YOKOREI CO.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

This earnings result delivered substantial growth in operating income, driven by higher revenue and profit in the Refrigerated Warehousing Business and improved profitability in the Food Sales Business. Revenue was ¥978.8B (+2.7% YoY), operating income was ¥61.6B (+66.1%), ordinary income was ¥62.0B (+89.2%), and net income attributable to owners of the parent was ¥27.9B (+21.9%). Net income growth was relatively modest compared with operating income growth because an impairment loss of ¥22.0B was recognized as an extraordinary loss.

Factors Affecting Performance

【Revenue】Revenue was ¥978.8B, up +2.7% YoY. While the Refrigerated Warehousing Business expanded to external revenue of ¥306.9B (+10.3%), the Food Sales Business was ¥671.7B (-0.4%), remaining virtually flat. The Food Sales Business accounted for approximately 69% of the revenue mix, while the Refrigerated Warehousing Business accounted for approximately 31%, indicating that revenue growth is highly dependent on the Refrigerated Warehousing Business.

【Profit and Loss】Operating income was ¥61.6B (+66.1%), supported by a gross margin of 13.4% (+approximately 2.1pt YoY) and a decline in the SG&A ratio. By segment, the Refrigerated Warehousing Business remained the main contributor, generating segment profit of ¥69.3B (+18.6%, profit margin 21.5%), while the Food Sales Business recorded segment profit of ¥23.2B (+168.0%, profit margin 3.5%), representing a significant improvement in profitability. Ordinary income of ¥62.0B (+89.2%) benefited from non-operating income, including foreign exchange gains of ¥5.5B. Meanwhile, net income of ¥27.9B (+21.9%) was pressured by the ¥22.0B impairment loss recognized as an extraordinary loss, widening the gap between ordinary income and net income. Overall, the Company achieved higher revenue and profit, but growth in bottom-line profit was not as significant as the improvement at the operating level due to the temporary impairment factor.

Segment Analysis

The Refrigerated Warehousing Business generated external revenue of ¥306.9B (+10.3% YoY), segment profit of ¥69.3B (+18.6%), and a profit margin of 21.5%, making it the core contributor to Company-wide profit. Although external revenue in the Food Sales Business was ¥671.7B (-0.4% YoY), remaining virtually flat, segment profit increased substantially to ¥23.2B (+168.0%), and its profit margin improved to 3.5%. The profit margin differential between the two businesses is approximately 18pt, meaning that Company-wide profitability depends on the utilization rate and electricity costs of the refrigerated warehouses and the sustainability of margin improvement in the Food Sales Business. Company-wide expenses (adjustments) were ¥31.2B, up from ¥30.2B in the previous year, but the increase in profit from both segments absorbed these costs.

Key Financial Indicators

【Profitability】The operating margin of 6.3% improved from 3.9% in the same period of the previous year, while the gross margin also increased to 13.4% from 11.3%. The net margin attributable to owners of the parent was 2.9%, improving from 2.4% in the same period of the previous year; excluding the impairment loss, the underlying improvement would have been greater. 【Cash Flow Quality】Operating cash flow (OCF) was ¥122.4B, reaching 4.4 times net income of ¥27.9B, indicating strong earnings-to-cash conversion. 【Investment Efficiency】Annualized ROE was 4.4% and the equity ratio was 39.5%. Reflecting the asset-intensive business structure, total asset turnover remains at a low level. 【Financial Soundness】The current ratio was below 1.0x, with current assets of ¥347.3B versus current liabilities of ¥456.5B, resulting in negative working capital. Interest-bearing debt remained high, centered on long-term borrowings of ¥689.7B and including bonds and other liabilities. Monitoring is required from both financial leverage and liquidity perspectives.

Cash Flow Analysis

Operating cash flow was ¥122.4B, a substantial increase from ¥36.5B in the same period of the previous year, demonstrating cash generation well above the level of net income. In addition to depreciation and amortization of ¥65.6B, the recognition of the non-cash impairment loss of ¥22.0B also contributed. From a working capital perspective, accounts payable increased by ¥10.8B, providing funds, while trade receivables increased by ¥8.6B, using funds. Investing cash flow was negative ¥104.4B, primarily due to capital expenditures of ¥127.4B, which were approximately 1.9 times depreciation and amortization. Free cash flow, calculated as the sum of operating and investing cash flow, was positive at ¥18.0B; however, deducting only capital expenditures from operating cash flow results in approximately negative ¥4.9B, indicating that cash recoveries from the sale of investment securities and other sources supported the positive balance. Financing cash flow was negative ¥21.9B, and cash and cash equivalents decreased by ¥3.2B due to dividend payments and net repayment of borrowings.

