| Indicator | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥154.1B | ¥136.8B | +12.7% |
| Operating Income / Operating Profit | ¥26.5B | ¥22.9B | +15.5% |
| Equity-method Investment Income (Loss) | - | - | - |
| Profit Before Tax (Taxable Income) | ¥25.9B | ¥22.9B | +13.1% |
| Net Income / Net Profit | ¥17.8B | ¥15.6B | +14.2% |
| ROE | 3.5% | 3.1% | - |
FY2027 Q1 delivered Revenue ¥154.1B (YoY +¥17.4B +12.7%), Operating Income ¥26.5B (YoY +¥3.6B +15.5%), Ordinary Income ¥26.0B (YoY +¥3.0B +13.1%), and Net Income Attributable to Owners of Parent ¥17.6B (YoY +¥2.3B +14.7%), marking a solid start with both revenue and profit growth. Operating margin improved to 17.2% (up +1.3pt from 15.9% a year ago), and net margin rose to 11.4% (up +0.5pt from 10.9%), indicating better profitability. Domestic operations reported Revenue ¥137.7B ( +11.6%) and Operating Income ¥31.4B ( +14.8%) maintaining a 22.8% margin, while international operations achieved Revenue ¥16.5B ( +22.4%) but Operating Income declined to ¥1.1B ( -20.6%) with margin falling to 6.6%. Operating Cash Flow was ¥30.5B (YoY +126.7%), Free Cash Flow was ¥41.5B, demonstrating strong cash generation. Progress against full-year guidance stands at Revenue 25.3%, Operating Income 25.9%, and Net Income 25.2%, generally on track.
[Revenue] Revenue ¥154.1B (+12.7%) rose in both domestic and international segments. Domestic operations accounted for ¥137.7B (+11.6%), representing 89.3% of total revenue, driven by resilient customer traffic and spend at existing stores, new store openings, and improved price mix. International revenue ¥16.5B (+22.4%) delivered double-digit growth but faces margin deterioration. Segment mix: Domestic 89.3% of revenue, International 10.7%. Gross profit was ¥46.4B (gross margin 30.1%), up +0.4pt from 29.7% a year earlier. Cost of sales ratio was 69.9%, with procurement, labor, and overhead control plus pass-through pricing contributing to gross margin expansion.
[Profitability] SG&A was ¥20.5B (SG&A ratio 13.3%), improving -0.3pt from 13.6% a year earlier. While revenue grew +12.7%, SG&A increased only +9.9%, generating operating leverage. Operating Income ¥26.5B (+15.5%) and operating margin 17.2% (+1.3pt) reflect both gross margin improvement and SG&A control. Financial income was ¥0.1B and financial expenses ¥0.6B, resulting in net non-operating impact of -¥0.5B, immaterial. Profit before tax ¥25.9B (+13.1%), less income taxes ¥8.1B (effective tax rate 31.2%), produced Net Income ¥17.8B (+14.2%). Net Income Attributable to Owners of Parent was ¥17.6B (+14.7%), concluding the period with revenue and profit growth.
Domestic operations: Revenue ¥137.7B (+11.6%), Operating Income ¥31.4B (+14.8%), operating margin 22.8%. Margin improved +0.6pt from 22.2% a year earlier, supported by the high-margin Komeda Coffee Shop franchise (FC) and company-owned store models. Domestic remains the core contributor to consolidated operating profit, with SG&A efficiency and scale benefits boosting margins. International operations: Revenue ¥16.5B (+22.4%) maintained high growth, but Operating Income decreased to ¥1.1B (-20.6%), and operating margin fell to 6.6% (down -7.0pt from 13.6% a year earlier). International profitability is pressured by local launch costs, higher labor and raw material costs, and FX impacts; margin recovery is urgent. Adjustments were -¥6.0B (prior year -¥5.8B), including corporate cost allocations. Maintaining domestic high margins and correcting international profitability are key to future consolidated margin performance.
[Profitability] Operating margin 17.2% (up +1.3pt from 15.9% a year ago), Net margin 11.4% (up +0.5pt from 10.9%), Gross margin 30.1% (up +0.4pt from 29.7%) — profitability improved across the board. ROE was 3.5% (DuPont decomposition: Net margin 11.4% × Total asset turnover 0.139 × Financial leverage 2.18x); although low, margin improvement contributed. ROIC (NOPAT / Invested capital) was 3.2%, below cost of capital; goodwill and long-term receivables increase asset base and depress turnover.
