FIRST BAKING CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥21.15B
• Operating Income: ¥191M
• Net Income: ¥1.89B
• EPS: ¥14.89

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

Daiichi-ya Pan Co., Ltd. (TSE:22150) reported FY2025 Q3 consolidated results under JGAAP with steady topline growth but sharp profit compression. Revenue rose 4.3% year on year to ¥21.146 billion, indicating resilient demand or price/mix improvements in the bread and confectionery categories. Gross profit was ¥5.662 billion, implying a gross margin of 26.8%, consistent with a mid-20% margin profile typical for bakery manufacturing. Operating income declined 65.3% YoY to ¥191 million, compressing operating margin to roughly 0.9%, which signals significant SG&A or input cost pressure despite higher sales. Ordinary income was ¥186 million, broadly aligned with operating income after ¥17 million of interest expense, pointing to modest financial leverage. Net income fell 94.5% YoY to ¥103 million, driving a net margin of 0.49%, reflecting possible non-operating or extraordinary impacts and/or tax normalization. DuPont metrics point to an ROE of 1.26%, with a low net margin, asset turnover of 1.426x, and financial leverage of 1.82x; profitability rather than asset efficiency is the primary ROE constraint. Balance sheet strength looks reasonable: total assets are ¥14.833 billion and equity is ¥8.160 billion, implying an equity ratio around 55% based on reported totals (the separate equity ratio line of 0.0% appears undisclosed rather than zero). Current assets are ¥8.131 billion versus current liabilities of ¥4.455 billion, yielding working capital of ¥3.676 billion and a current ratio of 182.5%, suggesting sound short-term liquidity. Interest coverage is a comfortable 11.2x (operating income/interest expense), albeit supported by low absolute interest costs. Cash flow items, depreciation, EBITDA, and cash balances are shown as zero and are treated as undisclosed; as such, operating cash flow quality and free cash flow cannot be assessed from this dataset. EPS is ¥14.89, which implies roughly 6.9 million shares outstanding (based on net income), although share count lines are undisclosed. The profit downdraft alongside revenue growth indicates negative operating leverage in the period, likely due to elevated raw materials, energy, logistics, or labor costs, and/or higher selling expenses. Tax expense of ¥27 million suggests an indicative tax rate in the mid-teens if applied against ordinary income, but extraordinary items could distort this. Overall, the company exhibits adequate liquidity and moderate leverage but faces acute margin pressure that has depressed earnings and ROE year to date. Data limitations (notably cash flow and depreciation) temper the depth of the analysis, but available figures point to near-term profitability challenges amid otherwise stable balance sheet fundamentals.

Profitability Analysis

ROE_decomposition: Reported DuPont ROE is 1.26%, derived from Net Profit Margin 0.49% x Asset Turnover 1.426x x Financial Leverage 1.82x. The primary drag is the compressed net margin; asset utilization is reasonable for a food manufacturer, and leverage is modest-to-moderate. margin_quality: Gross margin is 26.8%. Operating margin is ~0.9% (¥191m/¥21.146b), signaling heavy SG&A or input cost burden. Net margin at 0.49% is thin and vulnerable to cost volatility and non-operating items. Interest expense is small (¥17m), so below-the-line dilution is limited outside potential extraordinary items. operating_leverage: Revenue grew 4.3% YoY while operating income fell 65.3% YoY, indicating negative operating leverage this period. This likely reflects input cost inflation (wheat/sugar/dairy), energy and logistics cost persistence, and/or increased sales promotion expenses that outpaced pricing and mix benefits.

Growth Assessment

revenue_sustainability: Topline momentum of +4.3% YoY suggests demand resilience and/or price pass-through. Sustainability depends on continued pricing power against private-label competition and stable volumes across supermarket and convenience store channels. profit_quality: Profitability deteriorated sharply despite higher sales, indicating that price/mix improvements have not fully offset cost inflation and fixed-cost absorption. The low net margin raises sensitivity to modest revenue shocks. outlook: Assuming commodity and energy inputs stabilize and further pricing/mix actions take hold, margins could recover from current trough levels. However, near-term visibility on cost deflation is limited, and elevated SG&A or promotional spend could keep operating margins under pressure.

