Japanese beverage maker Ito En saw its shares surge more than 8% on Wednesday, defying a broad sell-off in Japanese equities, after reporting robust fiscal first-quarter results for the period from May through July [1]. The company posted an operating profit of 10.2 billion yen ($63.7 million), marking a 22% increase from the previous year, while revenue rose 3.3% to 135.18 billion yen [1]. These results significantly exceeded Citi's forecast of 7.7 billion yen in operating profit, as the bank had anticipated a decline due to higher raw material and tea leaf costs, as well as increased expenses related to the vending machine business [1].
A key driver of the profit beat was the company's vending machine business, which delivered a 4% operating profit margin, surpassing Citi's expectations for a loss in this segment [1]. Ito En attributed this turnaround to the integration of its vending machine-related businesses in May, aimed at improving profitability and efficiency [1]. The tea leaves and beverages segment also performed strongly, with operating profit rising 23.5% to 8.99 billion yen and sales up 2.7%, supported by lower promotional expenses and reduced depreciation that offset rising costs [1].
Citi described the first-quarter results as "positive" for Ito En shares, highlighting the impressive profitability of the vending machine business, which had been loss-making until the previous year [1]. The May-to-July period is noted as the peak demand season for soft drinks, further boosting performance [1].
Looking ahead, Ito En announced plans to expand its overseas business to more than 60 countries and regions by the fiscal year ending April 2029, up from 52 currently, citing increasing sales volumes of beverages and tea bags in existing international markets [1]. The company also reported holding the leading share of Japan's green tea beverage market in 2025 and accounting for about 25% of crude tea transaction volumes in the country [1].
CONCLUSION
Ito En's strong first-quarter earnings and the turnaround in its vending machine business drove an 8% surge in its share price, outperforming the broader market. The company's positive outlook and international expansion plans further support investor confidence, positioning Ito En for continued growth.