| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥98.9B | ¥89.8B | +10.1% |
| Operating Income / Operating Profit | ¥5.1B | ¥5.0B | +1.2% |
| Ordinary Income | ¥5.4B | ¥5.2B | +2.7% |
| Net Income / Net Profit | ¥3.1B | ¥2.7B | +13.2% |
| ROE | 1.4% | 1.2% | - |
For Q1 of the fiscal year ending March 2027, Revenue was ¥98.9B (YoY +¥9.1B, +10.1%), Operating Income was ¥5.1B (YoY +¥0.1B, +1.2%), Ordinary Income was ¥5.4B (YoY +¥0.1B, +2.7%), and Net Income was ¥3.1B (YoY +¥0.4B, +13.2%). While both revenue and profit increased, SG&A ratio rose by 5.2pt from 48.5% to 53.7%, compressing the operating margin from 5.6% to 5.2% (-0.4pt). The core Yakiniku (grilled meat) Business accounted for ¥54.6B (+2.3%), representing 55.2% of total sales but had a low operating margin of 5.4%. The Restaurant Business, driving growth, recorded Revenue of ¥27.1B (+18.1%) with a relatively high operating margin of 6.8%. The main reason Net Income grew faster than Operating Income was an improvement in the effective tax rate from 44.7% to 40.6% (improvement of 4.1pt).
Revenue: Revenue expanded to ¥98.9B (YoY +10.1%). By segment, the Restaurant Business grew the fastest at ¥27.1B (+18.1%), followed by the Yakitori Business ¥10.5B (+8.4%) and Others ¥6.8B (+75.3%). The core Yakiniku Business remained largest at ¥54.6B (+2.3%) with a 55.2% share. Gross margin slightly declined to 58.8% (prior 59.6%) but remains at a high level, indicating effective cost control.
Profitability: Operating Income rose to ¥5.1B (+1.2%), with a limited increase relative to revenue growth. SG&A increased by approximately ¥4.6B to ¥53.1B (prior-year equivalent ¥48.5B), raising the SG&A ratio from 48.5% to 53.7% (+5.2pt). This higher SG&A ratio compressed the operating margin from 5.6% to 5.2% (-0.4pt), so operating leverage did not work. The increase in personnel expenses, energy costs, logistics costs, and higher fixed costs from store expansion are plausible drivers. Ordinary Income was ¥5.4B (+2.7%), with non-operating income of ¥0.3B (interest income ¥0.1B, etc.) and non-operating expenses of ¥0.1B (interest expense ¥0.0B, etc.), so non-operating contribution was minor. Extraordinary losses of ¥0.2B (impairment ¥0.1B, disposal of fixed assets ¥0.1B) were recorded but limited in scale, resulting in pre-tax income of ¥5.2B (+5.3%). Income taxes were ¥2.1B (effective tax rate 40.6%, prior 44.7%); improved tax burden supported Net Income of ¥3.1B (+13.2%), achieving double-digit net profit growth. In summary, although revenue and profit increased, higher SG&A at the operating level constrained profit growth while tax burden reduction underpinned net profit growth.
The Yakiniku Business: Revenue ¥54.6B (+2.3%), Operating Income ¥2.9B (-0.7%), Margin 5.4%; it remains the largest segment at 55.2% of sales but is the least profitable segment and saw a slight decline in profit. The Restaurant Business: Revenue ¥27.1B (+18.1%), Operating Income ¥1.8B (+15.8%), Margin 6.8%; high growth and high profitability drove consolidated results. Yakitori Business: Revenue ¥10.5B (+8.4%), Operating Income ¥0.8B (-6.8%), Margin 7.8%; it has the highest margin but turned to lower profit. Others (izakaya business, etc.): Revenue ¥6.8B (+75.3%), Operating Income ¥0.1B (+15.4%), Margin 2.2%; rapid growth but low profitability. Total segment profit of ¥5.7B less corporate expenses ¥0.6B (prior ¥0.5B) reconciles to consolidated Operating Income of ¥5.1B. Increased corporate expenses also contributed to the decline in operating margin. Improving margins in the core Yakiniku segment and continued growth in the Restaurant Business are keys to future consolidated profitability improvement.
Profitability: Operating margin 5.2% (prior 5.6%), down 0.4pt; Net margin 3.1% (prior 3.0%), up 0.1pt. The decline in operating margin is mainly due to the rise in SG&A ratio (48.5% → 53.7%), while the improvement in net margin is due to the decline in the effective tax rate (44.7% → 40.6%). Gross margin remains high at 58.8% (prior 59.6%), indicating good cost control. ROE 1.4% (prior 1.2%) improved slightly, reflecting higher net income and stable shareholders’ equity.
