| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥726.7B | ¥664.1B | +9.4% |
| Operating Income / Operating Profit | ¥93.2B | ¥89.8B | +3.9% |
| Ordinary Income | ¥104.4B | ¥93.5B | +11.6% |
| Net Income / Net Profit | ¥87.1B | ¥78.5B | +11.0% |
| ROE | 5.0% | 4.9% | - |
For the cumulative Q3 period of FY2026 ending May 2026, Revenue was ¥726.7B (YoY +¥62.6B +9.4%), Operating Income was ¥93.2B (YoY +¥3.4B +3.9%), Ordinary Income was ¥104.4B (YoY +¥10.9B +11.6%), and Net Income attributable to owners of the parent for the quarter was ¥87.0B (YoY +¥8.7B +11.0%). The Overseas Wholesale Business accounted for 80.3% of sales, and revenue growth in that segment drove overall performance; however, an increase in SG&A ratio caused Operating Income growth to lag Revenue. Non-operating income totaled ¥18.2B (interest income ¥6.2B, dividend income ¥5.3B, etc.) and extraordinary gains totaled ¥22.4B (gain on sales of investment securities ¥16.9B, gain on sale of fixed assets ¥23.5B), which boosted Ordinary and Net Income, resulting in Comprehensive Income of ¥185.1B (YoY +136.2%)—a large increase. Progress toward the full-year plan stood at 72.0% for Revenue, 74.6% for Operating Income, 80.3% for Ordinary Income, and 87.0% for Net Income, indicating profit metrics are running ahead of the standard pace.
Revenue was ¥726.7B (+9.4%), led by Overseas Wholesale Business at ¥583.5B (+12.1%) which accounted for 80.3% of the total. Domestic Wholesale Business was steady at ¥106.8B (+3.1%), while Retail Business declined to ¥25.7B (-14.5%). Gross Profit was ¥468.9B, with a gross margin of 64.5% (up +0.5pp from 64.0% a year earlier). On the income statement side, SG&A amounted to ¥375.7B, resulting in an SG&A ratio of 51.7% (up +1.2pp from 50.5% a year earlier), leading to Operating Income of ¥93.2B (+3.9%) and an Operating Margin of 12.8% (down -0.7pp from 13.5% a year earlier). The main drivers of the higher SG&A ratio were company-wide costs in R&D, supply chain, and corporate administration increasing from ¥79.4B to ¥83.8B (+5.5%), and widening operating losses in Retail Business (¥-2.5B → ¥-4.3B). In non-operating items, non-operating income of ¥18.2B (including foreign exchange gains ¥1.1B, interest income ¥6.2B, dividend income ¥5.3B) contributed, offset by non-operating expenses of ¥7.0B (including interest expense ¥2.6B, foreign exchange losses ¥2.7B), resulting in Ordinary Income of ¥104.4B (+11.6%) and an Ordinary Income margin of 14.4% (up +0.3pp from 14.1% a year earlier). Extraordinary gains were ¥22.4B (gain on sales of investment securities ¥16.9B, gain on sale of fixed assets ¥23.5B) less extraordinary losses of ¥0.7B (impairment losses ¥0.7B, disaster losses ¥4.2B, valuation losses on investment securities ¥1.2B) produced Profit before Tax of ¥126.1B (+13.1%). After deducting corporate taxes of ¥39.0B, Net Income attributable to owners of the parent was ¥87.0B (+11.0%), with a Net Margin of 12.0% (up +0.2pp from 11.8% a year earlier). In conclusion, the company achieved revenue and profit growth centered on Overseas Wholesale, but Operating Margin contracted due to higher SG&A ratio; non-operating and extraordinary items filled the gap to secure final profit growth.
