BCC Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.47B
• Operating Income: ¥-98M
• Net Income: ¥-73M
• EPS: ¥-66.23

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

BCC Co., Ltd. (73760) reported FY2025 Q4 (JGAAP, non-consolidated) results showing modest top-line growth but continued operating losses. Revenue grew 5.9% YoY to ¥1,467 million, while operating income remained a loss at ¥-98 million, essentially flat YoY, indicating limited operating leverage despite revenue expansion. Gross profit is disclosed at ¥533 million (36.3% margin), suggesting a mid-30s gross margin profile; however, the combination of reported revenue and cost of sales implies a higher gross profit, pointing to possible classification differences or rounding in disclosed line items. Ordinary loss narrowed slightly to ¥-92 million, implying positive net non-operating items of roughly ¥6 million (e.g., financial income/expenses and other non-operating gains). Net loss was ¥-73 million, translating to a net margin of -4.98% and a reported/Calculated ROE of -12.85% on an equity base of ¥568 million. Asset turnover is relatively strong at 1.44x, reflecting efficient utilization of the asset base to generate sales. Financial leverage (Assets/Equity) stands at 1.79x, moderate for a small-cap services-type profile and not indicative of high balance sheet risk. EBITDA was ¥-92 million with a margin of -6.3%, underscoring ongoing pressure at the operating level before depreciation. Liquidity is robust with a current ratio of 319% and quick ratio of 318%, supported by sizeable working capital of ¥542 million. Total liabilities are ¥268 million, resulting in a modest debt-to-equity ratio of 0.47x and indicating conservative solvency. Operating cash flow was ¥-94 million, broadly consistent with the net loss, and free cash flow was ¥-149 million after ¥-55 million investing cash outflows. Financing inflows of ¥171 million offset the negative FCF, likely through debt or equity funding, preserving balance sheet flexibility. Annual DPS is ¥0.00, appropriate given negative earnings and FCF, with payout ratio at 0%. Several line items including cash and cash equivalents, equity ratio, and share data are unreported in XBRL and should not be interpreted as zeros; this constrains per-share and capital efficiency analyses. Overall, BCC shows improving revenue momentum but has yet to translate growth into operating profitability and positive cash generation; liquidity and leverage are comfortable, providing runway for execution. Near-term focus should be on cost discipline, mix optimization to protect gross margin, and conversion of revenue growth into positive operating cash flow.

Profitability Analysis

ROE decomposition (DuPont): Net margin -4.98% x Asset turnover 1.441 x Financial leverage 1.79 = ROE -12.85%. The negative ROE is primarily driven by the negative net margin, while decent asset turnover and moderate leverage partially offset losses. Gross margin is reported at 36.3%, indicating reasonable value-add; however, the gap between revenue, cost of sales, and gross profit suggests possible classification or timing effects in disclosures. Operating margin is -6.7% (Operating income ¥-98m / Revenue ¥1,467m), indicating insufficient scale or elevated operating costs (e.g., SG&A) absorbing gross profit. EBITDA margin at -6.3% is slightly better than operating margin, reflecting low depreciation burden (¥5.9m), which also implies limited capital intensity. Ordinary income is less negative than operating income, suggesting small net non-operating gains or lower net interest burden; interest expense is modest at ¥0.45m, yielding a mechanically large negative interest coverage ratio (-219.7x) due to negative EBITDA rather than debt stress. Operating leverage remains unfavorable in the period: revenue grew 5.9% YoY but operating loss did not improve, implying that incremental gross profit was offset by cost growth. Margin quality hinges on sustaining gross margin while tightening SG&A; with the current cost structure, a low double-digit uplift in revenue may be needed to reach operating breakeven absent cost cuts.

Growth Assessment

Revenue growth of 5.9% YoY to ¥1,467m demonstrates some demand resilience, but profit growth is lacking as operating and net losses persisted. The growth appears organic and steady rather than volatile; however, without segment disclosure, sustainability across end-markets cannot be verified. Profit quality remains weak: negative operating income and EBITDA point to an under-absorbed cost base. Ordinary income outperforming operating income indicates some support from non-operating items, which is not a durable driver of earnings. For an improving outlook, the company must either expand gross profit faster than SG&A or reduce fixed costs to unlock operating leverage. With asset turnover at 1.44x, incremental sales could translate effectively if cost discipline improves. Near-term outlook hinges on execution in cost containment and pricing/mix to preserve margins; absent these, growth may not translate into positive earnings. The lack of cash balance disclosure limits assessment of commercial momentum via advance receipts or contract liabilities. Overall, growth is present but not yet of high quality given the cash burn and operating losses.

