Iida Group Holdings Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

The Company delivered higher revenue and higher profit, accompanied by improved margins, resulting in a strong start supported by operating leverage. Revenue was ¥3,805.2B (¥3,260.6B in the previous year, +16.7%), Operating Income was ¥257.4B (¥142.0B, +81.3%), Profit Before Tax was ¥231.7B (+98.7%), and Net Income attributable to owners of the parent on a consolidated basis was ¥151.7B (¥80.2B in the previous year, +89.2%). Improved gross margin and restrained growth in SG&A expenses drove the expansion in profit, while broadly double-digit revenue growth was confirmed across the segments against a backdrop of solid housing demand.

Factors Affecting Performance

【Revenue】Revenue increased 16.7% year on year to ¥3,805.2B. By segment, the Ichiken Group at ¥1,029.2B (+19.3%), the Iida Sangyo Group at ¥769.9B (+21.4%), the Earnest One Group at ¥739.0B (+16.3%), and the Toei Housing Group at ¥577.5B (+15.1%) all recorded double-digit revenue growth and drove the overall result. The Tact Home Group grew at a relatively slower pace, with revenue of ¥431.9B (+6.5%).

【Profit and Loss】Gross profit was ¥705.4B, with a gross margin of 18.5% (+79bp year on year), while the SG&A ratio declined to 11.7% from 13.5% in the previous year. The restrained growth in SG&A expenses relative to revenue growth resulted in positive operating leverage. Operating Income was ¥257.4B (+81.3%), with a margin of 6.8% versus 4.4% in the previous year. After absorbing financial expenses of ¥29.7B, Profit Before Tax was ¥231.7B and consolidated Net Income was ¥149.3B. By segment, Tact Home recorded a decline in profit to ¥25.9B (-6.7%), while businesses outside the other segments also recorded a loss of ¥27.4B, indicating variability in profitability despite overall revenue and profit growth. In conclusion, the Company achieved higher revenue and higher profit.

Segment Analysis

Five of the six reported segments recorded higher profit. The Ichiken Group posted the largest increase in profit, with Operating Income of ¥72.8B (+32.7%) and a margin of 7.1%. The Iida Sangyo Group recorded ¥69.0B (+51.4%), with both its margin and profit growth rate at high levels. The Earnest One Group at ¥56.1B (+31.7%, margin of 7.6%) and the Toei Housing Group at ¥53.0B (+29.7%, margin of 9.2%) also performed steadily. ID Home recorded a substantial increase in profit to ¥8.6B (+525.4%), although this was partly attributable to a low-base effect. Meanwhile, the Tact Home Group was the only segment to report lower profit, at ¥25.9B (-6.7%, margin of 6.0%), and the profitability gap between segments is widening. Businesses outside the reported segments recorded a loss of ¥27.4B, with the loss expanding year on year, and were a factor depressing overall profit.

Key Financial Indicators

【Profitability】The Operating Income margin improved by +242bp to 6.8% from 4.4% in the previous year, while the Net Income margin also increased to 3.9% from 2.3%. The improvement in gross margin associated with revenue growth (18.5%, +79bp) and the decline in the SG&A ratio (11.7%) contributed to the improvement.【Cash Flow Quality】Inventories stood at ¥1,305.3B, accounting for 50.2% of total assets, and increased by +¥644.9B during the period. Meanwhile, accounts payable declined by -¥139.4B, indicating that working capital moved in a direction that absorbed cash.【Investment Efficiency】ROE was 1.5% (before simple annualization based on quarterly profit), while the total asset turnover ratio remained low. The inventory-dependent business model is therefore a bottleneck for capital efficiency.【Financial Soundness】The Equity Ratio was 49.9%, slightly down from 50.8% in the previous year. Interest-bearing debt comprised ¥5,112.9B of short-term debt and ¥3,086.1B of long-term debt, indicating relatively high dependence on short-term funding. However, liquidity remains ample, with current assets of ¥1,500.10B against current liabilities of ¥663.12B.

Cash Flow Analysis

Although the cash flow statement has not been directly disclosed, the movement of funds can be inferred from changes in the balance sheet. Despite the growth in Operating Income, the increase in working capital appears to have absorbed cash. Inventories increased by +¥644.9B and contract assets increased by +¥27.1B, while accounts payable declined by -¥139.4B and income taxes payable declined by -¥105.9B. These working capital movements represent a combination likely to put pressure on Operating Cash Flow. The situation appears to have been partially bridged by an increase in short-term borrowings (+¥467.5B), while cash and deposits decreased from ¥366.65B to ¥410.27B. Capital expenditures appear to have been limited, given the small change in property, plant and equipment (+¥4.97B). The primary use of funds is therefore considered to have been inventory investment, including land acquisition.

