| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥583.4B | ¥525.1B | +11.1% |
| Operating Income | ¥36.9B | ¥35.1B | +5.1% |
| Profit Before Tax | ¥57.8B | ¥46.4B | +24.5% |
| Net Income | ¥45.8B | ¥31.4B | +46.1% |
| ROE | 1.9% | 1.3% | - |
Revenue growth continued, but growth at the operating level was limited. The key point of this earnings report is that the significant increase in net income was driven primarily by non-operating factors, such as finance income and share of profit of investments accounted for using the equity method. Revenue was ¥583.4B (+11.1% YoY), operating income was ¥36.9B (+5.1%), profit before tax was ¥57.8B (+24.5%), and net income was ¥45.8B (+46.1%). The operating margin declined to 6.3% from 6.7% in the previous year, as the increase in SG&A expenses (33.2% of revenue) offset the benefit of improved gross profit, while higher finance income and an increase in share of profit of investments accounted for using the equity method boosted net income.
【Revenue】Revenue was ¥583.4B, securing double-digit growth of +11.1% YoY. By segment, Japan at ¥297.9B (+11.5%, 51.1% of total) and Americas at ¥224.2B (+12.2%, 38.4% of total) led growth, while AsiaAndOthers was relatively sluggish at ¥61.2B (+5.6%, 10.5% of total).
【Profit and Loss】Operating income was ¥36.9B (+5.1%). Although the gross margin was maintained at 38.7% (nearly flat from 39.1% in the previous year), SG&A expenses increased to ¥193.6B (33.2% of revenue, versus 32.3% in the previous year), causing the operating margin to decline to 6.3%, down 36bp from 6.7% in the previous year. Meanwhile, increases in finance income to ¥7.0B (from ¥4.4B in the previous year) and share of profit of investments accounted for using the equity method to ¥18.5B (from ¥13.0B) resulted in substantial increases in profit before tax to ¥57.8B (+24.5%) and net income to ¥45.8B (+46.1%). By segment profit, Japan made the largest contribution at ¥3.24B (+10.2%, 10.9% margin), while Americas recorded ¥14.9B (-0.7%, 6.7% margin) and AsiaAndOthers recorded ¥2.1B (-22.8%, 3.5% margin), indicating sluggish profitability in the overseas segments. Overall, the Company achieved higher revenue and profit, but the operating income growth rate was significantly below the net income growth rate, indicating that the earnings results were highly dependent on non-operating factors.
The Japan segment maintained the highest profitability among the three segments, with revenue of ¥297.9B (+11.5%), operating income of ¥32.4B (+10.2%), and a 10.9% margin. It is the core business, accounting for approximately 66% of total operating income (total segment operating income of ¥49.3B). Americas continued to generate revenue growth at ¥224.2B (+12.2%), but operating income declined to ¥14.9B (-0.7%), leaving the margin at 6.7%; revenue growth has not translated into profit growth. AsiaAndOthers recorded revenue of ¥61.2B (+5.6%) but a substantial decline in operating income to ¥2.1B (-22.8%), with its 3.5% margin the lowest among the three segments. The margin gap between regions is widening, and improving the profitability of the overseas businesses, particularly in Asia, is a Company-wide challenge for raising the overall profit margin.
【Profitability】The operating margin declined to 6.3% from 6.7% in the previous year, while the net profit margin improved to 7.9% from 6.0%. This difference reflects the contribution of non-operating factors, such as finance income and share of profit of investments accounted for using the equity method, which boosted the net profit margin, while profitability at the operating level remained sluggish.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥53.4B, or 1.17 times net income of ¥45.8B, indicating that earnings were supported by cash generation and were of good quality. However, operating cash flow before changes in working capital was ¥88.0B, while an increase in inventories (-¥67.8B) and a decrease in trade payables (-¥29.6B) weighed on cash flow through working capital.【Investment Efficiency】ROE was 1.9% (quarterly figure, before annualization), indicating room for improvement in capital efficiency. Share of profit of investments accounted for using the equity method represented approximately 32% of profit before tax of ¥57.8B, creating a structure with high sensitivity to fluctuations in the performance of investees.【Financial Soundness】The equity ratio was 52.1%, improving from 51.0% in the previous year, and the capital structure is conservative. Cash and cash equivalents were ample at ¥669.0B, indicating sufficient short-term funding capacity.
OCF declined 31.9% YoY to ¥53.4B, but remained above net income of ¥45.8B, indicating that the conversion of earnings into cash remained sound. The primary causes of the decline were deterioration in working capital due to an increase in inventories (-¥67.8B) and a decrease in trade payables (-¥29.6B). On a pre-working-capital-change basis, cash generation remained broadly at the previous-year level at ¥88.0B. Investing Cash Flow was a modest -¥1.3B, while capital expenditures were ¥13.5B, nearly flat from ¥14.3B in the previous year. Financing Cash Flow was -¥79.3B, with dividend payments of ¥48.5B and repayment of long-term borrowings of ¥20.7B representing the primary cash outflows. As a result, free cash flow (OCF + investing cash flow) was ¥52.1B, slightly below the combined ¥62.0B of dividends and capital expenditures, with the difference funded by cash on hand. Cash and cash equivalents stood at ¥669.0B at period-end, maintaining a high level while absorbing the increase in working capital.
