| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥10047.5B | ¥9862.1B | +1.9% |
| Operating Income / Operating Profit | ¥132.1B | ¥149.9B | -11.9% |
| Equity-method Investment Income (Loss) | ¥0.0B | ¥-0.1B | +144.4% |
| Ordinary Income | ¥135.3B | ¥156.2B | -13.3% |
| Net Income / Net Profit | ¥90.3B | ¥72.9B | +23.9% |
| ROE | 7.3% | 6.3% | - |
The fiscal year ended March 2026 results were: Revenue ¥10047.5B (YoY +185.4B +1.9%), Operating Income ¥132.1B (YoY -17.8B -11.9%), Ordinary Income ¥135.3B (YoY -20.9B -13.3%), and Net Income attributable to owners of the parent ¥90.3B (YoY +17.4B +23.9%). As a daily consumer goods and cosmetics wholesaler, demand remained firm and revenue increased, but gross margin edged down to 9.7% year-on-year and SG&A rose to ¥841.2B (+3.6%), outpacing sales growth, resulting in a contraction of operating margin to 1.3%. Ordinary profit also declined, but extraordinary gains of ¥14.7B (gain on sale of investment securities ¥8.7B, gain on sale of fixed assets ¥6.0B) supported pre-tax profit and a lower effective tax rate contributed to higher net income. Operating Cash Flow reached ¥186.9B, a significant increase YoY of +91.2%, driven by working capital improvements. ROE was 7.3%, down from 9.2% prior year, mainly due to the contraction in operating margin and slower asset turnover from asset growth. The company’s full year plan is conservative: Revenue ¥10300.0B (+2.5%), Operating Income ¥110.0B (-16.7%), Ordinary Income ¥105.0B (-22.4%), factoring in a tough cost environment and continued investment burden.
[Revenue] Revenue was ¥10047.5B (YoY +1.9%) maintaining top-line growth. Despite demographic-driven market contraction pressure for daily goods and cosmetics, revenue inched up through deeper penetration with existing clients and new channel development. Cost of sales was ¥9074.2B, yielding Gross Profit ¥973.3B and a gross margin of 9.7%, slightly down year-on-year. The decline reflects rising procurement prices and delayed margin recovery during price-up phases. SG&A was ¥841.2B (YoY +3.6%), substantially outpacing sales growth of +1.9%, driven by higher logistics and labor costs plus increases in IT investment and M&A-related expenses.
[Profitability] Operating Income was ¥132.1B (YoY -11.9%), with an operating margin of 1.3%, down 0.2pt from 1.5% a year earlier. The primary cause of the decline was negative operating leverage as SG&A growth exceeded gross profit growth. Ordinary Income was ¥135.3B (YoY -13.3%). Non-operating income included dividend income ¥2.7B and foreign exchange gains ¥1.8B, while interest expenses rose to ¥6.8B from ¥4.3B prior year (+¥2.5B), pressuring results due to increased borrowings. Net extraordinary gains amounted to +¥12.2B (extraordinary gains ¥14.7B: gain on sale of investment securities ¥8.7B, gain on sale of fixed assets ¥6.0B; extraordinary losses ¥2.5B: impairment loss on investment securities ¥1.5B, loss on disposal of fixed assets ¥0.8B), supporting pre-tax profit of ¥147.6B. Income taxes were ¥46.3B, with an effective tax rate of 31.4% improved from 33.6% prior year, resulting in Net Income attributable to owners of the parent of ¥90.3B (YoY +23.9%). While ordinary-level profit declined, one-off items and tax improvement produced higher final profit. In conclusion: revenue up but operating and ordinary profit down, while net profit increased due to extraordinary gains and tax effects.
[Profitability] Operating margin was 1.3%, down 0.2pt from 1.5% last year, driven by a slight decline in gross margin to 9.7% and an increase in SG&A ratio to 8.4%. ROE declined to 7.3% (prior year 9.2%), composed of Net Profit Margin 0.9%, Total Asset Turnover 2.89x, and Financial Leverage 2.80x; margin contraction and slower asset turnover were contributing factors. ROA was 3.9%, down from 5.0% prior year. [Cash Quality] Operating Cash Flow of ¥186.9B is 2.07x Net Income ¥90.3B, indicating good cash realization. EBITDA (Operating Income + Depreciation & Amortization) was ¥180.7B, margin 1.8%, and Operating CF/EBITDA ratio was 1.03x, indicating solid quality. [Investment Efficiency] Total Asset Turnover was 2.89x (Revenue ¥10047.5B ÷ Total Assets ¥3478.8B), down from 3.16x prior year, indicating deteriorating sales efficiency relative to asset growth. Goodwill of ¥86.3B represents 7.0% of shareholders’ equity and 0.48x of EBITDA—conservative levels with limited impairment risk. [Financial Soundness] Equity Ratio was 35.7% (prior year 37.4%). Interest-bearing debt (short-term borrowings ¥211.5B + long-term borrowings ¥220.8B + corporate bonds ¥57.0B) totaled ¥489.3B, producing Debt/Equity of 39.4% and Debt/EBITDA of 2.71x—investment-grade levels. Current ratio was 143.6% and quick ratio 117.4%, indicating adequate short-term liquidity, but short-term debt ratio was high at 51.3% (current liabilities ¥1,785.3B ÷ total liabilities ¥2,237.2B), implying refinancing dependence. Cash and deposits were ¥397.1B, 1.88x short-term borrowings, providing a sufficient liquidity buffer.