Financial Health

Liquidity: Current assets ¥790m vs current liabilities ¥248m yield a strong current ratio of 319% and quick ratio of 318%, supported by minimal inventories (¥3m) and sizable working capital (¥542m). Solvency: Total liabilities ¥268m vs equity ¥568m give a debt-to-equity ratio of 0.47x, indicating moderate leverage and comfortable solvency. Asset base totals ¥1,018m, and financial leverage (Assets/Equity) is 1.79x, not excessive. Interest expense is low at ¥0.45m, implying limited reliance on interest-bearing debt. While the equity ratio is unreported in XBRL (displayed as 0.0%), the balance sheet implies an equity ratio around 55.8% (Equity/Assets). Capital structure appears conservative, providing flexibility to absorb near-term losses. Data limitations: cash and cash equivalents are unreported (shown as 0), preventing direct evaluation of immediate liquidity buffer and net cash/debt position.

Cash Flow Quality

Earnings quality: Net loss of ¥-73m accompanied by operating cash flow of ¥-94m yields an OCF/NI ratio of 1.29 (both negative), indicating that cash outflow is somewhat larger than the accounting loss but broadly consistent. Free cash flow is ¥-149m (OCF ¥-94m + investing CF ¥-55m), reflecting continued investment amid operating cash burn. Working capital: With strong reported working capital (¥542m), part of the OCF shortfall may reflect increases in receivables or other current assets; detailed working-capital drivers are not disclosed. Depreciation is only ¥5.9m, so non-cash add-backs are limited; EBITDA closely tracks operating cash performance. Financing CF of ¥171m plugged the FCF deficit, implying reliance on external funding in the period; the low interest burden suggests incremental funding may have been equity-like or short-duration. Overall, cash flow quality is weak given negative OCF and FCF, but the gap to breakeven appears bridgeable if costs are moderated and revenue growth persists.

Dividend Sustainability

Annual DPS is ¥0.00 with a payout ratio of 0.0%, appropriate given negative earnings (¥-73m) and negative free cash flow (¥-149m). Free cash flow coverage of dividends is 0.00x due to suspension. Given the loss-making and cash-burning status, reinstatement would likely require sustained positive OCF and a return to operating profitability. The balance sheet is reasonably strong (D/E 0.47x, implied equity ratio ~56%), but deploying it for dividends would not be prudent without cash generation. Policy outlook: Expect a conservative stance focused on reinvestment and liquidity preservation until EBITDA and OCF turn positive; any future distributions would likely trail a period of demonstrated profitability.

Risk Assessment

Business Risks:

• Continued operating losses despite revenue growth, indicating weak operating leverage
• Potential gross margin pressure if pricing/mix deteriorates or input costs rise
• Execution risk in SG&A control and scaling to breakeven
• Dependence on non-operating items to narrow losses, which may be non-recurring
• Limited disclosure granularity (no segment detail), obscuring drivers of growth

Financial Risks:

• Negative operating and free cash flow requiring ongoing external financing
• Unreported cash balance constrains assessment of liquidity runway
• Potential working capital volatility impacting OCF
• Small absolute equity base increases sensitivity of ROE to earnings swings

Key Concerns:

• Sustained negative EBITDA and operating income
• Reliance on financing inflows (¥171m) to offset FCF deficit (¥-149m)
• Data reconciliation gap in gross profit vs. revenue and cost of sales disclosures

Investment Implications

Key Takeaways:

• Revenue up 5.9% YoY to ¥1,467m, but profitability remains negative
• ROE -12.85% driven by -4.98% net margin; asset turnover and leverage are acceptable
• EBITDA margin -6.3%; cost base needs recalibration for breakeven
• Strong liquidity (current ratio 319%) and moderate leverage (D/E 0.47x) provide runway
• OCF ¥-94m and FCF ¥-149m highlight ongoing cash burn; financing inflows bridged the gap
• DPS suspended, appropriately prioritizing balance sheet preservation

Metrics to Watch:

• Operating margin and EBITDA margin progression toward breakeven
• Gross margin stability and mix/pricing actions
• Quarterly OCF and working capital movements (receivables, payables)
• Revenue growth rate vs. SG&A growth to gauge operating leverage
• Ordinary income vs. operating income spread (quality and sustainability of non-operating gains)
• Cash and cash equivalents and net cash/debt once disclosed

Relative Positioning: Within small-cap Japan peers, BCC exhibits better-than-average balance sheet conservatism and asset efficiency (1.44x turnover) but lags on operating profitability and cash generation; near-term equity story hinges on converting top-line growth into margin and OCF improvement.

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
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