UNICAFE INC. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥11.49B
• Operating Income: ¥565M
• Net Income: ¥269M
• EPS: ¥29.32

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

Verdict: A solid Q3 with notable top-line growth and operating leverage, though some line-item inconsistencies around pre-tax profit vs net income warrant caution in interpreting bottom-line quality. Revenue rose 22.8% YoY to 114.92, while operating income increased 47.7% YoY to 5.65, indicating efficient cost control and improved mix. Gross profit reached 20.95, yielding an 18.2% gross margin, with operating margin at approximately 4.9%. Based on last year’s implied figures, operating margin expanded by roughly 83 bps (from ~4.1% to ~4.9%), demonstrating improved operating leverage. Net income increased 46.1% YoY to 3.92, translating to a 3.4% net margin. DuPont-calculated ROE is 5.8%, driven by a 3.4% net margin, 0.802x asset turnover, and 2.10x financial leverage. SG&A of 17.12 implies an SG&A ratio of ~14.9%, which appears well-contained relative to revenue growth. Liquidity remains comfortable with a current ratio of 137.8% and a quick ratio of 121.9%, supported by cash and deposits of 31.45. Leverage is moderate with a D/E of 1.10x and interest coverage of ~45.8x, implying ample cushion against financial costs. ROIC is reported at 8.2%, slightly above typical 7–8% targets, suggesting improving capital efficiency. However, earnings quality cannot be validated due to unreported cash flows (OCF and FCF are N/A). Additionally, the reported profit before tax (3.79) and tax (1.10) imply net income around 2.69, which does not reconcile with the reported 3.92, indicating disclosure or mapping inconsistencies; we therefore anchor analysis on operating and ordinary income, which are internally consistent. Working capital is sizable with receivables 33.70 and payables 54.96, typical for a beverage/food ingredient distributor, but exposes earnings to timing-related volatility. The calculated payout ratio is 28.3%, which appears conservative, though FCF coverage is unassessable given missing cash flow data. Forward-looking, margin trajectory hinges on green coffee input costs, FX (USD/JPY), and pass-through discipline to customers; current data indicate improved profitability resilience, but external cost pressures remain a key swing factor.

Profitability Analysis

ROE decomposition (DuPont): ROE 5.8% = Net Profit Margin 3.4% × Asset Turnover 0.802 × Financial Leverage 2.10x. The largest driver QoQ/YoY appears to be margin expansion: operating income grew +47.7% vs revenue +22.8%, implying improved operating margin from ~4.1% to ~4.9% (+~83 bps). Business reason: better gross-to-operating conversion likely from pricing discipline (pass-through of raw coffee cost increases), mix improvements, and SG&A containment (SG&A ratio ~14.9%). Asset turnover at 0.802x is reasonable for a coffee roaster/wholesaler with material receivables and payables; no evidence suggests a structural change in turnover from available data. Financial leverage at 2.10x is moderate and likely stable given limited interest-bearing debt (12.25) relative to equity (68.13). Sustainability: Margin gains appear partly structural (pricing/mix, cost control) but remain vulnerable to commodity and FX volatility; operating leverage should persist if volume holds and cost pressures are manageable. Watchpoints: any acceleration in SG&A ahead of revenue (SG&A growth rate not disclosed, but if SG&A growth > revenue growth in future periods it would compress operating leverage).

Growth Assessment

Top-line growth of +22.8% YoY to 114.92 is robust and suggests healthy demand and/or pricing carryover. Operating income growth of +47.7% outpaced revenue, reflecting operating leverage and better pass-through. Net income +46.1% aligns with operating performance, though bottom-line reconciliation issues (PBT vs NI) temper confidence. Gross margin at 18.2% and operating margin at ~4.9% indicate improved profitability versus last year’s implied ~4.1% operating margin. Sustainability of revenue growth depends on consumer demand elasticity, shelf price acceptance, and contract pricing with key retail/foodservice customers. Near-term outlook hinges on green coffee price trends and USD/JPY: input cost easing or a stronger yen would be tailwinds; the opposite would compress margins. With ROIC at 8.2%, current returns are at or slightly above typical targets, supporting selective growth investment. Absent cash flow disclosure, we cannot validate whether growth is cash-generative, which is a key limitation. Overall, the trajectory is positive but externally sensitive.

