Noevir Holdings (4928) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of FY2026, operating income declined due to weak sales in the core Cosmetics Business and an increase in the SG&A expense ratio, while gains on the sale of fixed assets supported net income. Revenue was ¥46.08B (¥47.28B in the same period of the previous year, YoY -2.6%), operating income was ¥6.90B (¥8.01B, YoY -13.9%), and ordinary income was ¥7.29B (¥8.42B, YoY -13.4%). Net income attributable to owners of the parent was ¥4.30B (¥4.27B in the previous year, YoY +0.8%), remaining nearly flat. However, this was largely supported by the supplementary effect of extraordinary income, including a ¥0.92B gain on the sale of fixed assets, producing a result contrasting with the decline at the operating-income level.

Factors Affecting Performance

【Revenue】Revenue was ¥46.08B, down 2.6% year on year. The core Cosmetics Business (79.0% of revenue composition) generated ¥36.42B, down 2.6%, and was the main cause of the decline in consolidated revenue. The Pharmaceuticals and Foods Business also generated ¥8.00B, down 4.4%, as weakness in demand and sales continued, while Other Businesses grew modestly to ¥1.87B, up 10.3%.

【Profit and Loss】Operating income was ¥6.90B, down 13.9%, and the operating margin was 15.0%, down 1.9pt from 16.9% in the same period of the previous year. The gross profit margin improved slightly to 68.1% from 67.8%, indicating that deterioration in costs was not the primary factor. Meanwhile, SG&A expenses increased 1.8% to ¥24.49B, and the SG&A ratio rose 2.2pt to 53.1%. The increase in SG&A expenses amid declining revenue is having a negative effect on operating leverage. Ordinary income was ¥7.29B, down 13.4%, largely reflecting the decline in operating income. Extraordinary income included a ¥0.92B gain on the sale of fixed assets, while extraordinary losses totaled ¥0.29B, including a ¥0.12B impairment loss on land scheduled for sale in the Pharmaceuticals and Foods Business, resulting in net extraordinary income of ¥0.64B. This temporary factor enabled net income to remain at approximately the previous year's level at ¥4.30B. In summary, the Company experienced declines in revenue and operating and ordinary income, while net income remained nearly flat year on year due to temporary factors.

Segment Analysis

The Cosmetics Business recorded revenue of ¥36.42B (79.0% composition, YoY -2.6%) and segment profit of ¥8.08B (YoY -9.9%). Its profit margin remained high at 22.2%, although it was trending downward. The Pharmaceuticals and Foods Business recorded revenue of ¥8.00B (17.4% composition, YoY -4.4%) and segment profit of ¥0.56B (YoY -24.7%), with its profit margin falling significantly to 7.0%. The business also recorded a ¥0.12B impairment loss on land scheduled for sale. Other Businesses expanded to revenue of ¥1.87B (4.1% composition, YoY +10.3%) and segment profit of ¥0.16B (YoY +13.1%), although their impact on consolidated performance remains limited. The structure in which the majority of profit depends on the Cosmetics Business continues.

Key Financial Indicators

【Profitability】The operating margin was 15.0%, down 1.9pt from 16.9% in the same period of the previous year. The improvement in the gross profit margin to 68.1% from 67.8% was offset by an increase in the SG&A ratio to 53.1% from 50.9%.【Cash Flow Quality】The net profit margin improved slightly to 9.3% from approximately 9.0% in the previous year, but this was supported by extraordinary income including a ¥0.92B gain on the sale of fixed assets and is qualitatively different from the decline at the operating-income level.【Investment Efficiency】Annualized ROE was 11.1%, a level achieved with a high equity ratio of 70.1%.【Financial Soundness】The equity ratio was 70.1%, total assets were ¥73.50B, and net assets were ¥51.51B, indicating a low level of liabilities and a conservatively maintained capital structure. Cash and deposits were ¥14.23B, a significant decrease from the same period of the previous year, indicating a change in capital allocation.

Cash Flow Analysis

Although no cash flow statement has been disclosed, funds trends can be inferred from balance sheet movements. Cash and deposits decreased significantly to ¥14.23B from ¥26.93B in the same period of the previous year, while short-term investment securities increased to ¥9.95B and investment securities increased to ¥3.97B, suggesting that a portion of funds may have shifted toward securities investments. Inventories were ¥8.07B, up 35.0% year on year, and the accumulation of inventories amid declining revenue is tying up funds. Accounts receivable were ¥9.48B, down from ¥12.11B in the same period of the previous year, indicating improved cash efficiency in collections, although this was offset by the increase in inventories. Accounts payable were ¥3.48B, an increase year on year, with higher trade payables supporting part of working capital. The sale of fixed assets, including the ¥0.92B gain on sale of fixed assets, also appears to have contributed to cash generation, although this was a nonrecurring factor.

