| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥5517.0億 | ¥5078.8億 | +8.6% |
| Operating Income | ¥398.8億 | ¥343.5億 | +16.1% |
| Ordinary Income | ¥480.8億 | ¥315.8億 | +52.3% |
| Net Income | ¥277.3億 | ¥194.4億 | +42.6% |
| ROE | 17.2% | 14.6% | - |
FY2025 results delivered broad-based earnings growth with Revenue 551.7 billion yen (+43.8 billion yen, +8.6%), Operating Income 39.9 billion yen (+5.5 billion yen, +16.1%), Ordinary Income 48.1 billion yen (+16.5 billion yen, +52.3%), and Net Income 27.7 billion yen (+8.3 billion yen, +42.6%). The company achieved quality growth with margin expansion across all profit levels, supported by retail footprint expansion to 1,122 stores and operating leverage benefits from gross margin improvement and non-operating income gains.
Revenue growth of 8.6% was primarily driven by Gyomu Super Division expansion, with 38 net new stores reaching 1,122 locations and existing store shipments up 5.1% reflecting sustained consumer demand for value-priced products. Operating income increased 5.5 billion yen due to gross margin improvement of 55 basis points to 12.0% driven by procurement optimization and pricing discipline, combined with SG&A expense control that lowered the expense ratio. Ordinary income surged 16.5 billion yen, primarily driven by non-operating gains including factory subsidy income and foreign exchange-related mark-to-market gains on forward contracts, offset partially by reduced dividend income from investment portfolio rationalization. Net income rose 8.3 billion yen supported by operating improvements and non-operating gains, partially offset by impairment losses of 1.5 billion yen. This quarter represents a Revenue↑Profit↑ result with operating leverage and one-time non-operating tailwinds amplifying bottom-line expansion.
Gyomu Super Division: Operating profit 43.5 billion yen (YoY +6.2 billion yen): Store network expansion to 1,122 locations with 38 net additions and existing store shipment growth of 5.1% drove volume leverage, while gross margin improvement from procurement optimization and pricing strategy contributed to profit expansion reaching 8.1% operating margin.
Eco Renewable Energy Division: Operating profit 1.1 billion yen (YoY -0.1 billion yen): Stable power generation from 19 solar facilities and 1 biomass plant maintained solid profitability at 23.3% margin despite cost allocation methodology changes that modestly pressured margins, with electricity sales revenue remaining above prior year levels.
KOBE COOK Division: Operating profit 1.1 billion yen (YoY +0.1 billion yen): Continued restaurant expansion with 19 net Chisounabe store openings and 3 World Buffet additions offset rice price inflation pressures, while Premium Karubi franchise development progressed with first franchise location confirmed in Utsunomiya for March 2026 opening.
Profitability: ROE 19.8% (vs. 15.6% PY, well above historical trend), Operating Margin 7.2% (vs. 6.8% PY, comparing favorably to company's 5-year trajectory), Net Margin 5.8% (vs. 4.2% PY) Financial Health: D/E 0.19x (net cash position with 130.9 billion yen cash against 30.1 billion yen debt), Current Ratio 311% Cash Flow: FCF 33.2 billion yen, FCF Conversion 120% (OCF 42.1 billion yen / Net Income 27.7 billion yen = 1.52x), Payout Ratio 19.7%
Full-year FY2026 guidance projects Revenue 566.5 billion yen (+2.7% vs. FY2025), Operating Income 43.0 billion yen (+7.8%), Ordinary Income 43.7 billion yen (-9.1%), and Net Income 29.5 billion yen (+6.5%). Operating income guidance reflects continued store expansion with 32 net new Gyomu Super locations and existing store shipment target of 102% or higher, supported by private brand ratio expansion toward 37% and operational efficiency gains. The ordinary income downward revision of 4.4 billion yen from FY2025 reflects anticipated reversal of one-time non-operating gains including factory subsidies and foreign exchange mark-to-market benefits that contributed approximately 7-8 billion yen in FY2025. Management maintains conservative stance on non-recurring items while projecting operating earnings growth through core business momentum.
Annual dividend 30 yen per share (+4 yen vs. prior year), with progressive dividend policy maintained through FY2026 guidance of 32 yen per share. The FY2025 payout ratio of 19.7% provides ample reinvestment capacity, well-supported by FCF generation of 33.2 billion yen covering dividend payments of 5.1 billion yen with 6.5x coverage. Mid-term capital allocation plan through FY2026 allocates cumulative 50 billion yen to capital expenditure focused on domestic private brand production capacity enhancement including factory acquisitions and expansions, with cumulative shareholder returns of approximately 17 billion yen representing balanced allocation between growth investment and returns. The net cash position of 100.8 billion yen and robust operating cash flow of 42.1 billion yen provide sustainable foundation for progressive dividend policy targeting 20% payout ratio alongside 10 billion yen annual capital investment program.
Near-term: Q1 FY2026 earnings (February 2026) will clarify existing store momentum trajectory and private brand ratio progression toward 37% target; March 2026 Premium Karubi franchise opening in Utsunomiya represents first test case for franchise expansion model in premium yakiniku segment.
Long-term: Gyomu Super store network expansion targeting 1,154 locations by October 2026 and 1,500+ stores in long-term vision; domestic private brand ratio enhancement to 40%+ through capital investment in production facilities including Uehara Foods integration effects and new factory development; restaurant business scale-up targeting 500+ locations with Chisounabe and Premium Karubi franchise rollout; ROIC maintenance above 10% threshold while executing 50 billion yen cumulative capex program through FY2026.
Foreign exchange volatility on procurement costs and non-operating income through forward contract mark-to-market fluctuations, with FY2025 ordinary income benefiting approximately 7-8 billion yen from FX-related gains subject to reversal; commodity price inflation particularly rice prices impacting restaurant operations and imported private brand product costs; logistics cost escalation from fuel prices and labor shortages pressuring SG&A ratio expansion gains; impairment risk on acquired assets including 2.3 billion yen goodwill from Uehara Foods acquisition requiring monitoring of integration progress and profitability targets; franchise partner financial health and operational quality in external restaurant expansion affecting brand equity.
Core operating momentum remains robust with 16.1% operating income growth outpacing 8.6% revenue growth, demonstrating effective operating leverage through gross margin expansion of 55 basis points to 12.0% and SG&A ratio discipline. The quality of earnings improved substantially with operating cash flow reaching 1.52x net income conversion and free cash flow of 33.2 billion yen providing ample capacity for growth investment and progressive dividends while maintaining net cash position.
FY2026 guidance conservatively factors reversal of 7-8 billion yen non-operating tailwinds, positioning ordinary income 9.1% below FY2025 despite 7.8% operating income growth outlook. This creates potential for upside if core margin improvements offset non-recurring item headwinds more effectively than projected. Store expansion trajectory of 32 net additions toward 1,154 locations and private brand ratio target of 37% provide visible growth drivers, while 10 billion yen annual capital investment in domestic production capacity supports structural margin improvement through vertical integration.
The 19.8% ROE achievement with declining leverage to 0.19x debt-to-equity demonstrates exceptional capital efficiency, warranting monitoring of ROIC trends to ensure 50 billion yen cumulative capex program through FY2026 generates returns exceeding 10% hurdle rate. Valuation considerations should weigh sustainable mid-single-digit revenue growth with high-single-digit operating profit growth against elevated ROE potentially normalizing as capital deployment accelerates.
This report was automatically generated by AI integrating XBRL earnings data and PDF presentation materials. Final investment decisions are your own responsibility.