STI Foods Holdings,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥28.47B
• Operating Income: ¥2.03B
• Net Income: ¥1.59B
• EPS: ¥109.06

Income Statement

Balance Sheet

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

STI Food Holdings (TSE:2932) reported FY2025 Q3 (cumulative) revenue of ¥28,471 million, up 8.1% YoY, indicating solid top-line momentum despite a challenging cost environment. Gross profit was ¥7,573 million, implying a gross margin of 26.6%, which is respectable for a food processing/distribution business and suggests effective pricing and mix management. Operating income declined 13.8% YoY to ¥2,033 million, compressing the operating margin to roughly 7.1%, pointing to cost inflation or higher SG&A that outpaced revenue growth. Ordinary income of ¥2,059 million slightly exceeded operating income, indicating positive net non-operating contributions that more than offset interest expense of ¥18 million. Net income rose 22.2% YoY to ¥1,938 million, implying a 6.81% net margin; the divergence between operating and net profit growth suggests a favorable non-operating and/or tax effect in the period. The DuPont breakdown shows net margin of 6.81%, asset turnover of 1.341x, and financial leverage of 2.24x, yielding an ROE of 20.43%, which is robust for the sector and primarily driven by healthy margins and efficient asset use rather than excessive leverage. Liquidity appears sound with a current ratio of 146% and a quick ratio of 135%, supported by modest inventories (¥859 million) relative to current assets. The capital structure is balanced with total liabilities/equity at 1.15x and an estimated equity ratio of roughly 44.7% (equity/total assets), despite the equity ratio field being unreported. Interest coverage is very strong at about 115x (EBIT/interest), reflecting low interest burden and ample operating earnings buffer. Working capital stands at approximately ¥3,505 million, which should support ongoing operations and procurement cycles. The operating margin slippage alongside higher revenue indicates some operating deleverage and potential input cost pressures; margin stabilization will be a key watchpoint. Non-operating tailwinds and a likely normalized tax rate (estimated near 29–30% based on disclosed tax expense vs. implied pre-tax profit) contributed to the strong bottom line, but may not be recurring. Cash flow data, capex, and depreciation are not disclosed in this snapshot, limiting our ability to evaluate earnings-to-cash conversion and reinvestment intensity. Dividend is currently nil (DPS ¥0, payout 0%), consistent with either a reinvestment focus or prudent retention amid margin pressures. Overall, the company combines solid growth, high ROE, strong liquidity, and moderate leverage, but sustainability of net profit growth will depend on restoring operating margin and converting earnings to cash. Data limitations around cash flows and D&A require caution when interpreting EBITDA and free cash flow metrics. Near-term, monitoring price pass-through, raw material costs (notably seafood), and FX sensitivity will be critical to assessing earnings durability.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.81%
• asset_turnover: 1.341
• financial_leverage: 2.24
• calculated_ROE: 20.43%
• commentary: High ROE is balanced across margin and asset efficiency with moderate leverage; not overly dependent on balance sheet gearing. margin_quality:
• gross_margin: 26.6%
• operating_margin: 7.1% (approx.)
• ordinary_margin: 7.2% (approx.)
• net_margin: 6.81%
• insight: YoY operating income decline despite sales growth indicates cost pressure and/or elevated SG&A. Non-operating items slightly boosted ordinary profit above operating profit. operating_leverage:
• trend: Negative in the period
• evidence: Revenue +8.1% YoY vs. operating income -13.8% YoY implies deleverage.
• implication: Fixed cost absorption and procurement cost pass-through need improvement to stabilize OPM.

Growth Assessment

revenue_sustainability: Top-line growth of 8.1% YoY suggests successful demand capture and/or price/mix improvements. For a food/seafood platform, this is solid and likely a mix of price pass-through and volume resilience. profit_quality: Net income +22.2% YoY contrasts with operating income -13.8% YoY, indicating reliance on non-operating gains and/or tax effects. Core earnings quality thus appears weaker than headline NI growth. outlook: Sustaining growth will depend on cost normalization, continued price pass-through, and stable procurement. FX-driven import cost volatility and raw material availability remain key variables. Restoring operating margin toward prior levels is the primary lever for profit growth.

