| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥28946.8B | ¥29394.2B | -1.5% |
| Operating Income | ¥1858.7B | ¥2690.5B | -30.9% |
| Profit Before Tax | ¥1792.8B | ¥2669.9B | -32.9% |
| Net Income | ¥1227.7B | ¥1931.8B | -36.4% |
| ROE | 4.1% | 7.2% | - |
For the fiscal year ending December 2025, Revenue was ¥28946.8B (YoY -¥447.5B, -1.5%), Operating Income was ¥1858.7B (YoY -¥831.8B, -30.9%), Ordinary Income was ¥760.1B (YoY -¥183.0B, -19.4%), and Net Income was ¥1227.7B (YoY -¥704.1B, -36.4%), representing lower sales and a significant decline in profitability. Revenue was dragged down by a -3.7% decline in the Japan & East Asia segment, while Europe (+0.7%) and Asia Pacific (+0.1%) provided support. On the profit side, large decreases in Operating Income in Japan & East Asia (-53.1%) and Asia Pacific (-22.2%) offset Europe’s +12.1% increase. SG&A ratio rose 1.1pt from 27.6% to 28.7%, and Other Operating Expenses expanded to ¥825.2B (prior year ¥412.7B), including impairment losses of ¥276.5B that temporarily depressed profits. Operating margin fell 2.7pt from 9.1% to 6.4%, Net Profit Margin worsened 2.3pt from 6.5% to 4.2%, and ROE declined from 7.5% to 4.3%.
Revenue was ¥28946.8B (YoY -1.5%), a slight decline. By segment, Japan & East Asia was ¥13207.4B (-3.7%), the largest drag, affected by domestic volume decline and price-mix deterioration due to stronger promotions. Europe was ¥7657.4B (+0.7%) and Asia Pacific was ¥7815.5B (+0.1%), both modestly up and supporting overall performance. Other segments were ¥266.5B (+0.7%). By geography, Japan was ¥12744.3B (-4.9%) while overseas expanded to ¥16202.5B (+1.3%), with Australia stable at ¥6664.8B (+0.3%). Gross profit margin improved 0.5pt to 37.8% (prior 37.3%), but SG&A ratio rose to 28.7% (prior 27.6%), reversing operating leverage.
Operating Income was ¥1858.7B (YoY -30.9%). By segment, Japan & East Asia Operating Income was ¥625.8B (-53.1%, margin 4.7%), Asia Pacific was ¥632.1B (-22.2%, margin 8.1%) with large declines. Europe was ¥793.9B (+12.1%, margin 10.4%), the sole double-digit increase and a core earnings pillar. Other Operating Expenses doubled to ¥825.2B (prior ¥412.7B), including impairment losses of ¥276.5B (prior ¥68.3B) that temporarily pressured profits. SG&A rose to ¥8298.4B (+2.1%) despite lower sales, increasing fixed cost burden. Ordinary Income was ¥760.1B (-19.4%). Financial income was ¥219.3B versus financial expenses ¥285.2B, yielding net financial expense of -¥65.9B (prior -¥26.1B), impacted by higher interest from increased interest-bearing debt. Profit Before Tax was ¥1792.8B (prior ¥2669.9B), down -32.9%. Income taxes were ¥565.1B (effective tax rate 31.5%). Net Income was ¥1227.7B (-36.4%), Net Profit Margin fell to 4.2% (prior 6.5%). Conclusion: lower sales and substantially lower profits.
Japan & East Asia: Revenue ¥13207.4B (-3.7%), Operating Income ¥625.8B (-53.1%, margin 4.7%) with a sharp deterioration in profitability due to domestic volume decline, price-mix worsening from promotional activity, and higher fixed costs. Europe: Revenue ¥7657.4B (+0.7%), Operating Income ¥793.9B (+12.1%, margin 10.4%), maintaining high profitability and serving as the company’s earnings core. Asia Pacific: Revenue ¥7815.5B (+0.1%), Operating Income ¥632.1B (-22.2%, margin 8.1%) with margin deterioration. Other: Revenue ¥266.5B (+0.7%), Operating Income ¥42.8B (+11.3%, margin 16.0%), small but high-margin. Consolidated Operating Income after company-level expense adjustments was ¥1858.7B; Europe’s high margin partially offset declines in Japan & East Asia and Asia Pacific.
Profitability: ROE declined to 4.3% (prior 7.5%), a 3.2pt drop. DuPont decomposition indicates deterioration in Net Profit Margin to 4.2% (prior 6.5%) as the main driver, along with a decline in Total Asset Turnover to 0.48x (prior 0.54x); Financial leverage was roughly flat at 2.00x (prior 2.02x). Operating margin fell 2.7pt to 6.4% (prior 9.1%), pressured by a one-time impairment of ¥276.5B and higher SG&A ratio. Gross profit margin improved 0.5pt to 37.8% (prior 37.3%), offset by the SG&A increase to 28.7% (prior 27.6%). EBITDA was ¥3489.6B (Operating Income ¥1858.7B + Depreciation & amortization ¥1630.9B), with an EBITDA margin of 12.1%, maintaining double digits.