[Cash Quality] Operating Cash Flow ¥30.5B / Net Income ¥17.8B = 1.73x, indicating high cash quality. Accrual ratio ((Net Income ¥17.8B - Operating CF ¥30.5B) / Total assets ¥1105.4B) = -1.2%, favorable. Even after subtracting corporate tax payments ¥14.1B and lease payments ¥12.9B from subtotal Operating CF before working capital movements (¥45.0B), the company secured ¥30.5B, demonstrating robust cash-generation capacity.
[Investment Efficiency] Total asset turnover 0.139x (annualized ~0.56x) is low, with goodwill ¥398.1B (36.0% of total assets) and long-term receivables ¥268.4B inflating the asset base. Improving invested capital efficiency is a challenge. EPS ¥38.69 (prior year ¥33.75 +14.6%), BPS approximately ¥1,106 (Net assets ¥50.66B / shares outstanding 46.27M less treasury shares 0.76M) — PBR depends on market price, but high goodwill weight warrants caution interpreting BPS.
[Financial Soundness] Equity Ratio 45.5% (up +0.3pt from 45.2% a year earlier), Debt/Capital 11.5% (interest-bearing debt ¥6.58B / (interest-bearing debt + net assets)) indicates conservatism. Interest-bearing debt totals ¥6.58B (short-term borrowings ¥2.02B, long-term borrowings ¥4.56B), minor relative to annualized operating income (Operating Income ¥26.5B × 4 ≒ ¥106B). Interest coverage is strong: Operating CF ¥30.5B / interest paid ¥0.4B ≒ 76x. Lease liabilities are substantial at ¥352.1B (current ¥50.2B, non-current ¥301.9B), representing recurring cash outflows but covered by Operating CF. Current ratio is current assets ¥219.4B / current liabilities ¥169.2B ≒ 1.30x, acceptable. Cash and cash equivalents stood at ¥99.3B, providing ample liquidity.
Operating CF was ¥30.5B (prior year ¥13.5B +126.7%), a significant increase. On a subtotal basis Operating CF was ¥45.0B (Profit before tax ¥25.9B, Depreciation ¥6.4B, other adjustments included), from which corporate tax payments ¥14.1B and lease payments ¥12.9B were deducted to arrive at ¥30.5B. Working capital movements included increase in trade receivables -¥4.8B (greater accounts receivable due to revenue growth), slight decrease in trade payables -¥0.1B, and increase in other financial liabilities +¥16.1B contributing positively. Investing CF was +¥10.9B, primarily due to term deposit withdrawals (net increase/decrease +¥15.0B); actual capital expenditures were restrained at tangible fixed assets -¥3.3B and intangible assets -¥0.8B, totaling -¥4.1B. With Depreciation ¥6.4B vs CAPEX ¥3.3B, CAPEX/D&A ratio was 0.51x, indicating light investment this period. Financing CF was -¥31.4B, comprising dividend payments -¥13.4B, lease liability repayments -¥12.9B, and debt repayments -¥5.1B. FCF was Operating CF ¥30.5B + Investing CF ¥10.9B = ¥41.5B, ample to cover dividends ¥13.4B and investment ¥4.1B (total ¥17.5B) by more than 2.4x. Adding FX translation effects +¥0.6B, cash and cash equivalents increased from ¥88.6B at period start to ¥99.3B at period end (+¥10.7B). Operating CF / estimated EBITDA (Operating Income ¥26.5B + Depreciation ¥6.4B ≒ ¥32.9B) is ~0.93x, high, indicating good cash conversion. No signs of discretionary working capital manipulation; earnings cash backing is healthy.
This period’s profit is mainly operating in nature: Operating Income ¥26.5B versus non-operating income ¥0.1B (financial income) and non-operating expenses ¥0.6B (financial expenses), net -¥0.5B, signaling very high proportion of recurring earnings. Non-operating income is less than 0.1% of Revenue ¥154.1B, indicating low dependency and is mainly interest and dividends received. No extraordinary items were disclosed; the difference between Profit before tax ¥25.9B and Operating Income ¥26.5B is explainable within non-operating items. Comprehensive income ¥18.6B (parent ¥18.3B) results from Net Income ¥17.8B plus FX translation differences ¥0.8B; other comprehensive income is minor. Accrual quality is high: Operating CF ¥30.5B / Net Income ¥17.8B = 1.73x and accrual ratio -1.2%, indicating low accounting accruals and strong cash backing. Divergence between EBIT and Net Income is due to tax burden (effective tax rate 31.2%) and financial expenses ¥0.6B; no structural distortions identified. Earnings quality is recurring and well supported by cash.
