IMURAYA GROUP CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The current quarter posted higher revenue but lower operating income, while Ordinary Income and Net Income increased as non-operating income offset the slowdown in operating profitability. Revenue was ¥115.7B (+6.6% YoY), Operating Income was ¥2.6B (-25.4%), Ordinary Income was ¥3.7B (+7.1%), and Net Income was ¥2.3B (+26.3%). The primary factors behind the decline in Operating Income were a lower gross margin and higher SG&A expenses, while dividend income and foreign exchange gains supported earnings growth below the operating line.

Factors Affecting Performance

【Revenue】Revenue was ¥115.7B, representing a 6.6% YoY increase. The Distribution Business, which accounts for 89% of the revenue mix, grew to ¥103.2B (+6.3%), while the Seasonings Business increased to ¥12.1B (+9.7%), with both segments contributing to revenue growth.

【Earnings】Gross profit was ¥40.2B, with a gross margin of 34.7%, approximately 90bp lower than 35.6% in the previous year. SG&A expenses were ¥37.6B, with an SG&A ratio of 32.5% versus 32.4% in the previous year, representing nearly the same rate of growth. Operating Income declined to ¥2.6B (-25.4%), and the Operating Income margin deteriorated to 2.2% from 3.2% in the previous year. Non-operating income included dividend income of ¥0.7B and foreign exchange gains of ¥0.3B, resulting in Ordinary Income of ¥3.7B (+7.1%). Net Income was ¥2.3B (+26.3%). Although revenue increased, the earnings-generating power of the core business declined, resulting in a structure characterized by higher revenue but lower earnings in the core business and higher revenue and higher bottom-line earnings, supported by non-operating factors.

Segment Analysis

By segment, the Distribution Business expanded in scale, with revenue of ¥103.2B (+6.3%), but Operating Income declined to ¥4.5B (-26.8%), and its margin fell to 4.3% from the previous year. Increased logistics and promotional expenses appear to have pressured the Distribution Business’s margins. Meanwhile, the Seasonings Business posted higher revenue and earnings, with revenue of ¥12.1B (+9.7%) and Operating Income of ¥2.0B (+38.1%), achieving a margin of 16.2%, substantially above that of the Distribution Business. Against total segment profit of ¥6.4B, corporate expenses of ¥4.0B were deducted, resulting in consolidated Operating Income of ¥2.6B. The decline in earnings from the low-margin Distribution Business weighed on consolidated profitability, while expansion of the highly profitable Seasonings Business provided overall support.

Key Financial Metrics

【Profitability】The Operating Income margin was 2.2% versus 3.2% in the previous year, while the Net Income margin was 2.0% versus 1.7%. The decline in the gross margin to 34.7% from 35.6% in the previous year was the primary factor behind the deterioration in the Operating Income margin. 【Cash Flow Quality】Non-operating income represented 1.2% of revenue, primarily comprising dividend income of ¥0.7B and foreign exchange gains of ¥0.3B. Extraordinary items were limited, consisting of extraordinary income of ¥0.02B and extraordinary losses of ¥0.08B. 【Investment Efficiency】ROE was 0.9%, with the low total asset turnover ratio considered the primary factor behind the low ROE. Basic EPS was ¥17.74 versus ¥14.14 in the previous year, representing an increase of +25.5%. 【Financial Soundness】The Equity Ratio was 52.2%, down from 57.7% in the previous year and on a declining trend. Short-term borrowings increased substantially to ¥85.0B from ¥27.0B in the previous year. Cash and deposits of ¥16.3B compared with current liabilities of ¥190.3B and current assets of ¥160.1B indicate a change in the short-term funding structure, with current liabilities exceeding current assets.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is unavailable, changes in the balance sheet indicate that expanding working capital is increasing funding needs. Inventories increased to ¥47.7B from ¥38.7B in the previous year, while accounts receivable and notes receivable expanded to ¥68.9B from ¥63.0B. The increase in working capital appears to have been funded by an expansion in short-term borrowings to ¥85.0B from ¥27.0B in the previous year. Cash and deposits increased modestly to ¥16.3B from ¥13.1B in the previous year; however, current liabilities exceed current assets, making the reduction of inventories and receivables key to improving funding efficiency.

