YODOKO,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Although Operating Income declined due to lower revenue from the core steel sheet-related business and an increase in the SG&A ratio, Net Income increased as a result of temporary factors, including gains on the sale of fixed assets. Revenue was ¥515.1B (¥527.7B in the same period of the previous year, YoY -2.4%), Operating Income was ¥38.5B (¥42.0B, YoY -8.2%), and Ordinary Income was ¥50.0B (¥51.2B, YoY -2.4%). Consolidated Net Income was ¥40.1B (¥37.6B in the previous year, YoY +6.8%), of which Net Income attributable to owners of the parent was ¥37.1B (¥34.0B in the previous year, YoY +9.1%). This was supported by ¥0.98B in extraordinary gains, including ¥0.94B in gains on the sale of fixed assets. The primary driver of the revenue decline was the volume and pricing trends in the core steel sheet-related business (95.1% of revenue composition), while the primary driver of the decline in Operating Income was the increase in the SG&A ratio (11.4%, up +0.9pt year on year).

Factors Affecting Performance

【Revenue】Revenue was ¥515.1B, down -2.4% year on year. The core steel sheet-related business declined to ¥489.7B (-2.2%, 95.1% of revenue composition), weighing on overall performance. While the Roll Business also declined to ¥0.72B (-16.1%), the Real Estate Business increased to ¥0.46B (+4.8%), and Other Businesses increased to ¥1.29B (+4.9%).

【Profit and Loss】Operating Income was ¥38.5B (YoY -8.2%), and the Operating Margin declined to 7.5% from 7.9% in the previous year. Although the Gross Margin improved to 18.9% (+0.4pt year on year), the SG&A ratio increased to 11.4% (+0.9pt), resulting in a decline in Operating Income. Ordinary Income was ¥50.0B (YoY -2.4%), with Non-operating Income of ¥12.0B, including ¥5.8B in dividend income, partially offsetting the decline in Operating Income. In addition, the recognition of ¥0.98B in extraordinary gains, including ¥0.94B in gains on the sale of fixed assets, resulted in Net Income attributable to owners of the parent of ¥37.1B (YoY +9.1%). The underlying business experienced both revenue and profit declines, while Net Income increased due to temporary factors.

Segment Analysis

The steel sheet-related business generated revenue of ¥489.7B (YoY -2.2%), Operating Income of ¥38.0B (YoY -10.0%), and a 7.8% margin. It is the core segment, accounting for the vast majority of company-wide revenue and profit, and its decline in profit weighed on company-wide Operating Income. The Real Estate Business generated revenue of ¥0.46B (+4.8%) and Operating Income of ¥0.22B (+16.3%), with a highly profitable 47.8% margin, supporting the company-wide margin despite its small scale. The Roll Business recorded lower revenue of ¥0.72B (-16.1%), but Operating Income rose substantially to ¥0.08B (+181.5%). The Grating Business generated revenue of ¥0.68B (-1.2%), while Operating Income declined to ¥0.003B (-66.7%), reducing its margin to 0.4%. There are significant differences in profitability among the segments, and the performance of the core steel sheet-related business largely determines overall results.

Key Financial Metrics

【Profitability】The Operating Margin declined to 7.5% from 7.9% in the previous year, as the improvement in the Gross Margin to 18.9% (+0.4pt year on year) was offset by the increase in the SG&A ratio to 11.4% (+0.9pt). The Ordinary Income Margin was 9.7%, exceeding the Operating Margin, indicating a contribution from Non-operating Income, including ¥5.8B in dividend income. The effective tax rate was 32.4%, up from 27.2% in the previous year.【Cash Quality】Accounts receivable increased to ¥439.7B (+8.9% year on year), while inventories decreased to ¥209.1B (-4.2%). As a result, the approximate quarterly cash conversion cycle lengthened from approximately 84 days in the previous year to approximately 93 days.【Investment Efficiency】ROE was 1.8%, and basic EPS was ¥25.90 (¥23.52 in the previous year, YoY +10.1%). Net Income attributable to owners of the parent of ¥37.1B against total assets of ¥2,609.4B indicates low asset turnover relative to the substantial asset base, which includes ¥403.1B in investment securities.【Financial Soundness】The Equity Ratio was 75.6% (76.0% in the previous year), while the Current Ratio was extremely high at 582.7%. Together with Cash and Deposits of ¥607.5B, this indicates a substantial financial cushion.

Cash Flow Analysis

As cash flow statement data has not been disclosed, funding trends are assessed based on changes in the balance sheet. Cash and Deposits decreased to ¥607.5B (¥620.6B in the previous year, -2.1%), while current securities decreased to ¥2.96B (-73.3%) and investment securities increased to ¥403.1B (+5.5%), suggesting that some funds may have shifted into investment securities. In terms of working capital, Accounts Receivable increased to ¥439.7B (+8.9%), while Accounts Payable decreased to ¥137.7B (-7.1%), indicating movement toward greater cash tied up in working capital. Property, Plant and Equipment increased to ¥564.5B (+1.2%), suggesting that ongoing maintenance and replacement investment in facilities has continued. Although ample cash and deposits and investment securities support the funding base, the upward trend in Accounts Receivable will be an item to monitor in assessing future cash-generation capacity.

