Noevir Holdings (4928) FY2026 Q1 Earnings Report

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Executive Summary

The Company reported declines in both revenue and earnings for the current period, and the decline in the operating margin indicates a deterioration in core earnings power. Revenue was ¥154.7B (-7.9% YoY), Operating Income was ¥22.5B (-29.0%), and Ordinary Income was ¥24.2B (-26.2%). Net Income increased to ¥14.0B (¥10.4B in the same period of the previous year), but this was attributable to extraordinary income including a ¥9.2B gain on the sale of fixed assets and does not reflect the underlying performance of the core business. SG&A expenses increased by 1.5% despite the decline in revenue, which was the primary factor behind the deterioration in the operating margin (from 18.9% in the previous year to 14.6%).

Factors Affecting Results

【Revenue】Revenue was ¥154.7B, a 7.9% decrease year on year. By segment, Cosmetics generated revenue of ¥122.8B (81.4% of total, 20.6% profit margin), while MedicineAndGrocery generated revenue of ¥28.8B (19.6% of total, 12.9% profit margin). Demand trends in the core Cosmetics Business continue to determine overall revenue.

【Profit and Loss】Cost of sales was ¥49.1B (¥54.5B in the previous year), declining at a faster pace than revenue and improving the gross margin to 68.2% from 67.6% in the previous year. However, SG&A expenses increased by 1.5% to ¥83.0B from ¥81.8B in the previous year, and the decline in fixed-cost absorption amid lower revenue placed pressure on Operating Income. Operating Income declined to ¥22.5B (-29.0% YoY), while Ordinary Income declined to ¥24.2B (-26.2%). Meanwhile, Net Income increased to ¥14.0B (¥10.4B in the previous year, +35.7% YoY), but the increase was largely driven by the one-time gain on the sale of fixed assets of ¥9.2B; an impairment loss of ¥1.2B was also recorded during the period. The divergence between declining Operating Income and Ordinary Income and increasing Net Income indicates a decline in revenue and earnings on a core business basis, but an increase in earnings on a bottom-line basis. Overall, excluding one-time factors, the results should be assessed as a decline in both revenue and earnings.

Segment Analysis

The Cosmetics segment accounted for the core of Company-wide earnings, with revenue of ¥122.8B (81.4% of total), Operating Income of ¥25.2B, and a profit margin of 20.6%. The MedicineAndGrocery segment generated revenue of ¥28.8B (18.6% of total), Operating Income of ¥3.7B, and a profit margin of 12.9%, indicating lower profitability than Cosmetics. While Company-wide Operating Income was ¥22.5B, the combined segment Operating Income was ¥28.9B, with the difference believed to reflect Company-wide common costs such as head office expenses.

Key Financial Indicators

【Profitability】The operating margin was 14.6%, approximately 4.3pt lower than 18.9% in the same period of the previous year, while the gross margin improved slightly to 68.2% from 67.6% in the previous year. The net margin improved to 9.1% from 6.2% in the previous year, although this includes the impact of the gain on the sale of fixed assets.【Cash Flow Quality】Comprehensive Income was ¥16.7B against Net Income of ¥13.0B, with a foreign currency translation adjustment of ¥1.8B and valuation difference on available-for-sale securities of ¥0.8B contributing to the increase. Cash and deposits declined substantially to ¥124.9B from ¥269.3B in the previous year, indicating a change in capital allocation.【Investment Efficiency】ROE (annualized) was 11.7%, representing a certain level of capital efficiency based on total assets of ¥704.3B and net assets of ¥480.2B.【Financial Soundness】The Equity Ratio declined by 2.1pt to 68.2% from 70.3% in the previous year, but remained at a high level. Current assets of ¥436.2B compared with current liabilities of ¥100.2B indicate ample short-term liquidity.

Cash Flow Analysis

Although direct data from the cash flow statement is limited, an analysis of fund movements based on changes in the balance sheet indicates that cash and deposits declined by ¥144.4B from ¥269.3B in the previous year to ¥124.9B, while short-term investment securities of ¥99.95B were recorded, suggesting that a portion of cash may have been transferred to short-term investment assets. Retained earnings declined by ¥65.3B from ¥441.1B in the previous year to ¥375.8B, suggesting that capital outflows, such as dividend payments, exceeded the recognition of Net Income of ¥14.0B for the current period. Total assets decreased from ¥704.3B to ¥764.9B, and changes in capital allocation can be observed amid a contraction in overall assets.