Cash Quality: Non-operating items are minor (non-operating income ¥0.3B, non-operating expense ¥0.1B), indicating an operating-centric earnings structure. Extraordinary items were a loss of ¥0.2B, down from ¥0.3B in the prior year, with limited impairment/disposal losses. Contract liabilities increased to ¥2.7B (prior ¥2.2B, +22.6%), indicating growth in deferred revenue and a cash-advance effect.
Investment Efficiency: Total asset turnover was 0.34x (annualized 1.35x), unchanged YoY, and a fixed-asset ratio of 61.6% reflects a capital-intensive structure. Inventories ¥1.3B (prior ¥1.3B) represent 1.3% of sales and indicate high inventory efficiency.
Financial Soundness: Equity Ratio 76.8% (prior 75.9%), Current Ratio 230.0% (prior 226.1%), D/E ratio 0.30x — extremely high financial safety. Cash and deposits ¥83.3B are 1.7x current liabilities ¥48.8B, indicating solid short-term liquidity. Interest-bearing debt totaled ¥9.9B (short-term borrowings ¥3.0B, long-term borrowings including current portion ¥6.9B), which is 4.4% of shareholders’ equity ¥224.8B — very low. Interest coverage is Operating Income ¥5.1B / interest expense ¥0.0B = over 255x, implying negligible financial burden.
Although Operating Cash Flow disclosure is not provided, funding trends can be inferred from BS changes. Cash and deposits decreased to ¥83.3B from ¥88.3B (down ¥5.0B). Major cash outflows included corporate tax payments: tax payable decreased from ¥4.5B in the prior year to ¥2.2B in the current period (down ¥2.2B), indicating payment of prior taxes. Accounts payable decreased from ¥16.6B to ¥13.7B (down ¥2.9B), and progress in paying trade payables absorbed working capital. Conversely, raw materials rose from ¥7.3B to ¥8.8B (+¥1.6B, +21.5%), and inventory buildup consumed cash. Contract liabilities increased from ¥2.2B to ¥2.7B (+¥0.5B), and the expansion of deferred revenue provided a positive cash-advance effect. Buildings were unchanged at ¥57.8B, suggesting depreciation and new investments balanced. Extraordinary losses of ¥0.2B (impairment ¥0.1B, disposal ¥0.1B) were non-cash items, preserving the quality of recurring earnings. Overall, tax payments, accounts payable reductions, and inventory increases were the main drivers of the cash decline, while non-operating and extraordinary effects were minor. Improving inventory turnover and optimizing payables/inventory terms are keys to enhancing operating cash flow generation.
With Ordinary Income ¥5.4B and Net Income ¥3.1B, non-operating items contributed ¥0.2B and extraordinary items were a ¥0.2B loss. Non-operating income ¥0.3B consisted of interest income ¥0.1B, rental income ¥0.1B, etc., accounting for 0.3% of sales and indicating low dependency and an operating-centric earnings structure. Extraordinary losses ¥0.2B (impairment ¥0.1B, disposal ¥0.1B) decreased from ¥0.3B (impairment ¥0.2B, disposal ¥0.1B) in the prior year, indicating limited one-off impacts. Pre-tax income ¥5.2B and income taxes ¥2.1B imply an effective tax rate of 40.6%, improved from 44.7% but still relatively high. This normalization of tax burden was the primary driver pushing Net Income +13.2%, significantly exceeding operating profit growth (Operating +1.2%). On an accrual basis, increases in inventories (raw materials +21.5%) and decreases in payables (-17.8%) absorbed cash, creating divergence between profit and cash. The increase in contract liabilities (+22.6%) indicates growth in deferred revenue and is a factor improving cash quality. Comprehensive income ¥3.1B equals Net Income, with no impact from other comprehensive income items. Overall, earnings quality is stable and operating-centric, but inventory increases and payable reductions have reduced working capital efficiency and constrained cash generation.
