| Indicator | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4068.7B | ¥3657.8B | +11.2% |
| Operating Income / Operating Profit | ¥272.4B | ¥273.0B | -0.2% |
| Ordinary Income | ¥270.4B | ¥267.3B | +1.1% |
| Net Income | ¥201.3B | ¥203.7B | -1.2% |
| ROE | 1.4% | 1.4% | - |
In Q1 of the fiscal year ending March 2026, Revenue was ¥4,068.7B (YoY +¥410.9B +11.2%), Operating Income was ¥272.4B (YoY -¥0.6B -0.2%), Ordinary Income was ¥270.4B (YoY +¥3.0B +1.1%), and Profit Attributable to Owners of Parent was ¥149.2B (YoY -¥5.0B -3.2%). Revenue growth was achieved across all regions, but gross profit margin declined to 36.6% from 37.9% a year earlier (approximately -130bp) due to increases in raw material and logistics costs. SG&A ratio improved to 29.6% (approximately -56bp), but could not offset the deterioration in gross margin, resulting in an operating margin of 6.7% (down about 77bp from 7.5% a year earlier). By region, Oceania showed rapid growth with Revenue +66.3% and Operating Income +119.8%; Europe, Asia, and Americas also delivered revenue growth, but declines in Europe (Operating Income -5.6%) and Japan (Operating Income -11.9%) weighed on consolidated profits. Operating Cash Flow improved to ¥206.4B (YoY +79.4%), but increases in inventories of ¥129.1B and corporate tax payments of ¥131.4B were headwinds, resulting in a cash conversion rate of about 61% against the Operating CF subtotal of ¥337.6B. Investing Cash Flow was an outflow of ¥154.0B, mainly due to capital expenditures of ¥164.3B, leaving Free Cash Flow of ¥52.3B. Dividend payments of ¥185.4B were made, and Financing Cash Flow totaled an outflow of ¥220.8B. Cash and cash equivalents remained high at ¥1,324.2B, and the Equity Ratio was 60.3%, indicating sound financial health. Despite revenue growth, cost increases and segment mix pressure led to lower profits — a revenue-up / profit-down quarterly result.
[Revenue] Revenue of ¥4,068.7B was up ¥410.9B YoY (+11.2%). By region, Oceania stood out with ¥303.8B (+66.3%), Europe ¥879.6B (+13.0%), Americas ¥452.5B (+9.8%), Asia ¥831.0B (+9.6%), and Japan ¥1,601.8B (+4.9%). Segment composition: Japan 39.4% (largest), Europe 21.6%, Asia 20.4%, Americas 11.1%, Oceania 7.5%. Revenue increased across all segments, suggesting progress in price revisions, premium SKU shift, and channel optimization. Cost of sales rose to ¥2,581.1B (prior ¥2,271.0B, +13.7%), outpacing revenue growth, leaving gross profit at ¥1,487.5B (+7.3%). Gross margin fell to 36.6% from 37.9% (approx. -130bp), reflecting pressure from higher raw material, energy, and logistics costs.
[Profitability] SG&A increased to ¥1,204.1B (prior ¥1,103.2B, +9.1%), but as a percentage of sales improved to 29.6% from 30.2% (approx. -56bp), indicating some efficiency gains in SG&A management. However, the decline in gross margin could not be absorbed, and Operating Income slightly decreased to ¥272.4B (-0.2%). Operating margin was 6.7% (down approx. 77bp from 7.5% a year earlier). By region, Europe contributed the largest Operating Income at ¥111.4B (margin 12.7%) but was down -5.6% YoY; Asia posted ¥101.9B (margin 12.3%, +1.4%); Americas ¥43.9B (margin 9.7%, +10.8%); Oceania ¥30.8B (margin 10.1%, +119.8%). Japan’s Operating Income was ¥42.8B (margin 2.7%, -11.9%), showing low margin and double-digit decline. Consolidated adjustments increased as well, with segment profit totaling ¥330.8B and consolidated Operating Income after adjustments at ¥272.4B. Non-operating items comprised financial income ¥6.8B and financial expenses ¥8.8B for a net -¥2.0B, equity-method profit ¥1.3B, and other items net -¥12.4B, bringing total non-operating loss to -¥13.1B. Ordinary Income was ¥270.4B (+1.1%), and after corporate taxes of ¥69.0B, quarterly profit was ¥201.3B (-1.2%). Profit Attributable to Owners of Parent was ¥149.2B (-3.2%), with non-controlling interests of ¥58.6B. Rising cost ratios and segment mix (declines in Japan and Europe) compressed margins, producing a revenue-up / profit-down result despite top-line growth.
