, take positive view of earnings stability but challenges

remain for growth strategy

From a near-term perspective, we still think Calbee will ultimately be able to pass on rising

input costs stemming from the situation in the Middle East, albeit at a lag, but 27/3 Q1

results did little to lift expectations for the company's longer-term growth strategy, with

profits down in North America, which the company regards as a growth business. We

retain our Neutral rating on Calbee and our target price of ¥3,000, which we obtain by

multiplying our 27/3 EPS forecast by a P/E of 20x. As previously, we apply a premium of

10–20% over the average P/E of 18x for major food companies in view of stable earnings

in the company's Japan operations.

27/3 Q1 results: Profits trending better than we forecast, but were down in North

America

Operating profits rose 24% y-y to ¥6.6bn in 27/3 Q1, with the company's Japan operations

making a major contribution to profit growth. Price hikes implemented in 26/3 and lower

sales promotion costs offset rises in input and labor costs. Overseas, strong sales in

APAC enabled profit growth, but profits were down in existing operations in North America

due to lower sales on a local currency basis as a result of fewer OEM transactions and

because of investment aimed at strengthening its business base. Profits beat our forecast

of ¥6.0bn due to better-than-expected performance in Japan, with lower-than-expected

rises in personnel, input, and other costs offsetting weaker-than-expected sales growth.

JPY 3,000

Closing price

JPY 3,006

17 August 2026

-0.2%

Implied upside

Relative performance chart

Source: LSEG, Nomura

Outlook: Price hikes scheduled for October likely to stick

We retain our operating profit forecasts.…