Kirin Holdings Company,Limited FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.76T
• Operating Income: ¥123.26B
• Net Income: ¥118.06B
• EPS: ¥126.95

Income Statement

Balance Sheet

Cash Flow Statement

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

Kirin Holdings (2503) reported FY2025 Q3 (IFRS, consolidated) revenue of 17,561.17 (100M JPY), up 3.3% YoY, indicating modest top-line growth amid a generally stable demand environment. Gross profit was 7,786.58 with a gross margin of 44.3%, reflecting solid pricing power and/or favorable mix despite input cost pressures typical in beverages. SG&A was 6,166.16, yielding an operating income of 1,232.62 and an estimated operating margin of 7.0%, suggesting reasonable operating efficiency for a diversified beverage group. Net income reached 1,028.33, up 29.7% YoY, outpacing revenue growth and implying margin expansion and/or non-operating contributions. EPS was 126.95 yen based on 810.1 million average shares, consistent with reported net income. Profit before tax of 1,673.21 exceeded operating income by 440.59, indicating sizable contributions from non-operating items including equity-method gains of 291.43. The effective tax rate was 30.6%, broadly in line with expectations. DuPont metrics show a net margin of 5.9%, asset turnover of 0.531x, and financial leverage of 2.27x, producing an ROE of 7.1% (in line with the reported calculation). Operating cash flow was strong at 1,786.04 (OCF/NI 1.74x), demonstrating healthy earnings quality, although free cash flow was negative at -809.06 due to heavy investing outflows (-2,595.10). The balance sheet shows total assets of 33,101.10 and total equity of 14,571.44, while the reported equity ratio is 35.3%, suggesting a material non-controlling interest component in total equity. Liabilities stood at 18,204.45, translating to a debt-to-equity (broad, using total liabilities) of 1.25x, indicating moderate leverage for the sector. Dividend cash outflow was -583.16, and a calculated payout ratio of 63.1% suggests a shareholder return focus, though FCF coverage was negative (-1.25x) given the investing cycle. Comprehensive income (894.14) was below net income, signaling negative OCI movements (e.g., FX or securities revaluation), which dampened equity creation. Overall, profitability appears resilient with good cash conversion, but negative FCF and reliance on non-operating gains warrant monitoring. Several detailed items are unreported (e.g., interest expense, cash balance breakdown, current liabilities, capex), so some ratios and inferences use available proxies and may differ from management’s presentations.

Profitability Analysis

ROE_decomposition: ROE 7.1% = Net margin 5.9% × Asset turnover 0.531 × Leverage 2.27x. Net margin reflects disciplined pricing/mix and cost controls; turnover is typical for a beverage conglomerate with sizable asset base; leverage is moderate and supportive to ROE without appearing excessive. margin_quality: Gross margin 44.3% (7,786.58/17,561.17) is robust for beverages, likely aided by price/mix and easing input cost pressure. SG&A intensity is 35.1% of sales, producing an operating margin of about 7.0% (1,232.62/17,561.17). EBITDA margin is 10.9% (1,921.32/17,561.17), with D&A of 688.70 providing a meaningful non-cash cushion. Net margin at 5.9% benefits from non-operating contributions, notably equity-method income of 291.43. operating_leverage: Revenue grew 3.3% YoY while net income grew 29.7% YoY, indicating positive operating and financial leverage effects; however, operating income YoY is unreported, limiting precision. The expansion from gross profit to operating income suggests some SG&A efficiency, while the step-up from operating income to PBT indicates incremental non-operating tailwinds.

Growth Assessment

revenue_sustainability: Top-line growth of 3.3% is consistent with steady performance in core beverage markets; sustainability depends on continued pricing discipline and volume resilience amid demographic headwinds in Japan and mixed macro abroad. profit_quality: The 5.9% net margin and 7.0% operating margin indicate healthy underlying profitability. Equity-method income (291.43) is sizable relative to operating income (~24%), elevating PBT and net income; this component may be more volatile and non-core. outlook: With operating cash conversion strong (OCF/EBITDA ~0.93), underlying earnings quality supports near-term stability. Key swing factors include input costs (malt, aluminum, energy), FX on overseas earnings, and the trajectory of equity-method contributions. Continued cost optimization and selective price/mix should underpin margins, though investment-led negative FCF near term could temper free cash returns.

