| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥212.7B | ¥194.2B | +9.5% |
| Operating Income | ¥12.7B | ¥7.0B | +81.9% |
| Ordinary Income | ¥13.1B | ¥7.2B | +83.5% |
| Net Income | ¥9.4B | ¥5.3B | +77.2% |
| ROE | 3.4% | 2.0% | - |
The results for Q1 FY2026 show revenue of ¥212.7B (YoY +¥18.4B +9.5%), operating income of ¥12.7B (YoY +¥5.7B +81.9%), ordinary income of ¥13.1B (YoY +¥6.0B +83.5%), and net income of ¥9.4B (YoY +¥4.1B +77.2%), representing higher revenue and materially higher profits. Price revisions and improved product mix in the core Alcoholic Beverages business lifted gross margin to 18.8% (up +2.1pt from 16.7% a year earlier). SG&A ratio improved to 12.8% (down -0.3pt from 13.1%), driving operating margin to 6.0% (up +2.4pt from 3.6%). The high-margin Enzyme Pharmaceuticals segment (operating margin 28.6%) continued high growth with sales +26.8%, and the Real Estate segment maintained a high margin (59.6%). However, the profitability improvement in the Alcoholic Beverages segment, which accounts for 91.3% of sales composition, was the primary driver of consolidated earnings improvement.
[Revenue] Revenue was ¥212.7B (prior year ¥194.2B, +9.5%). The Alcoholic Beverages segment recorded ¥194.1B (+8.5%), accounting for 91.3% of total revenue; price revisions and product mix improvements drove revenue growth. The Enzyme Pharmaceuticals segment achieved ¥15.0B (+26.8%) and continued high growth. The Real Estate segment was ¥3.3B (+0.6%) and remained stable. Other segments (warehousing/stevedoring, etc.) contracted to ¥0.2B (-16.0%). Segment revenue composition: Alcoholic Beverages 91.3%, Enzyme Pharmaceuticals 7.1%, Real Estate 1.6%.
[Profitability] Cost of sales was ¥172.7B (prior year ¥161.8B), resulting in gross profit of ¥40.0B and a gross margin of 18.8% (up +2.1pt from 16.7%). SG&A was ¥27.3B (SG&A ratio 12.8%, down -0.3pt from 13.1%), reflecting effective cost control, producing operating income of ¥12.7B (operating margin 6.0%, up +2.4pt from 3.6%). Non-operating income was ¥1.0B (including dividend income ¥0.2B and equity-method investment income ¥0.3B), and non-operating expenses were ¥0.6B (interest expense ¥0.4B, foreign exchange losses ¥0.1B), yielding ordinary income of ¥13.1B (+83.5%). Extraordinary items were roughly neutral (gain on sale of investment securities ¥0.1B, loss on disposal of fixed assets ¥0.0B), resulting in profit before tax ¥13.1B. After deducting income taxes of ¥3.7B (effective tax rate 28.2%), net income was ¥9.4B (+77.2%). Net income attributable to non-controlling interests was ¥0.0B, and net income attributable to owners of parent was ¥9.4B. Conclusion: revenue up, substantial profit growth.
Alcoholic Beverages segment (revenue ¥194.1B, operating income ¥6.3B, margin 3.3%) recorded revenue +8.5% and operating income +167.9%, a substantial profit increase. Margin expansion driven mainly by price revisions and product mix improvements. Enzyme Pharmaceuticals segment (revenue ¥15.0B, operating income ¥4.3B, margin 28.6%) posted revenue +26.8% and operating income +65.4%, maintaining high growth and high profitability and improving the consolidated profit mix. Real Estate segment (revenue ¥3.3B, operating income ¥2.0B, margin 59.6%) recorded revenue +0.6% and operating income +1.5%, continuing stable high margins. Other segments (warehousing/stevedoring, revenue ¥0.2B, operating income ¥0.0B, margin 14.3%) contracted -16.0% in revenue but profits were flat. Profitability improvement in the core Alcoholic Beverages business and growth in high-margin segments supported the consolidated operating margin improvement to 6.0%.
