| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥2541.8B | ¥2038.1B | +24.7% |
| Operating Income | ¥280.8B | ¥195.3B | +43.7% |
| Ordinary Income | ¥271.2B | ¥182.1B | +49.0% |
| Net Income | ¥188.3B | ¥126.0B | +49.5% |
| ROE | 15.8% | 12.5% | - |
For the cumulative period through Q2 of FY2026, Revenue was ¥2,541.8B (YoY +¥503.7B, +24.7%), Operating Income was ¥280.8B (YoY +¥85.5B, +43.7%), Ordinary Income was ¥271.2B (YoY +¥89.1B, +49.0%), and Net income attributable to owners of parent was ¥177.9B (YoY +¥59.2B, +49.9%). Revenue growth was driven by international business expansion and robust domestic same-store performance, delivering a second consecutive period of double-digit growth. Operating margin improved to 11.0% (from 9.6% a year ago, +1.4pt), reaching a record high. The International segment led with Revenue +60.0% and profit +100.3%; gross margin modestly declined to 57.0% (from 57.8%) but SG&A ratio improved to 46.0% (from 48.0%) resulting in effective operating leverage. Progress vs. Full Year guidance stands at Revenue 50.3%, Operating Income 57.9%, Net Income 59.3%, indicating profits are running ahead of schedule.
【Revenue】Revenue totaled ¥2,541.8B, up ¥503.7B (＋24.7% YoY). By segment, International Sushiro recorded ¥940.6B (+60.0%) driven by overseas openings and same-store growth, expanding its mix to 37.0%. Japan Sushiro delivered ¥1,445.4B (+12.0%), maintaining a 56.9% mix as the domestic core with continued increases in traffic and ticket price producing double-digit growth. Kyotaru declined to ¥111.9B (-7.0%) in Revenue but materially improved profits through restructuring. Japan Sugidama was steady at ¥43.1B (+11.3%). Overall, high growth overseas plus resilient domestic same-store demand supported top-line expansion.
【Profitability】Operating Income was ¥280.8B, up ¥85.5B (＋43.7% YoY). Cost of sales was ¥1,093.9B (cost ratio 43.0%), up ¥109.3B YoY; gross margin was 57.0% (down 0.8pt from 57.8%). SG&A was ¥1,168.4B (SG&A ratio 46.0%), increasing by ¥104.3B YoY, and the SG&A ratio improved by 2.0pt, expanding operating margin to 11.0% (+1.4pt). Non-operating items included finance costs of ¥15.8B (prior ¥14.3B) which were offset by increased finance income of ¥6.2B (prior ¥1.0B) and foreign exchange gains, resulting in Ordinary Income of ¥271.2B (+49.0%). Extraordinary items were minimal; pre-tax income of ¥271.2B incurred income taxes of ¥82.9B (effective tax rate 30.6%), yielding Net Income of ¥188.3B (+49.5%) and Net income attributable to owners of parent of ¥177.9B (+49.9%). In summary, top- and bottom-line expansion with effective operating leverage produced profit growth significantly exceeding revenue growth.
International Sushiro delivered Operating Income of ¥127.6B (margin 13.6%), up +100.3% YoY, achieving the company’s highest margin due to accelerated overseas openings and stabilized operations. Japan Sushiro posted Operating Income of ¥123.0B (margin 8.5%), +10.0% YoY, contributing the largest share of profits though at a lower margin than the international segment. Kyotaru reported Operating Income of ¥3.9B (margin 3.5%), up +771.1% YoY, reflecting tangible benefits from structural reforms. Japan Sugidama recorded Operating Income of ¥1.2B (margin 2.9%), up +439.1% YoY. Higher profitability in the international segment combined with stable domestic core operations is lifting consolidated margins.
