THE TORIGOE CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥19.52B
• Operating Income: ¥943M
• Net Income: ¥702M
• EPS: ¥34.80

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Torigoe Seifun (20090) reported FY2025 Q3 (cumulative) revenue of ¥19.519 billion, up 0.6% year on year, indicating broadly stable top-line conditions in a mature staple-foods market. Operating income rose 32.4% YoY to ¥943 million, expanding the operating margin to approximately 4.8%, a clear sign of operating leverage and improved cost efficiency or pricing discipline despite muted revenue growth. Ordinary income reached ¥1,196 million, exceeding operating income by about ¥253 million, suggesting material non-operating tailwinds (e.g., financial income, forex gains, or equity-method contributions) that lifted overall profitability. Net income increased 15.8% YoY to ¥810 million, equating to a 4.15% net margin on the cumulative period. Using reported tax expense of ¥359.6 million, the implied effective tax rate is approximately 30.7% (based on pre-tax income approximated by net income plus tax), which differs from the displayed 0.0% figure that reflects unreported metric formatting rather than an actual zero. The DuPont framework shows net margin of 4.15%, asset turnover of 0.436x, and financial leverage of 1.25x, yielding a calculated ROE of 2.25%, consistent with the reported figure. Total assets are ¥44.803 billion and total equity is ¥35.961 billion, implying an equity ratio near 80.2% (the displayed 0.0% equity ratio is an unreported placeholder). Liquidity is exceptionally strong with a current ratio of 559% and quick ratio of 527%, backed by working capital of ¥19.33 billion. Leverage is modest at a debt-to-equity ratio of 0.26x and interest coverage is robust at roughly 67x, reflecting very low interest burden (¥14.1 million). Gross margin stands at 18.1%, and the improvement in operating profit alongside flat revenue indicates better cost control and/or the benefit of earlier price revisions flowing through. Ordinary income outperformance versus operating income may not be recurring, so margin durability at the ordinary and net levels warrants monitoring. Cash flow data, depreciation and amortization, and cash balances are not disclosed in this dataset, limiting our ability to assess cash conversion and reinvestment intensity; accordingly, EBITDA-based metrics are not available here. Dividend data show DPS at zero and payout at zero for the period; however, without free cash flow disclosure, dividend capacity cannot be definitively assessed. Overall, the company exhibits solid balance sheet strength, improved operating profitability, and strong coverage metrics, but the lack of cash-flow disclosure and the contribution of non-operating gains to ordinary income temper visibility on the quality and sustainability of earnings. The near-term outlook hinges on the stability of raw material costs, pricing power in milling and food-related businesses, and the trajectory of non-operating items.

Profitability Analysis

ROE of 2.25% is driven by a 4.15% net margin, 0.436x asset turnover, and modest leverage of 1.25x. ROA is approximately 1.81% (¥810m/¥44.803bn), consistent with low-leverage, asset-heavy characteristics typical in milling/food processing. Gross margin of 18.1% supports an operating margin of roughly 4.8% (¥943m/¥19.519bn), indicating improved operating efficiency versus the prior year given revenue grew only 0.6% YoY while operating income rose 32.4% YoY. Ordinary income margin is approximately 6.1% (¥1,196m/¥19.519bn), boosted by non-operating gains, so ordinary-level profitability may overstate core run-rate margins. Interest expense is minimal at ¥14.1m, translating to an interest coverage ratio of ~67x (operating income/interest), confirming low financial drag. The leap in operating income despite flat sales suggests positive operating leverage from cost actions (e.g., procurement, manufacturing efficiency, or SG&A discipline) and possibly improved mix. Absent depreciation disclosure, EBITDA and cash-based margin assessments are not possible; as a result, we cannot quantify non-cash impacts or the degree of accounting versus cash margin quality. Overall, profitability quality appears to have improved at the operating level, but part of the YoY improvement at the ordinary and net levels may be non-operating and thus less durable.

Growth Assessment

Top-line growth was modest at +0.6% YoY to ¥19.519bn, consistent with a mature domestic market and likely reflecting price/mix more than volume. Operating income growth of +32.4% YoY outpaced sales, implying cost normalization (e.g., raw wheat and logistics) or successful price pass-through catching up with prior cost inflation. Ordinary income (¥1.196bn) exceeded operating income by ~¥253m; without detail, the uplift likely includes financial income, FX, or other non-operating items—these may not recur at the same magnitude. Net income increased 15.8% YoY to ¥810m; the smaller YoY increase versus operating income suggests some normalization in below-OP line items and taxes. Sustainability of growth hinges on input cost stability, procurement strategy, FX (imported wheat/raw materials), and the company’s ability to maintain pricing without sacrificing volume. Given limited disclosure on segment drivers and volumes, we infer that core growth is steady but modest, with profitability improvements as the key near-term lever. Outlook: expect low-single-digit revenue growth barring material price adjustments, with profit growth contingent on maintaining cost efficiency and pricing discipline; non-operating contributions could normalize and reduce ordinary income growth.

