| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥782.6B | ¥790.0B | -0.9% |
| Operating Income / Operating Profit | ¥10.3B | ¥66.6B | -84.5% |
| Ordinary Income | ¥23.6B | ¥51.6B | -54.3% |
| Net Income | ¥4.7B | ¥57.9B | -91.9% |
| ROE | 0.2% | 1.9% | - |
For the quarter ended March 2026 (Q1), Revenue was ¥782.6B (YoY -¥7.3B, -0.9%), Operating Income was ¥10.3B (YoY -¥56.3B, -84.5%), Ordinary Income was ¥23.6B (YoY -¥28.0B, -54.3%), and Net income attributable to owners of parent was ¥4.7B (YoY -¥53.2B, -91.9%). While Revenue declined only marginally, a deterioration in Gross Margin to 69.8% (YoY -1.9pt) and an increase in SG&A ratio to 68.5% (YoY +5.2pt) compressed Operating Margin to 1.3%, down 7.1pt from 8.4% a year ago. Preemptive investments in promotion and advertising of ¥76.7B (+29%) and personnel expenses of ¥141.1B (+4%) combined with a slight revenue decline produced negative operating leverage. Non-operating income included foreign exchange gains of ¥7.4B, but structural items including extraordinary items compressed profits at and after the Ordinary Income stage. An unusually high effective tax rate of 79.1% led to taxes of ¥17.7B against Profit before tax of ¥22.4B, severely depressing Net Income. Progress against the full-year plan (Revenue ¥3,500B, Operating Income ¥200B, Net Income ¥121B) is weak: Revenue 22.4%, Operating Income 5.2%, Net Income 3.9%, implying a recovery scenario weighted to the second half.
[Revenue] Revenue of ¥782.6B was a slight decline of -0.9% YoY. By region: Japan ¥481.6B (from ¥517.7B), Asia ¥113.7B (from ¥97.7B, +16.4%), North America ¥166.7B (from ¥153.7B, +8.4%), Others ¥20.7B, indicating domestic slowdown partly offset by growth in Asia and North America. By segment: Cosmetics Business ¥639.2B (+0.6%) accounted for 81.7% of sales, Cosmetary Business ¥136.5B (-7.8%), Others ¥9.6B (+19.1%). The slight increase in cosmetics likely reflects regional mix changes and product mix effects. Cosmetary decline is attributed to softness in the domestic market and channel shifts. Gross margin of 69.8% worsened by 1.9pt YoY, with COGS ratio rising to 30.2% suggesting higher raw material costs and product mix shifts.
[Profitability] Operating Income ¥10.3B (-84.5%) was primarily driven by an increase in SG&A to ¥535.8B (+7.3%). SG&A ratio of 68.5% rose 5.2pt from 63.3%, consuming almost all gross profit of ¥546.1B. Key increases included advertising and promotion ¥76.7B (from ¥59.5B, +29%), salaries and allowances ¥141.1B (from ¥135.3B, +4%), and depreciation within SG&A ¥19.3B (from ¥14.1B, +37%). Non-operating income comprised interest income ¥2.6B, foreign exchange gains ¥7.4B, dividend income ¥0.7B, totaling non-operating revenue ¥13.8B; after non-operating expenses ¥0.6B, net non-operating income was +¥13.2B, resulting in Ordinary Income ¥23.6B (-54.3%). After extraordinary gains ¥1.5B (gain on sale of investment securities) and extraordinary losses ¥2.7B (impairment losses ¥0.4B etc.), Profit before tax was ¥22.4B. Corporate taxes of ¥17.7B (current ¥2.5B, deferred -¥0.7B) produced an effective tax rate of 79.1%, and after deducting non-controlling interests ¥0.4B, Net income attributable to owners of parent was ¥4.7B (-91.9%). In summary, the quarter saw declining revenue and a steep fall in profitability.
Cosmetics Business: Revenue ¥639.2B (+0.6%), Operating Income ¥23.3B (-61.1%), Margin 3.7% (from 9.4%, -5.7pt). Despite revenue growth, margin deterioration is likely due to concentrated promotional investment and higher fixed cost burden. Cosmetary Business: Revenue ¥136.5B (-7.8%), Operating loss ¥1.2B (from Operating Income ¥18.5B last year, turning to loss), Margin -0.8%, with revenue decline and fixed cost under-absorption worsening profitability. Others: Revenue ¥9.6B (+19.1%), Operating Income ¥5.1B (+41.7%), Margin 53.3%, maintaining high profitability, likely supported by amenity products. Aggregate segment profit ¥27.3B less corporate allocation -¥17.0B (HQ costs, basic R&D, etc.) yields consolidated Operating Income ¥10.3B. Declines in the core Cosmetics margin and the Cosmetary loss materially diluted company-wide margins.
