| Metric | Current | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1945.5B | ¥1887.9B | +3.1% |
| Operating Income / Operating Profit | ¥87.5B | ¥72.7B | +20.4% |
| Ordinary Income | ¥129.6B | ¥107.0B | +21.2% |
| Net Income / Net Profit | ¥78.9B | ¥83.4B | -5.5% |
| ROE | 5.0% | 5.5% | - |
For the fiscal year ended March 2026, Revenue amounted to ¥1945.5B (YoY +¥57.6B +3.1%), Operating Income was ¥87.5B (YoY +¥14.8B +20.4%), Ordinary Income was ¥129.6B (YoY +¥22.6B +21.2%), and Net Income was ¥78.9B (YoY -¥4.5B -5.5%). At the operating level, SG&A efficiency improved (SG&A ratio 39.6%, prior year 40.4%), lifting the operating margin to 4.5% (prior year 3.9%) — an improvement of +0.6pt. Ordinary Income grew substantially, supported by non-operating income of ¥44.0B including equity-method investment income of ¥21.1B, while Net Income declined due to special losses of ¥15.1B, including impairment losses of ¥13.2B (prior year ¥1.4B). Operating Cash Flow (OCF) was ¥137.9B, generating 1.7x of Net Income, and Free Cash Flow (FCF) of ¥81.8B covers dividends of ¥52.8B by 1.5x, indicating a robust cash-generating profile.
Revenue by segment: Direct Sales Group ¥1112.5B (+2.6%, sales mix 57.2%), Food Group ¥689.1B (+3.2%, sales mix 35.4%), Other ¥169.7B (+2.9%, sales mix 8.7%) — all segments achieved revenue growth. The Food Group saw improvements in customer visits and ticket size centered on the Mister Donut business, while the Direct Sales Group showed steady performance in Clean Service and Care Service businesses. Overall revenue grew +3.1%, maintaining a sustainable growth trajectory driven by price pass-through and service expansion.
Profitability: Cost of sales was ¥1087.1B (cost of sales ratio 55.9%), yielding a gross margin of 44.1% (prior year 44.3%), a slight decrease of -0.2pt. SG&A was controlled at ¥771.0B (SG&A ratio 39.6%, prior year 40.4%), growing only +1.1% versus sales growth of +3.1%, thus leveraging operating leverage. As a result, Operating Income expanded to ¥87.5B (+20.4%), improving the operating margin by +0.6pt. Non-operating income totaled ¥44.0B, including equity-method investment income ¥21.1B, dividend income ¥4.7B, and interest income ¥3.6B, driving Ordinary Income to ¥129.6B (+21.2%). In extraordinary items, gains on sales of investment securities were ¥14.4B, offset by impairment losses ¥13.2B and disaster losses ¥4.8B, leaving special items net close to zero. After deducting corporate taxes of ¥37.2B, Net Income was ¥78.9B (-5.5%). In summary, revenue and operating income increased, Ordinary Income rose significantly, but Net Income declined due to higher special losses.
The Direct Sales Group recorded Operating Income of ¥56.4B (-1.4%) with a margin of 5.1%; it is the core segment but relatively lower in profitability. The Food Group delivered Operating Income of ¥100.2B (+17.1%) with a margin of 14.5%, becoming the largest profit-contributing segment and demonstrating improved high-margin performance. The Other segment posted Operating Income of ¥5.8B (+13.3%) with a margin of 3.4%, small but showing improvement. Consolidated Operating Income after corporate adjustments was ¥87.5B, with profit growth in the Food Group driving group-wide profitability.
Profitability: Operating margin improved to 4.5% (prior year 3.9%) — +0.6pt — primarily due to SG&A efficiency. Gross margin was 44.1% (prior year 44.3%) — -0.2pt — but SG&A containment outweighed the slight gross margin decline. ROE 5.0% (prior year 5.7%) declined due to lower Net Income and is below the company’s historical average.
Cash Quality: OCF ¥137.9B is 1.7x Net Income ¥78.9B; cash conversion (OCF ÷ EBITDA) is 0.86x, in a healthy range. Working capital movements were largely stable: trade receivables -¥6.0B, inventories -¥3.6B, trade payables +¥3.3B.
Investment Efficiency: CapEx / Depreciation 0.67x (capital expenditures ¥49.4B ÷ depreciation ¥73.7B) indicates continued restraint with allocations focused on maintenance and renewals. Investment securities totaled ¥677.3B (32.2% of total assets), which underpin Ordinary Income via dividends and equity-method income but also introduce market volatility risk.
Financial Soundness: Equity Ratio 75.3% (prior year 74.5%) remains high; long-term borrowings were ¥0.02B, effectively zero. Current ratio 158.3% and quick ratio 137.8% indicate ample short-term liquidity, maintaining an effectively net-debt-free, very conservative capital structure.
OCF was ¥137.9B (prior year ¥166.8B, -17.3%), generating 1.7x Net Income ¥78.9B. OCF subtotal was ¥164.1B with major adjustments including corporate tax paid ¥47.8B and interest & dividends received ¥21.4B; working capital movements were trade receivables -¥6.0B, inventories -¥3.6B, trade payables +¥3.3B, broadly neutral. Investing Cash Flow was -¥56.1B (capital expenditures ¥49.4B and intangible asset investment ¥51.9B totaling about ¥101B, partially offset by proceeds from sale of securities ¥78.4B), resulting in CapEx / Depreciation 0.67x and a restrained investment stance. Financing Cash Flow was -¥50.4B, driven mainly by dividend payments of ¥52.8B; share buybacks were negligible. FCF was ¥81.8B (OCF ¥137.9B + Investing CF -¥56.1B), covering dividends 1.5x, and cash & cash equivalents increased to ¥241.8B at year-end (up ¥31.9B from ¥209.9B at the beginning of the period). Cash generation is stable and dividend payment capacity is well secured.