Financial Health

Balance sheet strength is high with total equity of ¥35.961bn against total assets of ¥44.803bn, implying an equity ratio near 80.2% (the displayed 0.0% is an unreported placeholder). Total liabilities are only ¥9.460bn, resulting in a debt-to-equity ratio of 0.26x. Liquidity is ample: current assets ¥23.541bn vs current liabilities ¥4.211bn yields a current ratio of 559% and a quick ratio of 527% (inventories ¥1.367bn). Working capital stands at ¥19.33bn, providing a strong buffer against supply chain or input cost shocks. Interest expense is very low (¥14.1m), consistent with a lightly levered structure and minimal refinancing risk. Solvency and coverage metrics are therefore robust. The absence of cash and cash flow disclosures in this dataset limits precise assessment of cash on hand and debt maturities, but balance sheet ratios suggest conservative financing and high resilience.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, cash and equivalents, and depreciation are not disclosed here (zeros represent unreported), preventing a direct assessment of cash conversion, capex intensity, or free cash flow. Consequently, the displayed OCF/Net Income ratio of 0.00 and FCF of 0 should be treated as unavailable rather than actual values. Earnings quality at the operating level appears to have improved given margin expansion, but without OCF and D&A we cannot verify the degree of non-cash contributions or working capital effects (e.g., payables unwind, inventory normalization). Working capital is sizeable at ¥19.33bn; movements in receivables, inventories, and payables will be key to cash generation, especially in an environment of stabilizing input prices. The presence of ordinary income materially above operating income suggests non-operating items contributed to earnings; these may be less cash-generative or less repeatable. In sum, cash-flow quality cannot be conclusively assessed from the provided data; we would monitor subsequent filings for OCF, capex, and cash balances.

Dividend Sustainability

Annual DPS is shown as ¥0.00 with a payout ratio of 0.0%, but these figures may reflect timing or undisclosed data rather than a definitive policy stance. With net income of ¥810m and a very strong balance sheet (equity ratio ~80%), the company has capacity to fund dividends in principle, but sustainability must be judged against free cash flow, which is not disclosed here. FCF coverage is displayed as 0.00x; treat this as unavailable, not zero. Absent OCF and capex, we cannot evaluate dividend coverage from cash. Historically, staples manufacturers target stable dividends; however, without policy disclosure we cannot infer intent. Near-term dividend sustainability would hinge on cash generation from operations, working capital management, and capex needs, none of which are available in this dataset.

Risk Assessment

Business Risks:

• Raw material price volatility (imported wheat and related inputs) impacting gross margins
• Pricing power and pass-through risk in a competitive milling/food ingredients market
• Demand sensitivity in bakery, foodservice, and consumer channels amid macro shifts
• Foreign exchange exposure on imports (USD/JPY) and potential hedging effectiveness
• Potential normalization of non-operating gains that lifted ordinary income
• Regulatory/administrative pricing frameworks affecting wheat procurement costs in Japan
• Energy and logistics cost volatility affecting cost of goods sold and distribution

Financial Risks:

• Limited visibility on cash flows, capex, and cash balances due to undisclosed CF data
• Working capital swings potentially affecting cash conversion despite reported profit
• Concentration risk if funding is tied to short-term facilities (maturity profile undisclosed)
• Interest rate changes modestly affecting borrowing costs (currently low interest expense)

Key Concerns:

• Sustainability of ordinary income uplift given non-operating contributions
• Absence of OCF and capex data preventing free cash flow assessment
• Potential margin pressure if input costs re-accelerate or pricing pass-through weakens

Investment Implications

Key Takeaways:

• Operating leverage evident: operating income +32.4% YoY on revenue +0.6% YoY
• Strong balance sheet with equity ratio ~80% and debt-to-equity 0.26x
• Ordinary income exceeds operating income by ~¥253m, implying non-operating tailwinds
• Interest coverage ~67x reflects minimal financial risk from debt
• Cash flow and D&A not disclosed; EBITDA/FCF metrics unavailable
• Net margin at 4.15% and ROE at 2.25% are modest but improving with cost discipline

Metrics to Watch:

• OCF, capex, and free cash flow once disclosed
• Input cost indices (wheat, energy) and USD/JPY for import cost pressure
• Price/mix versus volume to gauge pricing power and demand elasticity
• Ordinary income components (financial income, FX, equity-method) for durability
• Working capital movements (inventories, receivables, payables) and cash conversion
• Operating margin progression and SG&A efficiency

Relative Positioning: Within Japanese food staples and milling peers, Torigoe Seifun appears conservatively financed with superior liquidity and low leverage, delivering improving operating margins despite modest growth; however, near-term profitability is partly supported by non-operating items and cash flow transparency is limited in this dataset.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis