| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥787.8B | ¥723.5B | +8.9% |
| Operating Income | ¥186.0B | ¥176.1B | +5.6% |
| Ordinary Income | ¥187.3B | ¥176.9B | +5.9% |
| Net Income | ¥120.3B | ¥82.5B | +45.8% |
| ROE | 25.1% | 20.6% | - |
For the fiscal year ended March 2026, Kotobuki Spirits reported revenue of ¥787.8B (YoY +¥64.3B +8.9%), operating income of ¥186.0B (YoY +¥9.9B +5.6%), ordinary income of ¥187.3B (YoY +¥10.5B +5.9%), and net income attributable to owners of the parent of ¥120.3B (YoY +¥37.8B +45.8%), securing both revenue and profit growth. Revenue was led by the core Shukurei Group and Kotobukiseika Group, while operating income rose 5.6% albeit with operating margin contracting by 0.7pt to 23.6% (prior year 24.3%). SG&A ratio increased 0.2pt to 37.8% (prior year 37.6%), and cost pressures compressed profitability despite maintaining a high gross margin of 61.4%. Net income growth outpaced operating results mainly due to lower corporate taxes (effective tax rate 33.0% → prior year 31.3%), though this partly reflects a reversal from a heavier tax burden in the prior year. Non-operating items were minimal (non-operating income ¥1.4B, non-operating expenses ¥0.1B). Extraordinary gains/losses largely offset each other (gain on sale of fixed assets ¥1.2B vs. loss on disposal ¥1.0B), limiting one-off impacts. ROE remained high at 25.1%, and financial soundness is solid with an equity ratio of 79.7% and current ratio of 443%. Operating Cash Flow (OCF) was ¥138.0B, 1.15x net income, indicating strong cash generation, though tax payments of ¥60.9B and working capital consumption (accounts receivable +¥8.5B, inventories +¥1.1B, accounts payable -¥1.0B) exerted pressure. Free Cash Flow (FCF) was ¥83.5B, covering total returns of ¥79.5B (dividends ¥49.4B and share buybacks ¥30.1B), yielding a total return ratio of 66% within sustainable bounds. Versus full-year plan (Revenue ¥845.0B, Operating Income ¥205.5B, Net Income ¥138.1B), results reached 93.2%/90.5%/87.1% respectively, missing targets due to higher SG&A and margin softening in the KCC segment.
[Revenue] Revenue totaled ¥787.8B (YoY +8.9%), with all segments achieving growth. The core Shukurei Group recorded ¥370.5B (+6.8%), representing 47.1% of external sales; KCC was ¥231.8B (+7.9%); Kotobukiseika was ¥163.0B (+12.1%) contributing double-digit growth. Sales subsidiaries grew to ¥78.0B (+8.0%). Kotobukiseika’s high growth was likely aided by new product launches and distribution expansion. Other businesses (insurance agency, health foods, Taiwanese confectionery) declined slightly to ¥6.7B (-2.6%). Company-wide revenue drivers are assessed as a combination of price revisions, recovery in tourism/inbound demand, strengthened promotions, and improved product mix.
[Profitability] Gross profit was ¥483.9B (YoY +¥39.4B +8.8%), with gross margin contracting 0.5pt to 61.4% (prior year 61.9%). Increases in raw material and manufacturing costs were partially passed through price increases but not fully covered. SG&A rose to ¥297.9B (prior year ¥271.9B +9.6%), outpacing revenue growth, with SG&A ratio worsening 0.2pt to 37.8% (prior year 37.6%). Increases in personnel costs, logistics, and promotion expenses were main drivers. Operating income was ¥186.0B (prior year ¥176.1B +5.6%), with operating margin at 23.6% (prior year 24.3%), down 0.7pt. By segment, Shukurei Group operating income was ¥70.9B (margin 19.1%), KCC ¥48.3B (margin 20.8%, YoY -3.8% decline), Kotobukiseika ¥38.2B (margin 23.5%, YoY +18.0% strong growth). KCC margin deterioration pressured consolidated margins. Ordinary income was ¥187.3B (prior year ¥176.9B +5.9%) with non-operating items near neutral (interest income ¥0.3B, dividend income ¥0.1B, non-operating expenses ¥0.1B). Extraordinary gains/losses netted +¥0.1B (gain on sale of fixed assets ¥1.2B, loss on disposal ¥1.0B). Profit before tax was ¥187.4B (prior year ¥176.4B +6.2%). Corporate taxes were ¥61.9B (prior year ¥55.2B), giving an effective tax rate of 33.0% (prior year 31.3%). Net income attributable to owners of the parent was ¥120.3B (prior year ¥82.5B +45.8%), with the pronounced increase partly reflecting the prior year’s heavy tax burden. Net margin improved 3.9pt to 15.3% (prior year 11.4%), primarily due to tax effects. In conclusion, despite revenue and net income growth, core operating margin narrowed and the large net income increase was significantly aided by tax-related effects.