Japan: Revenue ¥1,601.8B (+4.9%) — slight increase, but Operating Income ¥42.8B (-11.9%), a double-digit decline, with margin 2.7% (lowest among segments). Pressure stems from higher raw material and logistics costs, delayed price pass-through, and intense competition.
Europe: Revenue ¥879.6B (+13.0%) — solid growth, but Operating Income ¥111.4B (-5.6%) with margin 12.7%. Despite revenue gains, increased costs of sales and higher promotion expenses likely drove the profit decline.
Asia: Revenue ¥831.0B (+9.6%), Operating Income ¥101.9B (+1.4%), margin 12.3%. Revenue and profit both grew, but profit expansion was modest.
Oceania: Revenue ¥303.8B (+66.3%), Operating Income ¥30.8B (+119.8%), margin 10.1%. Highest growth rates, likely aided by new business initiatives and acquisition effects.
Americas: Revenue ¥452.5B (+9.8%), Operating Income ¥43.9B (+10.8%), margin 9.7% — revenue and profit growth with improving margins.
Corporate adjustments (inter-segment transfers and headquarters costs) were -¥58.4B (prior -¥47.7B), reflecting increased central costs. Aggregate segment Operating Income was ¥330.8B, but consolidated Operating Income after adjustments was ¥272.4B. Declines in Japan and Europe weighed on consolidated profits, while Oceania and Americas provided downside support.
[Profitability] Operating margin of 6.7% declined about 77bp from 7.5% a year earlier; the primary driver was the decline in gross margin to 36.6% (from 37.9%, -130bp). SG&A ratio improved to 29.6% from 30.2% (-56bp) but could not offset gross margin deterioration. Net income margin attributable to owners of parent was 3.7% (prior 4.2%). ROE was 1.4%, low on an annualized basis, indicating substantial room to improve capital efficiency. By region, Europe 12.7% and Asia 12.3% maintain high margins, while Japan’s low 2.5% (actually 2.7% above) pulls down the consolidated average.
[Cash Quality] Operating Cash Flow was ¥206.4B, 1.38x Profit Attributable to Owners of Parent (¥149.2B), indicating high quality, but the cash conversion rate against the Operating CF subtotal of ¥337.6B was around 61%, constrained by inventory increase of ¥129.1B and corporate tax payments of ¥131.4B. Inventories were ¥1,515.1B, up +10.2% from ¥1,375.3B a year earlier, with Days Inventory Outstanding (DIO) around 214 days — a high level that raises concerns over capital efficiency.
[Investment Efficiency] Capital expenditures of ¥164.3B were about 72% of depreciation and amortization of ¥227.1B, indicating maintenance/update-focused investment and restrained capex. Impairment losses were minor at ¥0.8B. Goodwill was ¥2,995.2B (20.9% of equity, 13.7% of total assets); under IFRS goodwill is not amortized. Intangible assets/total assets stood at 25.8%, somewhat elevated.
[Financial Health] Equity Ratio was 60.3%. Interest-bearing debt totaled ¥154.4B (short-term ¥149.4B, long-term ¥5.0B) versus cash & deposits of ¥1,324.2B, representing a net cash position. Interest coverage was around 31x (EBIT ¥272.4B / financial expenses ¥8.8B), indicating light interest burden. Current ratio was about 130% (current assets ¥6,926.1B / current liabilities ¥5,345.9B), showing adequate short-term liquidity.
