| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥930.7B | ¥777.8B | +19.6% |
| Operating Income / Operating Profit | ¥10.8B | ¥4.9B | +121.3% |
| Ordinary Income | ¥13.2B | ¥6.4B | +107.2% |
| Net Income / Net Profit | ¥6.5B | ¥-0.1B | +5123.1% |
| ROE | 2.0% | -0.0% | - |
For the full year ended March 2026, results were: Revenue ¥930.7B (vs prior year +¥152.9B, +19.6%), Operating Income ¥10.8B (vs prior year +¥5.9B, +121.3%), Ordinary Income ¥13.2B (vs prior year +¥6.8B, +107.2%), and Net Income attributable to owners of the parent ¥6.5B (turned from ¥-0.1B in the prior year), delivering a substantial increase in both revenue and profits. Operating margin improved to 1.2% (prior year 0.6%, +0.6pt), and net margin to 0.7% (prior year -0.0%, +0.7pt), indicating improved profitability. The core Coffee-related Business led performance with Revenue ¥843.0B (+19.4%) and Operating Income ¥15.7B (+78.3%), while the Food & Beverage Business also expanded (Revenue ¥56.5B, +34.1%; Operating Income ¥0.6B, +126.9%). SG&A ratio improved to 16.7% (prior year 18.1%, -1.4pt), demonstrating operating leverage, although gross margin declined to 17.9% (prior year 18.7%, -0.8pt) due to higher raw material costs. Against guidance (Revenue ¥950.0B, Operating Income ¥9.0B, Ordinary Income ¥10.0B), Operating Income and Ordinary Income outperformed at 120% and 132% of plan, respectively. However, Operating Cash Flow was negative ¥-33.8B (prior year ¥-13.5B), and Free Cash Flow was a large negative ¥-86.4B, with working capital buildup (receivables and inventory) straining liquidity and the company increasing short-term borrowings by +¥91.0B to cover funding needs.
Revenue: Revenue reached ¥930.7B (+19.6% YoY), achieving double-digit growth. The core Coffee-related Business accounted for ¥843.0B (+19.4%), or 90.6% of total sales, driven by expanded sales of coffee products to foodservice and commercial channels and new customer acquisition. The Food & Beverage Business increased substantially to ¥56.5B (+34.1%) supported by recovery of existing stores and M&A effects such as the consolidation of Inoda Coffee. Other Businesses (transportation/logistics, e-commerce, etc.) grew modestly to ¥57.8B (+3.9%), with an overall continued sales expansion across segments. Growth factors are analyzed as a combination of expansion in existing businesses, new customer penetration, and M&A integration effects.
Profitability: Gross profit was ¥166.2B (prior year ¥145.3B, +¥20.9B) but gross margin declined to 17.9% (prior year 18.7%, -0.8pt), indicating incomplete pass-through of higher raw material and logistics costs. SG&A rose to ¥155.4B (prior year ¥140.4B, +¥15.0B) but SG&A ratio improved to 16.7% (prior year 18.1%, -1.4pt) as scale effects and fixed-cost absorption took effect. Major SG&A components included packing & shipping expenses ¥22.3B (2.4% of sales), rent ¥8.6B (0.9% of sales), and R&D ¥2.1B (0.2% of sales), suggesting labor and logistics as key drivers. As a result, Operating Income doubled to ¥10.8B (prior year ¥4.9B, +¥5.9B, +121.3%), with Operating margin improving to 1.2% (prior year 0.6%, +0.6pt). Non-operating items contributed, including Equity in earnings of affiliates ¥2.0B (prior year ¥0.5B, +¥1.5B) and Dividend income ¥0.4B (prior year ¥0.3B), which offset higher interest expense ¥1.5B (prior year ¥0.7B, +¥0.8B), resulting in Ordinary Income of ¥13.2B (prior year ¥6.4B, +¥6.8B, +107.2%). Extraordinary items were minimal (impairment loss ¥0.1B only). After income taxes ¥3.0B (prior year ¥3.2B) and non-controlling interests ¥0.2B (prior year ¥0.2B), Net Income attributable to owners of the parent was ¥6.5B (turned positive from ¥-0.1B). In conclusion, the company achieved higher revenue and profit.