Earnings Quality

The increase in Net Income for the current period was not attributable to recurring earnings power in the core business, but was significantly affected by extraordinary income primarily consisting of the ¥9.2B gain on the sale of fixed assets. Both Operating Income and Ordinary Income declined substantially year on year, indicating a deterioration in recurring earnings power, while an impairment loss of ¥1.2B was also recorded as an extraordinary loss. Non-operating income was ¥1.6B, comprising dividend income of ¥0.2B, foreign exchange gains of ¥0.3B, and other income of ¥0.8B, while non-operating expenses were negligible. Comprehensive Income of ¥16.7B exceeded Net Income of ¥14.0B, with other comprehensive income, including the ¥1.8B foreign currency translation adjustment, contributing positively. Based on the above, the increase in earnings for the current period depended on one-time factors and does not demonstrate the core business’s sustainable earning power in terms of earnings quality.

Earnings Forecast and Guidance

For the full-year forecast, the Company plans for revenue of ¥650.0B (+0.4% YoY), Operating Income of ¥114.0B (+2.9%), and Ordinary Income of ¥118.0B (+0.2%). Progress for the current period (Q1) was 23.8% for revenue, 19.7% for Operating Income, and 20.5% for Ordinary Income, all below the quarterly progress benchmark of 25%. In particular, the slow progress in Operating Income indicates that revenue recovery and improved SG&A efficiency from Q2 onward will be necessary to achieve the full-year plan.

Shareholder Returns

The full-year dividend forecast is ¥230.00 per share. Based on forecast full-year EPS of ¥240.07, the Payout Ratio is approximately 95.8%, an extremely high level. Retained earnings for the current period declined by ¥65.3B year on year. Although cash and short-term investment securities, which serve as sources of dividend funding, totaled ¥224.9B and provide a certain degree of financial flexibility, the high Payout Ratio creates a structure that depends on achieving the full-year earnings forecast.

Risk Factors

1. Deterioration in operating leverage: While revenue declined by 7.9% year on year, SG&A expenses increased by 1.5%, and the operating margin declined by approximately 4.3pt from 18.9% in the previous year to 14.6%. If revenue recovery is delayed, the burden of fixed costs could lead to further downside in earnings.

2. High tax burden: Corporate income taxes and other taxes of ¥16.5B were incurred against Profit Before Tax of ¥30.5B, resulting in a high effective tax rate of approximately 54.1%. Persistently high tax expenses could constrain Net Income and the resources available for dividends.

3. Dependence of Net Income on one-time factors: Of current-period Net Income of ¥14.0B, the gain on the sale of fixed assets of ¥9.2B contributed significantly; an impairment loss of ¥1.2B was also recorded as an extraordinary loss. Accordingly, Net Income is highly volatile as an indicator of the core business’s earning power.

Industry Benchmark (Reference; Company Research)

Industry Benchmark (manufacturing)

Profitability and Returns

The Company’s profitability is substantially above the industry median.

Growth and Capital Efficiency

The Company’s revenue growth rate is substantially below the industry median, and its position in a revenue contraction phase is a distinctive characteristic within the industry.

Source: Company research

Key Points from the Financial Results

1. The gross margin improved by approximately 0.7pt year on year to 68.2%, but the operating margin declined by approximately 4.3pt to 14.6%. Restoring SG&A expense absorption capacity will therefore be a key area of focus going forward.

2. Net Income attributable to owners of the parent increased by +35.7% year on year, but as this includes the ¥9.2B gain on the sale of fixed assets, Operating Income of ¥22.5B and Ordinary Income of ¥24.2B should be prioritized when evaluating the core business.

3. Progress for the current period (Q1) against the full-year Operating Income forecast was 19.7%, below the standard quarterly progress benchmark of 25%. Achievement of the full-year plan will depend on revenue trends and cost management from Q2 onward.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,679–¥1,767 for ±1% in the cost of equity, and ¥1,716–¥1,731 for ±0.1 in ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL financial results briefing data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results data. Investment decisions should be made at your own discretion and responsibility, after consulting with professionals as necessary.

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