Wel-Dish.Incorporated FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.30B
• Operating Income: ¥32M
• Net Income: ¥114M
• EPS: ¥2.24

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Welldish Co., Ltd. (29010) reported FY2025 Q4 consolidated results under JGAAP showing modest profit stability against a softer top line and stressed cash generation. Revenue declined 2.0% YoY to ¥1,305 million, while operating income held essentially flat at ¥32 million, implying resilient operating discipline amid top-line pressure. Net income was ¥47 million (EPS ¥2.24), translating to a 3.6% net margin, supported by positive non-operating contributions that lifted ordinary income above operating income. DuPont analysis indicates low-return dynamics: ROE stands at 1.44%, driven by a thin net margin (3.60%), slow asset turnover (0.341x), and conservative financial leverage (1.17x). Gross margin is shown at 50.7% and EBITDA margin at 5.2%, suggesting adequate value-add but limited operating leverage conversion into operating profit. Liquidity appears strong, with a current ratio of 236% and quick ratio of 214%, and working capital of ¥1,164 million providing a sizable short-term cushion. The capital structure is conservative, with a debt-to-equity ratio of 0.58x, indicating moderate solvency risk. Cash flows, however, are a key weakness: operating cash flow (OCF) was negative ¥201 million, and free cash flow (FCF) was negative ¥534 million, pointing to earnings-to-cash conversion issues and/or elevated investment. The OCF/Net Income ratio of -4.28 signals poor near-term cash realization of reported profits. Despite reported income taxes of ¥13 million, the calculated effective tax rate is shown as 0.0% due to disclosure mapping; this is a data limitation rather than evidence of zero taxation. Certain items (e.g., equity ratio, cash balance, shares outstanding, book value per share) show as zero, which reflects non-disclosure in available XBRL rather than actual zero values. The balance sheet scale (assets: ¥3,825 million) against the revenue base yields low asset turnover, constraining ROE in the absence of margin expansion or efficiency gains. Non-operating gains supported ordinary and net income, but this reliance could introduce volatility if such items normalize. No dividends were paid (DPS ¥0), which is prudent given the negative FCF and the need to preserve liquidity. Overall, the company maintains balance sheet strength but faces challenges in cash flow quality and capital productivity, with near-term priorities likely centered on working capital discipline and careful capex pacing. Data inconsistencies in cost classifications (e.g., cost of sales vs. gross profit) and unreported items require cautious interpretation of certain ratios.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.60% (NI ¥47m / Revenue ¥1,305m)
• asset_turnover: 0.341x (Revenue ¥1,305m / Assets ¥3,825m)
• financial_leverage: 1.17x (Assets ¥3,825m / Equity ¥3,271m)
• calculated_ROE: 1.44% (consistent with reported 1.44%)
• commentary: ROE is constrained primarily by low asset turnover and modest margins; leverage is conservative and not a significant ROE driver. margin_quality:
• gross_margin: 50.7% (as provided; note classification inconsistency between reported cost of sales and gross profit figures)
• EBITDA_margin: 5.2% (EBITDA ¥68.2m)
• operating_margin: 2.45% (Operating income ¥32m / Revenue ¥1,305m)
• net_margin: 3.60%
• non_operating_contribution: Ordinary income (¥38m) > operating income (¥32m), implying positive net non-operating gains (~¥6m after interest expense of ¥5.3m). operating_leverage: Given a 2.0% YoY revenue decline and essentially flat operating income, implicit operating leverage appears contained or offset by cost controls. The small absolute profit base suggests sensitivity to volume/mix and input costs, but current period indicates disciplined expense management.

Growth Assessment

revenue_sustainability: Top-line contracted 2.0% YoY to ¥1,305m, indicating demand softness or pricing/mix headwinds. Low asset turnover (0.341x) suggests underutilized asset base or a business model with low throughput relative to balance sheet size. profit_quality: Operating margin at 2.45% and EBITDA margin at 5.2% indicate thin operating buffer. Dependence on non-operating gains to lift net income adds variability risk to future earnings. outlook: Absent evidence of accelerating demand or efficiency gains, near-term growth appears subdued. Key swing factors include input cost trends (food/raw materials), pricing power, and utilization improvements. Any normalization of non-operating gains could cap net income growth unless operating margin expands.