Earnings Quality

The gap between ordinary income of ¥62.0B and net income of ¥27.9B was largely attributable to the temporary factor of the ¥22.0B impairment loss, and the improvement through the ordinary-income level is considered closer to the underlying business performance. Non-operating income consisted primarily of foreign exchange gains of ¥5.5B, dividends received of ¥2.6B, and interest received of ¥3.4B. Attention should be paid to the fact that foreign exchange gains, which differ in nature from recurring earnings, made a certain contribution. OCF reached 4.4 times net income, and accruals—the divergence between accrual accounting and cash accounting—appear to be limited, indicating sound cash support for earnings. However, the impairment loss itself, as a non-cash item, also increased OCF, and this effect should be considered as part of the high cash conversion rate for the current period.

Earnings Forecast and Guidance

Progress against the full-year forecast was 78.3% for revenue (¥978.8B/¥1250.0B), 88.0% for operating income (¥61.6B/¥70.0B), and 96.9% for ordinary income (¥62.0B/¥64.0B), all exceeding the standard Q3 progress rate of 75%. Meanwhile, progress toward net income attributable to owners of the parent was 44.3% (¥27.9B/¥63.0B), substantially below the standard level, primarily due to recognition of the ¥22.0B impairment loss. The Company revised its earnings forecast during the current quarter. Achieving the full-year net income forecast will depend on Q4 earnings power as well as whether any additional one-time losses arise.

Shareholder Returns

The Q2 dividend was ¥13.00 per share, and the full-year dividend forecast is ¥27.00 per share. Based on net income attributable to owners of the parent of ¥27.9B, the payout ratio is approximately in the 27% range and appears to be within a sustainable range. No share repurchases were recorded, indicating that shareholder returns consist solely of dividends. Free cash flow of ¥18.0B exceeded dividend payments of ¥14.8B, securing the source of dividends on a cumulative basis for the current period. However, capital expenditures have expanded to approximately 1.9 times depreciation and amortization, and dividend sustainability will depend on the stability of future OCF and progress in recovering investments.

Risk Factors

1. Short-term liquidity: Current assets of ¥347.3B versus current liabilities of ¥456.5B resulted in a current ratio below 1.0x and negative working capital. Cash and deposits of ¥33.7B are limited relative to short-term interest-bearing debt, including short-term borrowings of ¥132.7B and long-term borrowings due within one year of ¥54.8B. The Company’s funding and liquidity management require ongoing monitoring.

2. Interest-bearing debt and interest burden: Interest-bearing debt remains high, including long-term borrowings of ¥689.7B and bonds of ¥100.0B. Interest expenses of ¥7.3B are equivalent to approximately 11.8% of operating income of ¥61.6B. In a rising interest-rate environment, part of the benefit from earnings improvement could be offset.

3. Impairment losses and investment recovery: The Company recognized an impairment loss of ¥22.0B during the current period. Given the substantial investment scale, including capital expenditures of ¥127.4B and construction in progress of ¥170.2B, if utilization rates or demand trends fall below expectations, this could lead to additional asset valuation revisions.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (trading)

Profitability and Returns

The operating margin is substantially above the industry median, while the net margin remains at approximately the same level due to the impact of the impairment loss.

Growth and Capital Efficiency

The revenue growth rate is below the industry median, indicating a relatively moderate pace of revenue growth.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The operating margin improved by approximately 2.4pt from the same period of the previous year, with higher revenue and profit in the Refrigerated Warehousing Business and a significant improvement in the profitability of the Food Sales Business driving Company-wide earnings power.

2. Progress through ordinary income exceeded the standard level against the full-year forecast; however, the ¥22.0B impairment loss limited progress toward net income to 44.3%, creating a temporary divergence between underlying operating performance and bottom-line profit.

3. OCF was 4.4 times net income, indicating strong cash generation. However, capital expenditures have expanded to approximately 1.9 times depreciation and amortization. Together with the low current ratio, the balance of capital allocation among investment, dividends, and debt will be a key focus going forward.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,315–¥1,392 at cost of equity ±1%, and ¥1,350–¥1,355 at ω±0.1.

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.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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 responsibility, after consulting with a professional as necessary.

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