Shukurei Group: Revenue ¥370.5B (YoY +6.8%), Operating Income ¥70.9B (YoY +4.3%), margin 19.1% (prior year 19.4%)—slight decline. Revenue growth was partially offset by higher SG&A, but profitability remained stable. KCC: Revenue ¥231.8B (+7.9%), Operating Income ¥48.3B (-3.8%), margin 20.8% (prior year 23.4%)—decline of 2.6pt. Despite revenue growth, profit fell likely due to higher raw material/manufacturing costs and expanded promotion spend; short-term structural correction is required. Kotobukiseika Group: Revenue ¥163.0B (+12.1%), Operating Income ¥38.2B (+18.0%), margin 23.5% (prior year 23.1%)—0.4pt improvement, combining high growth and high margin and driving consolidated profit growth. Sales subsidiaries: Revenue ¥78.0B (+8.0%), Operating Income ¥10.9B (+15.1%), margin 14.0% (prior year 13.1%)—0.9pt improvement due to distribution efficiency and improved sales mix. Other businesses: Revenue ¥6.7B (-2.6%), Operating Income ¥0.3B (-49.1%), margin 4.2% (prior year 8.0%)—significant deterioration but minimal impact on consolidated results. Consolidated operating income after adjustments was ¥186.0B, with Kotobukiseika’s growth partly offsetting KCC’s margin decline.
[Profitability] Operating margin of 23.6% is exceptionally high in the food industry, supported by brand strength and pricing power reflected in a gross margin of 61.4%. Net margin improved to 15.3% (YoY +3.9pt) primarily due to reduced tax burden, while core operating margin contracted 0.7pt. ROE is very high at 25.1%, driven by net margin 15.3% × total asset turnover 1.31x × financial leverage 1.25x—a healthy balance.
[Cash Quality] OCF was ¥138.0B, 1.15x net income, indicating robust cash generation, though OCF/EBITDA remains modest at 0.68x (EBITDA = Operating Income ¥186.0B + D&A ¥16.9B = ¥202.9B). Tax payments of ¥60.9B and working capital deterioration (AR +¥8.5B, inventory +¥1.1B, AP -¥1.0B; total approx. ¥10B cash out) restrained efficiency. FCF was ¥83.5B, with capital expenditure of ¥23.7B (1.40x depreciation), reflecting a moderate growth investment pace.
[Investment Efficiency] Total asset turnover was 1.31x; large cash balance (cash & deposits ¥322.0B, 53.5% of total assets) suppresses turnover but revenue growth is maintained. Simplified ROIC (NOPAT / invested capital) is approximately 30%, indicating high efficiency. Tangible fixed asset turnover is 6.4x (Revenue ¥787.8B ÷ Tangible fixed assets ¥123.8B), indicating high utilization of manufacturing/store assets.
[Financial Soundness] Equity ratio 79.7%, current ratio 443%, quick ratio 413%—extremely sound. Cash & deposits ¥322.0B vs. interest-bearing debt long-term ¥0.3B yields net cash of approximately +¥321.7B. D/E ratio is below 0.01x, indicating minimal leverage reliance. Retirement benefit obligations ¥18.8B are 3.9% of equity and modest; deferred tax assets ¥16.2B are at healthy levels.
