HOSHIZAKI CORPORATION FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥365.43B
• Operating Income: ¥46.29B
• Net Income: ¥30.68B
• EPS: ¥238.02

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Hoshizaki (6465) reported solid FY2025 Q3 (cumulative) results with resilient topline and earnings growth despite signs of softer operating leverage. Revenue was ¥365.4bn, up 10.3% YoY, while operating income rose 8.7% to ¥46.3bn and net income grew 10.8% to ¥33.7bn, indicating broadly healthy demand and disciplined cost control. Gross margin is reported at 34.8%, and operating margin stands at 12.7%, suggesting solid pricing power and scale benefits in core segments. Net margin of 9.21% is consistent with a capital-light profile and high-quality franchise in food service equipment. DuPont decomposition indicates ROE of 8.66%, driven by a 9.21% net margin, 0.654x asset turnover, and modest financial leverage of 1.44x. Operating leverage was slightly negative this period (operating income growth +8.7% lagging revenue +10.3%), implying incremental SG&A or input cost pressures, though overall profitability remains robust. Interest coverage is strong at 40.4x, reflecting a conservative balance sheet and ample earnings buffer versus financing costs. Liquidity is very strong with a current ratio of 3.0x and a quick ratio of 2.77x, and the liabilities-to-equity ratio is low at 0.42x, underscoring low balance sheet risk. The equity ratio disclosed as 0.0% is not representative; based on provided assets and equity, equity-to-assets is approximately 69.6%, indicating a highly solvent position. Effective tax rate appears to be about 28.5% based on income tax and ordinary income, consistent with Japan’s statutory range. Cash flow statements and D&A were not disclosed in this dataset, limiting visibility into earnings quality and investment intensity; zeros should be interpreted as not reported. Dividend data (DPS, payout, FCF coverage) are also not disclosed here, so dividend sustainability assessment relies on earnings capacity and balance sheet strength rather than cash flow data. EPS is ¥238.02; back-solving suggests roughly 141–142 million shares outstanding, subject to rounding and potential treasury share effects. Inventory of ¥31.0bn and strong working capital of ¥260.4bn support near-term operating flexibility. Overall, fundamentals point to a well-capitalized, profitable business with steady growth, albeit with some near-term margin headwinds and limited disclosure on cash flows in this extract. We base the analysis strictly on the available non-zero data and derived metrics and acknowledge unreported items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 9.21%
• asset_turnover: 0.654x
• financial_leverage: 1.44x (Assets/Equity)
• calculated_ROE: 8.66%
• commentary: ROE is primarily margin-driven, with moderate asset turnover and conservative leverage. The 8.66% ROE aligns with a high-quality franchise but leaves room for improvement via asset efficiency or incremental margins. margin_quality:
• gross_margin: 34.8%
• operating_margin: 12.7% (46.3bn / 365.4bn)
• ordinary_income_margin: 13.4% (49.1bn / 365.4bn)
• net_margin: 9.21%
• tax_rate_estimate: ≈28.5% (14.0bn / 49.1bn)
• insights: Gross and operating margins indicate solid pricing power and scale. The ordinary margin above operating margin suggests positive non-operating contributions net of interest. The tax rate is in line with statutory levels. operating_leverage: Revenue +10.3% YoY vs operating income +8.7% YoY implies modest negative operating leverage (~-1.6pp spread), likely reflecting input cost normalization, wage inflation, or strategic SG&A investments. Nonetheless, net margin expanded slightly YoY due to favorable non-operating items and a normalized tax rate.

Growth Assessment

revenue_sustainability: Topline +10.3% YoY to ¥365.4bn suggests sustained demand in core food service equipment and aftermarket. Mix and pricing likely contributed, though exact drivers are not disclosed here. profit_quality: Operating income +8.7% to ¥46.3bn lagged sales growth, signaling some cost headwinds; however, ordinary and net income performance indicates resilient underlying profitability. outlook: With a strong balance sheet and high interest coverage, the company is positioned to continue investing in product, service network, and overseas growth. Near-term margins may face pressure from cost inflation and FX, but structural demand for replacement cycles and hygiene/equipment upgrades supports medium-term growth. Guidance and order/backlog data would refine the outlook but are not provided in this dataset.