Operating Cash Flow was ¥186.9B (YoY +91.2%), a large increase. Starting from pre-tax profit ¥147.6B plus Depreciation & Amortization ¥48.6B, operating CF subtotal was ¥241.3B, and working capital improvements drove cash generation. Accounts receivable resulted in a cash outflow of ¥43.1B, inventories decreased by ¥11.8B, and accounts payable increased by ¥79.9B, so overall working capital contributed positively to cash flow. After paying corporate taxes ¥50.8B, Operating CF totaled ¥186.9B. Investing CF was -¥127.9B, mainly due to capital expenditure ¥56.5B, intangible asset acquisitions ¥28.4B, and subsidiary acquisitions ¥63.1B, reflecting continued investment in logistics, IT, and portfolio strengthening. Free Cash Flow was ¥59.1B; dividend payments ¥36.9B were well covered, but total shareholder returns including share buybacks ¥32.5B (~¥69.4B) slightly exceeded FCF, with the gap financed by increased borrowings and other external funds. Financing CF recorded an inflow of ¥101.2B, with long-term borrowings ¥179.2B and net short-term borrowings increase ¥63.9B as main sources, while long-term borrowings repayment ¥93.5B, dividend payments ¥36.9B, and share buybacks ¥32.5B were uses. Cash and deposits increased by ¥162.8B YoY to ¥397.1B, bolstering liquidity via increased funding. Operating CF/EBITDA ratio of 1.03x signals high-quality cash realization, but attention is needed for potential reversal of working capital improvements in subsequent periods.
The gap between Ordinary Income ¥135.3B and Net Income ¥90.3B is about 33.2%, mainly due to income taxes ¥46.3B and net extraordinary items (+¥12.2B). Extraordinary gains ¥14.7B consisted of gain on sale of investment securities ¥8.7B and gain on sale of fixed assets ¥6.0B, amounting to 1.5% of revenue and representing one-off items. Non-operating income ¥14.3B (0.14% of revenue) centered on dividend income ¥2.7B and foreign exchange gains ¥1.8B, and was limited in scale. Non-operating expenses ¥11.1B were led by interest expense ¥6.8B, up ¥2.5B from ¥4.3B prior year, reflecting higher interest burden from increased borrowings. Total comprehensive income was ¥112.2B versus Net Income ¥90.3B, a difference of ¥21.9B driven by valuation differences on securities ¥8.2B, adjustments related to retirement benefits ¥3.1B, and foreign currency translation adjustments -¥0.5B. The accrual ratio was -2.5% ((Net Income ¥90.3B - Operating CF ¥186.9B) ÷ Total Assets ¥3478.8B), negative and indicating high quality of earnings. Operating CF ¥186.9B is 2.07x Net Income and Operating CF/EBITDA is 1.03x; cash generation is stable and earnings quality is good. The ordinary-level profit decline suggests weakening business competitiveness, but strong operating CF—largely due to working capital improvements—warrants confirmation of sustainability.
The company’s full year plan is Revenue ¥10300.0B (YoY +2.5%), Operating Income ¥110.0B (YoY -16.7%), Ordinary Income ¥105.0B (YoY -22.4%), Net Income attributable to owners of the parent ¥70.0B (YoY -22.5%), and EPS ¥209.19, implying an anticipated decline in profits. Compared with current results, Operating Income is planned to fall from ¥132.1B to ¥110.0B (-16.7%) and Ordinary Income from ¥135.3B to ¥105.0B (-22.4%), a conservative stance reflecting continued pressure on costs and sustained strategic investment burdens. Sales progress rate is 97.5% (¥10047.5B ÷ ¥10300.0B) and satisfactory, but operating income progress is 120.1% and ordinary income progress is 128.9%, already exceeding full-year guidance and suggesting the company assumes a significant profit decline in the second half. This likely reflects ongoing rises in logistics and labor costs, expense recognition of strategic investments (IT and M&A related), and conservative responses to FX and interest rate uncertainties. There remains upside potential if price pass-through and efficiency measures materialize earlier than expected.
