| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥96.3B | ¥100.2B | -3.9% |
| Operating Income | ¥2.5B | ¥1.3B | +99.0% |
| Ordinary Income | ¥8.9B | ¥6.3B | +42.2% |
| Net Income | ¥-22.7B | ¥6.8B | -28.7% |
| ROE | -4.9% | 1.5% | - |
For the fiscal year ended March 2026, Yomeishu Seizo Co., Ltd. reported Revenue of ¥96.3B (YoY ▲¥3.9B ▲3.9%), Operating Income of ¥2.5B (YoY +¥1.2B +99.0%), Ordinary Income of ¥8.9B (YoY +¥2.6B +42.2%), and Net Income of ¥-22.7B (YoY ▲¥29.5B). While Revenue declined, aggressive cuts in advertising expense and fixed-cost compression effectively doubled Operating Income. However, the recognition of Special Losses totaling ¥35.6B, including an impairment loss of ¥30.0B, resulted in a net loss. Ordinary Income was supported by non-operating income such as dividend income received of ¥5.7B, with non-operating income totaling ¥6.7B (6.9% of Revenue), indicating continued high dependence on financial asset income.
[Revenue] Revenue decreased to ¥96.3B (YoY ▲3.9%). By segment, the core Yomeishu-related Business recorded ¥82.0B (▲4.3%), accounting for 85.1% of Revenue and contracting, while the Kurasuwa-related Business grew to ¥14.3B (+14.2%) but was insufficient to offset the overall decline. Gross margin declined to 54.5% (prior year around 57.3%), down approximately 2.8ppt, revealing a dual pressure of top-line contraction and margin deterioration.
[Profitability] Operating Income rose to ¥2.5B (+99.0%), effectively doubling. SG&A was reduced to ¥49.9B (SG&A ratio 51.9%) from ¥56.2B in the prior year, an approximately 11% reduction, with a primary driver being a reduction in advertising expense to ¥10.0B (prior year ¥16.9B), a roughly 41% cut. Operating margin improved by +1.3ppt to 2.6% (prior year 1.3%) but remains below 5%. Ordinary Income increased to ¥8.9B (+42.2%), aided by non-operating income of ¥6.7B including dividend income received of ¥5.7B and securities interest of ¥0.5B. On the other hand, after accounting for Special Losses including an impairment loss of ¥30.0B and Special Gains of ¥4.2B including investment securities sale gains of ¥4.1B, Profit Before Tax was ¥-22.6B, and after corporate taxes of ¥0.2B, Net Income was ¥-22.7B. Conclusion: revenue down but operating profit up (at the operating level), but a one-off impairment turned the result into a net loss.
The Yomeishu-related Business posted Revenue of ¥82.0B (YoY ▲4.3%), Operating Income of ¥24.8B (+5.4%), and an Operating Margin of 30.3%, maintaining high profitability and achieving profit growth through cost control despite Revenue contraction. The Kurasuwa-related Business grew Revenue to ¥14.3B (+14.2%) but widened its operating loss to ¥7.1B (prior year ▲¥6.2B), with a margin of ▲49.7%, failing to contribute positively to profitability. Consolidated Operating Income after company-wide allocations remained ¥2.5B, with the structural losses in the Kurasuwa business and company overheads weighing on overall profitability.
[Profitability] Operating margin 2.6% (prior year 1.3%), gross margin 54.5% (prior year around 57.3%), ROE ▲4.9% (prior year +1.5%). Operating margin improved due to SG&A compression but remains below the industry median (median 5.0%); gross margin decline and dependence on non-operating income continue.
[Cash Quality] Operating Cash Flow/Net Income ▲0.13x, Operating Cash Flow/EBITDA 0.27x, indicating weak cash conversion of profits. Inventory days 154, Days Sales Outstanding (DSO) 81 days, Cash Conversion Cycle (CCC) 218 days, showing significant working capital stagnation and structural issues in cash generation.
[Investment Efficiency] Total asset turnover 0.178x, ROIC 0.7%, both extremely low. Investment securities ¥282.0B (52.2% of total assets) indicate a heavy weighting of financial assets, suppressing asset efficiency.
[Financial Soundness] Equity Ratio 85.8%, Current Ratio 760.1%, D/E Ratio 0.17x, Interest Coverage 36.54x, reflecting a very strong financial position. Cash and deposits ¥94.1B, short-term securities ¥10.0B provide ample liquidity, but low-turnover asset composition is a challenge for capital efficiency.