【Profitability】Operating margin improved to 11.0% (from 9.6%, +1.4pt), continuing a two-year upward trend. Gross margin was 57.0% (down 0.8pt from 57.8%), while SG&A ratio improved to 46.0% (down 2.0pt), contributing to operating leverage. ROE was 15.8% (= Net income attributable to owners of parent ¥177.9B ÷ average shareholders’ equity approx. ¥1,126B), up from 12.1% last year (+3.7pt), reaching a record high.
【Cash Quality】Operating Cash Flow / Net Income ratio was 2.15x (OCF ¥405.5B ÷ Net Income ¥188.3B), indicating high cash conversion. Accrual ratio was -5.4% (=(Net Income ¥188.3B - OCF ¥405.5B) ÷ Total Assets ¥4,297.0B), showing strong cash backing of earnings. OCF/EBITDA was 0.83x (OCF ¥405.5B ÷ EBITDA ¥489.1B), slightly below the 0.9x benchmark, but adjusting for IFRS16 lease payments of ¥119.6B suggests underlying strength.
【Investment Efficiency】Capex/Depreciation ratio was 0.67x (Capex ¥139.2B ÷ Depreciation ¥208.3B), indicating continued capex restraint with room to reaccelerate investment mid-term. Total asset turnover was 0.59x (Revenue ¥2,541.8B ÷ average total assets approx. ¥4,142B), improved from 0.51x a year ago, reflecting better asset efficiency.
【Financial Soundness】Equity Ratio was 26.3%, up from 24.0% (+2.3pt), within an appropriate range. D/E ratio was 2.61x (interest-bearing debt + lease liabilities ¥1,469.6B ÷ net assets ¥1,146.7B), reflecting elevated leverage mainly due to IFRS16 lease recognition. On a lease-excluded basis, D/E was 0.65x (interest-bearing debt ¥785.4B ÷ net assets ¥1,146.7B), a conservative level. Interest coverage was 17.8x (Operating Income ¥280.8B ÷ Finance costs ¥15.8B), indicating minimal interest burden and sufficient debt tolerance.
Operating Cash Flow was ¥405.5B, up ¥142.8B (+54.7% YoY), 2.15x Net Income ¥188.3B, confirming strong cash generation. Subtotal operating cash flow (before working capital changes) was ¥470.8B, up from ¥329.6B, aided by profit growth, depreciation ¥208.3B and lease adjustments. Working capital movements included Accounts receivable up ¥31.8B, Inventories up ¥10.4B, and Accounts payable up ¥19.3B—normal growth-related fluctuations. After tax payments ¥52.9B, interest payments ¥15.3B and IFRS16 lease payments ¥119.6B, net OCF was ¥405.5B. Investing cash flow was -¥207.5B, driven by Capex -¥139.2B (new openings and remodels) and time deposits -¥50.9B, among others. Free Cash Flow was ¥198.0B (OCF ¥405.5B - Investing CF ¥207.5B), confirming ample cash generation capacity. Financing cash flow was -¥177.1B, including dividend payments ¥39.6B, debt repayments ¥20.1B, bond redemptions ¥50.0B, lease repayments ¥119.6B, partially offset by bond issuance ¥49.7B. Cash and deposits rose to ¥624.0B (prior ¥588.2B), and with foreign exchange translation effects of +¥14.9B, year-end liquidity is robust.
Ordinary Income of ¥271.2B was slightly below Operating Income of ¥280.8B, primarily due to finance costs of ¥15.8B (mainly lease interest and borrowing costs) exceeding finance income of ¥6.2B. Non-operating income comprised finance income ¥6.2B (up from ¥1.0B) and foreign exchange gains; these were minor one-off factors. Extraordinary items were minimal, leaving Ordinary Income ≈ Pre-tax Income of ¥271.2B and Net Income of ¥188.3B driven mainly by recurring operations. Comprehensive income was ¥214.5B, ¥26.2B above Net Income ¥188.3B, mainly due to ¥26.1B foreign currency translation gains (reflecting international expansion and yen weakness). The accrual ratio of -5.4% indicates high cash realization of earnings and sound earnings quality. The OCF of ¥405.5B being 2.15x Net Income ¥188.3B is explained by non-cash depreciation ¥208.3B and disciplined working capital management, supporting earnings sustainability.