[Profitability] Operating margin 1.3% (from 8.4%, -7.1pt), Ordinary margin 3.0% (from 6.5%, -3.5pt), Net margin 0.6% (from 7.3%, -6.7pt) — all stages deteriorated significantly. Decline in Gross Margin to 69.8% (from 71.7%, -1.9pt) and rise in SG&A ratio to 68.5% (from 63.3%, +5.2pt) produced negative operating leverage. ROE 0.2% (from 1.9%) driven largely by the sharp drop in Net margin. Of non-operating income ¥13.8B, foreign exchange gains ¥7.4B contributed, but tax burden kept post-Ordinary profitability weak. [Cash Quality] Days Sales Outstanding 230 days (from 259 days) improved but remains long. Inventory days 1,164 days (from 1,104 days) worsened, leading to Cash Conversion Cycle 1,231 days (from 1,104 days), indicating very heavy capital tie-up. Operating Cash Flow data undisclosed, but expansion of working capital suggests constraints on cash generation. [Investment Efficiency] Total asset turnover 0.20x (same as prior), tangible fixed assets ¥965.1B (from ¥818.0B, +18%) indicating ongoing capex. Construction in progress ¥376.4B (from ¥222.6B, +69%) points to future asset capitalization and productivity improvements. [Financial Soundness] Equity Ratio 77.4% (from 77.5%), Current Ratio 334.6% (from 362.2%) remain high. Interest-bearing debt is effectively zero except for short-term borrowings ¥8.4B. Interest Coverage 79x (Operating Income ¥10.3B / Interest expense ¥0.1B) indicates strong ability to service interest. Cash and deposits ¥734.8B exceed current liabilities ¥619.9B, providing ample financial flexibility.
Cash flow statement data is undisclosed; analysis is based on balance sheet movements. Cash and deposits ¥734.8B (from ¥924.6B, -¥189.9B) declined substantially, presumably funding investment activity and working capital increases. Large increase in construction in progress to ¥376.4B (from ¥222.6B, +¥153.8B) suggests front-loaded capital expenditures. Tangible fixed assets increased to ¥965.1B (from ¥818.0B, +¥147.1B) with transfers from construction-in-progress progressing. Inventory ¥442.2B (from ¥435.4B, +¥6.8B) rose slightly but remains associated with prolonged days on hand of 1,164 days; improving inventory efficiency is key to cash generation. Accounts receivable ¥493.5B (from ¥560.8B, -¥67.2B) decreased, indicating improved collection, while accounts payable and electronic recorded obligations total ¥198.8B (from ¥184.0B, +¥14.8B) increased, with Payables days 307 days (from 300 days) slightly extended. Retained earnings ¥2,469.0B (from ¥2,504.7B, -¥35.7B) decreased after Net Income ¥4.7B and dividend payments. No significant change in interest-bearing debt suggests investments were funded by internal reserves and cash.
Ordinary Income ¥23.6B is comprised of Operating Income ¥10.3B plus net non-operating income ¥13.2B, indicating high dependence on non-operating items. Main components of non-operating revenue ¥13.8B are foreign exchange gains ¥7.4B, interest income ¥2.6B, and dividend income ¥0.7B; FX gains include temporary elements from exchange rate movements. Non-operating expenses were minor at ¥0.6B. Extraordinary net -¥1.2B (extraordinary gains ¥1.5B, extraordinary losses ¥2.7B) with gain on sale of investment securities ¥1.5B being non-recurring. Impairment losses ¥0.4B are one-off but warrant asset efficiency review. Corporate tax ¥17.7B against Profit before tax ¥22.4B yields an anomalously high effective tax rate of 79.1%; composition (current tax ¥2.5B, deferred tax -¥0.7B) suggests tax adjustments affecting the period. Comprehensive income ¥5.0B comprises Net Income ¥4.7B plus Other Comprehensive Income ¥0.3B (FX translation adjustment ¥4.2B, valuation gains on securities ¥1.3B, retirement benefit adjustments -¥5.3B), indicating minor deviation from Net Income. Dependence on FX gains in non-operating income and the heavy tax burden distort earnings quality; isolating core operating profitability from temporary factors is critical.
