| Indicator | Current | Same period last year | YoY |
|---|---|---|---|
| Revenue | ¥45.5B | ¥51.0B | -10.9% |
| Operating Income | ¥-1.2B | ¥0.7B | - |
| Ordinary Income | ¥-1.0B | ¥1.3B | - |
| Net Income | ¥0.2B | ¥1.2B | -85.9% |
| ROE | 0.4% | 2.7% | - |
In the FY2025 non-consolidated results, Revenue was ¥45.5B (YoY -¥5.6B, -10.9%), Operating Loss was ¥1.2B (vs. Operating Income of ¥0.7B in the prior year), Ordinary Loss was ¥1.0B (vs. Ordinary Income of ¥1.3B in the prior year, a swing of -¥2.3B), and Net Income was ¥0.2B (YoY -¥1.0B, -85.9%). Despite the decline in revenue, SG&A expenses remained elevated at ¥14.3B, pushing the company into an operating loss. While Non-operating Income of ¥0.5B and Extraordinary Gains of ¥2.4B from the sale of investment securities and other items supported profits, Net Income fell sharply. Full-year guidance forecasts Revenue of ¥51.0B (+12.2%), Operating Income of ¥0.9B, Ordinary Income of ¥0.9B, and Net Income of ¥0.7B, implying a return to profitability.
[Profitability] ROE 0.4% (significantly down from an estimated 2.6% in the prior year), Operating Margin -2.6% (down 4.0pt from 1.4% in the prior year), Net Profit Margin 0.4% (down 2.0pt from 2.4% in the prior year). DuPont three-factor breakdown: Net Profit Margin 0.4%, Total Asset Turnover 0.68x, Financial Leverage 1.48x. With revenue down and SG&A at ¥14.3B remaining almost flat, fixed costs pressured profits. [Cash Quality] Operating Cash Flow (OCF) was ¥-4.8B, showing a large divergence from Net Income of ¥0.2B; the OCF/Net Income ratio was -28.4x, indicating serious issues in cash conversion of earnings. Cash and Deposits were ¥19.4B, Short-term Borrowings were ¥10.9B, yielding Cash/Short-term Liabilities coverage of 1.77x. Capital Expenditures (CAPEX) of ¥4.7B were 9.2x Depreciation of ¥0.5B, indicating an aggressive investment phase, but Free Cash Flow (FCF) was negative at ¥-7.9B. [Investment Efficiency] Total Asset Turnover was 0.68x (down from 0.84x in the prior year). While the CAPEX ratio is elevated, investment recovery has not yet been confirmed. [Financial Soundness] Equity Ratio was 67.4% (down 9.1pt from 76.5% in the prior year), Current Ratio 312.9%, and Quick Ratio 275.7%, indicating high liquidity. Debt-to-Equity Ratio was 0.48x, Interest-bearing Debt was ¥15.2B, reflecting a conservative capital structure; however, the Short-term Debt Ratio was high at 71.9%, requiring attention to refinancing risk. Interest Coverage was -16.2x, and Debt/EBITDA was -22.2x, both indicating a marked deterioration in debt-servicing capacity. The Effective Tax Rate of approximately 66% imposed a heavy tax burden that pressured profits.
Operating Cash Flow was ¥-4.8B, as the Operating Loss of ¥1.2B was compounded by a ¥1.5B increase in Accounts Receivable and other working capital movements, which strained funds. Inventories decreased by ¥1.5B, indicating progress in inventory reduction, while the ¥0.2B increase in Accounts Payable was limited, leaving issues in working capital management. Investing Cash Flow was ¥-3.1B, mainly due to CAPEX of ¥4.7B, partially offset by proceeds of ¥2.4B from the sale of Investment Securities. The balance of Investment Securities decreased by ¥2.2B from ¥7.1B in the prior year to ¥4.9B, with Extraordinary Gains recognized through sale gains. Free Cash Flow was a significant negative at ¥-7.9B, indicating weak cash generation. Financing Cash Flow was a ¥6.7B inflow, consisting of a ¥2.9B increase in Short-term Borrowings and ¥4.4B in Long-term Borrowings, covering Dividend Payments of ¥0.6B. Cash and Deposits decreased by ¥1.2B during the period to ¥19.4B, while coverage of short-term liabilities stood at 1.77x, indicating superficially adequate short-term liquidity. However, if negative OCF persists, concerns may arise regarding the sustainability of cash holdings.
Against an Ordinary Loss of ¥1.0B and an Operating Loss of ¥1.2B, Non-operating Income of ¥0.5B (equity in earnings of affiliates, interest and dividend income, etc.) less Non-operating Expenses of ¥0.3B (including interest expenses of ¥0.1B) provided a positive contribution of approximately ¥0.2B. Extraordinary Gains of ¥2.4B (gains on sale of investment securities and fixed assets) provided substantial support to the bottom line, enabling the company to secure Income Before Income Taxes of ¥0.5B. Non-operating Income accounted for 1.1% of Revenue, indicating limited recurring contribution. The ¥2.4B in Extraordinary Gains is a one-off factor and cannot be regarded as sustainable earnings. OCF of ¥-4.8B was far below Net Income of ¥0.2B, highlighting a pronounced gap between earnings and cash and a low quality of earnings. The ¥1.5B increase in Accounts Receivable and working capital movements expanded accruals; the timing gap between revenue recognition and cash collection contributed to the deterioration in OCF.
[Position within the Industry] (Reference information; In-house research) The company’s Operating Margin of -2.6% has deteriorated significantly from its past results (1.4% in the prior year), underscoring the urgency of structural profitability improvements. In this industry, many companies exhibit high economic cyclicality and a high fixed-cost component in SG&A, making margin deterioration likely in revenue downturns. The operating loss in these results was mainly due to insufficient SG&A reduction against a -10.9% decline in revenue, suggesting considerable room for efficiency improvement compared with the industry’s typical cost structure. ROE of 0.4% is well below the company’s estimated three-year historical average, driven by low levels in Total Asset Turnover of 0.68x and Net Profit Margin of 0.4%. While the Equity Ratio of 67.4% is healthy, the 71.9% dependence on short-term debt is relatively high within the industry, necessitating careful liquidity management. Negative OCF is severe even relative to industry peers, and improvements in both working capital efficiency and earning power are prerequisites for restoring market valuation. (Industry: Wholesale Trade; Comparatives: past fiscal periods and the company’s historical trends; Source: in-house aggregation)
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company based on publicly available financial results data. Investment decisions are your own responsibility; consult a professional as needed.