Financial Health

Liquidity is sound: current ratio 137.8% and quick ratio 121.9% exceed benchmarks. No explicit warning triggers (Current Ratio < 1.0 or D/E > 2.0) are present. Capital structure is conservative-to-moderate with D/E 1.10x; interest-bearing debt totals 12.25 (3.50 short-term, 8.75 long-term). Maturity mismatch risk appears low: cash and deposits of 31.45 and current assets of 89.10 comfortably exceed current liabilities of 64.65; short-term borrowings (3.50) are small relative to cash. Accounts payable (54.96) are high vs inventories (10.32) and receivables (33.70), typical for trading/roasting models but implies reliance on supplier credit—monitor in a tightening credit environment. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

Operating cash flow is unreported, so OCF/Net Income and FCF cannot be assessed; therefore, earnings quality cannot be validated via cash conversion. With payables materially exceeding inventories, timing effects could boost reported profits relative to cash if payable days extend—this is a general risk rather than a confirmed issue here. Capex and dividends paid are unreported, preventing FCF coverage analysis. Absent OCF, we cannot rule out working capital-driven volatility; monitor receivables and inventory turns versus payables in subsequent quarters.

Dividend Sustainability

Calculated payout ratio is 28.3%, which is conservative versus the <60% benchmark and appears supportable based on earnings. However, FCF coverage is not calculable due to missing OCF and capex data, so sustainability cannot be confirmed from a cash standpoint. Balance sheet flexibility (cash 31.45 and modest debt) provides some buffer for dividend maintenance under moderate stress. Policy outlook cannot be inferred from the data provided; watch guidance and capital allocation commentary in the full report.

Risk Assessment

Business Risks:

• Commodity price volatility in green coffee beans affecting gross margins
• FX risk (USD/JPY) given import exposure for raw beans
• Customer concentration and pricing power of major retailers/foodservice chains
• Demand elasticity risk following price hikes and potential downtrading
• Supply chain and logistics cost fluctuations

Financial Risks:

• Working capital volatility due to large payables versus receivables/inventory
• Potential cash conversion shortfalls (OCF unreported; timing effects possible)
• Interest rate risk modest but present on floating-rate debt, though interest coverage is strong
• Data inconsistency between PBT and net income complicates bottom-line assessment

Key Concerns:

• Inconsistency: reported PBT (3.79) and tax (1.10) imply NI ~2.69 vs reported 3.92; mapping or extraordinary items likely not disclosed
• Margin vulnerability to renewed input cost inflation or yen weakness
• Limited disclosure on SG&A components and cash flows reduces transparency

Investment Implications

Key Takeaways:

• Strong operating leverage: revenue +22.8% YoY, operating income +47.7% YoY
• Operating margin expanded by ~83 bps to ~4.9%
• ROE 5.8% with ROIC 8.2% suggests improving capital efficiency
• Liquidity and coverage ratios are comfortable; D/E 1.10x, interest coverage ~45.8x
• Earnings quality unverified due to missing OCF/FCF; bottom-line reconciliation inconsistency noted

Metrics to Watch:

• Gross margin and operating margin versus green coffee prices and USD/JPY
• SG&A ratio trend and operating leverage sustainability
• OCF/Net Income and FCF once disclosed
• Working capital metrics: receivable days, inventory days, payable days
• ROIC relative to cost of capital and segment mix
• Any clarification on extraordinary items impacting PBT vs NI

Relative Positioning: Within Japan’s beverage/food ingredients space, Unicafe demonstrates improving margins and solid balance sheet health, with ROIC slightly above typical targets. However, transparency is below peers with more comprehensive cash flow disclosure, and profitability remains sensitive to commodity and FX swings.

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