Operating Cash Flow was ¥2.9B (YoY ▲37.8%), shrinking and signaling warning relative to Net Income of ¥-22.7B with Operating Cash Flow/Net Income of ▲0.13x. Operating cash flow subtotal (pre-working capital changes) was ▲¥0.6B, indicating weak core cash generation and reliance on non-cash charges such as depreciation of ¥8.3B. Working capital movements were modest: inventory change +¥0.4B, accounts receivable change ▲¥0.6B, accounts payable change +¥0.3B, but persistent high inventory days (154) and DSO (81) impede cash conversion. Investing Cash Flow saw a large inflow of ¥24.3B, aided by securities sale gains ¥6.1B and time deposit withdrawals ¥26.6B, far exceeding capital expenditure of ▲¥2.7B. Financing Cash Flow was ▲¥6.3B, with dividend payments of ▲¥6.2B, negligible share buybacks, and net short-term borrowings roughly offsetting ±¥6.0B. Free Cash Flow was positive ¥27.2B, but largely driven by financial transactions such as time deposit withdrawals and securities sales; core-business cash generation is limited. Interest and dividend receipts of ¥6.4B supported Operating Cash Flow, but improving cash realization from operations will require reductions in inventory and receivables and greater expense efficiency.
Net Income of ¥-22.7B this period was driven by one-off Special Losses of ¥35.6B including an impairment loss of ¥30.0B. Ordinary Income of ¥8.9B relied heavily on non-operating income of ¥6.7B (5.9% of Revenue from dividend income received ¥5.7B, and ¥0.5B securities interest), exceeding core Operating Income of ¥2.5B (2.6% of Revenue) by more than threefold. As a recurring earnings base, dependence on non-operating income is high and core EBIT margin remains weak. Operating Cash Flow of ¥2.9B is roughly in line with Operating Income of ¥2.5B, but relative to Net Income the Operating Cash Flow/Net Income of ▲0.13x highlights accrual distortions; even excluding the impairment, cash conversion remains weak due to working capital stagnation. There were also one-off gains such as investment securities sale gains of ¥4.1B, but the large impairment leads to a ¥31.5B gap between Ordinary Income and Net Income. Evaluating earnings quality hinges on three factors: sustainability of Operating Income, stability of non-operating income, and the degree to which impaired assets recover profitability.
The year-end dividend was suspended (no dividend); cash dividend payments during the period were ¥6.2B (prior period ¥6.2B). With Net Income of ¥-22.7B, Payout Ratio is not computable; dividend funding relies on retained earnings from prior periods. As announced on April 9, 2026, following the successful tender offer, the company is scheduled to be delisted on June 18, 2026, and dividend policy will shift to the new owner's capital policy. Share buybacks were ¥-0.0B (negligible), so total return during the period was effectively dividends only. Free Cash Flow of ¥27.2B more than covers dividend payments, but with Operating Cash Flow weak at ¥2.9B and reliance on drawing down financial assets, sustainable shareholder return capacity depends on recovery of core business cash generation.
Working Capital Efficiency Risk: Inventory days 154, DSO 81, CCC 218 indicate persistently high working capital stagnation relative to peers, structurally pressuring cash generation due to channel and supply-demand mismatches. Coupled with declining gross margin, improving inventory turnover and credit management is urgent.
Earnings Structure Vulnerability Risk: With an Operating Margin of 2.6% well below the industry median of 5.0%, and over 70% of Ordinary Income (¥8.9B) coming from non-operating income (e.g., dividend income received ¥5.7B), the thin core profitability and high dependence on financial income expose earnings to valuation swings in investment securities and dividend reductions.
Post-impairment Asset Efficiency Risk: The ¥30.0B impairment reduced tangible fixed assets to ¥88.4B (YoY ▲27.4%), but ROIC remains extremely low at 0.7%. If profitability does not recover on the post-impairment asset base, additional impairment or asset replacement costs may occur, further pressuring profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.6% | 5.0% (3.3%–8.4%) | -2.4pt |
| Net Margin | -23.6% | 3.2% (1.9%–6.6%) | -26.8pt |
Operating Margin trails the industry median by 2.4ppt, indicating substantial scope for cost-structure efficiency improvements. Net Margin is deeply negative due to the one-off impairment.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -3.9% | 5.4% (1.0%–8.6%) | -9.3pt |
Revenue growth lags the industry median by 9.3ppt, making top-line expansion a key challenge.
※Source: Company aggregation
Quality and sustainability of core earnings: Although Operating Margin doubled year-on-year to 2.6%, the improvement was primarily driven by a large reduction in advertising expense (▲41%), and the medium-to-long-term impact on brand strength and demand should be monitored. With Ordinary Income of ¥8.9B including ¥6.7B of non-operating income, dependence on financial asset returns is high; strengthening core EBIT generation is critical for sustainable growth.
Working capital management and cash conversion: High working capital stagnation — inventory days 154, DSO 81, CCC 218 — constrains Operating Cash Flow, and Operating Cash Flow/EBITDA of 0.27x indicates very low cash conversion. Inventory optimization, faster receivables collection, and optimization of payable terms are directly linked to sustainable Free Cash Flow generation and ROIC improvement.
Asset efficiency and post-impairment recovery: With investment securities of ¥282.0B (52.2% of total assets) and total asset turnover of 0.178x and ROIC 0.7%, capital efficiency is very low. The impact on operating margin on the post-impairment asset base, progress of structural reforms in the Kurasuwa business, and appropriate allocation of company-wide overheads will be key considerations for recovery of profitability and avoidance of further impairments.
This report was automatically generated by AI analysis of XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the firm based on public financial statements. Investment decisions are your own responsibility; consult advisors as needed.