YAMADA (6392) FY2026 Q3 Earnings Report

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Executive Summary

The trend of revenue and operating income growth continued, but net income declined due to the recognition of an extraordinary loss, which was the key point of this earnings release. Revenue was ¥11.85B (+7.2% YoY), Operating Income was ¥1.88B (+9.9%), and Ordinary Income was ¥1.91B (+8.6%), securing growth at each stage. Meanwhile, Net Income attributable to owners of the parent was ¥1.18B (-7.1% YoY), with the recognition of an extraordinary loss of ¥0.16B and an increase in foreign exchange losses weighing on bottom-line profit. The primary factor behind the increase in operating income was cost efficiency, as the increase in SG&A expenses (+5.8%) remained below revenue growth (+7.2%).

Factors Affecting Results

【Revenue】Revenue increased 7.2% YoY to ¥11.85B. By segment, the Industrial field led growth at ¥7.86B (+9.5% YoY), while by region, overseas locations supported growth, with the United States at ¥4.82B (+7.5%) and the Netherlands at ¥1.30B (+22.3%). Japan grew modestly to ¥4.697B (+2.2%), indicating differences in growth rates between regions.

【Profit and Loss】Operating Income increased 9.9% YoY to ¥1.88B, and the Operating Margin improved to 15.8% from 15.4% in the same period of the previous year. The gross margin was broadly flat at 44.5%, while restrained SG&A growth (+5.8%) was the primary driver of the increase in profit. Ordinary Income also increased 8.6% YoY to ¥1.91B; however, against extraordinary income of ¥0.02B, an extraordinary loss of ¥0.16B was recorded, resulting in a net loss factor of ¥0.14B. In addition, foreign exchange losses expanded to ¥0.06B from ¥0.04B in the previous year, causing Net Income to decline to ¥1.18B (-7.1% YoY). Thus, despite revenue and profit growth at the operating and ordinary income levels, final profit declined due to extraordinary items and foreign exchange factors.

Segment Analysis

Segment profit was largest in the United States at ¥0.86B, with a profit margin of 17.6%, accounting for approximately 49% of total segment profit. Thailand had the highest profitability, with a profit margin of 23.3%, but its scale was small at ¥0.26B. The Netherlands recorded revenue of ¥1.34B and profit of ¥0.20B, for a profit margin of 14.7%, with profit increasing significantly compared with the same period of the previous year. China recorded revenue of ¥0.77B and profit of ¥0.08B, for a profit margin of 10.8%. Japan was the largest segment by revenue at ¥7.84B, but had the lowest profit margin at 6.9%, with profit declining YoY. Improving domestic profitability remains an issue for enhancing consolidated profitability.

Key Financial Indicators

【Profitability】The Operating Margin was 15.8%, improving from 15.4% in the same period of the previous year, while the Net Profit Margin declined to 9.9% from 11.5%. ROE (annualized) was 8.8%.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥1.82B, approximately 1.55 times Net Income of ¥1.18B, indicating favorable cash conversion of earnings.【Investment Efficiency】Capital expenditures were ¥1.38B, approximately 2.7 times depreciation and amortization of ¥0.52B, indicating a phase of expansionary investment accompanied by an increase in construction in progress. Free Cash Flow was ¥0.53B.【Financial Soundness】The Equity Ratio was 87.8%, cash and deposits were ¥4.05B, and interest-bearing debt was limited, indicating a conservative financial structure.

Cash Flow Analysis

OCF increased 62.5% YoY to ¥1.82B, exceeding Net Income of ¥1.18B and supporting the cash conversion of earnings. Investing Cash Flow was an outflow of ¥1.29B, primarily attributable to capital expenditures of ¥1.38B, with the scale of investment expanding from the previous year. Financing Cash Flow was an outflow of ¥0.73B, mainly reflecting dividend payments and related items. Free Cash Flow, calculated as OCF less capital expenditures, remained positive at ¥0.53B; however, the scale of surplus funds declined compared with the previous period due to expanded investment. The ¥0.22B increase in inventories was a factor reducing OCF, and the funds tied up in inventory warrant attention from a cash-efficiency perspective.