Full-year guidance: Revenue ¥609.2B (YoY +8.2%), Operating Income ¥102.0B (YoY +8.2%), Net Income ¥69.9B (YoY +6.8%). Q1 progress equals Revenue 25.3% (154.1/609.2), Operating Income 25.9% (26.5/102.0), Net Income 25.2% (17.6/69.9), broadly consistent with standard quarterly pace (25%). Full-year EPS guidance ¥151.63 vs Q1 EPS ¥38.69 implies 25.5% progress. Dividend guidance is ¥31 per share for the year (prior year ¥30, +¥1), with no revisions at Q1. Progress reflects continued high-margin domestic performance and SG&A control. International margin deterioration is a headwind but had limited consolidated impact at Q1. Achievement of full-year targets depends on international margin recovery and sustained domestic comparable-store growth into H2.
Full-year dividend guidance is ¥31 per share (prior year ¥30, +¥1), implying a payout ratio of approximately 20.4% against forecast EPS ¥151.63, a conservative stance. Q1 FCF ¥41.5B covers dividend payments ¥13.4B and CAPEX ¥3.3B (total ¥16.7B) by over 2.5x, supporting dividend sustainability. No share buybacks were executed this period (¥0 recorded in Financing CF). Cash and cash equivalents ¥99.3B and annualized Operating CF ≒ ¥122B (Q1 × 4) indicate strong cash generation; a payout ratio in the 20% range leaves room for further increases if earnings grow. Debt/Capital 11.5% and interest coverage ~76x show ample financial flexibility to sustain dividends while repaying lease liabilities. Retained earnings ¥38.09B provide robust internal reserves, balancing shareholder returns and growth investment.
High goodwill / net asset ratio 78.6%: Goodwill ¥398.1B equals 78.6% of net assets ¥506.6B and 36.0% of total assets ¥1105.4B, indicating capital quality heavily reliant on intangible assets. Goodwill / estimated annualized EBITDA (Q1 EBITDA ¥32.9B × 4 ≒ ¥131.6B) is about 3.0x, implying a material payback period. If economic downturn, reduction in FC franchisees, or brand impairment lead to missed earnings plans, impairment risk could materialize and materially erode net assets and ROE.
Deteriorating profitability in international operations: International Revenue ¥16.5B (+22.4%) vs Operating Income ¥1.1B (-20.6%), margin 6.6% (down -7.0pt from 13.6%) shows substantial margin deterioration. Local labor and raw material cost inflation, launch costs, and FX volatility are drivers. Although revenue grows double digits internationally, profit contribution is limited; delayed margin recovery could constrain consolidated margin upside and further depress investment efficiency (ROIC).
Prolonged working capital and low ROIC: Trade receivables ¥88.8B, DSO ≒ 210 days (88.8/154.1 × 365/4), trade payables ¥31.7B, DPO ≒ 107 days, CCC ≒ 123 days—collection and payment cycles are relatively lengthy. Long-term receivables to franchisees ¥268.4B inflate asset base, leading to total asset turnover 0.139x and ROIC 3.2%, indicating low capital efficiency. Continued working capital investment with growth could delay improvements in ROE and ROIC, potentially extending periods below cost of capital.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 17.2% | 4.3% (1.7%–6.9%) | +12.9pt |
| Net margin | 11.6% | 3.8% (1.5%–5.1%) | +7.8pt |
Company operating margin 17.2% and net margin 11.6% materially exceed industry medians, highlighting the high profitability of the domestic FC/company-owned model.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 12.7% | 3.1% (-0.6%–11.7%) | +9.6pt |
Revenue growth 12.7% outpaces industry median 3.1%, driven by strong domestic same-store performance and international expansion.
※ Source: Company compilation
Sustainment of high domestic margins and realization of operating leverage: Operating margin 17.2% (up +1.3pt), domestic margin 22.8% maintain top-tier industry profitability. Suppressed SG&A growth (SG&A ratio -0.3pt) enabled operating leverage, linking revenue growth directly to margin improvement. Operating CF / Net Income 1.73x and FCF ¥41.5B demonstrate solid cash generation to comfortably fund dividends and CAPEX. Ongoing maintenance of comparable-store traffic and spend, new store openings, and continued price pass-through will determine sustainability of profitability and cash generation.
High goodwill ratio and low ROIC focus on capital efficiency: Goodwill / net assets 78.6% and ROIC 3.2% pose capital efficiency challenges. Goodwill / annual EBITDA ~3.0x implies a lengthy payback period and impairment resilience depends on sustaining annual EBITDA above ~¥130B. Total asset turnover 0.139x and DSO 210 days indicate asset heaviness and long collection cycles suppressing turnover. Medium-term improvement requires EBITDA growth, working capital efficiency (shorter collection cycles), and stricter ROIC criteria for new investments. International margin recovery (from 6.6% to double digits) would expand scope to improve consolidated ROIC.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.