Ezaki Glico Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥264.74B
• Operating Income: ¥9.02B
• Net Income: ¥8.26B
• EPS: ¥114.18

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Ezaki Glico (TSE: 2206) reported FY2025 Q3 consolidated results under JGAAP with solid topline growth but notable margin compression. Revenue reached ¥264.7bn, up 9.8% YoY, evidencing resilient demand and pricing/mix support across core categories. Gross profit was ¥95.1bn, translating to a 35.9% gross margin, which appears stable-to-slightly resilient despite input cost headwinds common in confectionery and dairy. Operating income declined 28.8% YoY to ¥9.0bn, implying operating margin contraction to roughly 3.4%, pointing to elevated SG&A, higher logistics/utilities, or lagged price-cost pass-through. Ordinary income of ¥10.9bn exceeds operating income, indicating non-operating gains or financial income offsetting modest interest expense (¥58m). Net income came in at ¥7.3bn, down 11.5% YoY, with a net margin of 2.75%, reflecting pressured profitability despite revenue growth. DuPont analysis yields an ROE of 2.67%, driven by a modest asset turnover of 0.709 and low financial leverage of 1.37, highlighting an under-geared balance sheet and earnings shortfall as primary ROE constraints. Liquidity remains strong with a current ratio of 191% and quick ratio of 167%, supported by ¥165.4bn in current assets versus ¥86.6bn in current liabilities. The capital structure is conservative: total liabilities of ¥105.2bn against equity of ¥272.6bn, implying an equity ratio around 73% by calculation, despite the reported 0.0% equity ratio field being non-disclosed. Interest coverage is ample at 155.5x, underscoring low financing risk and significant headroom. Working capital is healthy at ¥78.8bn, providing operational flexibility for inventory normalization and seasonal sales. Cash flow statements are not disclosed in this dataset; thus, OCF/NI and FCF metrics shown as zero are placeholders rather than economic reality. EPS stands at ¥114.18 for the period, but share count data is not provided in this extract. The effective tax burden calculated from disclosed items is consistent with a typical domestic tax rate, despite a reported 0.0% metric in the summary due to data limitations. Overall, the quarter demonstrates robust revenue execution overshadowed by cost pressures and higher operating expenses, resulting in lower operating leverage and subdued ROE. The balance sheet strength mitigates financial risk, but near-term valuation and capital efficiency hinge on margin recovery, sustained pricing power, and improved cash conversion.

Profitability Analysis

ROE_decomposition: ROE 2.67% = Net margin 2.75% × Asset turnover 0.709 × Financial leverage 1.37. Low ROE is primarily a function of compressed net margin and modest asset turnover, with minimal leverage contribution given the conservative balance sheet. margin_quality: Gross margin at 35.9% suggests reasonable cost pass-through and mix resilience; however, operating margin compressed to ~3.4% (¥9.0bn OI on ¥264.7bn revenue), implying elevated SG&A/logistics and potentially lagged pricing relative to raw materials (e.g., cocoa, dairy, sugar) and utilities. Net margin at 2.75% benefited from non-operating income lifting ordinary profit above operating profit. operating_leverage: Revenue grew 9.8% YoY while operating income fell 28.8% YoY, indicating negative operating leverage in the period. This points to cost inflation, higher fixed cost absorption issues, or strategic investments in marketing and channels that are not yet matched by pricing/mix gains.

Growth Assessment

revenue_sustainability: Topline growth of 9.8% YoY indicates healthy demand and pricing/mix execution. Sustainability will depend on continued price realization, product innovation, and channel expansion, especially in domestic confectionery, frozen desserts, beverages, and overseas businesses. profit_quality: Ordinary income (¥10.9bn) exceeding operating income suggests reliance on non-operating gains to support bottom line. The underlying operating margin compression signals core profit quality headwinds that need reversal through cost control and improved price-cost alignment. outlook: Near-term outlook hinges on input cost normalization, the cadence of additional pricing/mix actions, and efficiency gains in SG&A and logistics. If cost pressures ease and price discipline holds, margins can recover; otherwise, elevated costs could keep ROE subdued despite volume/mix growth.

