Fujisan Magazine Service Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.27B
• Operating Income: ¥60M
• Net Income: ¥131M
• EPS: ¥2.32

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

Fujisan Magazine Service reported FY2025 Q3 consolidated results under JGAAP with revenue of ¥4,266m, up 3.2% YoY, indicating modest topline growth despite a challenging media distribution environment. Gross profit was ¥1,241.8m, implying a gross margin of 29.1%, which appears stable and suggests that core take-rate/commission economics remained intact. Operating income fell sharply to ¥60m (-71.5% YoY), compressing operating margin to 1.4% and signaling significant operating deleverage from higher SG&A or mix effects. Ordinary income was ¥65m, slightly above operating income due to limited non-operating net gains versus interest expense of ¥2.6m. Net income dropped to ¥7m (-93.5% YoY), driving a thin net margin of 0.16%, with reported income tax expense of ¥77.6m materially exceeding ordinary income, pointing to tax adjustments (e.g., valuation allowance changes or prior-period tax effects) or non-recurring items under JGAAP. DuPont shows ROE at 0.28%, driven by very low net margin (0.16%), moderate asset turnover (0.774x), and financial leverage of 2.22x. The company maintains a solid liquidity position, with current assets of ¥5,112.0m vs. current liabilities of ¥3,368.8m (current ratio 151.7%) and working capital of ¥1,743.2m. Balance sheet strength is reasonable: total assets ¥5,509m and equity ¥2,479m imply an equity ratio around 45% (assets/equity leverage ~2.22x), indicating moderate leverage even though a reported equity ratio figure was not disclosed. Interest coverage remains adequate at 23.1x (operating income/interest expense), mitigating near-term solvency concerns. Cash flow data are not disclosed this quarter (OCF/FCF shown as zero placeholders), limiting our ability to assess earnings-to-cash conversion; caution is warranted until OCF trends are available. Depreciation and EBITDA figures are also undisclosed, constraining assessment of underlying operating cash generation and non-cash expense dynamics. Dividend payments are not indicated (DPS ¥0), likely reflecting the priority to preserve liquidity amid earnings volatility. Overall, the quarter reflects resilient revenue but pronounced margin pressure and tax-related drag, resulting in subdued profitability and ROE. Near-term focus should be on SG&A control, mix management, and visibility into the tax line normalization. With modest leverage, adequate liquidity, and positive revenue momentum, the company has flexibility, but sustained improvement in operating margin and confirmation of cash generation are key for earnings quality.

Profitability Analysis

ROE_decomposition: ROE 0.28% = Net margin 0.16% × Asset turnover 0.774 × Financial leverage 2.22. The primary drag is the net margin, as operating margin is only 1.4% and the tax burden/non-recurring effects further compress net profit. margin_quality: Gross margin at 29.1% suggests stable commission/take-rate economics. Operating margin of 1.4% is weak versus the gross margin, implying elevated SG&A (marketing, platform costs, logistics/fulfillment, or personnel). The gap between operating and net margins reflects tax expense (¥77.6m) disproportionately high relative to pretax income. operating_leverage: Revenue grew 3.2% YoY while operating income fell 71.5% YoY, indicating adverse operating leverage. Small revenue fluctuations materially impact EBIT, pointing to a high fixed-cost base or increased customer acquisition/retention spend.

Growth Assessment

revenue_sustainability: Topline grew to ¥4,266m (+3.2% YoY), suggesting steady demand for subscription/EC-related services. Sustainability hinges on churn control, publisher contract renewals, and mix of print vs. digital offerings. profit_quality: Ordinary income ¥65m barely exceeds operating income, indicating limited non-operating support. The large tax expense versus earnings depresses bottom-line quality. Absent cash flow disclosure, earnings-to-cash conversion cannot be verified. outlook: If SG&A normalization and pricing/mix improvements are achieved, margins could recover given stable gross margin. However, continued investment in customer acquisition, logistics inflation, and any tax adjustments could cap near-term profit growth.