Earnings Quality

Operating Income and Ordinary Income reflect recurring earnings improvement driven by revenue growth and SG&A efficiency, whereas the decline in Net Income was largely attributable to non-recurring and market-related factors, namely the extraordinary loss of ¥0.16B and foreign exchange loss of ¥0.06B. Non-operating income consisted of relatively small items such as dividend income and interest income and did not materially affect earnings quality. Comprehensive Income was ¥1.53B, exceeding Net Income of ¥1.18B, with other comprehensive income, including a foreign currency translation adjustment of ¥0.32B, providing an additional contribution. This divergence resulted from translation differences related to the assets and liabilities of overseas businesses and should not be interpreted as an indicator of the businesses’ underlying earning power. As OCF exceeded Net Income, accruals—the difference between accounting profit and cash—were small, and earnings quality can be considered generally favorable.

Earnings Forecast and Guidance

Progress against the Full-Year forecast was 78.5% for Revenue, 93.8% for Operating Income, and 91.0% for Ordinary Income. Progress for Operating Income and Ordinary Income was therefore substantially above the standard 75% level. Progress toward the Full-Year forecast of ¥1.50B in Net Income attributable to owners of the parent was 78.3%, which was not as significantly ahead of schedule as at the operating income level. Based on the company’s forecasts, the Operating Income required in Q4 is approximately ¥0.13B, while required Revenue is approximately ¥3.25B, representing a modest plan compared with the preceding three quarters. Possible background factors include conservative planning assumptions and the concentration of investments and expenses in Q4.

Shareholder Returns

The Q2 dividend was ¥100 per share, and the Full-Year dividend forecast is ¥210. Based on forecast Full-Year Net Income of ¥1.50B, the forecast Payout Ratio is approximately 33.6%, within the range below 60% generally considered sustainable. No cash flow related to share repurchases was disclosed; accordingly, this analysis evaluates only the Payout Ratio. Considering cash and deposits of ¥4.05B, the low level of interest-bearing debt, and the stability of OCF, the company has substantial financial capacity to support the current dividend level.

Risk Factors

1. Inventory and working capital efficiency risk: Inventories were ¥3.30B, increasing 13.6% YoY, faster than revenue growth of 7.2%. In the event of demand fluctuations, risks including valuation losses, particularly on finished goods inventories, and production adjustments are anticipated.

2. Variations in regional profitability: The United States accounts for approximately 49% of segment profit, while Japan, despite having the largest revenue, has a low profit margin of 6.9% and recorded a YoY decline in profit. Dependence on profits from specific regions may cause fluctuations in consolidated profitability.

3. Volatility in extraordinary items and foreign exchange: During the current period, an extraordinary loss of ¥0.16B and a foreign exchange loss of ¥0.06B weighed on Net Income. If these factors recur, the structure in which improvements at the operating level are less likely to be reflected in final profit may continue.

Industry Benchmark (Reference; Company Analysis)

Profitability and Returns

Both metrics significantly exceeded the industry median, placing profitability in the upper tier of the industry.

Growth and Capital Efficiency

The Revenue Growth Rate also exceeded the industry median, indicating relatively high growth within the industry.

※Source: Company analysis

Key Earnings Highlights

1. The improvement in the Operating Margin to 15.8% from 15.4% in the same period of the previous year reflects cost efficiency resulting from restrained SG&A growth and indicates that fixed-cost absorption is progressing alongside revenue growth.

2. OCF reached 1.55 times Net Income, indicating that earnings for the current period were substantive earnings accompanied by cash generation. Meanwhile, capital expenditures expanded to 2.7 times depreciation and amortization, making the recovery of investments a key determinant of future cash-generation capacity.

3. The decline in the Japan segment’s profit margin and the increase in inventories are structural points requiring review when assessing the sustainability of improvements in consolidated earnings.

Theoretical Share Price (Reference Value)

Sensitivity: ¥6,866–¥7,260 at ±1% for the Cost of Equity, and ¥7,047–¥7,066 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the Cost of Equity, the theoretical value is below Book Value per Share.
• Net assets as of the quarter-end 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 (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from 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 earnings release 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, in consultation with a professional adviser as necessary.

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