Financial Health

liquidity:

• current_ratio: 3.00x
• quick_ratio: 2.77x
• working_capital: ¥260.4bn
• commentary: Ample liquidity provides cushion for inventory procurement, seasonal swings, and capex needs. solvency:
• equity_ratio_derived: ≈69.6% (Equity 388.6bn / Assets 558.9bn)
• debt_to_equity: 0.42x (Total liabilities / Equity)
• interest_coverage: 40.4x (Operating income / Interest expense)
• commentary: Low leverage and high interest coverage imply low refinancing risk and strong solvency. capital_structure: Balance sheet remains conservative, supporting flexibility for M&A or shareholder returns without compromising credit strength.

Cash Flow Quality

earnings_quality: OCF is not disclosed in this extract. With net income at ¥33.7bn and strong interest coverage, earnings appear backed by core operations, but cash conversion cannot be verified here. FCF_analysis: Capex/D&A not disclosed; FCF cannot be computed. Historically for the sector, maintenance capex is moderate relative to EBITDA, but we avoid assumptions without disclosed figures. working_capital: Inventories of ¥31.0bn and strong current asset base suggest adequate buffer; monitoring inventory turnover and receivables days is important to confirm cash conversion, but period metrics are not provided.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are not disclosed in this dataset (zeros denote unreported). Based on current earnings of ¥33.7bn and conservative leverage, capacity to fund dividends appears strong, but exact payout cannot be assessed. FCF_coverage: OCF and capex not disclosed; therefore, FCF coverage of dividends cannot be calculated. Historical stability of cash flows and low leverage would typically support coverage, subject to confirmation. policy_outlook: Absent disclosed policy in this extract, we assume a balanced stance between investment and shareholder returns, enabled by the strong balance sheet. Confirmation from company guidance is needed.

Risk Assessment

Business Risks:

• End-market cyclicality in food service and hospitality impacting equipment demand and replacement cycles
• Raw material and component cost volatility affecting gross margin
• FX fluctuations (overseas revenue and procurement) influencing pricing and costs
• Competitive pricing pressure in commercial kitchen and refrigeration equipment
• Supply chain and logistics constraints affecting delivery lead times and inventory levels

Financial Risks:

• Potential working capital build (receivables/inventory) could dampen cash conversion if demand slows
• Interest rate and FX impacts on non-operating income and financing costs
• M&A execution risk if deploying balance sheet for acquisitions

Key Concerns:

• Softer operating leverage in FY2025 Q3 despite strong sales growth
• Limited visibility on cash flows and capex due to non-disclosure in this extract
• Gross margin sustainability amid input cost and wage inflation

Investment Implications

Key Takeaways:

• Solid topline growth (+10.3% YoY) with resilient profitability (operating margin 12.7%)
• ROE of 8.66% driven mainly by healthy margins and conservative leverage
• Strong liquidity (current ratio 3.0x, quick ratio 2.77x) and low balance sheet risk (liabilities/equity 0.42x)
• Operating leverage slightly negative; monitor SG&A discipline and cost pass-through
• Cash flow, D&A, and dividend details not disclosed here; limits assessment of earnings-to-cash conversion and payout sustainability

Metrics to Watch:

• Gross and operating margin trajectory vs cost inflation and pricing actions
• Order intake, backlog, and regional sales mix for demand visibility
• Inventory and receivables turnover to gauge cash conversion
• Capex and D&A to assess investment intensity and FCF
• FX exposure and hedging effectiveness on ordinary income

Relative Positioning: Within Japanese capital goods/food service equipment peers, Hoshizaki exhibits above-average margins, strong liquidity, and conservative leverage, positioning it defensively through cycles while sustaining steady growth.

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