Financial Health

liquidity: Current assets ¥5,112.0m vs. current liabilities ¥3,368.8m; current ratio 151.7% and working capital ¥1,743.2m indicate comfortable liquidity. Quick ratio equals current ratio given no inventories disclosed. solvency: Total liabilities ¥3,368.8m and equity ¥2,479.0m imply debt-to-equity near 1.36x and an equity ratio roughly 45%, reflecting moderate leverage. Interest coverage at 23.1x provides cushion against interest rate increases. capital_structure: Financial leverage of 2.22x (assets/equity) is moderate. Balance sheet can support operational needs, but profit volatility suggests maintaining conservative leverage is prudent.

Cash Flow Quality

earnings_quality: OCF, investing CF, and financing CF are undisclosed this period (zeros indicate unreported). Therefore, we cannot corroborate net income with cash generation or assess the cash impact of working capital movements. FCF_analysis: Free cash flow is undisclosed. With EBIT at ¥60m and no depreciation disclosure, true cash earnings are unclear. Capex needs are unknown; absent FCF data, coverage of potential dividends or debt service cannot be evaluated. working_capital: Working capital stands at ¥1,743.2m, but the composition (receivables, payables, contract liabilities) is not provided. Monitoring receivable days and deferred revenue is important for cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is 0%, consistent with prioritizing internal retention amidst thin profitability (net income ¥7m). FCF_coverage: FCF not disclosed; thus, dividend coverage cannot be assessed. Given low earnings and undisclosed OCF, resumption of dividends would require clearer cash generation. policy_outlook: With ROE at 0.28% and margin pressure, a conservative dividend stance appears likely until operating margin and cash flow visibility improve.

Risk Assessment

Business Risks:

• Publisher contract renegotiations affecting commission rates and supply terms
• Shift from print to digital formats altering revenue mix and take rates
• Customer acquisition costs and churn dynamics in subscription services
• Logistics and postage cost inflation impacting gross-to-operating margin bridge
• Competition from e-commerce and digital content platforms
• Seasonality and campaign timing affecting quarterly earnings volatility

Financial Risks:

• High operating leverage leading to earnings volatility on modest revenue changes
• Tax expense volatility (e.g., valuation allowance or one-off adjustments) depressing net profit
• Working capital swings (receivables, payables, deferred revenue) affecting OCF
• Sensitivity to interest rates is limited but present; maintaining interest coverage is key
• Data gaps on cash and capex obstruct proactive liquidity management assessment

Key Concerns:

• Operating margin compressed to 1.4% despite 29.1% gross margin
• Net income of ¥7m driven down by high tax expense relative to pretax income
• Lack of OCF/FCF disclosure reduces confidence in earnings quality

Investment Implications

Key Takeaways:

• Revenue growth of 3.2% YoY with stable gross margin (29.1%) demonstrates resilient core demand
• Operating deleverage is pronounced; EBIT down 71.5% YoY to ¥60m
• Net margin at 0.16% and ROE at 0.28% reflect profitability compression
• Liquidity is adequate (current ratio 151.7%, working capital ¥1,743.2m) and leverage moderate (D/E ~1.36x)
• Tax expense (¥77.6m) significantly impacted bottom line; normalization is critical for earnings recovery
• Cash flow and capex data are not disclosed; confirmation of OCF is necessary to validate earnings

Metrics to Watch:

• Operating margin recovery and SG&A ratio
• Gross margin stability and mix of subscription vs. EC/digital
• OCF and FCF once disclosed, including receivable/payable days and deferred revenue trends
• Tax rate normalization and any one-off tax items
• Interest coverage maintenance and changes in leverage
• Customer retention/churn and publisher contract terms

Relative Positioning: Within Japanese media distribution and subscription platforms, the company shows resilient revenue and moderate leverage but weaker profitability and ROE this quarter due to operating deleverage and tax burden.

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
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