Earnings Quality

Against Operating Income of ¥38.5B, the recurring source of earnings, Non-operating Income of ¥12.0B—including ¥5.8B in dividend income and ¥2.5B in interest income, equivalent to 2.3% of revenue—boosted Ordinary Income, resulting in an Ordinary Income Margin of 9.7%, above the Operating Margin of 7.5%. In addition, extraordinary gains of ¥0.98B were recorded, including ¥0.94B in gains on the sale of fixed assets. These extraordinary gains represented approximately 26% of Net Income attributable to owners of the parent of ¥37.1B. Gains on the sale of fixed assets are temporary items with limited recurrence, and their repeatability from the next period onward is considered limited. The effective tax rate rose to 32.4% from 27.2% in the previous year, also partially constraining Net Income growth. Overall, the increase in Net Income was driven not by improvement in the underlying business but substantially by contributions from Non-operating and extraordinary gains and losses, which is an important consideration in evaluating earnings quality.

Earnings Forecast and Guidance

Progress against the Full-Year plan was 24.3% for Revenue (¥515.1B/¥2,120.0B), 29.9% for Operating Income (¥38.5B/¥129.0B), 33.6% for Ordinary Income (¥50.0B/¥149.0B), and 31.4% for Net Income (¥37.1B/¥118.0B, attributable to owners of the parent). Compared with standard quarterly progress of 25%, Operating Income, Ordinary Income, and Net Income are tracking ahead of schedule. The company announced today revisions to its earnings and dividend forecasts. The Full-Year Ordinary Income forecast calls for a decline of -14.9% from the previous year, which differs from the Q1 Ordinary Income YoY decline of -2.4%. This may indicate that the effects of reversals in Non-operating and extraordinary factors, or changes in the profitability of the core business, have been incorporated for the second half of the year. While Revenue progress is closest to the standard level, it is necessary to consider that temporary factors contributed to the early progress in profit.

Shareholder Returns

The company announced today that it revised its Full-Year dividend forecast to ¥62 (¥20 in the previous year). The Payout Ratio against the company’s forecast EPS of ¥82.37 is 75.3%, representing a relatively high level of shareholder returns. With an Equity Ratio of 75.6%, a Current Ratio of 582.7%, and Cash and Deposits of ¥607.5B, the company has substantial financial capacity to fund dividends. However, if the upward trend in working capital continues, the relationship between underlying Operating Cash Flow generation and the dividend level will need to be monitored in future disclosures.

Risk Factors

1. Business Concentration Risk: The steel sheet-related business accounts for 95.1% of revenue (¥489.7B) and the majority of Operating Income, creating a structure in which fluctuations in steel market conditions and construction and housing-related demand can directly affect overall performance.

2. Working Capital and Collection Risk: Accounts Receivable increased to ¥439.7B (+8.9% year on year), and the approximate cash conversion cycle lengthened from approximately 84 days in the previous year to approximately 93 days, potentially indicating a slower pace of cash conversion from earnings.

3. Dependence on Temporary Earnings Factors: Extraordinary gains of ¥0.98B, including ¥0.94B in gains on the sale of fixed assets, accounted for approximately 26% of Net Income attributable to owners of the parent of ¥37.1B, and their repeatability from the next period onward is limited.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

The Operating Margin is slightly below the industry median, while the Net Profit Margin exceeds the industry median, partly due to the contribution of temporary gains.

Growth and Capital Efficiency

The Revenue Growth Rate is below both the industry median and the lower bound of the IQR, positioning the company in a revenue-decline phase relative to its industry peers.

※Source: Company compilation

Key Points from the Earnings Results

1. While the Operating Margin declined to 7.5% (-0.4pt year on year), Net Income attributable to owners of the parent increased to ¥37.1B (YoY +9.1%) due to contributions from Non-operating Income and extraordinary gains. The fact that the increase in Net Income was driven by temporary factors rather than improvement in the underlying business is an important observation for understanding the quality of the earnings structure.

2. Full-Year progress rates were 29.9% for Operating Income, 33.6% for Ordinary Income, and 31.4% for Net Income, ahead of the standard level of 25%. However, the Full-Year Ordinary Income forecast calls for a decline of YoY -14.9%, making the reversal of factors in the second half and the profitability trends of the core business key to achieving the plan.

3. While financial soundness remains high, with an Equity Ratio of 75.6% and a Current Ratio of 582.7%, the increase in Accounts Receivable and lengthening of the cash conversion cycle require monitoring from a working capital efficiency perspective.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation for any specific investment action.

Sensitivity: ¥1,345–¥1,419 at ±1% in the cost of equity capital, and ¥1,377–¥1,384 at ±0.1 in ω.

Notes:

• Because forecast ROE is below the cost of equity capital, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference from the Full-Year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It is not a recommendation to invest 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 responsibility, and you should consult a professional as necessary.

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