Operating CF was ¥206.4B (prior ¥115.1B, +79.4%), a marked improvement. Composition: pre-tax quarterly profit ¥270.4B, depreciation & amortization ¥227.1B, impairment losses ¥0.8B, and adjustments for non-operating items produced an Operating CF subtotal of ¥337.6B. Working capital movements: inventories increased by ¥129.1B (improved from prior period increase of ¥196.0B), accounts receivable decreased by ¥417.5B (collection progress), accounts payable decreased by ¥317.1B (increased payments), and other working capital items contributed a negative ¥133.2B. Interest & dividend received ¥6.9B, interest paid ¥6.7B, and corporate tax paid ¥131.4B resulted in Operating CF of ¥206.4B. Investing CF was an outflow of ¥154.0B, driven by capital expenditures ¥164.3B (prior ¥190.6B, reduced) and proceeds from sale of tangible fixed assets ¥7.9B. Free Cash Flow was positive at ¥52.3B (Operating CF ¥206.4B − Investing CF ¥154.0B). Financing CF was an outflow of ¥220.8B, mainly dividend payments ¥185.4B and lease liability repayments ¥35.0B. Cash and cash equivalents declined from opening ¥1,486.6B to closing ¥1,324.2B after foreign exchange impact of +¥6.1B. Operating CF / EBITDA ratio was about 0.41x (Operating CF ¥206.4B / estimated EBITDA ≈ ¥499.5B = EBIT ¥272.4B + D&A ¥227.1B), with inventory increases and corporate tax payments suppressing cash conversion, though receivables collection contributed positively. Normalization of inventory days will be key to improving cash conversion in subsequent quarters.
Operating Income ¥272.4B and Ordinary Income ¥270.4B were nearly aligned, with non-operating loss net -¥13.1B — limited in scale. Breakdown: financial income ¥6.8B, financial expenses ¥8.8B (net -¥2.0B), equity-method profit +¥1.3B, other income ¥8.8B, other expenses ¥21.2B (net -¥12.4B). Other expenses may include temporary impairments or provisions, but no explicit special items were disclosed, indicating core operations are the main profit source. Total comprehensive income was ¥235.4B, exceeding quarterly profit ¥201.3B by ¥34.1B. Components of other comprehensive income: foreign currency translation adjustments +¥33.7B (benefit from yen depreciation), cash flow hedges +¥1.6B, fair value of financial assets -¥1.3B, remeasurements of defined benefit plans +¥0.02B. FX translation gains boosted comprehensive income, with Profit Attributable to Owners of Parent at ¥176.7B (¥149.2B quarterly net income + ¥27.5B OCI attributable to owners). The uplift in comprehensive income was driven by foreign exchange valuation gains, so cash-earnings capacity should be judged on quarterly net income. Progress in receivables collection (larger YoY decrease in accounts receivable) and controlled inventory increases improved the cash conversion rate against the Operating CF subtotal of ¥337.6B. Nevertheless, the ¥129.1B inventory increase remains a drag; improving inventory efficiency is central to enhancing quality of earnings. The accrual position is favorable (net income < Operating CF), indicating high cash earnings quality.
Full Year guidance remains: Revenue ¥18,260B (YoY +4.2%), Operating Income ¥1,550B (YoY +4.2%), Ordinary Income ¥1,535B (YoY +4.8%), Profit Attributable to Owners of Parent ¥890B (YoY +0.3%), EPS ¥288.03, Dividend ¥60 per share unchanged. Progress at Q1: Revenue 22.3% (¥4,068.7B / ¥18,260B), Operating Income 17.6% (¥272.4B / ¥1,550B), Profit Attributable to Owners of Parent 16.8% (¥149.2B / ¥890B). Revenue progress is roughly within seasonal norms, but Operating Income and Net Income progress lag due to front-loaded investments and margin pressures. Although revenue grew in Q1, Operating Income was flat and Net Income declined, primarily due to gross margin deterioration and profit declines in Japan and Europe. Achieving the full-year plan assumes easing of raw material and logistics cost pressures in H2, price revisions and mix improvement, and promotional efficiency gains to restore operating margins. Dividend policy remains ¥60 per share for the full year; based on forecasted Profit Attributable to Owners of Parent ¥890B, the payout ratio is about 20.9%, a sustainable level. No forecast revision has been announced at this time, but depending on progress at the end of H1, re-evaluation of H2 plans may be necessary.