Financial Health

liquidity: Current assets are 10,411.93, but current liabilities and cash detail are unreported, preventing current/quick ratio calculations. Cash and equivalents stand at 1,186.17, offering a liquidity buffer, supplemented by strong OCF. solvency: Total liabilities are 18,204.45 versus total equity 14,571.44, giving a broad D/E of 1.25x. The reported equity ratio is 35.3%, implying owners’ equity around 11,690 against total assets of 33,101. Interest-bearing debt details are unreported, so true net leverage can’t be precisely assessed. capital_structure: Non-controlling interests likely comprise a meaningful portion of total equity (difference between total and owners’ equity suggested by the 35.3% equity ratio). Financing CF of +1,000.65 indicates incremental net financing (debt and/or other), consistent with an investment phase.

Cash Flow Quality

earnings_quality: OCF of 1,786.04 versus net income of 1,028.33 yields OCF/NI of 1.74x, signaling strong cash realization of earnings. D&A of 688.70 is a substantial non-cash contributor, and OCF/EBITDA of ~0.93 points to good working capital discipline. FCF_analysis: Free cash flow is -809.06, driven by investing CF of -2,595.10; capex is unreported, so investing CF likely includes capex and possibly acquisitions or strategic investments. Negative FCF suggests an investment-heavy period rather than operational weakness, given robust OCF. working_capital: Receivables are 5,028.80, inventories 3,589.85, and payables 3,642.65; without current liabilities and cash detail, we cannot compute standard liquidity ratios or days metrics. Nonetheless, positive OCF suggests manageable working capital movements.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 63.1%, which is elevated but not atypical for a mature beverage franchise prioritizing shareholder returns. Cash dividends paid were -583.16, implying cash payout of ~56.7% of net income, close to the calculated ratio. FCF_coverage: FCF coverage is -1.25x, indicating dividends are not covered by free cash flow in this period due to heavy investment outflows. Coverage should improve if investing intensity normalizes or OCF grows further. policy_outlook: While underlying cash generation supports dividends, near-term investment needs and negative FCF create some tension. Continuity of dividends likely relies on sustained OCF and access to financing; absent capex/acquisition detail, we assume a stable to cautious stance.

Risk Assessment

Business Risks:

• Input cost volatility (malt, aluminum, energy) impacting gross margins
• Competitive pricing pressure in domestic and overseas beverage markets
• Regulatory and tax changes on alcoholic beverages
• Demand softness in Japan due to demographics and consumption trends
• Execution risks in portfolio mix and overseas operations
• Reputation and brand risks in consumer markets

Financial Risks:

• Reliance on equity-method income to augment PBT and net income
• Negative free cash flow due to elevated investing cash outflows
• FX volatility affecting overseas earnings and OCI
• Limited visibility on interest-bearing debt and interest expense; potential coverage risk cannot be assessed
• OCI losses reducing comprehensive income and owners’ equity
• Potential impairment risks on intangible assets (details unreported)

Key Concerns:

• Non-operating contributions (equity-method) form a meaningful share of profits
• Sustained negative FCF would pressure balance sheet flexibility if prolonged
• Incomplete disclosure on current liabilities and debt obscures true liquidity and leverage

Investment Implications

Key Takeaways:

• Stable top-line growth (+3.3% YoY) with healthy gross margin (44.3%) supports core earnings
• Operating margin around 7.0% and EBITDA margin 10.9% reflect decent efficiency
• Net income growth (+29.7% YoY) benefited from non-operating gains, including equity-method income (291.43)
• Strong cash conversion (OCF/NI 1.74x) underpins earnings quality
• FCF negative (-809.06) due to substantial investing CF (-2,595.10), implying an investment phase
• Balance sheet leverage appears moderate (broad D/E 1.25x), though granular debt metrics are unavailable
• Equity ratio at 35.3% indicates adequate solvency at the owners’ equity level
• Comprehensive income below net income highlights OCI headwinds

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio
• OCF versus EBITDA and working capital movements
• Capex and M&A cash outflows (to clarify FCF normalization path)
• Equity-method income volatility and contribution to PBT
• FX impacts on OCI and reported earnings
• Interest-bearing debt, interest expense, and coverage once disclosed
• Inventory and receivable turnover as demand and pricing evolve

Relative Positioning: Within Japanese beverage peers, Kirin shows solid margins and strong cash conversion, with moderate leverage; current results are supported by non-operating gains and tempered by investment-driven negative FCF, positioning it as operationally resilient but investment-intensive in the period.

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