Quality of Earnings

The increase in profit for the current quarter was primarily attributable to recurring improvement in core operating earnings, with limited effects from extraordinary items and temporary factors. Non-operating income and expenses were limited in scale, comprising financial income of ¥2.6B, financial expenses of ¥29.7B, and share of profit or loss of investments accounted for using the equity method of ¥1.3B. The gap between Operating Income and Profit Before Tax was therefore primarily attributable to financial expenses. Income taxes were ¥82.4B, representing an effective tax rate of approximately 35.6%; the relatively heavy tax burden reduced Profit Before Tax of ¥231.7B to Net Income of ¥149.3B. Total comprehensive income was ¥155.2B, including ¥158.3B attributable to owners of the parent. The difference from Net Income of ¥149.3B was primarily attributable to other comprehensive income, including foreign currency translation adjustments of +¥4.9B related to foreign operations. The divergence from Net Income was small, indicating good earnings quality.

Earnings Outlook and Guidance

Progress against the full-year plan—Revenue of ¥16,630B, Operating Income of ¥1,036.0B, and Net Income of ¥659.0B—was 22.9% for Revenue, 24.9% for Operating Income, and 22.7% for consolidated Net Income. These figures are broadly in line with the standard quarterly run rate of 25%. Operating Income progress exceeded Revenue progress, suggesting that margin improvement may continue for the full year. The Company has made no revisions to either its earnings forecast or dividend forecast and has maintained its initial plan.

Shareholder Returns

The Company’s forecast annual dividend is ¥92 per share. At the end of Q2 of the fiscal year ending March 2026, a dividend including an ordinary dividend of ¥45 and a commemorative dividend of ¥10 for participation in the “Expo 2025 Osaka, Kansai, Japan” is scheduled to be paid. Against the previous-year dividend of ¥55, the current-period forecast of ¥92 represents a planned dividend increase. Based on the Company’s forecast Net Income attributable to owners of the parent of ¥659.0B and the number of shares outstanding after deducting treasury shares (approximately 0.2763B shares), the Payout Ratio is approximately 39%. There are no significant concerns regarding sustainability, as the dividend plan is accompanied by earnings growth.

Risk Factors

1. Inventory Level and Working Capital Efficiency Risk: Inventories stood at ¥1,305.3B, accounting for 50.2% of total assets, and increased by +¥644.9B from the previous year. Due to the inventory-dependent business structure, any slowdown in the pace of inventory sales could tie up funds in working capital and put pressure on cash flow.

2. Dependence on Short-Term Funding Risk: Short-term interest-bearing debt of ¥5,112.9B exceeded long-term interest-bearing debt of ¥3,086.1B, indicating a high degree of dependence on short-term funding in line with the development and sales cycle. During periods of rising interest rates, the risks of higher refinancing costs and maturity mismatches may increase relatively.

3. Intersegment Profitability Gap Risk: The Tact Home Group was the only segment to record lower profit, with Operating Income of ¥25.9B (-6.7%), while businesses outside the reported segments recorded a loss of ¥27.4B. Segment margins range widely from 5.1% to 9.2%, requiring monitoring of the impact of changes in the business mix on overall profitability.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

The Company’s margins are slightly below the industry median but remain within the industry IQR range, with no significant underperformance.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeds the industry median, placing the Company among the industry’s high-growth group.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. In addition to revenue growth, the Operating Income margin improved by +242bp from 4.4% in the previous year to 6.8%. The emergence of positive operating leverage through higher gross margins and a lower SG&A ratio is noteworthy from the perspective of earnings quality.

2. Progress against the full-year plan was broadly on a standard trajectory, at 22.9% for Revenue and 24.9% for Operating Income. No revisions were made to the earnings forecast or dividend forecast.

3. Inventories accounted for 50.2% of total assets and increased by +¥644.9B during the period. In addition, the funding structure in which short-term interest-bearing debt exceeds long-term debt is a key point to monitor in assessing future working capital efficiency and refinancing trends.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥3,352–¥3,547 at ±1% for the cost of equity, and ¥3,439–¥3,453 at ±0.1 for ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used; there is a timing difference relative to the full-year forecast.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings report data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional advisor as necessary.

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