RISO KAGAKU CORPORATION FY2027 Q1 Earnings Report

Quick View

Executive Summary

Q1 of FY2026 ended March 2026 recorded increases in both revenue and profit; however, it should be noted that the substantial growth in net income was largely attributable to the one-time gain on the sale of investment securities. Revenue was ¥206.0B (+12.7% YoY), with the core Printing Equipment-Related Business accounting for 97.8% of total revenue and remaining solid. Operating income was ¥15.9B (+7.6%), while the operating margin declined to 7.7% from 8.1% a year earlier, as SG&A expenses increased by +13.0%, outpacing gross profit growth. Ordinary income was ¥17.2B (+12.3%), while profit before tax expanded to ¥22.5B due to the recognition of a ¥5.3B gain on the sale of investment securities. Net income attributable to owners of the parent was ¥13.7B (+54.3%).

Factors Affecting Earnings

【Revenue】Revenue was ¥206.0B, representing a +12.7% YoY increase. The core Printing Equipment-Related Business accounted for 97.8% of revenue (¥201.5B, +12.7%) and drove overall performance. The Real Estate Business generated ¥2.8B (+10.3%), while Other Businesses generated ¥1.7B (+18.3%); both businesses recorded revenue growth despite their small scale.

【Profit and Loss】Operating income increased to ¥15.9B (+7.6%), but the operating margin declined to 7.7% from 8.1% a year earlier. While the gross margin was broadly flat at 62.2% (62.5% in the previous year), SG&A expenses increased to ¥112.3B (+13.0%), outpacing revenue growth and becoming the primary factor behind the decline in the operating margin. Ordinary income was ¥17.2B (+12.3%), supported by non-operating income of ¥2.5B, including a ¥0.8B foreign exchange gain and ¥0.7B in dividend income. Profit before tax expanded to ¥22.5B (+57.0%) due to the recognition of a ¥5.3B gain on the sale of investment securities, a one-time factor, which accounted for 23.4% of profit before tax. The effective tax rate was somewhat high at 38.4% (+7.5pt YoY), and net income attributable to owners of the parent was ¥13.7B (+54.3%), with a net profit margin of 6.7% (an improvement of +1.8pt from 4.9% in the previous year). In conclusion, although the current results showed increases in both revenue and profit, a considerable portion of the profit growth depended on a one-time extraordinary gain.

Segment Analysis

The Printing Equipment-Related Business generated revenue of ¥201.5B (+12.7%) and operating income of ¥15.4B (+9.2%), accounting for the majority of company-wide profit. However, its profit margin declined to 7.66% from 7.90% a year earlier, a decrease of 0.24pt, indicating a slight softening in the profitability of the core business. The Real Estate Business generated revenue of ¥2.8B (+10.3%) and operating income of ¥1.8B (+13.1%), maintaining a high profit margin of 65.1% (an improvement of +1.6pt from 63.5% in the previous year). Although small in scale, it remains a stable source of earnings. Other Businesses, including Print Create and Digital Communications, generated revenue of ¥1.7B (+18.3%) but posted an operating loss of ¥1.4B, with the deficit widening from a loss of ¥0.98B in the previous year. Its profit margin was negative 81.5%, making it a dilutive factor for company-wide profitability.

Key Financial Indicators

【Profitability】The operating margin was 7.7%, down 0.4pt from 8.1% in the previous year. The gross margin was broadly flat at 62.2% (62.5% in the previous year), while the SG&A ratio edged up to 54.5% (54.4% in the previous year). The net profit margin, based on net income attributable to owners of the parent, improved to 6.7% from 4.9%, an increase of +1.8pt, although it benefited significantly from the ¥5.3B gain on the sale of investment securities.【Cash Flow Quality】The extraordinary gain of ¥5.3B accounted for 23.4% of profit before tax of ¥22.5B, creating a divergence from recurring earnings power. Comprehensive income was ¥20.1B (¥20.0B attributable to owners of the parent), exceeding net income of ¥13.7B, with foreign currency translation adjustments of +¥3.3B and valuation differences on available-for-sale securities of +¥4.1B contributing to the difference.【Investment Efficiency】ROE was 2.1%, while the level of net income remained limited relative to total assets of ¥978.8B.【Financial Soundness】The equity ratio was 68.9%, down 3.4pt from 72.3% in the previous year. Interest-bearing debt totaled approximately ¥84.9B, comprising short-term borrowings of ¥49.0B, current portion of long-term borrowings of ¥7.6B, and long-term borrowings of ¥28.2B, compared with approximately ¥59.7B in the previous year. Against this, cash and deposits were ¥163.5B, securing net cash of approximately ¥78.6B, down from approximately ¥95.3B in the previous year.

