HOKKAIDO COCA-COLA BOTTLING CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥44.70B
• Operating Income: ¥2.23B
• Net Income: ¥1.52B
• EPS: ¥105.66

Income Statement

Balance Sheet

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

Hokkaido Coca-Cola Bottling (25730) delivered steady topline and operating profit growth in FY2025 Q3, with revenue up 3.4% year over year to ¥44.7bn and operating income up 5.1% to ¥2.23bn. Gross profit reached ¥14.02bn, implying a gross margin of 31.4%, which is solid for a regional beverage bottler and suggests pricing/mix and/or cost control offset input inflation. Operating margin printed at 5.0%, showing modest operational leverage as operating income growth outpaced sales growth. Ordinary income was essentially in line with operating income at ¥2.22bn, reflecting minimal non-operating drag (interest expense only about ¥1m). Net income declined 5.4% to ¥1.44bn despite higher operating profit, likely due to a normalized tax burden; our calculated effective tax rate is approximately 34–35%, consistent with Japanese statutory levels. DuPont analysis shows ROE of 3.33%, driven by a 3.21% net margin, asset turnover of 0.813x, and low financial leverage of 1.28x, indicating conservative capitalization constraining ROE despite decent operating performance. Balance sheet strength is a clear positive: current ratio is 283% and quick ratio 225%, with working capital of ¥15.30bn. Total liabilities are only ¥9.80bn against equity of ¥43.09bn, for a debt-to-equity of 0.23x, underscoring ample solvency headroom. Using reported assets and equity, the implied equity ratio is about 78.4% (the line-item equity ratio was unreported), reaffirming a fortress balance sheet. Interest coverage is extremely high (~2,227x using operating income), reflecting negligible interest burden. Cash flow and depreciation were not disclosed in this dataset, so EBITDA and free cash flow metrics shown as zero are placeholders rather than economic reality for this asset-intensive business. The absence of cash flow data limits assessment of earnings-to-cash conversion and capex intensity, both critical for bottlers given plant, fleet, and vending machine investments. Dividend information is also unreported; with net income of ¥1.44bn and strong balance sheet, capacity likely exists, but policy and coverage cannot be verified without OCF/FCF. Inventory stands at ¥4.82bn within current assets of ¥23.65bn, which appears manageable; however, inventory turns and obsolescence risk cannot be assessed without additional detail. Overall, Q3 indicates resilient demand and cost control, modest margin improvement at the operating line, and continued conservative financial policy. Key watchpoints are the sustainability of price/mix gains, input cost trends (PET resin, sugar, aluminum, energy), and the eventual release of cash flow and depreciation data to validate earnings quality and dividend capacity.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.21% (Net income ¥1,437m / Revenue ¥44,699m)
• asset_turnover: 0.813x (Revenue ¥44,699m / Total assets ¥54,990m)
• financial_leverage: 1.28x (Assets ¥54,990m / Equity ¥43,091m)
• calculated_ROE: 3.33% (matches reported 3.33%)
• ROA: 2.61% (Net income ¥1,437m / Assets ¥54,990m) margin_quality:
• gross_margin: 31.4% (¥14,018m / ¥44,699m)
• operating_margin: 5.0% (¥2,227m / ¥44,699m)
• ordinary_margin: 5.0% (¥2,223m / ¥44,699m)
• net_margin: 3.21%
• commentary: Gross margin is healthy for a regional bottler, indicating reasonable pricing power and/or cost discipline. Operating margin modestly expanded as OI growth (+5.1% YoY) outpaced revenue (+3.4% YoY). Non-operating items are negligible. operating_leverage: Positive in the period: operating income grew faster than revenue (+5.1% vs +3.4%), implying some fixed-cost absorption benefits. Further leverage depends on volume recovery, vending channel performance, and input cost normalization.

Growth Assessment

revenue_sustainability: Sales growth of 3.4% YoY suggests stable demand and/or price/mix improvement. Given regional exposure (Hokkaido), seasonality and weather play meaningful roles; sustainability hinges on summer sell-through and route vending performance. profit_quality: Operating profit growth of 5.1% YoY with minimal non-operating effects indicates underlying improvement. However, net profit declined 5.4% YoY due to a normalized tax burden; our estimated effective tax rate is ~34–35%, not 0%. outlook: With strong balance sheet and minimal interest burden, the company has capacity to invest in route optimization, cold drink equipment, and marketing. Near-term growth drivers include price/mix discipline, vending footprint productivity, and on-premise recovery. Risks include raw material and energy costs and competitive pricing.