Cash quality: Operating Cash Flow (OCF) / Net Income was 0.86x, below 1.0, indicating weak cash conversion. OCF/EBITDA was 0.30x, low, with working capital deterioration (Accounts receivable +¥439.5B, Inventory +¥178.5B, Accounts payable -¥501.5B) pressuring cash. The accrual ratio ((Net Income - OCF)/Total Assets) is about 0.3%, indicating limited accrual distortion, but absolute OCF generation weakness is a concern.
Investment efficiency: Total Asset Turnover fell to 0.48x (prior 0.54x). Capital expenditures were ¥1235.4B (4.3% of Revenue), below Depreciation & amortization ¥1630.9B—maintenance-type spending. Intangible asset acquisitions were ¥311.7B, and goodwill & intangibles rose to ¥36579.0B, about 122% of Parent Owners’ Equity ¥30030.5B.
Financial soundness: Equity Ratio was 49.8% (prior 49.4%), neutral. Debt-to-equity improved slightly to 1.00x (prior 1.02x), but interest-bearing debt (short-term bonds & borrowings ¥8387.9B + long-term ¥8053.9B = total ¥16441.8B) rose materially from prior ¥12791.8B. Debt/EBITDA is about 4.7x (¥16441.8B ÷ ¥3489.6B), and interest coverage (EBIT ÷ financial expense) is about 3.1x (¥874.9B ÷ ¥285.2B), indicating tightened financial headroom. Current ratio is 0.57x (Current assets ¥10277.2B ÷ Current liabilities ¥18018.7B), at a concerning level, increasing rollover dependence on short-term liabilities.
Operating Cash Flow was ¥1048.2B (prior ¥4037.2B), a large decline; OCF/Net Income was 0.86x, showing weak cash realization of profit. Pre-working-capital subtotal was ¥2127.2B, but working capital deterioration—Accounts receivable increase -¥439.5B, Inventory increase -¥178.5B, Accounts payable decrease -¥501.5B—reduced cash by -¥1079.1B. Corporate tax payments of ¥947.8B were also a burden. Investing Cash Flow was -¥2004.7B, driven by CapEx -¥1235.4B, intangible acquisitions -¥311.7B, and acquisitions of subsidiary shares -¥455.2B. Free Cash Flow was a deficit of -¥956.5B, unable to cover dividends ¥796.5B and share buybacks ¥700.1B (total returns ¥1496.6B) from OCF. Financing Cash Flow provided +¥1259.4B, funded by net increase in short-term borrowings ¥6608.5B, bond issuance ¥500.0B, and long-term borrowings ¥50.0B, offset by bond redemptions -¥4147.0B, long-term loan repayments -¥418.9B, and dividends/share buybacks -¥1496.6B. Foreign exchange translation effects added +¥421.3B, increasing cash and cash equivalents from ¥839.6B to ¥1563.8B (+¥724.2B). Simultaneous increases in short-term borrowings and low OCF, together with a current ratio of 0.57x, heighten maturity mismatch risk.
Recurring earnings depend on core Operating Income; non-operating items produced a net financial expense of -¥65.9B (financial income ¥219.3B less financial expense ¥285.2B), about 0.2% of Revenue. One-time factors include significant impairment losses of ¥276.5B within Other Operating Expenses ¥825.2B (prior ¥412.7B), up sharply from prior ¥68.3B and pressuring profits. Loss on disposal of fixed assets was ¥40.8B (prior year had a gain of ¥153.9B), another headwind. Equity-method investment gains/losses were ¥0B (prior ¥5.5B), essentially neutral. OCF was ¥1048.2B, 0.86x of Net Income ¥1227.7B; OCF/EBITDA was 0.30x, low, but accrual ratio ((Net Income - OCF)/Total Assets) of ~0.3% suggests limited accrual distortion. The gap between Ordinary Income ¥760.1B and Net Income ¥1227.7B can be explained by tax burden from Profit Before Tax with effective tax rate 31.5%, with no abnormal divergence. Comprehensive income was ¥4894.4B, well above Net Income, but the majority of other comprehensive income ¥3666.7B was foreign currency translation differences of foreign operations ¥3574.8B, valuation gains not accompanied by cash generation. Earnings quality is temporarily impaired by impairments and working capital deterioration, but there are no signs of fundamental accounting manipulation.
