| Indicator | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1810.7B | ¥1448.7B | +25.0% |
| Operating Income / Operating Profit | ¥60.2B | ¥21.3B | +182.6% |
| Ordinary Income | ¥57.5B | ¥19.4B | +197.3% |
| Net Income / Net Profit | ¥39.6B | ¥11.2B | +252.2% |
| ROE | 5.0% | 1.4% | - |
The Q1 results for the fiscal year ending March 2026 showed significant growth: Revenue ¥1,810.7B (YoY +¥362.0B +25.0%), Operating Income ¥60.2B (YoY +¥38.9B +182.6%), Ordinary Income ¥57.5B (YoY +¥38.1B +197.3%), and Quarterly Net Income attributable to owners of the parent ¥39.6B (YoY +¥28.4B +252.2%). Operating margin improved to 3.3% from 1.5% in the prior-year period, a 1.8pt improvement, mainly driven by a 2.6pt decline in SG&A ratio to 13.0% (prior-year period 15.6%). Within a single-segment structure of Automotive Business (vehicle sales and ancillary businesses), operating leverage associated with scale expansion was prominently realized in the quarter.
Revenue ¥1,810.7B (+25.0%) is estimated to have been driven by store network expansion and increased unit sales. Cost of sales was ¥1,514.8B (as a percent of revenue 83.7%), resulting in Gross Profit of ¥295.9B and a Gross Margin of 16.3%. Gross margin declined by ~0.7pt from 17.0% in the prior-year period, possibly due to product mix changes, inventory valuation, and variations in procurement terms that pressured gross margin. SG&A was ¥235.6B (as a percent of revenue 13.0%), improving 2.6pt from ¥155.1B (15.6%) in the prior-year period, aided by dilution of fixed costs from scale expansion and process efficiency improvements. As a result, Operating Income ¥60.2B (Operating Margin 3.3%) markedly improved from ¥21.3B (1.5%) in the prior-year period. Ordinary Income ¥57.5B included Non-operating expenses of ¥4.3B (including Interest expense ¥2.3B), and offset by Non-operating income ¥1.6B, the decrease from Operating Income was limited to ¥2.7B. Non-operating expenses include Derivative valuation losses ¥0.9B but the impact is minor. Profit before tax ¥57.5B less Income taxes ¥17.9B (effective tax rate 31.1%) produced Quarterly Net Income ¥39.6B (Net Profit Margin 2.2%). No extraordinary gains or losses were recorded, so Ordinary Income and Profit before tax are consistent. Comprehensive income ¥39.9B is nearly identical to Net Income ¥39.6B, with Other Comprehensive Income ¥0.3B (including retirement benefit adjustments ¥0.2B) having minimal impact. In conclusion, revenue growth and substantial improvement in SG&A ratio drove the significant increase in profit.
Profitability: Operating Margin 3.3% improved 1.8pt from 1.5% in the prior-year period, offsetting a 0.7pt decline in Gross Margin to 16.3% by improving SG&A ratio by 2.6pt. ROE 5.0% is composed as Net Profit Margin 2.2% × Total Asset Turnover 0.79 × Financial Leverage 2.86; improvements in Net Profit Margin and Total Asset Turnover (prior-year period 0.64) contributed. Cash Quality: Inventory turnover days extended to 220 days (Inventory ¥912.6B ÷ Cost of Sales ¥1,514.8B × 365 days), indicating high inventory dependence (Inventory/Total Assets 40.0%). Receivables turnover days are 54 days, which is standard, but there is risk of future markdowns or valuation losses due to inventory build-up. Investment Efficiency: Total Asset Turnover 0.79 improved from 0.64 in the prior-year period, but an inventory-heavy model suppresses turnover. Interest Coverage is 26.4x (Operating Income ¥60.2B ÷ Interest expense ¥2.3B), indicating sufficient interest-paying capacity. Financial Soundness: Equity Ratio 34.9% is flat year-over-year; Current Ratio 175.9% is healthy, but Quick Ratio 59.0% reflects high inventory dependence. D/E Ratio 1.86x and Debt/Capital 47.8% indicate somewhat aggressive leverage, but Cash and Deposits ¥155.0B roughly match Short-term borrowings ¥154.1B, keeping short-term liquidity balanced. Long-term borrowings ¥574.1B and bonds ¥50.0B result in fixed liabilities of ¥704.6B; total interest-bearing debt ¥803.4B (short-term + long-term) yields a net asset multiplier of 1.01x.
