FUJIO FOOD GROUP INC. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥23.80B
• Operating Income: ¥589M
• Net Income: ¥472M
• EPS: ¥1.12

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

FujiO Food Group (TSE:2752) reported FY2025 Q3 consolidated results under JGAAP showing modest top-line growth but substantial profit compression. Revenue increased 1.7% year over year to ¥23,796 million, while operating income fell 48.7% to ¥589 million, highlighting negative operating leverage. Gross profit was ¥15,273 million, equating to a high gross margin of 64.2%, but SG&A and other operating costs absorbed most of this, leaving an operating margin of only 2.5%. Ordinary income was ¥456 million (margin 1.9%), reflecting non-operating costs including ¥95 million in interest expense. Net income declined 87.9% to ¥57 million (net margin 0.24%), indicating additional pressure from extraordinary items and/or minority interests relative to ordinary income. EPS was ¥1.12. DuPont analysis indicates a low ROE of 0.66%, driven by very thin net margin (0.24%), moderate asset turnover (0.968x), and leverage of 2.85x. Liquidity appears solid with a current ratio of 233.8% and working capital of ¥8,771 million, although the cash balance and cash flows were not disclosed. The debt-to-equity ratio stands at 2.05x, suggesting a fairly leveraged capital structure relative to the low profitability. Interest coverage is 6.2x, adequate at present earnings but vulnerable if operating income weakens further. The pronounced gap between ordinary income (¥456 million) and pre-tax income implied by taxes and net (approximately ¥234 million) suggests notable extraordinary losses or adjustments in the period. With depreciation and cash flows undisclosed (zeros indicate unreported, not actual zero), EBITDA and free cash flow can’t be reliably assessed, constraining conclusions on cash conversion. The equity ratio was listed as 0.0% but is mechanically about 35.1% using provided balances (equity ¥8,630 million / assets ¥24,571 million), indicating an error or non-disclosure in the reported ratio field. No dividend is indicated (DPS ¥0), effectively implying full earnings retention in the period. Overall, the quarter shows resilient sales but sharp margin pressure from rising costs, negative operating leverage, and potential one-off losses, leaving returns subdued and cushioning dependent on liquidity and cost control. Data limitations (cash flow statement and certain balance sheet details) necessitate caution in interpreting cash-based metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.24% (Net income ¥57m / Revenue ¥23,796m)
• asset_turnover: 0.968x (Revenue ¥23,796m / Assets ¥24,571m)
• financial_leverage: 2.85x (Assets ¥24,571m / Equity ¥8,630m)
• calculated_ROE: 0.66% (matches reported DuPont figure) margin_quality:
• gross_margin: 64.2% (¥15,273m / ¥23,796m)
• operating_margin: 2.5% (¥589m / ¥23,796m)
• ordinary_income_margin: 1.9% (¥456m / ¥23,796m)
• net_margin: 0.24% (¥57m / ¥23,796m)
• commentary: Despite a high gross margin, SG&A intensity is elevated: implied SG&A of ~¥14,684m equals ~61.7% of sales and ~96% of gross profit, compressing operating margin. The gap between operating and ordinary income reflects non-operating expenses (notably ¥95m interest), while the further drop to net income suggests extraordinary losses or other below-ordinary items. operating_leverage: Revenue grew 1.7% YoY but operating income declined 48.7% YoY, indicating negative operating leverage. Small changes in sales, combined with higher fixed costs (labor, rent, utilities), are materially impacting profits. Interest coverage at 6.2x is acceptable but could deteriorate quickly if operating income weakens further.

Growth Assessment

revenue_sustainability: Top-line grew 1.7% YoY, suggesting stable demand and/or modest pricing gains. Given the restaurant profile, sustainability will depend on same-store traffic, price/mix, and store network actions. profit_quality: Profit deterioration (operating income -48.7%, net income -87.9%) indicates cost inflation and limited pass-through, as well as potential one-offs below ordinary income. The low net margin (0.24%) points to fragile earnings quality. outlook: Near-term outlook hinges on cost normalization (food, labor, utilities), productivity initiatives, and pricing power to restore operating margin toward historical levels. Any extraordinary losses recognized this quarter may not recur, but underlying cost pressure must abate for earnings recovery.