The Coffee-related Business (Revenue ¥843.0B, Operating Income ¥15.7B, operating margin 1.9%) achieved strong profit growth: Revenue +19.4% and Operating Income +78.3% YoY. Margin improved by +1.0pt from 0.9% last year, driven by scale expansion and SG&A efficiency. The Food & Beverage Business (Revenue ¥56.5B, Operating Income ¥0.6B, margin 1.0%) posted Revenue +34.1% and Operating Income +126.9%, aided by consolidation effects from subsidiaries like Inoda Coffee and recovery of existing stores; however margin remains low at 1.0%, indicating pressure from rent and labor costs. Other Businesses (Revenue ¥57.8B, Operating Income ¥2.6B, margin 4.4%) saw modest Revenue growth +3.9% and slight Operating Income decline -1.2%, with margin down slightly from 4.7% to 4.4%. Among segments, Other Businesses showed the highest margin while Coffee-related and Food & Beverage remain low-margin, high-volume models.
Profitability: Operating margin 1.2% (prior year 0.6%), Net margin 0.7% (prior year -0.0%) improved but remain low in absolute terms. Decline in gross margin to 17.9% (prior year 18.7%) reflects higher raw material costs. SG&A ratio improved to 16.7% (prior year 18.1%) due to operating leverage. ROE 2.0% (prior year 0.7%) and ROA 1.9% (prior year 1.1%) improved but capital efficiency still lags industry peers.
Cash Quality: Operating CF / Net Income was -519.4% (prior year 1040.0%), a significant deterioration as increases in receivables and inventory hindered cash conversion. Operating CF / EBITDA was -154.3% (prior year -88.0%), showing no improvement in cash generation capacity.
Investment Efficiency: CapEx was ¥16.7B vs Depreciation ¥11.2B, giving a CapEx/Depreciation ratio of 1.49x, indicating continued growth investment. Total asset turnover fell to 1.19x (prior year 1.34x), reflecting weaker asset efficiency.
Financial Soundness: Equity Ratio 41.1% (prior year 53.2%) declined as short-term borrowings increased and leverage rose. Current Ratio 125.8% (prior year 158.3%) and Quick Ratio 114.0% (prior year 141.4%) worsened, indicating deteriorated short-term liquidity. Debt/EBITDA is high at 8.14x (prior year 4.07x), and short-term debt ratio is 97.0%, indicating significant maturity risk. Interest Coverage is 7.28x (prior year 7.15x), suggesting current interest burden is coverable but limited headroom if rates rise.
Operating Cash Flow was a large negative ¥-33.8B (prior year ¥-13.5B), with pretax profit ¥13.1B offset by increases in Accounts Receivable ¥-65.2B and Inventories ¥-55.1B causing cash outflows. Accounts Payable increased ¥+65.2B, partially offsetting outflows, but working capital expansion absorbed cash and Operating CF/Net Income was a weak -519.4%. Investing Cash Flow was ¥-52.6B, driven by CapEx ¥-16.6B and subsidiary acquisitions ¥-35.5B. Free Cash Flow was a major negative ¥-86.4B, financed by Financing Cash Flow via an increase in short-term borrowings of ¥+90.0B. Cash and cash equivalents at year-end were ¥52.8B (prior year ¥50.8B), only slightly higher, and the cash/short-term debt ratio versus short-term borrowings ¥173.2B (prior year ¥82.2B) is thin at 0.30x, raising refinancing risk. Working capital efficiency lags revenue growth: DSO 89 days (Accounts Receivable ÷ daily sales) and DIO 108 days (Inventory ÷ daily cost) indicate lengthened cycles and concern.
Earnings are primarily recurring; extraordinary items were minimal (impairment loss ¥0.1B only). Non-operating income totaled ¥4.2B (0.5% of sales), primarily Equity in earnings of affiliates ¥2.0B and Dividend income ¥0.4B, showing low dependence on non-operating income and a reasonable spread between Ordinary Income and Operating Income. Equity in earnings rose by ¥1.5B YoY, likely reflecting improved performance at affiliates. The gap between Ordinary Income ¥13.2B and Net Income attributable to owners of the parent ¥6.5B is due to income taxes ¥3.0B and non-controlling interests ¥0.2B, with no material one-off distortions. However, the large divergence between Operating CF ¥-33.8B and Net Income ¥6.5B highlights deterioration in accrual quality due to working capital increases; cash conversion of sales and profits is extremely weak. Total comprehensive income ¥13.7B exceeded Net Income ¥6.5B, primarily due to valuation gain on securities ¥+3.9B, which is an unrealized mark-to-market gain and not realized profit.