Overseas Wholesale Business: Revenue ¥583.5B (+12.1%), Operating Income ¥137.8B (+7.2%), Operating Margin 23.6%, serving as the main contributor to consolidated Operating Income. Domestic Wholesale Business: Revenue ¥106.8B (+3.1%), Operating Income ¥42.0B (-0.9%), Operating Margin 39.3% — maintaining high profitability but not achieving year-on-year income growth. Retail Business: Revenue ¥25.7B (-14.5%), Operating Loss ¥4.3B (widened from ¥-2.5B), Operating Margin -16.6%, diluting group-wide margins. Other (landscaping construction, staffing, etc.): Revenue ¥33.2B (+13.5%), Operating Income ¥1.4B (+82.3%), Operating Margin 4.3%. Intersegment adjustments included elimination of unrealized profit on inventories of ¥-3.5B and allocation of company-wide expenses of ¥-83.8B, leading to consolidated Operating Income of ¥93.2B. Continued growth in Overseas Wholesale and high profitability in Domestic Wholesale support the group, while improvement in Retail Business profitability will be key to restoring Operating Margin.
Profitability: Operating Margin 12.8% (prior year 13.5%), Ordinary Income margin 14.4% (prior year 14.1%), Net Margin 12.0% (prior year 11.8%). ROE 5.0% (calculated on prior-year-end equity) is modest. Cash Quality: Days Sales Outstanding (DSO) 111 days (improved from 122 days), Inventory Days 798 days (worsened from 693 days), CCC 879 days (worsened from 783 days), indicating inventory accumulation is pressuring working capital. Accounts receivable ¥220.7B, Inventories ¥563.3B (from ¥452.97B a year earlier, +24.4%), showing pronounced inventory day-lengthening. Investment Efficiency: Total Asset Turnover 0.346x (annualized), reflecting a heavy asset base that suppresses capital efficiency. Financial Soundness: Equity Ratio 82.6% (prior year 84.5%), Net D/E Ratio -0.17x (effectively debt-free), Current Ratio 496.3%, Quick Ratio 271.6%, indicating extremely high liquidity and financial safety. Interest-bearing debt totaled ¥52.8B (short-term borrowings ¥46.9B and long-term borrowings ¥5.9B) versus Cash and Deposits of ¥308.8B, yielding Net Cash of ¥256.0B. Interest Coverage Ratio was 36.1x (Operating Income ÷ Interest Expense), indicating minimal interest burden.
With Inventory Days at 798 and CCC at 879, accumulation of working capital is significant, making Operating Cash Flow (OCF) structurally prone to lag profit recognition. Inventories increased to ¥563.3B (YoY +¥110.3B +24.4%), driven by expansion of Overseas Wholesale Business and inventory build ahead of busy seasons; worsening inventory turns imply deterioration in cash conversion. Short-term borrowings doubled to ¥46.9B (YoY +¥24.1B +105.6%), reflecting increased working capital needs. However, Cash and Deposits remain ample at ¥308.8B (up +4.6% from ¥295.3B a year earlier). Capital expenditures show expansion with Property, Plant and Equipment at ¥527.3B (from ¥487.6B, +8.1%) and Intangible Assets at ¥53.4B (from ¥38.1B, +40.2%), reflecting investments in variety development and IT systems. Investment securities stood at ¥203.8B (from ¥184.6B, +10.4%), and ¥16.9B of proceeds from sales of investment securities were recorded as extraordinary gains. Overall, normalization of inventories and progress on receivables collection are focal points for improving Operating Cash Flow going forward.
The recurring earnings base is Operating Income of ¥93.2B, and non-operating income of ¥18.2B (2.5% of Revenue) is mainly interest income ¥6.2B and dividend income ¥5.3B. Extraordinary gains of ¥22.4B (17.8% of Profit before Tax) significantly contributed, with gain on sales of investment securities ¥16.9B and gain on sale of fixed assets ¥23.5B boosting Net Income. Excluding one-off items, Ordinary Income of ¥104.4B (Ordinary Income margin 14.4%) is closer to the underlying earnings power. Of the ¥11.2B difference between Operating Income and Ordinary Income, foreign exchange gains ¥1.1B and financial income (interest and dividends totaling ¥11.5B) are major components, partially offset by equity-method investment losses ¥1.9B. The divergence between Ordinary Income and Net Income is due to extraordinary gains and corporate tax burden (effective tax rate 30.9%); investors should be cautious about normalization of profit levels once extraordinary gains dissipate. On an accrual basis, inventory accumulation to ¥563.3B is pressuring Operating Cash Flow relative to Net Income, so cash-based earnings quality is not as high as profit figures suggest. Comprehensive Income of ¥185.1B is 2.1x Net Income of ¥87.1B, with foreign currency translation adjustments ¥76.6B and valuation differences on securities ¥21.2B significantly lifting Comprehensive Income.