Financial Health

liquidity:

• current_ratio: 233.8% (Current assets ¥15,328m / Current liabilities ¥6,557m)
• quick_ratio: 230.8% (Assuming inventories ¥194m; (CA-Inv)/CL ≈ 2.31x)
• working_capital: ¥8,771m
• commentary: On paper, liquidity looks ample. However, cash and cash flow data are undisclosed, so the true liquidity buffer cannot be confirmed. solvency:
• debt_to_equity: 2.05x (Total liabilities ¥17,732m / Equity ¥8,630m)
• equity_ratio: ≈35.1% (computed from balances; reported 0.0% appears to be non-disclosure)
• interest_coverage: 6.2x (Operating income ¥589m / Interest expense ¥95m)
• commentary: Leverage is meaningful relative to current profitability. Coverage is adequate but leaves narrow headroom if earnings face further pressure. capital_structure: The balance sheet mixes sizeable liabilities with moderate equity. With depreciation and lease details unreported, the extent of fixed-charge obligations (including leases) cannot be fully assessed under JGAAP.

Cash Flow Quality

earnings_quality: With OCF, investing CF, and financing CF undisclosed (zeros represent non-disclosure), we cannot validate cash conversion or working capital drag. Net income is positive but minimal relative to sales, increasing sensitivity to non-cash estimates and one-offs. FCF_analysis: Free cash flow cannot be computed due to lack of OCF and capex data. EBITDA is also undisclosed given missing depreciation, preventing leverage metrics like Net debt/EBITDA. working_capital: Inventories are low at ¥194m (typical for restaurants), but receivables and payables dynamics are unknown. The large working capital figure (¥8,771m) reflects balance totals but not cash realizability.

Dividend Sustainability

payout_ratio_assessment: Reported DPS is ¥0 with EPS of ¥1.12, implying a 0% payout in the period. Given low profitability and leverage, retaining earnings appears prudent. FCF_coverage: Not assessable due to undisclosed OCF and capex; reported FCF coverage of 0.00x reflects non-disclosure, not true cash generation. policy_outlook: Sustainable dividends would require a recovery in operating margin and demonstrable positive free cash flow. Absent visibility on cash flows, near-term policy likely prioritizes balance sheet resilience.

Risk Assessment

Business Risks:

• Cost inflation in food ingredients and utilities pressuring margins
• Labor cost increases and staffing constraints impacting store productivity
• Sensitivity to consumer traffic, macro sentiment, and competition in casual dining
• Potential extraordinary losses (impairments, store closures, or disaster-related costs)
• Food safety and brand reputation risks
• Supply chain disruptions and procurement volatility (including FX on imported inputs)

Financial Risks:

• Leverage at 2.05x liabilities-to-equity amid weak profitability
• Compression of interest coverage if operating income declines further
• Limited visibility on cash flow generation and liquidity quality due to non-disclosure
• Refinancing and interest rate risk given debt load
• Potential covenant pressure if EBITDA remains subdued (if applicable)

Key Concerns:

• Negative operating leverage despite revenue growth
• Thin net margin (0.24%) and ROE (0.66%)
• Gap between ordinary and pre-tax income implying material extraordinary losses
• Absence of cash flow disclosure, constraining assessment of earnings quality and dividend capacity

Investment Implications

Key Takeaways:

• Top-line resilience (+1.7% YoY) contrasted by significant margin erosion (OP -48.7% YoY).
• Cost structure is heavy: SG&A ~61.7% of sales, limiting operating margin to 2.5%.
• ROE is low at 0.66%, largely due to thin net margin despite moderate asset turnover.
• Leverage (2.05x liabilities/equity) is meaningful relative to earnings power; interest coverage 6.2x is serviceable but sensitive.
• Liquidity ratios are strong, but absence of cash flow data tempers confidence.
• Extraordinary items likely weighed on net income, adding volatility to bottom line.

Metrics to Watch:

• Same-store sales growth and average ticket
• Labor-to-sales, food cost ratio, and utilities as % of sales
• Operating margin trajectory and ordinary income margin
• Operating cash flow and capex to gauge FCF recovery
• Interest coverage and liabilities-to-equity
• Store openings/closures and impairment charges

Relative Positioning: Within Japan’s casual dining/food service peers, the company’s current profitability (OP margin ~2.5%, net margin ~0.24%) appears below sector averages, while leverage is on the higher side; a recovery case hinges on cost normalization and execution on productivity and pricing.

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