Full-year forecast remains unchanged: Revenue ¥3,500B (+6.0% YoY), Operating Income ¥200B (+8.3%), Ordinary Income ¥210B (-2.2%), Net income attributable to owners of parent ¥121B, EPS ¥212.67, Dividend ¥70 (with commemorative dividend ¥10 included for total ¥80). Q1 progress vs full-year forecast: Revenue 22.4% (standard 25%), Operating Income 5.2%, Ordinary Income 11.2%, Net Income 3.9%, showing substantial shortfalls at the Operating Income and Net Income levels. Achieving the full-year plan requires second-half (especially Q4) acceleration in sales, Gross Margin recovery, SG&A efficiency improvements, and normalization of tax burden. Assumptions likely include FX rates, new product launches, and overseas expansion driving a second-half recovery, but weak Q1 progress raises realization risk. No forecast revision was made this quarter, though adjustments are possible depending on Q2+ performance. Dividend forecast unchanged, maintaining annual ¥80 including the ¥10 commemorative dividend.
Full-year dividend forecast remains ¥70 per share (unchanged YoY), with year-end distribution comprising ordinary dividend ¥70 plus commemorative dividend ¥10 for total ¥80. Payout ratio relative to full-year EPS forecast ¥212.67 is approximately 33% (33% on a non-commemorative basis), a sustainable level. Q1 EPS ¥7.48 annualized would imply inadequate coverage, but based on full-year plan coverage is acceptable. Cash and deposits ¥734.8B, net-debt-free operations, and retained earnings ¥2,469B indicate ample capacity for dividend payments. No share buyback disclosed; shareholder returns appear dividend-focused. Going forward, achievement of full-year profit targets and improvement in working capital efficiency will be key to free cash flow generation and return capacity.
Sharp profitability decline and tax burden risk: Operating margin 1.3% (from 8.4%, -7.1pt) and effective tax rate 79.1% represent deterioration in both profitability and tax burden. Promotional and advertising spending ¥76.7B (+29%) has not yet translated into sales growth, increasing fixed cost pressure. Prolonged high tax burden driven by tax adjustments would impede achievement of the full-year profit targets.
Deterioration in working capital efficiency: Inventory days 1,164, Receivables days 230, Cash Conversion Cycle 1,231 days indicate very slow capital turnover. Extended inventory holding increases obsolescence and write-down risk; longer receivables raise collection concerns. Failure to compress working capital will constrain Operating Cash Flow and restrict investment capacity.
Capitalization delay and operational risk for construction in progress: Construction in progress ¥376.4B (+69% YoY) shows large ongoing investments; delays in commissioning or start-up issues would amplify depreciation burden and impairment risk. If new equipment fails to deliver expected yield improvement or cost reductions, recovery of Gross Margin and attainment of full-year profit targets will be difficult.
Profitability & Return
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.3% | 6.8% (2.9%–9.0%) | -5.5pt |
| Net Margin | 0.6% | 5.9% (3.3%–7.7%) | -5.3pt |
The company’s profitability is well below the median of the manufacturing sector and ranks in the lower tier within the industry.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.9% | 13.2% (2.5%–28.5%) | -14.1pt |
Revenue growth lags the industry median by 14.1pt, indicating inferior growth performance.
※ Source: Company aggregation
Full-year plan execution risk due to second-half weighting: Q1 Operating Income progress 5.2% and Net Income progress 3.9% are substantially below pace required to meet full-year targets (Operating Income ¥200B, Net Income ¥121B). Realizing promotional investment effects, Gross Margin reversal (via new equipment start-up and product mix improvement), and tax normalization must occur simultaneously; execution risk is high. Monitor Q2+ progress and company outlook commentary.
Progress on working capital efficiency: Cash Conversion Cycle 1,231 days and Inventory days 1,164 require urgent improvement. Inventory reduction (better demand forecasting, obsolescence management) and accelerated receivables collection are key to restoring Operating Cash Flow and investment flexibility. Quarterly tracking of working capital metrics and disclosed measures from management are critical monitoring points.
Timing and impact of new equipment commissioning: Assetization and commissioning of Construction in progress ¥376.4B (+69%) are prerequisites for Gross Margin recovery. Startup schedules and yield improvements will determine future profitability. Confirmation of marginal cost reductions and fixed-cost absorption after commissioning would lend credibility to a rebound in Operating Margin. Disclosure of operational status and productivity metrics will be closely watched.
This report is an AI-generated earnings analysis document created by analyzing XBRL financial statement data. It does not constitute an investment recommendation for any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.
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