Of Ordinary Income ¥129.6B, Operating Income accounted for ¥87.5B (67.5%) and non-operating income ¥44.0B (33.9%). Non-operating income is centered on financial income such as equity-method investment income ¥21.1B (16.3% of Ordinary Income), dividend income ¥4.7B, and interest income ¥3.6B. Earnings at the ordinary level are materially supported by financial assets, making them sensitive to market fluctuations. Special items included gains on sale of investment securities ¥14.4B, impairment losses ¥13.2B, and disaster losses ¥4.8B, netting nearly zero. Impairment losses were recognized across segments: Direct Sales ¥1,077 million, Food ¥244 million, reflecting asset profitability reassessments. Comprehensive income was ¥117.1B, exceeding Net Income ¥78.9B, driven mainly by other securities valuation gains +¥15.0B and actuarial gains/losses for retirement benefits +¥7.8B, reflecting valuation improvements on held assets. Operating-level earnings quality is high, while financial income and one-off special items expand volatility in Net Income.
Full Year guidance for the coming fiscal year is Revenue ¥2015.0B (+3.6%), Operating Income ¥90.0B (+2.9%), Ordinary Income ¥129.0B (-0.5%), and Net Income ¥90.0B (+14.1%). On a performance basis, achievement rates versus guidance are: Revenue 96.6%, Operating Income 97.2%, Ordinary Income 100.5% — generally within achievement range with Ordinary Income slightly above guidance. Net Income achieved ¥78.9B, representing 87.7% progress toward the forecast ¥90.0B, primarily due to special losses such as impairment exceeding expectations. Reported EPS for the full year guidance was ¥208.16 versus actual EPS ¥195.31; full-year dividend guidance ¥55 versus actual dividend ¥118 (interim ¥50 + year-end ¥68), reflecting a large additional year-end distribution. Revenue, Operating Income, and Ordinary Income were broadly within forecast ranges; the shortfall in Net Income is considered a temporary effect from higher special losses.
Annual dividend was ¥118 (interim ¥50, year-end ¥68), up ¥6 from prior year ¥112 (interim ¥50, year-end ¥62). Payout Ratio was 60.3%, maintaining a relatively high payout level against Net Income. FCF ¥81.8B covers dividend payments ¥52.8B by 1.5x. Equity Ratio 75.3% and total cash and short-term securities ¥306.9B provide very substantial financial flexibility, supporting high dividend sustainability. Share buybacks amounted to ¥0.02B (negligible); shareholder returns are dividend-centric. Total Return Ratio is effectively at the dividend payout level of 60.3%, continuing a stable dividend policy balanced with internal reserves.
Segment concentration risk: The Direct Sales Group accounts for 57.2% of Revenue but has a relatively low operating margin of 5.1%, making it vulnerable to labor cost increases and economic fluctuations. The Food Group is highly profitable (margin 14.5%) but only constitutes 35.4% of sales, so improving portfolio-wide profitability remains a challenge.
Cost inflation and gross margin pressure: Gross margin declined to 44.1% (prior year 44.3%) — -0.2pt — and pressures from raw materials, labor, and energy costs persist. Although SG&A efficiency improved the operating margin, insufficient price pass-through at the gross margin level could hinder sustained margin improvement.
Dependence on financial income and market volatility: Of Ordinary Income ¥129.6B, non-operating income was ¥44.0B (33.9%), with a substantial contribution from equity-method investment income ¥21.1B (16.3% of Ordinary Income). Investment securities totaling ¥677.3B (32.2% of total assets) expose results to market fluctuations. Although other securities valuation gains were +¥15.0B this period, market declines could compress earnings.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.5% | 8.1% (3.6%–16.0%) | -3.6pt |
| Net Margin | 4.1% | 5.8% (1.2%–11.6%) | -1.8pt |
Both operating margin and net margin are below industry medians, indicating substantial room for profitability improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.1% | 10.1% (1.7%–20.2%) | -7.0pt |
Revenue growth rate trails the industry median by -7.0pt, indicating a relatively moderate growth pace.
※ Source: Company compilation
Food Group high-margin expansion and Direct Sales efficiency improvements: The Food Group, with an operating margin of 14.5%, is the largest profit contributor; growth investment and improving existing store quality will be key to overall company profitability. The Direct Sales Group remains at a 5.1% margin, so medium-term themes include digital transformation (DX) and augmenting service value to lift profitability.
Very strong financial base and stable dividends: The company maintains an effectively net-debt-free balance sheet, Equity Ratio 75.3%, and FCF ¥81.8B which covers dividends 1.5x, indicating a resilient financial structure. Despite a high Payout Ratio of 60.3%, liquidity buffers of cash and short-term securities ¥306.9B support dividend sustainability.
Room to improve capital efficiency and optimize investment allocation: ROE 5.0% and CapEx / Depreciation 0.67x suggest conservative capital efficiency and restrained growth investment. Optimizing the allocation of investment securities ¥677.3B (32.2% of total assets), improving Direct Sales profitability, and strategically investing in the Food Group could drive medium-to-long-term ROIC improvement and shareholder value creation.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial analysis document. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; please consult a professional as necessary before making investment decisions.