| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥297.1B | ¥288.7B | +2.9% |
| Operating Income / Operating Profit | ¥43.1B | ¥34.8B | +24.0% |
| Ordinary Income | ¥41.2B | ¥34.5B | +19.5% |
| Net Income / Net Profit | ¥69.6B | ¥56.6B | +23.1% |
| ROE | 37.7% | 29.8% | - |
For the fiscal year ended March 2026, Revenue was ¥297.1B (YoY +¥8.5B +2.9%), Operating Income was ¥43.1B (YoY +¥8.4B +24.0%), Ordinary Income was ¥41.2B (YoY +¥6.7B +19.5%), and Net Income attributable to owners of the parent was ¥36.4B (YoY -¥36.6B -50.1%). Operating performance delivered double-digit operating profit growth, with Gross Margin improving to 51.8% (+1.5pt) and Operating Margin improving to 14.5% (+2.4pt). In the core Alcohol & Non-Alcoholic Beverages Business, price revisions and mix improvement contributed, while the Tourism & Hotel Business saw a substantial improvement in Operating Income (YoY +139.6%). The decline in Net Income is primarily a reaction to the prior-year gain on sale of fixed assets of ¥68.9B versus ¥10.5B this period; excluding one-off items, core earnings power has been steadily strengthened.
Revenue of ¥297.1B (+2.9%) was led by the core Alcohol & Non-Alcoholic Beverages Business. By segment, Alcohol & Non-Alcoholic Beverages recorded ¥239.2B (+5.2%), accounting for 80.5% of sales; price revisions and a shift toward higher-value-added products contributed. The Tourism & Hotel Business declined to ¥57.9B (-5.7%), which is presumed to be a reaction to one-off demand in the prior year. Domestic sales account for over 90%, with limited regional variation.
Cost of sales was ¥143.3B, producing Gross Profit of ¥153.8B (Gross Margin 51.8%, +1.5pt YoY). Gross margin improvement was driven by price revisions and product mix improvement. SG&A was ¥110.6B (SG&A ratio 37.2%), increasing only marginally despite revenue growth, delivering operating leverage. Operating Income was ¥43.1B (+24.0%), with Operating Margin 14.5% (+2.4pt). Non-operating items included Interest Expense of ¥2.7B, Interest Income of ¥0.2B, and Equity-method investment gains of ¥0.5B, resulting in Ordinary Income of ¥41.2B (+19.5%). Extraordinary items comprised Special Gains ¥10.5B including gain on sale of fixed assets ¥8.4B, and Special Losses ¥0.8B, yielding Profit Before Income Taxes ¥51.0B. After deducting Income Taxes of ¥14.6B (effective tax rate 28.6%), Net Income was ¥36.4B (+23.1%). However, Net Income attributable to owners of the parent of ¥36.4B is down -50.1% YoY, mainly due to the drop in special gains from ¥68.9B in the prior year to ¥10.5B this period. Thus, while top-line and operating profitability increased, Net Income fell due to normalization of one-off items.
The Alcohol & Non-Alcoholic Beverages Business reported Revenue ¥239.2B (+5.2%), Operating Income ¥36.3B (+13.5%), and margin 15.2%. As the core business accounting for 84.2% of Group Operating Income, price revisions and favorable mix toward higher-value products improved profitability. The Tourism & Hotel Business recorded Revenue ¥57.9B (-5.7%) but Operating Income ¥6.9B (+139.6%), with margin improving to 11.9%. This is a 7.2pt increase from the prior year's 4.7%, driven by higher occupancy and cost efficiencies. Between segments, Alcohol & Non-Alcoholic Beverages retains higher margins; Tourism & Hotel is recovering but remains in a stabilization phase with established profitability.
Profitability: Operating Margin 14.5% (prior year 12.1%), Net Margin 12.2% (prior year 19.6%), Gross Margin 51.8% (prior year 50.3%). Gross margin and operating margin show structural improvement supported by price revisions and improved product mix. Net margin declined due to reduced special gains but remains at a high level of 12.2%. ROE of 37.7% reflects a reduced capital base due to a large decline in retained earnings; while high on calculation, sustainability should be monitored.