Because the cash flow statement is not disclosed, funding trends are analyzed from balance sheet movements. Cash and Deposits were ¥155.0B, down ¥21.9B from ¥176.9B in the prior-year period. Short-term borrowings increased to ¥154.1B from ¥79.7B in the prior-year period, up ¥74.3B (+93.2%), indicating short-term funding was procured to meet working capital needs (notably inventory buildup). Inventory increased to ¥912.6B from ¥885.0B in the prior-year period, a ¥27.6B rise, confirming inventory accumulation alongside revenue expansion. Accrued corporate taxes and similar liabilities decreased to ¥18.5B from ¥37.5B in the prior-year period, reflecting temporary reduction in short-term liabilities due to prior period tax payments. Retained earnings increased to ¥620.1B from ¥616.8B in the prior-year period, up ¥3.3B, implying the majority of Quarterly Net Income ¥39.6B was retained. The prolongation of inventory turnover and increase in short-term borrowings mean that efficient working capital management will be key to future cash conversion.
Ordinary Income ¥57.5B and Profit before tax ¥57.5B are consistent, with no extraordinary items, indicating recurring earnings. Non-operating income ¥1.6B consists of Interest income ¥0.3B and Other ¥0.9B; Non-operating expenses ¥4.3B consist of Interest expense ¥2.3B, Fees ¥0.1B, Derivative valuation losses ¥0.9B, and Other ¥1.0B. Net non-operating loss is -¥2.7B, equivalent to 4.5% of Operating Income, so deterioration in earnings quality from non-operating items is limited. Comprehensive income ¥39.9B is nearly identical to Net Income ¥39.6B; Other Comprehensive Income ¥0.3B (retirement benefit adjustment ¥0.2B, valuation difference on available-for-sale securities ¥0.0B) is minimal, indicating no inflation of earnings from valuation items. The conversion rate from Gross Profit ¥295.9B to Operating Income ¥60.2B is 20.3%, supported by SG&A efficiency. If inventory stagnation risk materializes, future valuation losses could deteriorate earnings quality, but at present the profit structure appears to be producing stable profits from ordinary operations.
Full Year / FY guidance is Revenue ¥6,840.0B (YoY +4.9%), Operating Income ¥240.0B (YoY +22.5%), Ordinary Income ¥226.0B (YoY +22.3%), and Net Income attributable to owners of the parent ¥150.0B. Q1 progress ratios are Revenue 26.5% (¥1,810.7B/¥6,840.0B), Operating Income 25.1% (¥60.2B/¥240.0B), Ordinary Income 25.4% (¥57.5B/¥226.0B), and Net Income 26.4% (¥39.6B/¥150.0B), roughly achieving the quarterly standard progress of 25% and indicating steady progress toward the full-year plan. Operating Income progress is slightly lower, but considering seasonality of SG&A and timing of investments, it is within an acceptable range. No revisions to earnings or dividend forecasts were made this quarter; the company maintains its initial plan. The achievability of the full-year forecast depends significantly on normalization of inventory turnover and stabilization of gross margin, and pace of store expansion and SG&A control in the second half will be key to meeting the plan.
Full-year dividend forecast is ¥0 with a Payout Ratio of 0%. The prior year also paid ¥0, and the company continues a no-dividend policy. Quarterly Net Income ¥39.6B was fully retained to prioritize growth investments and working capital needs. Retained earnings have accumulated to ¥620.1B, but there is no disclosure of dividend resumption. Potential resumption of shareholder returns would be linked to recovery of Operating Cash Flow generation through normalization of inventory turnover and improved financial stability via reduction of short-term borrowings. No share buybacks were conducted; Total Return Ratio is also 0%.
Industry Position (reference, company analysis): In the used car retail industry, Operating Margin 3.3% is improving due to scale expansion and SG&A efficiency, but Gross Margin 16.3% tends to remain relatively low within the industry. Inventory turnover days of 220 exceed industry norms, and improving inventory management efficiency is a challenge for enhancing competitive position. Equity Ratio 34.9% reflects somewhat aggressive financial leverage and a capital structure aligned with growth investments and working capital needs. ROE 5.0% has improved compared to the company’s historical performance but is estimated to be mid-tier within the industry. Revenue growth +25.0% reflects scale effects from store network expansion, positioning the company as pursuing an aggressive growth strategy within the industry.
Key points are as follows. 1. Realization of operating leverage through substantial SG&A efficiency improvement: SG&A ratio 13.0% declined 2.6pt from 15.6% in the prior-year period, and dilution of fixed costs with scale expansion improved Operating Margin to 3.3%. If scale expansion continues, further SG&A efficiency gains could be a driver of profit growth. 2. Prolonged inventory turnover and importance of working capital management: Inventory turnover days 220 and Inventory ¥912.6B (40.0% of Total Assets) indicate high inventory dependence, and Short-term borrowings ¥154.1B increased +93.2% YoY. Optimizing inventory composition and improving turnover will be key to cash conversion and ROIC improvement. 3. Balance between gross margin decline and SG&A efficiency improvement: Gross Margin 16.3% declined 0.7pt from the prior-year period but was offset by SG&A ratio improvement. Future profit growth assumes a bottoming and reversal of gross margin; improving procurement terms and optimizing product mix are critical to sustainable earnings power.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the company based on public financial statements. Investment decisions should be made at your own responsibility, and, if necessary, in consultation with a professional advisor.