Financial Health

liquidity:

• current_ratio: 283.1% (CA ¥23,653m / CL ¥8,354m)
• quick_ratio: 225.4% (CA−Inv ¥18,829m / CL ¥8,354m)
• working_capital: ¥15,299m
• commentary: Ample short-term liquidity with substantial buffer over current obligations. solvency:
• debt_to_equity: 0.23x (TL ¥9,797m / Equity ¥43,091m)
• equity_ratio_implied: 78.4% (Equity ¥43,091m / Assets ¥54,990m)
• interest_coverage: ≈2,227x (Operating income ¥2,227m / Interest expense ¥1m)
• commentary: Very conservative capital structure; negligible financial risk from leverage. capital_structure: Low leverage and high equity base provide flexibility to fund capex cycles typical for bottlers (plant, fleet, vending machines) without straining the balance sheet.

Cash Flow Quality

earnings_quality: Cannot be fully assessed due to undisclosed operating cash flow and depreciation in this dataset. Given the industry’s asset intensity, depreciation is expected to be material; the reported zero is an unreported item, not an economic zero. FCF_analysis: Free cash flow is shown as zero due to missing OCF and capex data. As such, FCF generation and reinvestment rates cannot be evaluated for the period. working_capital: Inventories at ¥4,824m appear reasonable relative to sales, but without receivables/payables turnover data and OCF, we cannot assess cash conversion cycle dynamics. Watch for inventory normalization post-peak season.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are unreported in this dataset (zeros indicate missing disclosure). With net income of ¥1,437m and strong balance sheet, capacity exists, but actual payout levels cannot be determined. FCF_coverage: Not assessable as OCF and capex are not disclosed; thus FCF coverage of dividends cannot be calculated. policy_outlook: Historically, Japanese beverage bottlers target stable dividends; however, without explicit guidance or cash flow data, we cannot infer policy changes. Balance sheet strength suggests room to maintain or gradually raise dividends when cash flows are confirmed.

Risk Assessment

Business Risks:

• Input cost volatility (PET resin, sugar, aluminum cans, CO2, and energy).
• Weather and seasonality in Hokkaido affecting demand, especially for cold beverages.
• Vending channel exposure (utilization rates, electricity costs, theft/maintenance).
• Competitive pricing and promotional intensity across retail and vending.
• Logistics and labor constraints (driver shortages, wage inflation).
• Product mix shifts toward low-margin SKUs or channels.
• Regulatory or health-related shifts impacting sugar-sweetened beverages.

Financial Risks:

• Capex cyclicality for vending machines, fleet, and plant equipment.
• Potential working capital swings around peak seasons impacting OCF.
• Asset impairment risk if underutilized equipment persists.
• Tax rate normalization keeping net margins structurally below operating margins.

Key Concerns:

• Lack of disclosed cash flow and depreciation data limits assessment of earnings quality.
• Sustainability of margin gains if input cost relief stalls.
• ROE at 3.33% is modest given the capital base and may remain subdued without leverage or higher margins/turnover.

Investment Implications

Key Takeaways:

• Topline grew 3.4% YoY to ¥44.7bn; operating income up 5.1% to ¥2.23bn.
• Operating margin at ~5.0%; gross margin at 31.4% indicates healthy pricing/mix.
• Net income fell 5.4% due to a normalized tax burden; effective tax rate ~34–35%.
• ROE is 3.33% with low leverage (financial leverage 1.28x), constraining return profile.
• Balance sheet is very strong: D/E 0.23x, implied equity ratio ~78%, current ratio 283%.
• Interest burden is negligible; coverage >2,000x.
• Cash flow and depreciation not disclosed; EBITDA/FCF metrics cannot be validated.
• Working capital position is solid; inventory level appears manageable.
• Positive operating leverage observed; watch sustainability into peak seasons.

Metrics to Watch:

• Operating cash flow, capex, and FCF margin once disclosed.
• Depreciation and amortization to gauge maintenance vs. growth capex needs.
• Price/mix vs. volume trends across vending, retail, and on-premise channels.
• Input cost indices (PET resin, sugar, aluminum) and energy/electricity costs.
• Inventory days, receivable/payable turns, and overall cash conversion cycle.
• Operating margin trajectory and SG&A efficiency.
• ROE vs. peers and potential capital allocation changes (dividends, buybacks, capex).

Relative Positioning: Versus domestic bottling peers, the company exhibits stronger balance sheet conservatism (low leverage, high equity ratio) but lower ROE, with margins in a reasonable range for a regional franchise. Scale is smaller than national peers, making operating leverage and cost control pivotal to narrow the ROE gap.

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