Full-year plan: Revenue ¥1,010.0B (+8.7%), Operating Income ¥125.0B (+2.0%), Ordinary Income ¥130.0B (+5.6%), Net Income attributable to owners of the parent ¥100.0B. Progress through the cumulative Q3 is Revenue 72.0%, Operating Income 74.6%, Ordinary Income 80.3%, Net Income 87.0%. Compared with a standard Q3 cumulative pace of 75%, Revenue is slightly behind (-3.0pp), Operating Income is roughly in line (-0.4pp), Ordinary Income is ahead (+5.3pp), and Net Income is substantially ahead (+12.0pp). The advance in profits is driven by non-operating income and extraordinary gains; Q4 is expected to see a decline in extraordinary gains and normalization of seasonal factors, bringing results toward the full-year plan. Full-year EPS is projected at ¥231.22, with Q3 cumulative EPS at ¥202.58 (progress 87.6%). Dividend forecast remains unchanged at Annual ¥40 (with ¥35 paid at Q2-end).
A Q2-end dividend of ¥35 has been paid. The full-year dividend forecast is ¥40, and on the basis of Q3 cumulative Net Income ¥87.0B the payout ratio is 19.7% (on an issued shares basis). Retained earnings ¥1,295.7B, Equity Ratio 82.6%, and Net Cash ¥256.0B indicate ample financial flexibility and high dividend sustainability. However, the current Net Income includes extraordinary gains of ¥22.4B (25.7% of Net Income), so dividend coverage on a normalized earnings basis needs verification in subsequent periods. On an Ordinary Income base of ¥104.4B, total dividends amount to ¥17.2B (Annual ¥40 × Issued Shares 42,260 thousand shares) representing a payout ratio of approximately 16.5%, a sustainable level. No share buyback was disclosed; shareholder returns are dividend-only. Payout ratio is low, leaving room for dividend increases, but given low capital efficiency (ROE 5.0%), deploying capital to growth investments or share repurchases alongside higher dividends should be considered to enhance shareholder value.
Industry Position (reference — company analysis): Compared with listed domestic agricultural/seed companies, the gross margin of 64.5% is high, reflecting brand strength and variety development capability. Equity Ratio 82.6% and Net D/E -0.17x are among the top tier for financial safety in the industry. Conversely, ROE 5.0% is below the industry median, and Total Asset Turnover 0.346x and heavy working capital weigh on capital efficiency. Inventory Days 798 are relatively long even within the industry, reflecting long production cycles and the complexity of managing many SKUs in the seed business. Operating Margin 12.8% ranks mid-to-upper in the industry, supported by overseas expansion and high-value varieties. While financial safety is very high, weak points are low capital efficiency and inventory management.
Key items to watch in the financials: 1. The rise in the share of Overseas Wholesale to 80.3% and maintenance of its Operating Margin at 23.6% are critical for future growth and margin preservation; foreign exchange trends and regional demand shifts will drive volatility. 2. Inventory Days of 798 and Inventories ¥563.3B (YoY +24.4%) are eroding working capital efficiency and OCF generation capability; inventory normalization and improvements in demand forecasting are essential to shorten CCC and improve capital efficiency. 3. Extraordinary gains of ¥22.4B (25.7% of Net Income) lifted Net Income this period, but from next period onward Ordinary Income (¥104.4B, Ordinary Income margin 14.4%) should be treated as the realistic earning baseline. Sustainable profit growth requires containment of SG&A ratio (particularly controlling company-wide cost growth) and correction of Retail Business profitability.
This report is an AI-generated earnings analysis document created by analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial disclosures. Investment decisions are your responsibility; please consult a professional advisor as needed.