Financial Health

liquidity:

• current_ratio: 146.4%
• quick_ratio: 135.0%
• working_capital: ¥3,504,839,000
• commentary: Adequate short-term buffer; low inventories relative to current assets support the strong quick ratio. solvency:
• total_assets: ¥21,232,000,000
• total_liabilities: ¥10,899,042,000
• total_equity: ¥9,487,000,000
• debt_to_equity: 1.15x (total liabilities / equity)
• equity_ratio_estimate: ≈44.7% (equity / total assets)
• interest_coverage: ≈115x (EBIT / interest expense)
• commentary: Balanced capital structure with ample interest coverage; solvency risk appears modest. capital_structure: Leverage is moderate and supports ROE without excessive risk. Capacity for incremental debt exists, but priority should be on maintaining margin and cash flow.

Cash Flow Quality

earnings_quality: Operating CF not disclosed in this dataset; NI growth outpacing OI suggests headline earnings benefited from non-operating/tax factors. Without OCF, cash conversion cannot be validated. FCF_analysis: Investing CF and D&A are unreported; EBITDA cannot be assessed. Capex intensity and maintenance vs. growth split are unknown, limiting FCF analysis. working_capital: Working capital positive at ~¥3.5bn; inventory is modest (¥859m), implying receivables and cash (undisclosed) drive current assets. Changes in receivables/payables are unknown, constraining interpretation of underlying cash generation.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is 0% (DPS ¥0), consistent with earnings retention. With NI of ¥1.94bn and moderate leverage, capacity for dividends likely exists, but policy appears conservative. FCF_coverage: Not assessable due to unreported OCF/FCF; stated 0.00x is not meaningful given missing cash flow disclosures. policy_outlook: Assuming a reinvestment focus amid margin pressures, continuation of a conservative dividend stance is plausible until operating margin stabilizes and cash conversion is evidenced.

Risk Assessment

Business Risks:

• Raw material price volatility (notably seafood procurement costs).
• FX exposure impacting import costs and selling prices (yen depreciation risk).
• Ability to pass through cost inflation to customers without volume loss.
• Supply chain disruptions affecting cold chain/logistics and product availability.
• Customer concentration or channel mix risks if reliant on few key retailers or foodservice partners.
• Food safety and quality control risks inherent in processing and distribution.

Financial Risks:

• Potential margin compression leading to weaker operating cash flow if costs remain elevated.
• Exposure to non-operating income variability that supported NI this period.
• Working capital swings (receivables/payables) possibly impacting OCF.
• Interest rate normalization increasing financing costs (albeit from a low base).

Key Concerns:

• Operating income decline despite revenue growth indicates cost pressure/operating deleverage.
• Cash flow, D&A, and capex data are undisclosed here, limiting assessment of cash conversion and reinvestment needs.
• Net income strength partly reliant on non-operating/tax effects that may not be recurring.

Investment Implications

Key Takeaways:

• Top-line growth is solid (+8.1% YoY) but accompanied by operating margin compression.
• ROE is strong at 20.4% on healthy asset turnover and moderate leverage.
• Liquidity is sound (CR 146%, QR 135%) and solvency risk is modest (liabilities/equity 1.15x, interest coverage ~115x).
• Net profit growth outpaces operating profit, implying non-operating/tax tailwinds.
• Data gaps (OCF, capex, D&A) limit visibility into cash generation and reinvestment intensity.
• Dividend remains nil; capital allocation appears conservative pending margin stabilization.

Metrics to Watch:

• Operating margin trend and SG&A ratio.
• Gross margin and cost pass-through effectiveness.
• Operating cash flow and free cash flow once disclosed.
• Capital expenditures and depreciation (to gauge maintenance vs. growth investment).
• Non-operating income/expenses and effective tax rate normalization.
• Inventory days, receivable days, and payable days (working capital discipline).
• FX impact on COGS and procurement hedging effectiveness.

Relative Positioning: Within Japanese mid-cap food processors/distributors, STI exhibits above-average ROE and asset turnover with a moderate leverage profile; operating margin is competitive but under pressure this term, making margin stabilization the key differentiator versus peers.

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