Operating Cash Flow was ¥138.0B (YoY +4.5%), with OCF subtotal (before working capital changes) of ¥198.4B. After increases in accounts receivable +¥8.5B, inventories +¥1.1B, decrease in accounts payable -¥1.0B (total ~¥10B working capital consumption), and corporate tax payments of ¥60.9B, OCF generated ¥138.0B. OCF/net income is 1.15x and cash generation adjusted for depreciation ¥16.9B and accruals is solid. However, OCF/EBITDA at 0.68x is relatively low, with tax payments and working capital constraints reducing cash efficiency. Investing CF was -¥54.5B, comprising capex -¥23.7B, acquisition of intangible assets -¥0.7B, proceeds from sale of tangible fixed assets +¥3.1B, and net change in time deposits -¥40.0B (placements -¥40.0B, withdrawals +¥10.0B). FCF (OCF + Investing CF) was ¥83.5B, marginally up YoY. Financing CF was -¥52.4B, driven by dividend payments ¥49.4B, share buybacks ¥30.1B, and proceeds from disposal of treasury stock +¥1.5B. Total returns (dividends + buybacks) were ¥79.5B, and total return ratio was 66% (total returns ÷ net income), within a sustainable range. FCF covers total returns by 1.05x, supporting sustainability. Year-end cash and deposits were ¥322.0B, up ¥61.2B from opening balance ¥260.8B (composed of net increase ¥31.2B plus time deposit placement/withdrawal net ~¥30B). On working capital, inventory turnover days ~14 days and accounts receivable days ~38 days are short but slightly worsened YoY, indicating room for efficiency improvements.
Earnings are primarily ordinary operations; non-operating income was minimal at ¥1.4B (0.18% of sales), comprised of interest income ¥0.3B, dividend income ¥0.1B, and insurance income ¥0.3B—income from investment securities and financial revenue is small. Non-operating expenses were ¥0.1B. Extraordinary gains/losses netted +¥0.1B (gain on sale of fixed assets ¥1.2B vs. disposal loss ¥1.0B), with impairment losses negligible at ¥0.03B, supporting balance sheet health. OCF ¥138.0B is 1.15x net income ¥120.3B, indicating appropriate accrual adjustments. Working capital deterioration (~¥10B cash out) partially lowers quality, but excluding corporate tax payments ¥60.9B, core cash generation remains solid. Comprehensive income was ¥126.4B, ¥6.1B higher than net income ¥120.3B, reflecting cumulative effects of foreign currency translation adjustment ¥0.1B, valuation difference on available-for-sale securities ¥0.4B, and retirement benefit adjustments ¥0.4B—no major distortion from other comprehensive income. The gap between ordinary income and net income is mainly attributable to corporate tax burden (effective tax rate 33.0%); there is no structural problem and earnings quality is ordinary and sustainable.
Full-year plan: Revenue ¥845.0B (YoY +7.3%), Operating Income ¥205.5B (YoY +10.5%), Ordinary Income ¥206.1B (YoY +10.0%), Net Income attributable to owners of the parent ¥138.1B. Actuals were Revenue ¥787.8B (93.2% of plan), Operating Income ¥186.0B (90.5%), Ordinary Income ¥187.3B (90.9%), Net Income ¥120.3B (87.1%), missing targets at each level. Shortfalls are attributed to higher-than-expected SG&A (personnel/logistics cost inflation), margin deterioration in KCC, and incomplete passthrough of raw material cost increases. The shortfalls versus plan (Operating Income -¥19.5B, Net Income -¥17.8B) can be explained by roughly +¥10B SG&A, ~0.5pt gross margin contraction (gross profit -¥4B), and higher tax burden. The company likely cites "SG&A increase" and "cost pressure" as reasons for the miss; next fiscal year focuses will be price/mix optimization and expense efficiency. EPS was ¥81.32 actual vs. planned ¥89.42 (approx. 9% shortfall). Dividend guidance is not specified, but with actual dividend of ¥35 and payout ratio 41% the dividend appears sustainable for next year.
Year-end dividend was ¥35, with a payout ratio of 41.0%—a reasonable level. Total dividend amount was ¥49.4B, offering 1.7x coverage against FCF ¥83.5B. Share buybacks were ¥30.1B (per cash flow statement), so combined total returns were ¥79.5B. Total return ratio was 66.1% (total returns ¥79.5B ÷ net income ¥120.3B), and total return coverage of FCF is 1.05x—within appropriate range. Given equity ¥479.4B and cash & deposits ¥322.0B, the financial base is strong and dividend policy appears sustainable, with scope for performance-linked dividend increases. Prior year dividend was not disclosed (Dividend Per Share = 0), but this period’s ¥35 suggests initiation or resumption of dividends. While policy is not explicitly stated, the company seems to target stable dividends around a 40% payout ratio. Share buybacks are implemented flexibly to improve capital efficiency and enhance shareholder returns. Treasury stock acquired totaled 1,225 thousand shares at period end (0.8% of issued shares), a small magnitude that limits dilution risk.