[Profitability] Operating margin 6.0% (up +2.4pt from 3.6%), net margin 4.4% (up +1.6pt from 2.8%), indicating material improvement in profitability. Gross margin 18.8% (up +2.1pt from 16.7%) reflects price revisions and product mix improvements; SG&A ratio 12.8% (down -0.3pt from 13.1%) indicates progress in cost management. ROE 3.4% (prior year 2.0%) improved +1.4pt due to net margin improvement and higher total asset turnover, yet remains at a low level.
[Cash Quality] Working capital shows significant funding tied up: accounts receivable ¥152.2B (DSO 261 days), inventories ¥75.3B (DIO 186 days), resulting in a cash conversion cycle (CCC) of approximately 361 days. Cash and deposits ¥7.3B (prior year ¥8.8B, -17.1%) indicate thin liquidity on hand.
[Investment Efficiency] Total asset turnover 0.39x (prior year 0.33x) improved with higher sales, but working capital stagnation impedes asset efficiency.
[Financial Soundness] Equity ratio 50.2% (up +6.0pt from 44.2%), Debt/Capital 13.7% (interest-bearing debt ¥43.5B ÷ (total equity ¥274.3B + interest-bearing debt ¥43.5B)), indicating healthy financial leverage. Current ratio 115.5% (current assets ¥251.6B ÷ current liabilities ¥217.8B), quick ratio 80.9% — short-term liquidity is borderline. Short-term borrowings ¥40.5B (prior year ¥19.5B, +107.7%) and short-term debt ratio 93.1% (short-term borrowings ¥40.5B ÷ interest-bearing debt ¥43.5B) show a maturity profile skewed to short-term. Cash/short-term borrowings ratio 0.18x (cash ¥7.3B ÷ short-term borrowings ¥40.5B) indicates liquidity stress. Interest coverage is 34.2x (operating income ¥12.7B ÷ interest expense ¥0.4B), indicating sufficient solvency.
Non-operating and extraordinary items had minimal impact (non-operating income ¥1.0B, non-operating expenses ¥0.6B, extraordinary +¥0.1B), so profit increases were driven by core operations. However, working capital stagnation is pronounced: DSO 261 days (accounts receivable ¥152.2B ÷ revenue ¥212.7B × 365), DIO 186 days (inventories ¥75.3B ÷ cost of sales ¥172.7B × 365), DPO ≈87 days (accounts payable ¥41.0B ÷ cost of sales ¥172.7B × 365), yielding CCC ≈361 days — an extremely long cash conversion cycle. Inventories rose +6.5% from ¥70.7B to ¥75.3B year-over-year, indicating inventory accumulation. Short-term borrowings increased by ¥21.0B (+107.7%) from ¥19.5B to ¥40.5B, while long-term borrowings halved from ¥6.0B to ¥3.0B, showing a shift toward short-term financing. Accounting net income ¥9.4B reflects underlying performance, but working capital funding constraints and short-term borrowing dependence limit cash flow quality; inventory optimization and stronger collections are required. Cash and deposits are thin at ¥7.3B; cash cover of short-term borrowings is 0.18x, exposing rollover and liquidity vulnerability.
Operating income of ¥12.7B is the core of earnings. Non-operating income ¥1.0B (0.47% of revenue) comprises dividend income ¥0.2B and equity-method investment income ¥0.3B, and non-operating expenses ¥0.6B (interest expense ¥0.4B, foreign exchange loss ¥0.1B) remain within normal ranges. Extraordinary gain ¥0.1B (gain on sale of investment securities) and extraordinary loss ¥0.0B (loss on disposal of fixed assets) indicate limited one-off impacts. The difference between ordinary income ¥13.1B and net income ¥9.4B is mainly income taxes ¥3.7B (effective tax rate 28.2%), with negligible contribution from non-recurring items. The +2.4pt improvement in operating margin stems from price revisions, product mix improvements, and SG&A efficiency, supporting solid earnings quality. Interest coverage 34.2x indicates minor interest burden. However, the persistence of working capital stagnation (CCC 361 days) poses a risk to cash conversion, and accrual quality should be monitored.