Cash Flow Analysis

As cash flow statement items have not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥163.5B, an increase of +¥8.5B from ¥154.9B in the previous year. During this period, short-term borrowings increased by +¥13.7B (+38.9%), while long-term borrowings increased by +¥11.3B (+66.5%), suggesting that funds were secured through external financing. The funds raised appear to have been allocated to goodwill recognized in connection with the acquisition of two Philippine sales subsidiaries (+¥34.6B, +196.2%) and an increase in inventories (+¥19.5B, +26.4%). Accounts payable also increased by +¥9.1B (+30.8%), consistent with the expansion of procurement and production activities. Overall, M&A and inventory accumulation were the primary sources of funding demand, with borrowing-based financing and an increase in cash and deposits occurring concurrently.

Quality of Earnings

Operating income, which reflects recurring earnings power, was ¥15.9B. Net non-operating income was +¥1.4B, comprising non-operating income of ¥2.5B—including a ¥0.8B foreign exchange gain and ¥0.7B in dividend income—and non-operating expenses of ¥1.1B. Non-operating income represented approximately 1.2% of revenue, indicating no excessive dependence. However, ¥5.3B, or 23.4%, of profit before tax of ¥22.5B was attributable to the one-time gain on the sale of investment securities and therefore should be evaluated separately from recurring earnings. The effective tax rate was somewhat high at 38.4%, and a considerable portion of net income of ¥13.7B after tax was derived from non-recurring items. Comprehensive income of ¥20.1B exceeded net income of ¥13.7B, with the primary drivers of the difference being foreign currency translation adjustments of +¥3.3B and valuation differences on securities of +¥4.1B. These items are also subject to market fluctuations. From the next quarter onward, the key focus will be the company’s ability to maintain recurring earnings after the extraordinary gain has fallen away.

Earnings Forecast and Guidance

Progress against the full-year plan was 25.5% for revenue (¥205.98B/¥809.0B), 32.4% for operating income (¥15.88B/¥49.0B), 33.8% for ordinary income (¥17.23B/¥51.0B), and 33.4% for net income (¥13.71B/¥41.0B), representing a pace above the simple quarterly allocation of 25%. However, the full-year forecasts for operating income and ordinary income call for declines of -4.1% and -13.1% YoY, respectively. Given that Q1 net income included the one-time gain on the sale of investment securities, caution is warranted in interpreting the high progress rates as a straightforward front-loading of core earnings. No revisions have been made to the earnings forecasts.

Shareholder Returns

The full-year dividend forecast remains ¥50 per share, with no revisions to the forecast. The payout ratio based on forecast EPS of ¥65.18 is 76.7% (¥50/¥65.18), a somewhat high level. Although the company has secured cash and deposits of ¥163.5B and net cash of approximately ¥78.6B, providing a certain degree of financial capacity to pay dividends, the sustainability of dividends depends on the accumulation of core earnings power, given that a portion of current-period net income relies on the one-time gain on the sale of investment securities.

Risk Factors

1. Business concentration risk: The Printing Equipment-Related Business accounts for 97.8% of revenue (¥201.5B), indicating a high degree of dependence on a single segment. Demand trends, price competition, and changes in the consumables mix in this business directly affect company-wide performance.

2. Working capital efficiency: Inventories increased to ¥93.5B (+26.4% YoY), requiring monitoring of the cash tied up in inventory accumulation and the risk of inventory write-downs. Accounts payable also increased by +30.8%, making the balance between the expansion of procurement and production activities and inventory levels a key focus going forward.

3. Increase in goodwill and borrowings associated with M&A: Goodwill increased to ¥52.2B (+196.2% from ¥17.6B in the previous year) following the acquisition of two Philippine sales subsidiaries. The purchase price allocation remains provisional, and may change as it is finalized. In addition, short-term and long-term borrowings increased by +38.9% and +66.5%, respectively, while the equity ratio declined to 68.9% from 72.3% in the previous year.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability is slightly below the industry median, suggesting a structure in which the SG&A burden is somewhat heavy relative to the gross margin.

Growth and Capital Efficiency

The revenue growth rate is at the upper end of the industry range, and the pace of revenue growth centered on the Printing Equipment-Related Business is relatively high compared with peers.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The growth in net income attributable to owners of the parent (+54.3%) depended heavily on the one-time gain on the sale of investment securities of ¥5.3B, which accounted for 23.4% of profit before tax. It therefore needs to be distinguished from growth in recurring earnings power.

2. The operating margin declined to 7.7% from 8.1% in the previous year, a decrease of 0.4pt, as SG&A expense growth (+13.0%) outpaced gross profit growth. The margin was also below the industry median of 8.8%, making the company’s ability to absorb costs a key focus going forward.

3. Following the acquisition of two Philippine sales subsidiaries, goodwill increased +196.2% YoY to ¥52.2B, while intangible assets increased +69.0% to ¥83.3B. The purchase price allocation remains provisional, and attention will focus on the impact on profit and loss from its finalization and the potential emergence of goodwill amortization.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from 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 price or a recommendation of any specific investment action.

Sensitivity: ¥959–¥1,013 at ±1% for the cost of equity, and ¥983–¥987 at ±0.1 for ω.

Notes:

• Since forecast ROE is below the cost of equity, 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).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee the future share price)

---

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. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

---End of Report---