YOKOREI CO.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

Improved utilization of the refrigerated warehousing business and improved profitability in the food sales business resulted in substantial increases in both operating income and ordinary income, in addition to higher revenue. Revenue was ¥978.8B (+2.7% YoY), operating income was ¥61.6B (+66.1%), and ordinary income was ¥62.0B (+89.2%). Net income increased 23.9% to ¥28.7B, although the increase was limited primarily due to the recognition of ¥22.0B in impairment losses as an extraordinary loss. The operating margin improved significantly to 6.3% from 3.9% in the previous year, indicating a qualitative improvement in the earnings structure.

Factors Affecting Performance

【Revenue】Revenue was ¥978.8B (+2.7%). The refrigerated warehousing business led overall performance, increasing 8.9% to ¥322.7B, while the food sales business was nearly flat at ¥671.7B (-0.4%). The revenue mix was 68.6% for food sales and 33.0% for refrigerated warehousing (before intersegment adjustments). While food sales accounts for the majority of revenue, refrigerated warehousing is driving growth.

【Profit and Loss】Operating income increased substantially by 66.1% to ¥61.6B, while ordinary income increased 89.2% to ¥62.0B. The refrigerated warehousing business maintained high profitability, with operating income of ¥69.3B (+18.6%; margin 21.5%), while the food sales business also achieved a significant improvement in profitability, with operating income of ¥23.2B (+168.0%; margin 3.5%). In non-operating items, foreign exchange gains of ¥5.5B and dividend income of ¥2.6B made positive contributions, lifting ordinary income. On the other hand, impairment losses of ¥22.0B were recorded as an extraordinary loss, limiting the increase in net income to ¥28.7B (+23.9%) relative to ordinary income. In conclusion, the Company achieved higher revenue and higher earnings.

Segment Analysis

The refrigerated warehousing business maintained high profitability, with revenue of ¥322.7B (+8.9%), operating income of ¥69.3B (+18.6%), and a margin of 21.5%, making it the primary contributor to Company-wide profits. The food sales business was nearly flat in terms of revenue at ¥671.7B (-0.4%), but profitability improved substantially, with operating income rising 168.0% to ¥23.2B and the margin reaching 3.5%. Food sales accounts for approximately 70% of total revenue, but the profit structure is highly dependent on the refrigerated warehousing business. The disparity in margins between the two businesses—21.5% versus 3.5%—has a significant impact on Company-wide profitability.

Key Financial Indicators

【Profitability】The operating margin was 6.3%, improving by +2.4pt from 3.9% in the previous year, while the ordinary income margin also expanded to 6.3%. The net margin remained at 2.9%, primarily due to the recognition of ¥22.0B in impairment losses. ROE was 3.3%, and EPS was ¥47.21 (+21.6% from ¥38.82 in the previous year). 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥122.4B, equivalent to 4.3 times net income of ¥28.7B, indicating strong cash backing for earnings. 【Investment Efficiency】Capital expenditures were ¥127.4B, approximately 1.9 times depreciation and amortization of ¥65.6B, indicating that the Company is in a phase of growth investment. Free Cash Flow (FCF) was positive at ¥18.0B. 【Financial Soundness】The equity ratio was 39.5%, with net assets of ¥869.4B against total assets of ¥2200.9B. Current assets of ¥347.3B versus current liabilities of ¥456.5B resulted in a current ratio of only 76.1%, a level requiring monitoring from a short-term liquidity perspective.

Cash Flow Analysis

Operating Cash Flow was ¥122.4B, a substantial 235.7% increase YoY, and significantly exceeded net income of ¥28.7B, indicating high-quality earnings conversion into cash. Investing Cash Flow was negative at ¥104.4B, primarily due to capital expenditures of ¥127.4B, demonstrating that the Company is actively investing in areas such as expanding refrigerated warehousing capacity. Financing Cash Flow was negative at ¥21.9B, as proceeds from and repayments of long-term borrowings largely offset each other, while dividend payments and other items were net uses of cash. As a result, FCF remained positive at ¥18.0B, indicating sufficient capacity to fund large-scale investments with internal funds.