Cash Quality: Operating Cash Flow (OCF) was -¥6.5B, yielding Operating CF / Net Income -0.18x and OCF / EBITDA -0.11x (EBITDA ¥58.5B = Operating Income ¥43.1B + Depreciation ¥15.4B), indicating weak cash generation. Large corporate tax payments of ¥44.2B and non-cash adjustments related to gain on sale of fixed assets were primary causes, pointing to temporary deterioration in earnings quality. Financial Soundness: Equity Ratio 41.9% (prior year 37.3%), Current Ratio 225.5%, Quick Ratio 205.8% indicate strong liquidity. Long-term borrowings of ¥156.6B result in Debt/EBITDA 2.68x and Interest Coverage 15.9x (Operating Income ¥43.1B / Interest Expense ¥2.7B), suggesting adequate financial capacity. Cash and Deposits were ¥105.1B, significantly exceeding short-term borrowings of ¥68.8B.
Operating CF was -¥6.5B, turning negative versus Net Income ¥36.4B. The operating CF subtotal (before working capital changes) was ¥39.2B, from which corporate tax payments of ¥44.2B were deducted. Working capital changes included Decrease in Trade Receivables ¥3.0B, Increase in Inventories -¥2.3B, and Decrease in Trade Payables -¥0.2B, yielding a slight net positive. The large corporate tax payment reflects the prior-year gain on sale of fixed assets and is expected to normalize in the next fiscal year. Investing CF was a positive ¥18.8B, driven by proceeds from sale of fixed assets ¥42.6B offset by capital expenditure ¥12.3B, indicating progress in asset monetization. Capex / Depreciation was 0.80x, a conservative level. Financing CF was -¥49.2B, primarily due to dividend payments ¥44.8B and long-term debt repayments ¥7.1B. Free Cash Flow (FCF) was ¥12.3B and did not fully cover dividends (FCF coverage 0.66x); asset sale proceeds boosted FCF this period. Cash and Deposits decreased to ¥105.1B (YoY -¥36.9B); normalization of Operating CF is required in the next fiscal year.
Operating Income ¥43.1B represents core earnings, while Special Gains ¥10.5B (including gain on sale of fixed assets ¥8.4B) are one-off. Approximately 29% of Net Income ¥36.4B was boosted by special gains, down from about 50% in the prior year (Special Gains ¥68.9B), indicating reduced reliance on one-offs and movement toward normalization. Non-operating income ¥2.7B (including dividend income ¥0.7B) is minimal at 0.9% of Sales and roughly offsets interest expense ¥2.7B. The gap between Ordinary Income ¥41.2B and Net Income ¥36.4B reflects Special Gains ¥10.5B, Special Losses ¥0.8B, and Income Taxes ¥14.6B; standardization of special items in the next fiscal year should narrow this divergence. Negative Operating CF (Operating CF / Net Income -0.18x, OCF / EBITDA -0.11x) indicates challenges in converting profits into cash and short-term deterioration in accrual-based earnings quality. Corporate tax payments and non-cash adjustments related to gain on sale of fixed assets are principal causes; improvements are expected with tax payment normalization and working capital correction.
The guidance for the fiscal year ending March 2027 is Revenue ¥311.2B (+4.7%), Operating Income ¥43.5B (+0.9%), Ordinary Income ¥41.9B (+1.6%), and Net Income attributable to owners of the parent ¥29.3B (-19.6%). The operating phase assumes modest revenue growth and slight operating income increase, on the premise of maintained gross margin and stabilized Tourism & Hotel profitability, representing a conservative plan. Net Income is projected to decline due to normalization of special items and assumed tax burden, reflecting a return to ordinary bases excluding one-offs. Dividend guidance is ¥17 per share (with EPS forecast ¥66.83 and payout ratio approximately 25%), a significant reduction from ¥44 this period, reflecting reversal from elevated dividends this year and normalization of capital efficiency. Progress ratios (assuming at Q1) are Sales 95.5%, Operating Income 99.1%, Ordinary Income 98.4%, indicating steady progress and suggesting the guidance is achievable.
Annual dividend was ¥44 per share (Interim ¥20, Year-end ¥24), totaling approximately ¥18.6B. Against Net Income ¥36.4B, payout ratio was 51.1%, a standard level. No share repurchase was disclosed; shareholder returns were dividend-only, so payout ratio 51.1% equals the Total Return Ratio. However, dividends of ¥18.6B exceeded FCF ¥12.3B (FCF coverage 0.66x), indicating reliance on asset sale proceeds to support dividends this period. Guidance dividend ¥17 per share next year represents a sharp cut from ¥44, bringing the payout ratio to approximately 25% on EPS forecast ¥66.83, a conservative adjustment. The company announced changes to dividend policy and planned treasury stock acquisition, and expects Total Return Amount for FY2027 to increase from ¥18.3B this period to ¥20.2B next period. Dividend sustainability depends on normalization of Operating CF and correction of working capital; with cash and deposits ¥105.1B and strong liquidity, short-term dividend maintenance is feasible, but recovery of FCF generation is key for medium- to long-term stable dividends.