Full-year guidance: Revenue ¥32200.0B, Operating Income ¥2970.0B, Net Income ¥1956.0B. Actuals represent progress rates of Revenue ¥28946.8B (89.9%), Operating Income ¥1858.7B (62.6%), Net Income ¥1227.7B (62.1%), indicating underperformance. The shortfall in Operating Income vs. guidance (guidance implied +59.8% YoY increase, actual -30.9% YoY) is substantial. Primary causes of the miss were larger-than-expected profit decline in Japan & East Asia, expansion of Other Operating Expenses (including impairments), increased financial expenses, and working capital deterioration pressuring OCF. The ¥276.5B impairment was likely not factored into guidance and suggests progress on structural reforms. Dividends of Interim ¥26 and Year-end forecast ¥26 (annual ¥52) were maintained and met. No revised forecast was disclosed; the divergence became apparent at year-end.
Annual dividend was ¥52 (Interim ¥26, Year-end ¥26), effectively flat after share-split adjustment vs. prior year ¥66. Payout Ratio was 38.7% (based on EPS ¥81.29), same as prior year. Total dividends paid were ¥796.5B. Share buybacks amounted to ¥700.1B, making total shareholder returns ¥1496.6B, about 122% of Net Income ¥1227.7B. The Total Return Ratio of 122% is excessive and unsustainable under negative Free Cash Flow of -¥956.5B; returns were funded through borrowings and bond issuance. Payout Ratio alone at 38.7% is within an acceptable range, but sustainability of total returns including buybacks is questionable. Cash and cash equivalents ¥1563.8B at year-end are below one year’s dividends, and dependence on short-term borrowings ¥8387.9B is increasing. Although the dividend policy states a target payout of around 30%, total returns including buybacks should be monitored against economic cycles and OCF recovery.
Liquidity risk: Current ratio 0.57x (Current assets ¥10277.2B / Current liabilities ¥18018.7B) shows current liabilities far exceed current assets and a clear maturity mismatch. Short-term borrowings ¥8387.9B increased +86.0% from prior ¥4511.3B, raising rollover dependence. With OCF ¥1048.2B, dividends and buybacks ¥1496.6B cannot be covered, exposing the company to refinancing cost increases.
Impairment risk: Goodwill and intangibles ¥36579.0B are about 122% of Parent Owners’ Equity ¥30030.5B and ~10.5x EBITDA, a high level. An impairment loss of ¥276.5B was recorded this period, but further impairment risk exists if profitability in Europe or Asia Pacific weakens or if FX moves adversely. Asia Pacific recorded ¥151.6B of impairment; continued deterioration could materially impact equity.
Capital allocation sustainability risk: Total Return Ratio 122% is unsustainable under negative Free Cash Flow. Interest-bearing debt ¥16441.8B, Debt/EBITDA ~4.7x, and Interest Coverage ~3.1x tighten financial flexibility. Sustaining dividends and buybacks will require OCF recovery and reallocation of investment (prioritizing CapEx, restraining M&A). Continued working capital deterioration (DSO ~63 days, DIH ~61 days) would force reductions in shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 4.3% | – | – |
| Operating Margin | 6.4% | – | – |
| Net Profit Margin | 4.2% | – | – |
Comparative data within the industry are limited, making relative assessment difficult, but ROE 4.3% is below the typical Food & Beverage sector average (8–12%).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.5% | – | – |
Revenue growth -1.5% lacks sufficient peer data for positioning. Domestic alcoholic beverage market contraction and modest European growth offset, indicating low growth.
※Source: Company compiled by our firm
Europe’s sustained high profitability is key to consolidated earnings. Europe’s Operating Margin of 10.4% exceeds Japan & East Asia 4.7% and Asia Pacific 8.1%, indicating progress in regional portfolio optimization. Continued price discipline and cost control in Europe will be primary drivers of margin improvement.
Despite a drop in Operating Margin to 6.4% driven by impairment losses ¥276.5B and higher SG&A ratio, Gross Profit Margin improved to 37.8% by 0.5pt. There is room for margin recovery through one-off cost reversals and fixed cost reductions. If working capital compression (shortening DSO and DIH) occurs, OCF/EBITDA could improve from 0.30x to over 0.50x, making Free Cash Flow positivity attainable.
Total Return Ratio 122% and current ratio 0.57x suggest a need to reallocate capital. The increase in short-term borrowings to ¥8387.9B may be a temporary liquidity measure, but with Debt/EBITDA ~4.7x and Interest Coverage ~3.1x, leverage is tightening. From next fiscal year, improvement in OCF and re-prioritization of investment (CapEx prioritization, M&A restraint) will be critical to normalize financial health metrics (target Debt/EBITDA < 3.5x, Current ratio > 1.0x).
This report is an AI-generated earnings analysis based on XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmark figures are reference data compiled by our firm from public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.