Financial Health

liquidity: Current assets ¥8.131b vs. current liabilities ¥4.455b produce a current ratio of 182.5% and working capital of ¥3.676b; the quick ratio of 180.2% indicates minimal reliance on inventory for liquidity (inventory reported at ¥101m). Cash balance is undisclosed, limiting deeper analysis. solvency: Total equity ¥8.160b and total liabilities ¥7.727b imply a liabilities-to-equity ratio of ~0.95x and an inferred equity ratio near 55% (based on totals). Interest coverage is 11.2x, suggesting manageable debt service at current earnings levels. capital_structure: Financial leverage (DuPont) is 1.82x, consistent with a conservative-to-moderate capital structure for a mid-sized food manufacturer. There is capacity for investment, but low margins constrain internal capital generation absent margin recovery.

Cash Flow Quality

earnings_quality: Operating cash flow, investing cash flow, and financing cash flow are undisclosed in this dataset (shown as zero). As a result, OCF-to-net income and accrual quality cannot be judged. FCF_analysis: Free cash flow is undisclosed. Depreciation and EBITDA are also undisclosed, making it difficult to separate cash and non-cash drivers or to assess replacement capex needs for bakery plants. working_capital: Working capital appears ample at ¥3.676b. Inventory is reported at ¥101m, which is unusually low relative to current assets for a bakery manufacturer and may reflect classification differences; days inventory cannot be assessed without cost flow and CF data.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as zero and treated as undisclosed. With net income of ¥103m and EPS ¥14.89, a cash dividend, if any, is not determinable from the provided data. FCF_coverage: Free cash flow is undisclosed; therefore, dividend coverage by FCF cannot be assessed. policy_outlook: Given compressed earnings (net margin 0.49%) and the need to preserve cash for input cost volatility and maintenance capex, a conservative dividend stance would be consistent, but actual policy cannot be inferred from the provided figures.

Risk Assessment

Business Risks:

• Input cost volatility (wheat, sugar, dairy, oils) affecting gross margin
• Energy and logistics cost persistence reducing operating margin
• Intense competition from larger bakery peers and private-label products
• Price pass-through challenges and potential demand elasticity
• Channel concentration risk in supermarkets and convenience stores
• Product recall or food safety risks inherent to food manufacturing
• Labor availability and wage inflation pressures
• Brand and innovation cycle risk in baked goods

Financial Risks:

• Thin net margin (0.49%) leaves little buffer for shocks
• Potential earnings sensitivity to small changes in volumes or costs (high operational gearing)
• Interest rate normalization could modestly raise financing costs (though current interest burden is low at ¥17m)
• Limited visibility on cash position and cash generation due to undisclosed cash flow statements
• Capex needs for plant and equipment could pressure FCF if margins remain weak

Key Concerns:

• Sharp YoY decline in operating income (-65.3%) despite revenue growth (+4.3%)
• ROE of 1.26% well below cost of equity proxies, driven by margin compression
• Lack of disclosed cash flow and depreciation data hinders assessment of cash earnings and FCF

Investment Implications

Key Takeaways:

• Topline grew 4.3% YoY to ¥21.146b, demonstrating demand resilience or effective pricing.
• Operating margin compressed to ~0.9%, highlighting acute cost and SG&A pressures.
• Net income fell to ¥103m (margin 0.49%), materially weakening ROE to 1.26%.
• Balance sheet is sound with inferred equity ratio near 55% and current ratio at 182.5%.
• Interest coverage at 11.2x indicates manageable debt service despite lower earnings.
• Cash flow data are undisclosed, limiting insight into earnings quality and FCF.
• EPS ¥14.89 implies roughly 6.9 million shares outstanding; share count lines are undisclosed.

Metrics to Watch:

• Gross margin trajectory and raw material cost indices (wheat, sugar, dairy, oils)
• SG&A-to-sales ratio and logistics/energy costs
• Price/mix realization vs. volume trends
• Operating income margin recovery toward historical levels
• Operating cash flow and capex to gauge FCF and dividend capacity
• Inventory and receivable days once disclosed to assess working capital efficiency
• ROE progression and capital allocation (debt levels, potential capex)

Relative Positioning: Within Japan’s bakery and packaged foods space, the company appears smaller scale with lower margins and ROE than leading peers, but maintains a comparatively conservative balance sheet; near-term competitiveness hinges on executing price/mix, cost control, and stabilizing input costs.

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