Financial Health

liquidity:

• current_ratio: 236.4% (CA ¥2,017.6m / CL ¥853.4m)
• quick_ratio: 214.2% (CA-Inv ¥1,828.1m / CL ¥853.4m)
• working_capital: ¥1,164.2m
• commentary: Short-term liquidity is strong, providing buffer despite negative OCF. Cash and equivalents are unreported (shown as 0), so absolute cash level is unknown. solvency:
• debt_to_equity: 0.58x (TL ¥1,898.4m / Equity ¥3,271.0m)
• equity_ratio: Unreported (shown as 0.0%); based on totals, implied equity/asset ratio would be ~85.5%, but reported field is unavailable.
• interest_coverage: 6.1x (EBIT ¥32m / Interest ¥5.26m)
• commentary: Moderate leverage with ample coverage suggests low near-term default risk, contingent on maintaining operating profit. capital_structure: Balance sheet is equity-heavy relative to liabilities, aligning with conservative funding. The moderate liabilities base against sizable equity reduces financial risk but limits ROE.

Cash Flow Quality

earnings_quality: OCF/Net Income at -4.28 indicates poor cash conversion and potential earnings quality concerns for the period. FCF_analysis: OCF (-¥201m) plus investing CF (-¥333m) yields FCF of -¥534m, indicating significant outflows from operations and investment. working_capital: Large positive working capital (¥1,164m) could be tying up cash; without sub-components, the OCF shortfall likely reflects increases in receivables and/or inventory, or timing effects. Inventory is ¥189.5m; receivables and payables are not disclosed. additional_notes: Cash balance and detailed CF breakdown are undisclosed, limiting granularity. Sustained negative OCF would pressure liquidity unless offset by cash reserves or financing.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is 0.0% with DPS at ¥0, which aligns with the need to preserve cash given negative FCF. FCF_coverage: Not meaningful in FY2025 as FCF is -¥534m and dividends are zero. policy_outlook: Absent a clear path to positive and stable FCF, resumption or initiation of dividends appears unlikely in the near term. Management may prioritize working capital normalization and investment returns before setting a payout policy.

Risk Assessment

Business Risks:

• Input cost volatility (food/raw materials, packaging, energy) potentially compressing margins.
• Price competition and limited pricing power in food/consumer channels.
• Demand softness and customer concentration risk with key retailers or foodservice clients.
• Product quality and food safety risks unique to the category.
• Operational execution risk in production planning and inventory management.
• Supply chain/logistics disruptions affecting fulfillment costs and service levels.

Financial Risks:

• Sustained negative operating cash flow leading to liquidity drain.
• Working capital volatility (receivables collection, inventory turns) stressing cash generation.
• Refinancing and counterparty risks if external funding is needed; covenant visibility is limited.
• Interest rate risk on floating-rate borrowings (coverage currently adequate but profit base is small).
• Reliance on non-operating income to support net profit, which may not be recurring.

Key Concerns:

• OCF/Net Income at -4.28 indicating weak cash conversion.
• Negative FCF of ¥534m alongside continued investing outflows.
• Low ROE at 1.44% driven by low asset turnover.
• Data inconsistencies in cost classifications and unreported equity ratio/cash/shares limiting precision.

Investment Implications

Key Takeaways:

• Profitability stable but thin: operating margin 2.45%, EBITDA margin 5.2%, ROE 1.44%.
• Top line down 2.0% YoY; asset turnover at 0.341x highlights underutilization.
• Liquidity strong (current ratio 236%, quick ratio 214%) and leverage moderate (D/E 0.58x).
• Cash flow is the weak link: OCF -¥201m; FCF -¥534m; OCF/NI -4.28.
• Non-operating gains supported net income; sustainability uncertain.
• No dividend, appropriately conservative given negative FCF.

Metrics to Watch:

• OCF/Net Income and trajectory of operating cash flow
• Working capital turns: inventory days and receivables days
• Capex intensity (investing CF) relative to sales and ROI on investments
• Gross and operating margin stability amid input cost changes
• Share of non-operating items in ordinary income
• Asset turnover improvement (Revenue/Assets)

Relative Positioning: Compared with domestic small-cap food manufacturers, Welldish exhibits conservative leverage and strong liquidity but lags on capital efficiency (low asset turnover, ROE 1.44%) and cash conversion (negative OCF/FCF).

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