LIBERTA CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥6.71B
• Operating Income: ¥-97M
• Net Income: ¥-70M
• EPS: ¥-31.68

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Liberta Co., Ltd. (49350) reported FY2025 Q3 (cumulative) revenue of ¥6,715m, up 8.5% YoY, indicating top-line recovery despite a still-loss-making bottom line. Gross profit was ¥2,329m, translating to a gross margin of 34.7%, which supports the view that pricing and product mix are reasonably resilient. Operating income was a loss of ¥97m; although negative, the YoY improvement (+379.6%) suggests material cost discipline and operating leverage beginning to work. Ordinary loss widened to ¥161m, reflecting the drag from financing costs (interest expense ¥21m) and limited non-operating income support. Net loss was ¥189m (net margin -2.81%), essentially flat YoY, signaling that while operating losses narrowed, below-the-line items and tax/adjustments kept the bottom line in red. The DuPont bridge shows ROE at -13.93% driven by a modest asset turnover of 0.973, negative net margin of -2.81%, and high financial leverage of 5.08x. Based on the balance sheet, equity is ¥1,357m versus assets of ¥6,898m, implying an equity ratio around 19.7% (the 0.0% field appears undisclosed rather than actual). Liquidity is adequate (current ratio 134.1%) but the quick ratio of 87.0% highlights reliance on inventory conversion. Inventories at ¥1,686m (about 25% of sales and ~118 days on a 9-month COGS basis) are elevated and a key working capital swing factor. Interest coverage is negative (-4.6x), so continued operating improvement is necessary to offset financing costs. SG&A intensity remains high; inferred SG&A is approximately ¥2,426m (36.1% of sales), indicating room for efficiency gains to achieve breakeven. Cash flow statements are undisclosed in this dataset; therefore, earnings-to-cash conversion cannot be assessed. Dividends are currently nil (DPS ¥0), appropriate given losses and the need to preserve capital. Overall, the company is in a transition phase: revenue growth is encouraging, gross margin is stable, and operating loss has narrowed, but leverage and inventory levels constrain flexibility. Forward focus should be on sustained margin expansion, inventory normalization, and restoring positive operating income to cover interest. Data gaps (notably cash flow and depreciation) limit precision of cash-based assessments, and conclusions rely on the disclosed non-zero items.

Profitability Analysis

ROE is -13.93%, decomposed into net margin -2.81%, asset turnover 0.973x, and financial leverage 5.08x. The negative margin is the primary driver of weak ROE; leverage amplifies the effect on equity. Gross margin is 34.7%, consistent with branded consumer products/cosmetics profiles, suggesting pricing power remains intact. Operating margin is -1.4% (operating loss ¥97m on ¥6,715m sales), implying SG&A at 36.1% of revenue; this is the key area to unlock operating leverage. Ordinary margin is -2.4%, with interest expense (¥21m) weighing on profitability and resulting in an interest coverage ratio of -4.6x. The YoY improvement in operating income (+379.6%) indicates that fixed cost absorption is improving as volumes grow. However, below-the-line items negate operating gains, keeping net margins negative. Without reported depreciation, EBITDA cannot be assessed, but given losses, cash earnings likely remain weak absent strong working capital release. Margin quality appears reasonable at the gross level but is eroded by overhead intensity and financing costs. Sustained revenue growth paired with SG&A discipline is needed to achieve breakeven and eventually rebuild ROE.

Growth Assessment

Revenue grew 8.5% YoY to ¥6,715m, signaling demand resilience and likely contributions from product launches or channel expansion. The growth converted into a narrowing operating loss, evidencing early-stage operating leverage. Gross profit growth and the 34.7% margin indicate mix/pricing have not deteriorated materially. Profit quality is mixed: operating loss narrowed, but ordinary and net losses persist due to financing costs and non-operating items, limiting earnings scalability in the near term. With inventories elevated (~118 days on a 9-month basis), a portion of reported sales growth should be monitored for sustainability versus potential channel inventory effects. Outlook hinges on Q4 seasonality and the company’s ability to curb SG&A; breakeven at operating level appears within reach if revenue momentum continues and cost controls persist. A return to positive ordinary income will require both operating profitability and either reduced interest burden or additional non-operating support. Given the lack of cash flow disclosure, we cannot verify cash conversion of growth, which tempers confidence in near-term earnings durability.