Quality of Earnings

Operating income, which indicates recurring earnings power, was ¥6.90B, down 13.9% year on year, indicating deterioration in core business profitability against a backdrop of a fixed cost structure. In contrast, profit before tax was ¥7.93B, exceeding ordinary income of ¥7.29B. This difference resulted from extraordinary income of ¥924M, mainly the ¥0.92B gain on the sale of fixed assets, exceeding extraordinary losses of ¥285M, including the ¥0.12B impairment loss associated with the sale of land in the Pharmaceuticals and Foods Business. Net income of ¥4.30B remained nearly flat, up +0.8% year on year, largely due to the contribution from this nonrecurring extraordinary income, making it qualitatively different from the declining trend in operating and ordinary income. Non-operating income of ¥0.39B included ¥0.04B in dividends received and ¥0.10B in foreign exchange gains, but at approximately 0.9% of revenue, it was not large enough to materially affect earnings quality. The effective tax rate was high at approximately 45.7%, and the fact that the improvement in profit before tax was not sufficiently converted into net income is also important when evaluating earnings quality. Overall, the resilience of net income in the current period was largely supported by temporary factors; from a sustainability perspective, greater emphasis should be placed on the declining trends in operating and ordinary income.

Earnings Forecasts and Guidance

The full-year forecasts remain unchanged at revenue of ¥65.00B (YoY +0.4%), operating income of ¥11.40B (YoY +2.9%), and ordinary income of ¥11.80B (YoY +0.2%). Progress rates for the cumulative Q3 were 70.9% for revenue, 60.5% for operating income, and 61.8% for ordinary income, all below the standard progress pace of approximately 75%. In particular, the insufficient progress in operating and ordinary income indicates that a meaningful improvement in profitability will be required in Q4 to achieve the full-year forecasts. Progress toward the full-year forecast of ¥8.20B in net income attributable to owners of the parent was only 49.9%, requiring approximately ¥4.11B in profit to be generated in the remaining quarter.

Shareholder Returns

The full-year dividend forecast is ¥230 per share, unchanged from the previous forecast. Based on the full-year forecast EPS of ¥240.07, the payout ratio, calculated using dividends alone in the numerator, is approximately 95.8%, above the generally sustainable benchmark of 60%. The Q2 dividend was ¥0, meaning that annual shareholder returns are structured to be concentrated in the year-end dividend. The equity ratio of 70.1% and cash and deposits of ¥14.23B support the Company's ability to pay dividends; however, with progress toward full-year operating income at only 60.5%, achievement of the earnings forecast is an important prerequisite for the dividend to be realized.

Risk Factors

1. Concentration of earnings in the Cosmetics Business: The Cosmetics Business accounts for 79.0% of consolidated revenue and the majority of segment profit. Revenue in the business declined 2.6% year on year, while segment profit declined 9.9%, resulting in a structure in which consolidated performance is heavily dependent on sales trends in this business.

2. Deterioration in the profitability of the Pharmaceuticals and Foods Business: The Pharmaceuticals and Foods Business generated segment profit of ¥0.56B, down 24.7% year on year, with a profit margin of 7.0%, substantially below the Cosmetics Business margin of 22.2%. The business also recorded a ¥0.12B impairment loss on land scheduled for sale, highlighting challenges in both its asset base and earnings.

3. Inventory growth and fixed cost structure: Inventories were ¥8.07B, up 35.0% year on year, confirming accumulation amid declining revenue. In addition, SG&A expenses increased 1.8% despite declining revenue, and the SG&A ratio rose 2.2pt, with the fixed cost structure contributing to the decline in the operating margin.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the operating margin and net profit margin exceed the industry median, indicating that profitability is at a superior level within the industry.

Growth and Capital Efficiency

The revenue growth rate is substantially below the industry median, indicating that the Company lags its industry peers in top-line growth.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The operating margin was 15.0%, down 1.9pt from 16.9% in the same period of the previous year. Structurally, the increase in the SG&A ratio (+2.2pt), exceeding the slight improvement in the gross profit margin (+0.3pt), has caused operating leverage to turn negative.

2. Net income was nearly flat at +0.8% year on year, but this resulted from the contribution of extraordinary income including the ¥0.92B gain on the sale of fixed assets and is qualitatively different from the declining trend in operating and ordinary income. When evaluating the quality of the earnings results, greater emphasis should be placed on trends in operating and ordinary income.

3. Progress toward the full-year forecasts was 70.9% for revenue, 60.5% for operating income, 61.8% for ordinary income, and 49.9% for net income attributable to owners of the parent, all below the standard progress pace. Whether profitability improves in Q4 will be the determining factor in achieving the full-year forecasts.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥1,753–¥1,845 at ±1% for the cost of equity, and ¥1,792–¥1,806 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Since 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 / This is a mechanical calculation based solely on publicly disclosed data; it is not a forecast of the market stock price or a recommendation of any specific investment action, and does not predict or guarantee future stock prices.)

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

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