Financial Health

liquidity: Current ratio 191% and quick ratio 167% indicate strong short-term solvency. Current assets ¥165.4bn vs current liabilities ¥86.6bn and working capital of ¥78.8bn provide ample buffer. solvency: Total liabilities ¥105.2bn vs equity ¥272.6bn imply an equity ratio near ~73% (calculated), despite the reported field being non-disclosed. Interest coverage of 155.5x and modest interest expense (¥58m) reflect low financial risk. capital_structure: Debt-to-equity at 0.39x suggests conservative leverage. With financial leverage of 1.37 (assets/equity), the company has capacity to fund strategic investments without compromising balance sheet integrity.

Cash Flow Quality

earnings_quality: Cash flow statements are not disclosed in this dataset; OCF/NI shown as 0.00 is not economically meaningful. As such, we cannot corroborate accrual quality or cash conversion for the period. FCF_analysis: FCF not available due to undisclosed OCF and capex. Depreciation is also not disclosed here, limiting EBITDA and maintenance capex normalization analysis. working_capital: Inventories of ¥20.5bn within current assets of ¥165.4bn suggest manageable stock levels; robust quick ratio points to liquidity strength. Without OCF detail, we cannot assess period-to-period working capital swings (receivables/payables timing).

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio fields are shown as zero due to non-disclosure. With EPS at ¥114.18 for the period and a strong balance sheet, the capacity for dividends cannot be assessed from this extract alone. FCF_coverage: FCF coverage cannot be computed given undisclosed OCF and capex. Balance sheet strength implies potential flexibility, but sustainable distributions should be judged against normalized OCF and capex needs. policy_outlook: Absent explicit disclosures, dividend policy inference is limited. A conservative capital structure suggests room for stable shareholder returns contingent on margin recovery and cash generation.

Risk Assessment

Business Risks:

• Raw material price volatility (cocoa, dairy, sugar, palm oil) impacting gross margin.
• Energy and logistics cost inflation pressuring SG&A and distribution costs.
• Competitive pricing dynamics in confectionery and dairy leading to price elasticity risk.
• Execution risk on pricing/mix actions and innovation pipeline.
• Overseas expansion risks including FX and local competitive intensity.
• Channel mix shifts (e-commerce vs. traditional retail) affecting promotional spend.

Financial Risks:

• Margin compression leading to weaker cash generation and lower ROE.
• Potential inventory and receivables buildup if demand slows, affecting cash conversion.
• Limited operating profit buffer increases sensitivity to cost shocks despite low leverage.
• FX exposure on imported inputs and overseas sales not quantified in this dataset.

Key Concerns:

• Operating income down 28.8% YoY despite 9.8% revenue growth, indicating negative operating leverage.
• Net margin at 2.75% and ROE at 2.67% are subdued relative to sector norms.
• Lack of cash flow disclosure prevents assessment of earnings-to-cash conversion.

Investment Implications

Key Takeaways:

• Topline growth is robust (+9.8% YoY), but operating margin pressure is the key issue.
• ROE is low (2.67%) due to thin net margin and modest asset turnover, not balance sheet strain.
• Liquidity and solvency are strong, providing time to execute margin restoration.
• Non-operating gains helped ordinary profit; sustainable improvement depends on core operations.
• Data gaps in cash flow and dividends limit visibility on cash returns and capital allocation.

Metrics to Watch:

• Operating margin trajectory and SG&A ratio in subsequent quarters.
• Gross margin vs. input cost indices (cocoa, dairy) and price realization.
• Working capital intensity (inventories, receivables) and OCF conversion once disclosed.
• Ordinary-to-operating income gap as a gauge of non-operating reliance.
• ROE improvement via margin recovery and asset turnover normalization.

Relative Positioning: Within Japan’s confectionery and dairy peers, Ezaki Glico shows competitive revenue momentum but lags on profitability and ROE this period; balance sheet strength remains a differentiator, offering capacity to invest in efficiency and brand equity to close the margin gap.

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