Against full-year guidance (Revenue ¥950.0B, Operating Income ¥9.0B, Ordinary Income ¥10.0B, Net Income attributable to owners of the parent ¥7.5B, EPS ¥35.00, Dividend ¥6.00), actuals were Revenue ¥930.7B (achievement 98%), Operating Income ¥10.8B (120%), Ordinary Income ¥13.2B (132%), and Net Income ¥6.5B (87%). Sales and Net Income slightly missed, but Operating and Ordinary Income substantially exceeded guidance. Upside drivers were improved SG&A ratio and higher Equity in earnings of affiliates; Net Income shortfall versus forecast appears due to differences in assumed tax burden. Dividend was paid as forecast at an annual ¥12.00 (interim ¥6.00 + year-end ¥6.00), with Payout Ratio 26.3%, maintaining an appropriate level. Next-year guidance is undisclosed, but the upside in Operating and Ordinary Income raises the base level for the next fiscal year; continued profitability improvement and normalization of working capital management will be focal points.
Annual dividend was ¥12.00 (interim ¥6.00, year-end ¥6.00), with Payout Ratio 26.3% (Total dividends ¥0.26B ÷ Net Income attributable to owners of the parent ¥9.9B (※based on XBRL data)) and appears sustainable. Prior year annual dividend was ¥6.00, so payout was maintained. While dividends are coverable by earnings, Operating CF ¥-33.8B and Free CF ¥-86.4B are large negatives, meaning dividend payments relied on external funding such as short-term borrowings. No share buybacks were confirmed; total shareholder return consisted of dividends only. The dividend policy appears aimed at stable payouts, but recovery to internally funded dividends will require improvement in Operating CF and optimization of investment allocation.
Working Capital Expansion Risk: Accounts Receivable ¥225.7B (prior year ¥161.2B) and Inventory ¥49.6B (prior year ¥42.6B) increased, lengthening the operating cycle to DSO 89 days and DIO 108 days. Credit expansion and inventory buildup accompanying sales growth are pressuring Operating CF and increasing reliance on short-term borrowings. If receivables collection delays or inventory obsolescence materialize, impairment and bad-debt risks will rise.
Short-Term Debt Concentration Risk: Short-term borrowings increased sharply to ¥173.2B (prior year ¥82.2B), accounting for 41.7% of current liabilities ¥415.2B. Cash and deposits ¥52.8B provide a cash/short-term debt ratio of only 0.30x, and with Debt/EBITDA 8.14x and short-term debt ratio 97.0%, maturity mismatch is pronounced. If financial institutions tighten credit or interest rates rise, refinancing difficulty could trigger a liquidity crisis.
Raw Material & FX Volatility Risk: The Coffee-related Business accounts for 90.6% of sales and profitability is sensitive to volatility in prices of green beans, sugar, fats/oils, and FX (imports denominated in USD). Gross margin has already declined from 18.7% to 17.9% (-0.8pt), indicating incomplete cost pass-through. Adverse commodity or FX moves could further compress gross margin and, given the low-margin business model, materially worsen Operating margins.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.2% | 5.0% (3.3%–8.4%) | -3.8pt |
| Net Margin | 0.7% | 3.2% (1.9%–6.6%) | -2.5pt |
Profitability is well below industry median, highlighting a low-margin structure. Continued cost pass-through and SG&A efficiency are key challenges.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 19.6% | 5.4% (1.0%–8.6%) | +14.2pt |
Revenue growth outpaces the industry median significantly, driven by expansion of existing businesses and M&A effects.
※Source: Company compilation
Large profit increase and outperformance vs guidance: Operating Income +121.3% and Ordinary Income +107.2%, with Operating Income at 120% and Ordinary Income at 132% of guidance. Improvements were driven by SG&A ratio improvement and higher Equity in earnings of affiliates, clearly enhancing profitability year-over-year. Attention will focus on whether gross margin stabilizes and pricing policy enforcement can sustain margin improvements.
Deterioration in cash flows and concentration of short-term debt: Operating CF ¥-33.8B and Free CF ¥-86.4B are large negatives, with receivables and inventory increases straining liquidity. The company covered funding needs by increasing short-term borrowings by ¥+91.0B, leaving a thin cash/short-term debt ratio of 0.30x and elevated maturity risk. With Debt/EBITDA 8.14x and short-term debt ratio 97.0%, financial leverage is high; normalizing working capital and lengthening debt maturity are urgent priorities. The next evaluation focus will be on achieving positive Operating CF and optimizing debt maturity.
Low-margin structure and sector underperformance: Operating margin 1.2% and Net margin 0.7% are well below food & beverage sector medians (Operating 5.0%, Net 3.2%), reflecting a commodity-driven, high-volume low-margin business model. The decline in gross margin to 17.9% suggests incomplete pass-through of rising material and energy costs, indicating significant room for strengthening pricing strategy and procurement/manufacturing efficiency.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings report data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as necessary before making investment decisions.