Dividend payments of ¥185.4B were made in Q1 (equivalent to ¥60 per share, matching the prior year dividend payment). Full-year dividend forecast is ¥60 per share, unchanged, with payout ratio versus forecasted Profit Attributable to Owners of Parent ¥890B at about 20.9%. Shares outstanding are 309,000,000 shares (excluding 340 shares of treasury stock), and average shares outstanding during the period are approximately 309,000,000. No share buybacks were executed (Financing CF ¥0 for buybacks); shareholder return consisted of dividends only. The payout ratio of 20.9% is conservative; Free Cash Flow ¥52.3B is insufficient to cover the interim dividend payment of ¥185.4B in the quarter, but this is largely due to timing of inventory increases and corporate tax payments, and full-year Operating CF recovery is expected to cover dividends. Cash & deposits ¥1,324.2B provide ample liquidity, supporting dividend sustainability. Retained earnings are ¥7,635.2B, providing sufficient distributable reserves. With an Equity Ratio of 60.3% and sound financial health, there remains scope for enhancing total shareholder return via dividend increases or buybacks when profits recover. For now, the policy is to maintain stable dividends and consider increasing returns in a profit-recovery phase.
Gross Margin Downside Risk: Gross margin at 36.6% is down ~130bp from 37.9% a year earlier, directly impacted by rises in raw materials (sugar, PET resin, coffee beans, etc.), energy, and logistics costs. Delays in price pass-through and persistent high promotional intensity from competitors could further compress operating margins. Inventories at ¥1,515.1B (YoY +10.2%) with DIO around 214 days are high; risks include inventory obsolescence and additional margin pressure from discounting.
Regional Mix Deterioration Risk: Profitability in core regions has declined — Japan Operating margin 2.7% (prior 4.9%), Europe 12.7% (prior 15.2%). Japan faces intense competition and difficulty passing through costs; Europe faces cost inflation and higher promotion spend. If profitability improvements in these regions are delayed, high growth in Oceania and Americas may be insufficient to restore consolidated profits. Japan and Europe account for about 61% of consolidated revenue, so continued profit declines in these regions would make achieving targets difficult.
Constraints on Cash Generation: Operating CF ¥206.4B is 1.38x Profit Attributable to Owners of Parent, indicating quality, but the inventory increase of ¥129.1B strains working capital. Operating CF / EBITDA ratio around 0.41x is low; delays in correcting inventory efficiency could constrain investment capacity and shareholder returns. Capex of ¥164.3B is restrained, but underinvestment could erode competitiveness. Cash & deposits ¥1,324.2B provide liquidity, but the gap between dividend payments ¥185.4B and FCF ¥52.3B could create future cash outflow pressure.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.7% | – | – |
| Net Income Margin | 4.9% | – | – |
Industry comparative data are for reference only; median values are not disclosed. Operating margin 6.7% declined YoY, primarily due to higher cost ratios.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 11.2% | – | – |
Revenue growth of +11.2% is solid, but profit growth did not keep pace, resulting in a revenue-up / profit-down profile. Improving the quality of growth is the next-stage theme.
※Source: Company aggregation
Despite revenue growth, gross margin deterioration led to an operating margin of 6.7% (down ~77bp from 7.5%), making margin recovery the top priority. To address rising raw material and logistics costs, price revisions, premium SKU shift, and promotional efficiency improvements must be executed to restore H2 profits. Oceania’s strong performance (Revenue +66.3%, Operating Income +119.8%) is a positive, but profit declines in Japan (Operating Income -11.9%, margin 2.7%) and Europe (Operating Income -5.6%, margin 12.7%) are dragging on consolidated results; timing of profitability recovery in these core regions should be closely monitored.
Operating CF of ¥206.4B is 1.38x Profit Attributable to Owners of Parent (¥149.2B), indicating good quality, but inventory increase of ¥129.1B and high DIO (~214 days) are pressuring capital efficiency. Receivables collection improved (accounts receivable decrease ¥417.5B), but accounts payable also decreased ¥317.1B, leaving an overall working capital headwind. Normalization of inventory days is key to improving cash conversion and expanding FCF in coming quarters. Progress against the full-year forecast stands at Revenue 22.3% / Operating Income 17.6% / Profit Attributable to Owners of Parent 16.8%; the lag in profit progress makes H2 improvements in cost ratios and expense efficiency critical to achieving the plan.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed before making investment decisions.