The full-year plan remains unchanged: Revenue ¥411.0B (+9.0%), Operating Income ¥25.0B (+13.1%), Ordinary Income ¥25.4B (+8.3%), Net Income ¥14.5B, EPS ¥70.57. Q1 progress rates are: Revenue 24.1% (¥98.9/¥411.0), Operating 20.4% (¥5.1/¥25.0), Ordinary 21.2% (¥5.4/¥25.4), Net Income 21.2% (¥3.1/¥14.5). Revenue is close to the standard quarterly pace of 25% and progressing well, but Operating Income is ~5pt behind and Ordinary/Net Income ~4pt behind. The profit shortfall is mainly due to the rise in SG&A ratio (higher personnel and energy costs) and slight profit decline in the core Yakiniku segment. To achieve the full-year plan, improvement in customer numbers and average spend at existing stores in H2, the effect of price revisions, and mix improvement to recover margins are necessary. The company assumes a full-year operating margin of 6.1%, requiring about a 0.9pt improvement from Q1 actual 5.2%. The company has not revised its earnings or dividend forecasts and appears to expect a H2-weighted recovery.
Full-year dividend forecast is ¥17.00 (no breakdown between interim and year-end disclosed), unchanged from prior-year dividend of ¥17.00. Against the full-year EPS forecast of ¥70.57, the payout ratio is 24.1%, a conservative level. Based on 20,546 thousand shares outstanding (treasury shares 1 thousand), annual dividend payout is approximately ¥350M, representing 24.1% of full-year Net Income forecast ¥14.5B. Annualizing Q1 Net Income ¥3.1B to ¥12.4B implies a payout ratio of 28.2%, indicating sustainability. Cash and deposits ¥83.3B are about 24x the dividend payout, showing very high capacity to pay dividends. The dividend policy appears to target stable dividends, and there remains potential for future increases depending on earnings progress and investment opportunities. No share buybacks disclosed; total shareholder return ratio at present equals the payout ratio, approximately 24%.
SG&A Ratio Increase Risk: SG&A ratio rose from 48.5% to 53.7% (+5.2pt), pushing down operating margin by 0.4pt. The rise is attributed to higher personnel, energy, and logistics costs, which are industry-structural and not easily corrected in the short term. If external cost pressures persist and price pass-through, mix improvement, and operational efficiencies lag, operating margin could shrink further, endangering achievement of the full-year plan (operating margin 6.1%).
Continued Weak Profitability in Core Yakiniku Segment: The Yakiniku Business accounts for 55.2% of sales but has the lowest operating margin at 5.4% and suffered a slight YoY profit decline (-0.7%). If initiatives to increase traffic, raise average spend, or implement price changes fail to improve margins, structural improvement of consolidated profitability will be difficult. A 1pt margin improvement in this segment would increase consolidated operating income by approximately ¥0.5B, so potential is large but will take time to realize.
Deterioration in Inventory & Working Capital Efficiency: Raw materials increased 21.5% from ¥7.3B to ¥8.8B, while accounts payable decreased 17.8% from ¥16.6B to ¥13.7B. This working capital absorption poses risks of inventory stagnation, higher spoilage losses, and reduced cash generation. Inventory days are short — about 11.7 days (inventory ¥1.3B vs. COGS ¥40.7B/quarter) — but the pace of raw material increases exceeds revenue growth, raising concerns about future inventory management precision.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.2% | 3.4% (0.8%–7.7%) | +1.8pt |
| Net Margin | 3.1% | 2.2% (0.5%–6.2%) | +0.9pt |
Both operating and net margins exceed the industry median, placing the company in a relatively high-profitability category within retail/foodservice.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.1% | 7.7% (0.8%–14.6%) | +2.4pt |
Revenue growth outperforms the industry median by 2.4pt, indicating mid-to-high ranking growth within the sector.
※ Source: Company compilation
Although revenue and profit increased, operating profit progress is about 5pt behind the full-year plan, making H2 SG&A control and margin recovery critical to meeting targets. The 5.2pt rise in SG&A ratio and contraction in operating margin suggest structural upward pressure on personnel and energy costs; the effectiveness of price pass-through and mix improvement will be important to monitor. The Yakiniku segment’s 5.4% margin is the lowest among segments, and improving efficiency in this segment is the biggest opportunity to enhance consolidated profitability.
Financial safety is very high: Equity Ratio 76.8%, Cash and Deposits ¥83.3B, D/E 0.30x, and the payout ratio of 24.1% is sustainable. However, the sharp increase in raw materials (+21.5%) and decrease in accounts payable (-17.8%) mean working capital is absorbing cash; improving inventory turnover and cash generation is key to capital efficiency. The main constraint on ROE of 1.4% is the combination of low total asset turnover 0.34x and operating margin 5.2%; both top-line growth and margin improvement are required.
This report was automatically generated by AI analyzing XBRL earnings announcement data. 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 own responsibility; consult a professional advisor as needed.