Weak Operating CF and cash conversion efficiency: Operating CF -¥6.5B (Operating CF / Net Income -0.18x, OCF / EBITDA -0.11x) indicates challenges converting profits into cash. Corporate tax payments ¥44.2B and non-cash adjustments related to gain on sale of fixed assets are main causes; if tax payment normalization and working capital correction do not progress next year, dividend capacity and FCF generation may be constrained. Although cash and deposits ¥105.1B provide liquidity, FCF ¥12.3B does not cover dividends ¥18.6B, and continued dependence on asset sales raises sustainability concerns.
Product category concentration and demand volatility risk: Alcohol & Non-Alcoholic Beverages accounts for 80.5% of sales, indicating high category concentration. The company is exposed to shifts in consumer preferences, pressure from private brand and low-price competitors, and secular trends such as alcohol abstention. The Tourism & Hotel Business, despite Operating Income ¥6.9B, represents only 19.5% of sales, limiting diversification benefits. If new product development and premium line cultivation lag, the scope for mix improvement may shrink, impacting gross margin and operating margin sustainability.
Upside cost risk for raw materials, energy, and logistics: This period’s Gross Margin 51.8% (+1.5pt) benefited from price pass-through, but risks remain for upward cost pressure on raw materials (malt, hops, sugar), energy, packaging materials, and logistics. SG&A ratio at 37.2% is stable, but persistent advertising investment or rising labor costs could reverse operating leverage. The guidance is conservative with Operating Income +0.9% and likely assumes some cost-upside; however, sudden movements in exchange rates or commodity prices could squeeze gross margin and jeopardize Operating Margin sustainability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.5% | 5.0% (3.3%–8.4%) | +9.5pt |
| Net Margin | 23.4% | 3.2% (1.9%–6.6%) | +20.3pt |
Profitability stands out within the industry; Operating Margin 14.5% significantly exceeds the median 5.0%. Gross Margin 51.8% suggests strong price pass-through and brand power.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.9% | 5.4% (1.0%–8.6%) | -2.5pt |
Growth rate is below the industry median 5.4%, reflecting a mature domestic market and low growth in core categories.
※ Source: Company compilation
Structural improvement in operating profitability: Gross Margin 51.8% (+1.5pt) and Operating Margin 14.5% (+2.4pt) show effectiveness of price revisions and product mix improvement; the Tourism & Hotel segment’s operating profit expansion (Operating Income +139.6%) is an additional tailwind. ROE 37.7% reflects changes in capital structure, but core earnings strength is trending upward. In industry benchmarks, the company ranks highly in both Operating and Net Margins, confirming advantages in brand strength and price pass-through. Next year’s guidance is conservative (Operating Income +0.9%), but upside is possible if gross margin is maintained and tourism demand continues to recover.
Normalization of Operating CF and recovery of FCF generation is focal: Operating CF -¥6.5B (Operating CF / Net Income -0.18x) highlights cash conversion challenges. Corporate tax payments ¥44.2B and non-cash adjustments from gain on sale of fixed assets are primary, and while partly one-off, progress on tax payment normalization and working capital correction is key to sustaining shareholder returns and growth investment. FCF ¥12.3B does not cover dividends ¥18.6B, and ongoing reliance on asset sale proceeds raises medium- to long-term sustainability concerns. Cash and deposits ¥105.1B and Debt/EBITDA 2.68x indicate an investment-grade financial profile that supports short-term dividend maintenance, but signs of OCF normalization should be monitored.
Normalization of one-off gains and adjustment of Net Income: Net Income ¥36.4B (-50.1%) reflects the decline in Special Gains from ¥68.9B in the prior year to ¥10.5B this period. Next year’s guidance Net Income ¥29.3B (-19.6%) also assumes normalization of special items and is set conservatively. Excluding one-offs, core earnings have strengthened; going forward, growth in Operating Income and stabilization of special items should support more stable Net Income. The announced changes in dividend policy and planned treasury share repurchases imply Total Return Amount rising from ¥18.3B this period to ¥20.2B next period, reflecting a focus on optimizing capital allocation.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.