Full Year guidance is Revenue ¥5,050.0B (+34.8%), Operating Income ¥485.0B (+34.4%), and Net income attributable to owners of parent ¥300.0B (+30.8%). Progression at Q2 is Revenue 50.3%, Operating Income 57.9%, Net Income 59.3%. Both Operating Income and Net Income exceed the standard 50% halfway mark, driven by international high-margin contributions outperforming assumptions in the first half. Assumed second-half plan is Revenue ¥2,508.2B (down ¥33.5B vs. first half) and Operating Income ¥204.2B (down ¥76.6B vs. first half), reflecting conservative assumptions; unless adverse conditions emerge, upside to the full-year guidance is likely. Full-year EPS forecast ¥132.13 vs. first-half actual ¥156.81 suggests an upside pace. Dividend forecast ¥20.00 (payout ratio approx. 15%) is conservative and sustainable given FCF ¥198.0B. Guidance has been revised mid-year and assumptions are incorporated.
No interim dividend was paid (interim dividend ¥0), with full-year dividend forecast ¥20.00 to be paid as a year-end lump sum. The payout ratio vs. full-year EPS forecast ¥132.13 is approximately 15%, conservative historically. Dividend coverage relative to first-half Free Cash Flow ¥198.0B and dividend payments ¥39.6B is about 5.0x, indicating very high dividend sustainability. No share buybacks were executed in the period (CF impact ¥0.0B, shares repurchased 0), reflecting prioritization of growth investment and financial health in capital allocation. Total Return Ratio is about 15% based on dividend only, remaining low, leaving scope for future dividend increases or share buybacks. Disclosure of clear shareholder return targets is limited; defining mid-term dividend policy (increase cadence, payout ratio targets) could strengthen investor engagement.
Revenue concentration in the domestic core segment (Japan Sushiro): with a Revenue mix of 56.9% and Operating Income mix ~48%, changes in domestic consumer trends or competition could directly affect consolidated results. Slowing same-store growth would risk margin compression.
Downward pressure on gross margin: Gross margin was 57.0% (down 0.8pt YoY). Continued raw material cost inflation or adverse FX could erode margins if price pass-through is insufficient.
IFRS16 lease liabilities and sustained investment restraint: Lease liabilities of ¥1,469.6B result in a headline D/E of 2.61x. Prolonged capex restraint (Capex/Depreciation 0.67x) could delay store refreshes or IT investment, risking competitive position.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.0% | – | – |
| Net Margin | 7.4% | – | – |
Company operating margin 11.0% and net margin 7.4% are high for retail, reflecting high-margin international operations and SG&A efficiency.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 24.7% | – | – |
Revenue growth 24.7% is outstanding in retail, driven by accelerated international expansion and steady domestic same-store growth.
※ Source: Company compilation
High-growth, high-margin international operations are lifting consolidated margins, with Operating Margin 11.0% at a record high. International segment margin 13.6% and profit growth +100.3% suggest structural profitability expansion; the full-year guidance progress (Operating Income 57.9%) implies potential upside. SG&A ratio improvement of -2.0pt demonstrates fixed-cost leverage; if revenue growth persists, margins could improve further.
OCF ¥405.5B (2.15x Net Income) and Free Cash Flow ¥198.0B confirm strong cash generation, supporting shareholder returns. With a conservative payout ratio ~15% and dividend coverage ~5.0x, dividend sustainability is high. Given restrained capex (Capex/Depreciation 0.67x), balancing mid-term capex reacceleration and enhanced shareholder returns (dividend increases, share buybacks) is a key capital allocation consideration. Lease-excluded D/E 0.65x and interest coverage 17.8x indicate solid financial resilience and capacity for growth investment.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the Company from public financial statements and are provided for reference only. Investment decisions are your responsibility; please consult advisors as appropriate.