Financial Health

Total assets are ¥6,898m and equity is ¥1,357m, implying an equity ratio near 19.7% despite the undisclosed 0.0% field. Total liabilities are ¥4,865m (liabilities-to-assets ~70.5%), reflecting a leveraged balance sheet. Current assets are ¥4,804m versus current liabilities of ¥3,582m, yielding a current ratio of 134.1%, which is adequate. The quick ratio is 87.0%, pointing to dependence on inventory monetization for liquidity. Working capital stands at ¥1,221m, providing a buffer, but the composition (large inventories) introduces execution risk. Debt-to-equity is 3.58x, underscoring limited headroom for additional leverage without earnings recovery. Interest expense of ¥21m with negative operating income results in weak interest coverage (-4.6x). Absent cash flow details, assessment of near-term solvency relies on liquidity metrics and inventory turnover. Overall, the company maintains liquidity but operates with high leverage and must restore operating profits to strengthen coverage and improve capital structure resilience.

Cash Flow Quality

Cash flow data (operating, investing, financing) are undisclosed in this dataset; zeros should not be interpreted as actual values. As a result, OCF/Net Income and free cash flow cannot be meaningfully assessed despite the displayed 0.00 figures. Earnings quality is therefore uncertain: while gross margin is stable and operating losses are narrowing, the lack of OCF data prevents validation of working capital consumption or release. Working capital analysis from the balance sheet suggests inventories of ¥1,686m (roughly 35% of current assets) are a key driver of cash conversion; an estimated ~118 days of inventory (versus 9-month COGS) indicates scope for optimization. Receivables and payables are not disclosed, limiting a full CCC assessment. Capex and depreciation are similarly undisclosed, making maintenance versus growth investment unclear. Overall, cash flow quality cannot be confirmed; monitoring inventory turns and any disclosed OCF in future filings is critical.

Dividend Sustainability

Dividends are currently nil (DPS ¥0; payout ratio 0%), which is consistent with ongoing net losses. With undisclosed OCF and FCF, coverage analysis cannot be performed beyond noting that free cash flow figures are not available in this dataset. Given a negative earnings base and high leverage, a conservative dividend stance appears prudent until operating profitability and cash generation improve. Future dividend capacity will depend on sustained positive operating income, interest coverage restoration, and working capital normalization. Policy outlook likely remains cautious near term; any resumption would require clear evidence of durable profits and cash inflows.

Risk Assessment

Business Risks:

• Execution risk in reducing SG&A intensity to achieve breakeven.
• Demand volatility in beauty/household categories and potential channel inventory adjustments.
• Product concentration and new product launch risk affecting mix and pricing.
• Competitive pressure from domestic and overseas brands compressing margins.
• Dependence on inventory turnover; elevated inventory days could lead to obsolescence or markdowns.

Financial Risks:

• High leverage (debt-to-equity 3.58x; liabilities/assets ~70.5%) limits flexibility.
• Negative interest coverage (-4.6x) despite revenue growth raises solvency concerns if operating improvement stalls.
• Liquidity reliance on inventory conversion (quick ratio 87%) increases cash flow volatility.
• Potential covenant pressure if financing agreements require positive earnings or coverage metrics.
• Limited visibility on cash flows and capex due to undisclosed CF statements.

Key Concerns:

• Sustained net losses (-¥189m) and ordinary losses (-¥161m) despite top-line growth.
• Elevated inventories (¥1,686m; ~118 days) as a working capital and markdown risk.
• High financial leverage (assets/equity 5.08x) amplifying earnings volatility on equity.
• Inability to assess cash conversion due to undisclosed operating and investing cash flows.

Investment Implications

Key Takeaways:

• Top-line recovery (+8.5% YoY) with stable gross margin (34.7%) is encouraging.
• Operating loss narrowed significantly (operating margin -1.4%), indicating early operating leverage.
• Leverage remains high (D/E 3.58x) and interest coverage is negative, keeping pressure on ordinary profit.
• Liquidity is adequate (current ratio 134.1%) but depends on inventory monetization (quick ratio 87%).
• Data gaps (cash flows, depreciation) limit assessment of earnings quality and FCF.

Metrics to Watch:

• Operating margin trajectory and SG&A as a percentage of sales (currently ~36.1%).
• Inventory days and turns; progress toward lowering inventory from ¥1,686m.
• Ordinary income and interest coverage improvement from -4.6x.
• Equity ratio recovery from ~19.7% through profit retention and/or de-leveraging.
• Disclosure of operating cash flow and capex to validate cash conversion.

Relative Positioning: Within Japan’s small-cap beauty/consumer products cohort, Liberta exhibits below-peer profitability (negative operating and ordinary margins) and higher leverage than typical peer medians, offset by respectable gross margins and recent revenue growth; execution on cost discipline and working capital efficiency is needed to converge toward peer operating metrics.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis