IKK Holdings Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥22.45B
• Operating Income: ¥1.82B
• Net Income: ¥2.08B
• EPS: ¥67.98

Income Statement

Balance Sheet

Cash Flow Statement

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

IKK Holdings (TSE:2198) delivered FY2025 Q4 consolidated results under JGAAP marked by resilient bottom-line quality despite softer top-line and operating profit. Revenue declined 3.5% YoY to 224.55, reflecting a modest contraction likely tied to demand normalization and event volume mix. Gross profit of 140.25 implies a robust gross margin of 62.5%, underscoring solid pricing and cost control in core services. SG&A of 115.34 (51.4% of sales) remained heavy, compressing operating income to 18.20 (down 26.9% YoY) and an 8.1% operating margin. Ordinary income was 18.90 (down 25.1% YoY), broadly consistent with operating trends given limited non-operating swings. Profit before tax of 25.20 exceeded ordinary income, indicating positive extraordinary items (not detailed in XBRL), which, together with a 32.1% effective tax rate, supported net income growth. Net income rose 15.4% YoY to 19.63, lifting EPS to 67.98 yen on 28.89 million average shares. DuPont shows solid ROE at 16.1%, driven by an 8.7% net margin, asset turnover of 1.079, and moderate financial leverage of 1.70x. Operating cash flow was healthy at 19.85, roughly in line with net income (OCF/NI 1.01x), indicating decent earnings quality. Investing cash outflow of -17.21 exceeded reported capex of -5.44, suggesting additional growth or maintenance investments (e.g., deposits, intangible additions, or M&A-related items). Financing CF of -15.89 reflects disciplined capital returns, including 5.07 of buybacks and likely dividends and/or debt service, within a strong liquidity position. The balance sheet remains conservative: total assets 208.02, equity 122.02, and liabilities 100.81 with significant cash and deposits of 67.30. Current ratio is 134% and quick ratio 130.3%, while at least a net cash position of roughly 43 (cash 67.30 less known long-term loans 24.24) supports solvency. Interest coverage is very strong at 93.9x, reflecting low funding costs and modest debt utilization. FCF defined as OCF plus investing CF was 2.64, weighed by discretionary investments, but OCF-based dividend cover appears comfortable given a calculated payout ratio of 36.6%. Some reported XBRL ratios (e.g., operating margin 0.1%, ROA 0.1%, DOE 0.1%) are not reflective of the underlying numbers presented and appear to be placeholders or mapping artifacts. Overall, IKK shows solid profitability quality and balance-sheet strength, albeit with elevated operating leverage sensitivity as evidenced by the outsized decline in operating income relative to revenue.

Profitability Analysis

ROE_decomposition: ROE 16.1% = Net margin 8.7% x Asset turnover 1.079 x Leverage 1.70x. The margin component is the main driver; turnover is healthy for an asset-heavy service model; leverage is moderate and not the primary source of ROE. margin_quality: Gross margin is high at 62.5% (140.25/224.55), indicating strong value capture per event. SG&A intensity at 51.4% constrains operating margin to 8.1% (18.20/224.55). Net margin of 8.7% benefited from non-operating/extrastatutory positives (PBT 25.20 > ordinary income 18.90), partially offset by a 32.1% effective tax rate. operating_leverage: Revenue fell 3.5% YoY while operating income dropped 26.9% YoY, evidencing high fixed-cost absorption and sensitivity to minor top-line shifts. D&A of 11.59 (5.2% of sales) also contributes to fixed cost base; EBITDA margin is 13.3%, implying limited variable cost flexibility in the near term.

Growth Assessment

revenue_sustainability: Revenue at 224.55 declined 3.5% YoY. Given the venue-based model and demographic headwinds, sustaining growth likely hinges on pricing (unit price per wedding/banquet), upselling of ancillary services, and regional mix rather than volume expansion alone. profit_quality: Ordinary income tracked operating trends, but profit before tax exceeded ordinary income, suggesting extraordinary gains. Net income grew 15.4% YoY to 19.63, supported by non-core items; underlying operating earnings momentum is weaker than headline bottom line. outlook: With strong cash reserves and measured capex (-5.44) plus additional investing cash outflows (-17.21), management appears to be investing for medium-term competitiveness. Near-term profitability will depend on recovering utilization, cost containment amid labor/food inflation, and stabilizing booking pipelines.

Financial Health

liquidity: Current assets 77.97 vs current liabilities 58.19 yield a current ratio of 134%; quick ratio is 130.3% supported by cash of 67.30. Working capital is positive at 19.78. solvency: Total liabilities 100.81 vs equity 122.02 (debt-to-equity 0.83x using total liabilities). Known long-term loans are 24.24; short-term loans and total interest-bearing debt were unreported. Cash materially exceeds known long-term loans, implying at least ~43 of net cash. capital_structure: Leverage is modest (Assets/Equity 1.70x). Interest coverage is very strong at 93.86x, reflecting conservative debt usage and stable operating earnings.

Cash Flow Quality

earnings_quality: OCF of 19.85 vs NI of 19.63 yields OCF/NI of 1.01x, indicating solid conversion and limited accrual build. EBITDA of 29.79 supports cash generation relative to non-cash D&A of 11.59. FCF_analysis: Free cash flow as OCF + Investing CF = 2.64, pressured by investing CF of -17.21 which exceeds capex of -5.44, implying other investing uses (e.g., deposits, asset acquisitions). On an OCF - capex basis, underlying FCF would be ~14.41, highlighting discretion in investment outlays. working_capital: Receivables (3.65) and inventories (2.17) are small relative to sales, consistent with advance payments and event-cycle dynamics. Payables at 9.78 suggest normal vendor credit; no anomalies are evident from disclosed items.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 36.6%, implying dividends are manageable against earnings. Reported payout ratio of 0.4% appears to be an unrepresentative placeholder. FCF_coverage: FCF coverage ratio is 0.37x using OCF + Investing CF definition, indicating dividends exceeded this period’s aggregate FCF due to elevated investing outflows. On OCF alone, coverage looks comfortable. policy_outlook: With strong cash (67.30) and at least net cash position versus known debt, dividends appear sustainable under stable operations. However, if management prioritizes growth investments similar to FY2025, dividend coverage on a strict FCF basis may remain tight. Share repurchases of 5.07 reflect an ongoing shareholder return stance.

Risk Assessment

Business Risks:

• Domestic demographic headwinds (declining marriages, aging population) pressuring long-term demand
• Input cost inflation (food, beverages, staffing) squeezing margins if not fully passed through
• Utilization variability and event seasonality increasing earnings volatility
• Competition from other bridal operators and alternative venues/events
• Execution risk on new venue openings and service expansion tied to recent investing outflows
• Exposure to adverse weather/natural disasters impacting event operations

Financial Risks:

• Operating leverage sensitivity as modest revenue swings drive outsized profit changes
• Potential increase in lease/financing commitments not fully visible due to unreported short-term debt details
• FCF shortfalls in years of elevated investment outlays affecting cash buffer if sustained
• Possible normalization of tax rate or reduction of extraordinary gains that supported NI

Key Concerns:

• Operating income decline of 26.9% YoY despite only a 3.5% revenue drop
• Dependence on non-operating/extraordinary items for bottom-line growth in FY2025
• Sustained high SG&A ratio (51.4%) limiting operating margin expansion

Investment Implications

Key Takeaways:

• Core operations softened: revenue -3.5% YoY and operating income -26.9% YoY
• Net income up 15.4% aided by items below ordinary income (PBT > ordinary income)
• ROE solid at 16.1% with conservative balance sheet leverage
• Strong liquidity: current ratio 134%, cash 67.30; at least ~43 net cash vs known long-term loans
• Healthy cash conversion (OCF/NI 1.01x), but FCF tempered by discretionary investing
• Dividend affordability good on earnings basis (36.6% payout), tighter on FCF basis amid higher investments
• High operating leverage evident; margin expansion hinges on SG&A discipline and utilization

Metrics to Watch:

• Booking pace, average spend per event, and cancellation rates
• SG&A as a percentage of sales and labor cost trends
• Venue utilization and mix by region/format
• Capex and other investing cash outflows (lease deposits, acquisitions)
• Net cash position and interest-bearing debt disclosures
• Extraordinary items trend and effective tax rate normalization
• Asset turnover and ROE components

Relative Positioning: Within domestic bridal peers, IKK combines high gross margins and a net cash-leaning balance sheet with noticeable operating leverage; its ability to control SG&A and convert bookings into higher utilization is key to sustaining its ROE advantage without relying on non-operating gains.

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