Full year guidance is unchanged: revenue ¥890.0B (+1.6%), operating income ¥39.5B (-4.5%), ordinary income ¥40.0B (-6.8%), net income ¥29.0B, EPS ¥51.47, dividend ¥12.00 per share. Q1 progress ratios versus the full-year forecast: revenue 23.9% (¥212.7B ÷ ¥890.0B), operating income 32.1% (¥12.7B ÷ ¥39.5B), ordinary income 32.8% (¥13.1B ÷ ¥40.0B), net income 32.4% (¥9.4B ÷ ¥29.0B). Compared with the standard quarterly pace of 25%, profitability is about 7–8pt ahead, as gross margin improvements, SG&A efficiency, and product mix improvements have taken effect ahead of schedule. Revenue is largely on plan; quantity trends are cautious while price/mix are driving profitability. No revisions to earnings or dividend forecasts.
Dividend forecast is ¥12.00 per share (prior year ¥11.00, +¥1.00). Weighted average shares outstanding during the period are 56,346 thousand shares. With full-year EPS forecast ¥51.47, the payout ratio is 23.3%, a conservative level. Q1 EPS was ¥16.69 (prior year ¥9.41, +77.4%), indicating sufficient dividend capacity. Net assets attributable to owners of parent are ¥266.4B, interest-bearing debt ¥43.5B, and Debt/Capital 13.7%, reflecting strong financial health and no immediate issue with dividend funding. However, cash and deposits ¥7.3B versus short-term borrowings ¥40.5B (cash/short-term borrowings ratio 0.18x) mean liquidity on hand is thin; if working capital funding constraints persist, there may be a trade-off between maintaining dividends and preserving liquidity. No share buyback is disclosed.
Liquidity risk: Short-term borrowings ¥40.5B (YoY +107.7%) and a short-term skew in debt maturity (short-term debt ratio 93.1%) are progressing, with cash/short-term borrowings ratio 0.18x indicating liquidity stress. The working capital structure (CCC 361 days) ties up funds, exposing the company to rollover and liquidity vulnerability. Rising interest rates would increase funding costs.
Working capital efficiency risk: DSO 261 days and DIO 186 days lengthen the cash conversion cycle, tying up funds in receivables and inventory. Inventories rose +6.5% YoY, suggesting inventory stagnation and raising the risk of impairment or disposal and weaker capital efficiency. Inventory optimization and stronger credit/collection management are urgent.
Concentration in Alcoholic Beverages and gross margin vulnerability: High concentration in the Alcoholic Beverages segment (91.3% of revenue) means underperformance in specific categories or channels would directly impact results. Gross margin of 18.8% remains below industry benchmarks (25–40%), leaving vulnerability to increases in raw material, energy, and logistics costs and pricing pressure from private brands. Demand changes (health trends, younger cohorts drinking less) and exchange rate moves (yen depreciation increasing imported input costs) are downside risks.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.0% | – | – |
| Net Margin | 4.4% | – | – |
Industry median data are limited, but the company’s operating margin of 6.0% represents a significant improvement from 3.6% a year ago, and net margin 4.4% is up +1.6pt from 2.8%.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 9.5% | – | – |
Revenue growth of 9.5% is estimated to be favorable within the industry.
※ Source: Company compilation
Price revisions and product mix improvements raised gross margin to 18.8% (up +2.1pt from 16.7%) and operating margin to 6.0% (up +2.4pt from 3.6%), pushing profit progress about 7–8pt ahead of the full-year plan. High-margin Enzyme Pharmaceuticals (operating margin 28.6%, revenue +26.8%) improved the profit mix, and combined with improved profitability in the core Alcoholic Beverages business, consolidated profitability continued to improve.
Short-term borrowings increased +107.7%, short-term debt ratio 93.1%, and cash/short-term borrowings ratio 0.18x — exposing vulnerabilities in liquidity and maturity composition. With DSO 261 days, DIO 186 days, and CCC 361 days tying up funds, inventory optimization, stronger collections, and extending debt maturities are key to cash flow quality and dividend sustainability. Although gross margin improvement is progressing, it remains below industry benchmarks (25–40%), so strengthening resilience against cost inflation and price competition is necessary.
This report was automatically generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmark figures are compiled by the firm based on public financial statements and are provided for reference only. Investment decisions are your responsibility; please consult a professional advisor as needed.