Actual dividends for the period were annual ¥112 (interim ¥56, year-end ¥56). Total dividends relative to Net Income ¥90.3B amounted to approximately ¥37.5B (based on shares outstanding 33,476 thousand), implying a payout ratio of about 41.6%. The total including dividends on shares held in the stock-based compensation trust (BBT) was approximately ¥37.5B. Dividend coverage by FCF ¥59.1B is approximately 1.58x, supporting dividend sustainability. Share buybacks of ¥32.5B were executed, making total shareholder returns about ¥70.0B and Total Return Ratio 77.5%. Total returns slightly exceeded FCF ¥59.1B; the shortfall (~¥10.9B) was financed by increased borrowings and other external funds. The company’s full year plan assumes annual dividend ¥56, halving from the current ¥112, consistent with prioritizing financial flexibility under weaker earnings, prioritizing investment funding, and balancing against buybacks. The payout ratio on planned Net Income ¥70.0B is about 26.7%, a conservative level, leaving room for dividend increases contingent on earnings recovery and investment payback progress.
Continued pressure on operating margin: With gross margin at 9.7% trending slightly down and ongoing increases in procurement, logistics, and labor costs, delays in price pass-through or relative weakening of negotiating power with customers could further compress the operating margin of 1.3%. SG&A ratio of 8.4% has risen year-on-year; if SG&A growth +3.6% continues to exceed sales growth +1.9%, negative operating leverage could lead to structural deterioration in profitability. The company’s full year Operating Income plan ¥110.0B (-16.7%) also suggests continuation of this trend.
Short-term debt dependence and refinancing risk: Short-term debt ratio is high at 51.3%, and short-term borrowings reached ¥211.5B (YoY +¥91.3B). Although cash and deposits ¥397.1B secure liquidity, in a rising rate environment rollover costs for short-term borrowings could pressure profitability. Interest payments have already increased to ¥6.8B (YoY +¥2.5B), raising interest sensitivity concerns. Debt/EBITDA 2.71x is healthy, but sustained EBITDA declines would reduce financial headroom.
Sustainability risk of working capital improvements: The large increase in Operating CF to ¥186.9B heavily depended on working capital improvements—accounts payable +¥79.9B and inventories -¥11.8B. These improvements may be temporary; if they reverse next period, Operating CF could decline sharply. Accounts receivable were a cash outflow of -¥43.1B, indicating potential lengthening of collection days. Sustained working capital management is a key monitoring point for Operating CF quality.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.3% | 3.4% (1.4%–5.0%) | -2.0pt |
| Net Profit Margin | 0.9% | 2.3% (1.0%–4.6%) | -1.4pt |
Profitability reflects the low-margin, high-volume wholesale structure and is below industry medians. Operating margin 1.3% is -2.0pt versus median 3.4%, and Net Profit Margin 0.9% is -1.4pt versus median 2.3%, placing the company in the lower tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.9% | 5.9% (0.4%–10.7%) | -4.0pt |
Revenue growth 1.9% lags the industry median 5.9%, with market maturity and structural cost pressures constraining growth.
※ Source: Company aggregation
Sustainability of operating CF quality and margin improvement: Operating CF ¥186.9B rose substantially YoY +91.2% due to working capital improvement, but the increase in accounts payable +¥79.9B may be temporary. If working capital normalizes next period, Operating CF could decline, making the sustainability of cash generation central. Operating margin 1.3% trails the industry median 3.4% by -2.0pt; amid continued SG&A ratio increases, ability to restore gross and operating margins via price pass-through and efficiency measures will be key to medium-term earnings recovery.
Balance between recovery of strategic investments and financial flexibility: The company continued proactive investments—intangible asset acquisitions ¥28.4B, subsidiary acquisitions ¥63.1B, and capex ¥56.5B—to strengthen logistics, IT, and the portfolio. Meanwhile, interest-bearing debt increased with short-term borrowings +¥91.3B and long-term borrowings +¥94.5B, and interest expense rose by ¥2.5B. The full year plan (Operating Income ¥110.0B, -16.7%) signals concerns about delayed investment payback. The dividend plan of ¥56 (half of actual ¥112) aligns with a priority on preserving financial flexibility; early realization of investment benefits and profitability improvement are prerequisites for expanding shareholder returns.
This report is an AI-generated financial analysis document produced by analyzing XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.