Quality of Earnings

Ordinary income of ¥62.0B represents recurring earnings supported by operating income and non-operating income, including foreign exchange gains and dividend income. Non-operating income was limited to 1.6% of revenue, indicating high-quality earnings. On the other hand, net income of ¥28.7B diverged substantially from ordinary income, primarily due to the ¥22.0B impairment loss recorded as an extraordinary loss. This impairment loss is a temporary factor reflecting a reassessment of asset values; therefore, when evaluating full-year profitability, greater weight should be placed on the growth at the ordinary income level. The fact that OCF significantly exceeded net income further supports the high quality of earnings from an accrual perspective.

Earnings Forecast and Guidance

Progress against the full-year plan was ¥978.8B/¥1250.0B, or 78.3%, for revenue; ¥61.6B/¥70.0B, or 88.0%, for operating income; and ¥62.0B/¥64.0B, or 96.9%, for ordinary income. All were progressing at favorable levels as of Q3. Net income was ¥28.7B. Although a simple comparison with the Company’s forecast of ¥63.0B is difficult, progress remained limited even when viewed on the basis of net income attributable to owners of the parent of ¥27.9B. This was due to the recognition of the extraordinary loss. If the favorable trend in operating and ordinary income continues, there may be room for net income to recover toward the fiscal year-end. It should also be noted that the earnings forecast was revised during the current quarter.

Shareholder Returns

The interim dividend was ¥13 per share, and the full-year dividend forecast is ¥27, representing a planned increase from ¥12 in the previous year. Based on net income attributable to owners of the parent of ¥28.7B and weighted-average shares outstanding during the period of 59,087 thousand shares, EPS was calculated at ¥47.21, implying a payout ratio of 27.5% based on the ¥13 interim dividend. Against OCF of ¥122.4B and FCF of ¥18.0B, dividend payments were ¥14.8B, indicating sufficient dividend coverage from a cash flow perspective.

Risk Factors

1. Short-term liquidity risk: Current assets of ¥347.3B versus current liabilities of ¥456.5B resulted in a current ratio of 76.1%. Short-term liabilities, including ¥100.0B in bonds due within 1 year, are substantial relative to cash and deposits of ¥33.7B, requiring monitoring of liquidity.

2. Risk of recurring extraordinary losses: The Company recorded impairment losses of ¥22.0B during the current period, reducing net income. If similar temporary losses occur in the future, the divergence between ordinary income and net income may persist.

3. Risk of an earnings disparity between segments: The food sales business accounts for approximately 70% of revenue but has a low margin of 3.5%, resulting in a high degree of dependence on the refrigerated warehousing business, which has a margin of 21.5%. Any deterioration in the profitability of food sales could significantly affect Company-wide earnings.

Industry Benchmarks (For Reference; Compiled by the Company)

Industry Benchmarks (trading)

Profitability and Returns

The operating margin is substantially above the industry median, while the net margin remains slightly below the median due to the impact of the extraordinary loss.

Growth and Capital Efficiency

Although the revenue growth rate is below the industry median, it falls within the IQR range, with the high earnings growth rate offsetting the lower revenue growth rate.

※Source: Compiled by the Company

Key Takeaways from the Results

1. The high margin of the refrigerated warehousing business (21.5%) and improved profitability in the food sales business (equivalent to an increase of +2.2pt in margin) have structurally improved the earnings profile at the operating income level. The fact that OCF exceeds four times net income indicates high earnings quality.

2. The primary reason for the limited progress in net income during the current period was the temporary factor of ¥22.0B in impairment losses. On an ordinary income basis, progress against the full-year forecast reached 96.9%. Trends in extraordinary gains and losses will be a key point of focus in interpreting future results.

3. A current ratio of 76.1% and cash and deposits of ¥33.7B, together with funding requirements associated with the sharp increase in construction in progress (capital expenditures of ¥127.4B), make the composition of short-term liabilities and progress toward extending their maturities important areas for monitoring from a financial perspective.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥1,315–¥1,392 for a ±1% change in the cost of equity, and ¥1,350–¥1,355 for a change of ±0.1 in ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used; there is a timing difference relative to the full-year forecast.

(Model used: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market stock price or a recommendation of any specific investment action, nor does it predict or guarantee future stock prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional adviser as necessary.

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