Quality of Earnings

It is important to note that the earnings increase for the current period does not stem from recurring core operating earnings, but depends to a certain extent on non-operating factors. Of the ¥1.4B in non-operating income, dividend income of ¥0.7B is recurring in nature, while foreign exchange gains of ¥0.3B are temporary and may fluctuate depending on market conditions. Non-operating income represented 1.2% of revenue, which is not an excessive level. Extraordinary items were also limited, consisting of extraordinary income of ¥0.02B and extraordinary losses of ¥0.08B, indicating that distortions to earnings from non-core factors were limited. The difference between Ordinary Income and Net Income resulted from corporate income taxes and other taxes of ¥1.3B being imposed on pre-tax income of ¥3.6B, implying an effective tax rate of approximately 37%, with no particular abnormality. Overall, earnings increased as non-operating income offset the decline in Operating Income, indicating that there remains room for improvement in the quality of core operating earnings.

Earnings Forecast and Guidance

Progress against the Full-Year forecast was 20.7% for Revenue (¥115.7B/¥560.0B), 7.8% for Operating Income (¥2.6B/¥33.0B), 10.8% for Ordinary Income (¥3.7B/¥34.0B), and 9.5% for Net Income (¥2.3B/¥24.0B). Compared with a simple one-quarter benchmark of 25%, revenue was only slightly below that level, while Operating Income and Net Income were substantially below it. The Company has not revised either its earnings forecast or dividend forecast, suggesting that the plan may assume a second-half-weighted earnings profile. Going forward, the recovery of the gross margin and progress in improving SG&A efficiency are expected to determine whether the Full-Year targets can be achieved.

Shareholder Returns

The Full-Year dividend forecast is ¥38.00 per share, resulting in a Payout Ratio of approximately 20.3% against forecast EPS of ¥187.54. As the previous year’s actual dividend has not been clearly disclosed, the assessment is based on the current period’s level; however, the Payout Ratio relative to forecast EPS is comparatively low, suggesting a policy of retaining a larger portion of earnings internally. The dividend forecast was not revised during the current quarter. No information regarding share buybacks was identified, and shareholder returns are evaluated solely on the basis of dividends.

Risk Factors

1. Business portfolio concentration risk: The Company depends on the Distribution Business for 89% of its revenue mix, while the segment’s Operating Income margin has declined to 4.3% from the previous year. A high degree of dependence on a single business indicates vulnerability to fluctuations in the earnings structure.

2. Dependence on short-term funding: Short-term borrowings increased to ¥85.0B from ¥27.0B in the previous year, an increase of +214.8%, and this does not represent a sufficient level of immediate coverage relative to cash and deposits of ¥16.3B. Current liabilities of ¥190.3B exceed current assets of ¥160.1B, making funding and liquidity trends an item requiring monitoring.

3. Structural decline in profitability: Both the gross margin, at 34.7% versus 35.6% in the previous year, and the Operating Income margin, at 2.2% versus 3.2%, have declined, indicating that increases in costs and SG&A expenses have not kept pace with revenue growth. If this trend continues, improvement in the gross margin will be a prerequisite for achieving the Full-Year Operating Income target.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (food_beverage)

Profitability and Return

Both the Operating Income margin and Net Income margin are below the industry median, placing the Company’s profitability at a relatively low level within the industry.

Growth and Capital Efficiency

The Revenue growth rate exceeds the industry median, indicating that top-line growth is relatively favorable within the industry.

※Source: Compiled by the Company

Key Points in the Financial Results

1. The results combine higher revenue but lower earnings in the core business with higher revenue and higher Net Income. The increase in Ordinary Income and Net Income was found to have a relatively high degree of dependence on non-operating income, namely dividend income and foreign exchange gains.

2. By segment, the Operating Income margin of the core Distribution Business, which accounts for 89% of the revenue mix, declined to 4.3%, while the Seasonings Business maintained and expanded its high margin of 16.2%, demonstrating contrasting movements in the business mix.

3. Short-term borrowings increased sharply (+214.8%), and current liabilities exceeded current assets. In addition, progress against the Full-Year targets remained low, at 7.8% for Operating Income and 9.5% for Net Income. Accordingly, second-half earnings improvement and funding efficiency are key points of focus based on the performance data.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly available data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,926–¥2,040 at ±1% for the Cost of Equity, and ¥1,981–¥1,982 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a time lag relative to the Full-Year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated at a somewhat higher level.

(Calculation model: Residual Income Model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional where necessary.

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