The earnings structure for the current period consisted of operating income of ¥36.9B from recurring business activities, supplemented by non-operating finance income of ¥7.0B and share of profit of investments accounted for using the equity method of ¥18.5B, which significantly boosted net income. Other income of ¥5.1B and other expenses of ¥0.4B were immaterial relative to revenue, and their impact as temporary factors was limited. Meanwhile, share of profit of investments accounted for using the equity method represented approximately 32% of profit before tax of ¥57.8B and is susceptible to the performance of investee companies and foreign exchange trends, creating a risk that changes in net income may diverge from operating fundamentals. OCF of ¥53.4B exceeded net income of ¥45.8B, indicating a small accrual gap (the difference between accounting profit and cash) and good earnings quality in terms of cash backing. However, the wide gap between operating income growth (+5.1%) and net income growth (+46.1%) indicates that earnings growth in the current period depended on non-operating factors. Whether this trend continues will depend on the future performance of investees accounted for using the equity method.
Progress against the full-year forecast was 20.5% for revenue, at ¥583.4B / ¥2845.0B; 11.3% for operating income, at ¥36.9B / ¥326.0B; and 16.1% for net income, at ¥45.8B / ¥285.0B. All were below the standard quarterly progress rate of 25%, with the delay in operating income progress particularly notable. The Company has not revised either its earnings forecast or dividend forecast, and appears to be maintaining a second-half-weighted plan premised on the penetration of price revisions and cost optimization in the second half. The trend in operating income, which is progressing most slowly, will be a key focus in upcoming quarters when assessing achievement of the full-year plan.
Dividend payments during Q1 were ¥48.5B, and no share repurchases were conducted. Based on the full-year dividend forecast of ¥74.00 per share and forecast EPS of ¥246.30, the payout ratio is approximately 30.0%, which is not excessive. Free cash flow of ¥52.1B exceeded dividend payments of ¥48.5B, indicating that the dividend for the quarter was largely covered by cash generated from operating activities. Given cash and cash equivalents of ¥669.0B and an equity ratio of 52.1%, the financial foundation supporting dividend sustainability remains intact.
High goodwill and intangible asset ratio: Goodwill and intangible assets total ¥125.42B, equivalent to 26.6% of total assets and 51.1% of equity attributable to owners of the parent. This is a level at which impairment risk could materialize if the business environment deteriorates in the future.
Deterioration in working capital efficiency: Inventories increased to ¥47.98B (+17.4% from ¥40.89B at the end of the previous fiscal year), reducing OCF by ¥6.78B. If inventory accumulation continues, cash generation may be affected by storage costs and pressure to revise prices.
Regional profitability gap: Americas (6.7% margin) and AsiaAndOthers (3.5% margin) recorded lower profit despite revenue growth, resulting in a high dependence on Japan (10.9% margin) for earnings. If overseas business profitability does not improve, the increase in the Company-wide profit margin will be constrained.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.3% | 8.7% (4.2%–14.2%) | -2.4pt |
| Net Profit Margin | 7.9% | 7.0% (3.2%–10.6%) | +0.8pt |
The operating margin is below the industry median, while the net profit margin exceeds the median due to the boost from non-operating factors.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.1% | 6.2% (-1.1%–14.6%) | +4.9pt |
The revenue growth rate is significantly above the industry median and is positioned in the upper range of the IQR.
※Source: Compiled by the Company
While revenue growth indicates high growth even within the industry, the operating margin is below the industry median. The high dependence of net income growth on non-operating factors, such as finance income and share of profit of investments accounted for using the equity method, is an important point to monitor when assessing earnings sustainability.
The increase in inventories and decrease in trade payables placed pressure on cash through working capital, resulting in OCF of -31.9% YoY. Inventory turnover trends will be a key focus in assessing future cash flow generation.
Progress against the full-year plan was below the standard progress rate of 25% for all three key metrics, with operating income particularly delayed at 11.3%. Achievement of the second-half-weighted plan will need to be monitored in upcoming quarters.
This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type, with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | 2,238円 |
| base | 2,316円 |
| bull | 2,396円 |
| Calculation Assumption | Value |
|---|---|
| Book Value Per Share (BPS) | 2,123円 |
| Adjusted Forecast EPS | 262.5円 |
| Cost of Equity r | 9.27%（10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 0.50%） |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 30.0% |
| Forecast EPS Confidence Adjustment | ×1.066（based on the Company’s historical track record of achieving its guidance） |
| Implied PBR / PER |
Sensitivity: 2,251円–2,385円 at cost of equity ±1%, and 2,311円–2,323円 at ω±0.1.
Notes:
（Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This figure does not forecast or guarantee future share prices）
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 available earnings data. Investment decisions should be made at your own discretion and, where necessary, after consulting with a professional advisor.
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| 1.09倍 / 8.8倍 |
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.