Continued margin deterioration in KCC segment: KCC posted revenue ¥231.8B (+7.9%) but operating income ¥48.3B (-3.8%), with margin down to 20.8% from 23.4% prior year. Rising raw material/manufacturing costs and expanded promotion spending are squeezing gross margin; failure of corrective measures could further depress consolidated operating margins. KCC accounts for 26.0% of consolidated operating income, so a 1pt margin decline in KCC would reduce consolidated operating income by approximately ¥2.3B. Quantitatively, if KCC margins recover to prior-year levels, consolidated operating income could increase by approximately ¥6B—monitoring cost optimization progress is crucial.
Prolonged SG&A inflation risk: SG&A totaled ¥297.9B (YoY +9.6%), outpacing revenue growth +8.9%, with SG&A ratio 37.8% (prior year 37.6%) worsening 0.2pt. Personnel, logistics, and promotion cost increases, driven by wage pressures, fuel prices, and distribution expansion, are primary causes. A future 1pt increase in SG&A ratio would reduce operating income by roughly ¥8B (Revenue ¥787.8B × 1%), lowering operating margin to 22.6%. While automation, DX investment, and logistics optimization could offset this, short-term pressure on profitability may persist.
Working capital efficiency deterioration and cash pressure risk: This period saw accounts receivable +¥8.5B, inventory +¥1.1B, accounts payable -¥1.0B (total ~¥10B working capital consumption). Although inventory days (~14) and AR days (~38) are short, they worsened YoY. Continued expansion in inventory and receivables with sales growth could further lower OCF/EBITDA and reduce FCF available for returns. Quantitatively, a 1% deterioration in working capital (≈¥8B) would directly reduce operating cash flow by the same amount and compress FCF into the ¥70s B range. Improving inventory management, receivables collection, and supplier payment terms are near-term priorities.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 23.6% | 5.0% (3.3%–8.4%) | +18.6pt |
| Net Margin | 15.3% | 3.2% (1.9%–6.6%) | +12.1pt |
Kotobuki Spirits’ operating margin of 23.6% exceeds the industry median 5.0% by 18.6pt, demonstrating exceptional brand strength and pricing power. Net margin 15.3% also surpasses the median 3.2% by 12.1pt, ranking among the top in the food industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.9% | 5.4% (1.0%–8.6%) | +3.5pt |
Revenue growth of 8.9% outpaces the industry median 5.4% by 3.5pt, driven by steady expansion of core segments and price revision effects.
※Source: Company aggregation
Sustainability of high gross margin / high ROE and SG&A control challenge: Gross margin 61.4%, ROE 25.1%, operating margin 23.6% are outstanding in the food sector, confirming brand strength and pricing power. However, SG&A ratio rose to 37.8% (prior year 37.6%), and personnel/logistics inflation pressures are compressing profitability. The key to stabilizing and expanding operating margin will be keeping SG&A growth below revenue growth via automation/DX investment, logistics efficiency, and selective promotion spend. Quantitatively, a 0.5pt improvement in SG&A ratio would increase operating income by approximately ¥4B and restore operating margin into the mid-24% range, indicating mid-term structural improvement potential.
Polarization of segment profitability and evaluation of reorganization effects: Kotobukiseika Group achieved high growth and margin (Revenue +12.1%, Operating Income +18.0%, margin 23.5%), driving consolidated profit growth. In contrast, KCC showed revenue +7.9% but operating income -3.8% and margin 20.8% (prior year 23.4%)—profitability softened. Post-restructuring (integration of Shukurei and Ninety-Nine), core business profitability remains stable and synergies are limited so far, though future synergy realization is expected. Recovery of KCC margins and sustained Kotobukiseika growth are directly linked to consolidated margin improvement; quarterly monitoring of segment ROIC and margin trends is important.
Improving cash generation quality and outlook for sustainable returns: OCF ¥138.0B is 1.15x net income but OCF/EBITDA is only 0.68x, with tax payments and working capital deterioration lowering efficiency. Improving working capital by ¥10B could raise OCF to ¥148B and FCF to ¥93B, expanding return capacity. Given cash & deposits ¥322.0B and net cash +¥321B, a payout ratio 41% and total return ratio 66% are sustainable, and there is room for performance-linked dividend increases or additional share buybacks. Next fiscal year, with working capital efficiency improvements and KCC margin recovery, FCF above ¥90B, maintained payout ratio in the 40% range, and total return ratio in the 60–70% range are plausible.
This report is an AI-generated earnings analysis document created by analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your own responsibility; please consult professionals as needed.