ALBIS Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

The quarter resulted in lower revenue but higher operating income, as the Company secured an operating profit increase through the containment of SG&A expenses despite a slight decline in revenue. Revenue was ¥247.7B (-0.9% YoY), operating income was ¥4.0B (+16.0%), ordinary income was ¥4.7B (-3.5%), and net income attributable to owners of the parent was ¥2.9B (+14.1%). While the operating margin improved to 1.6% from 1.4% in the previous year, ordinary income declined due to a decrease in non-operating income and an increase in interest expenses, indicating that the quality of earnings growth was not uniform.

Factors Affecting Earnings

【Revenue】Revenue was ¥247.7B, representing a 0.9% decline YoY. The Company has a high proportion of revenue from its supermarket business and omits disclosure of segment information; therefore, the factors behind changes by business cannot be confirmed from the disclosed materials. Overall, stagnation in existing businesses appears to have been the background to the revenue decline.

【Profit and Loss】Operating income increased 16.0% YoY to ¥4.0B. The gross margin declined by -0.44pt to 29.4% from 29.8% in the previous year, suggesting the impact of product mix and price competition. However, the decline in the SG&A ratio to 28.95%, down -0.57pt, more than offset this effect, resulting in a +0.24pt improvement in the operating margin to 1.6%. Ordinary income declined 3.5% to ¥4.7B, with the decrease in non-operating income (¥1.2B versus ¥1.8B in the previous year) and the increase in interest expenses (¥0.3B versus ¥0.2B in the previous year) serving as downward pressure. Net income increased 14.1% to ¥2.9B, partly reflecting the absence in the current period of the ¥0.8B loss on disposal of fixed assets recorded in the same period of the previous year. In conclusion, the quarter featured lower revenue but higher operating income, with earnings growth from cost efficiencies coexisting with headwinds at the ordinary income level.

Key Financial Indicators

【Profitability】The operating margin improved by +0.2pt to 1.6% from 1.4% in the previous year, while the net margin also improved to 1.2% from 1.0%. In contrast, the gross margin declined to 29.4% from 29.8%, indicating that cost efficiency was the primary driver of improved profitability. ROE remained at 0.9%. 【Cash Flow Quality】While there were no extraordinary gains or losses and the majority of profit was derived from the core business, inventories increased 3.3% YoY to ¥28.6B and inventory days extended to approximately 61 days. Accounts payable decreased 2.2% YoY to ¥55.6B, indicating room for adjustment in cash generation from working capital. 【Investment Efficiency】Asset turnover remained low at 0.44x (revenue of ¥247.7B ÷ total assets of ¥569.1B), as did ROA at 0.5% (net income of ¥2.9B ÷ total assets of ¥569.1B). 【Financial Soundness】The equity ratio increased +1.9pt to 58.2% from 56.3% in the previous year, while long-term borrowings continued to trend downward to ¥76.8B. EBIT-based interest coverage was approximately 12.0x (EBIT of ¥3.96B ÷ interest expenses of ¥0.33B), indicating sound debt-servicing capacity, and the current ratio was 112.8% (current assets of ¥151.3B ÷ current liabilities of ¥134.1B).

Cash Flow Analysis

Cash and deposits decreased by -¥14.7B (-17.3%) to ¥70.5B from ¥85.2B in the previous year. Long-term borrowings declined to ¥76.8B from ¥83.9B in the previous year, suggesting that debt repayments through financing activities absorbed funds. While inventories increased by +¥0.9B to ¥28.6B, accounts payable decreased by -¥1.3B to ¥55.6B, resulting in an outflow of funds from working capital. Property, plant and equipment declined on a net basis due to ongoing depreciation, suggesting that the implementation of large-scale investments was limited. Overall, the current period’s cash movements reflect a situation in which debt repayments and the buildup of working capital weighed on cash levels. Going forward, improvements in cash generation from operating activities through inventory reductions and a review of payment terms will require monitoring.

Earnings Quality

There were no extraordinary gains or losses in the current period. The reversal of the ¥0.8B loss on disposal of fixed assets recorded in the same period of the previous year boosted net income, meaning that part of the earnings growth was attributable to a temporary factor. Non-operating income was ¥1.2B, or 0.5% of revenue, and was immaterial; it was primarily composed of ¥0.2B in dividend income, indicating low dependence on non-core income. Non-operating expenses were ¥0.5B, primarily consisting of ¥0.3B in interest expenses, which increased from ¥0.2B in the previous year, indicating a slight increase in the interest burden. The difference between ordinary income of ¥4.7B and net income of ¥2.9B was attributable to income taxes and other taxes of ¥1.7B, resulting in a somewhat high effective tax rate of 37.3% (income taxes and other taxes of ¥1.7B ÷ income before taxes of ¥4.7B). Comprehensive income was ¥4.1B, exceeding net income of ¥2.9B by +¥1.1B, primarily due to a ¥1.1B increase in the valuation difference on securities. Given that inventories increased during a period of earnings growth, attention should be paid to potential future accrual risk related to inventory valuation.

Earnings Forecast and Guidance

Progress against the full-year Company plan was 23.8% for revenue (¥247.7B ÷ ¥1040.0B), 17.2% for operating income (¥4.0B ÷ ¥23.0B), 18.6% for ordinary income (¥4.7B ÷ ¥25.1B), and 21.7% for net income (¥2.9B ÷ ¥13.5B), all below the 25% benchmark for simple quarterly progress. The delays in progress for operating income and ordinary income were particularly notable, likely reflecting the weakening gross margin and the contraction in non-operating income. As of the current quarter, neither the earnings forecast nor the dividend forecast had been revised, and the full-year outlook remained unchanged.

Shareholder Returns

The full-year dividend forecast remained unchanged at ¥70.00 per share, with no revision as of the current quarter. The payout ratio against forecast EPS of ¥161.33 is approximately 43.4% (¥70 ÷ ¥161.33). No disclosure regarding share repurchases has been made. With an equity ratio of 58.2% and EBIT-based interest coverage of approximately 12.0x, the financial base is stable and provides a certain degree of resilience in securing funds for dividends. However, the Q1 earnings progress rate for net income was a slow-starting 21.7%, requiring continued monitoring of full-year profit generation.

Risk Factors

1. Decline in gross margin: The gross margin declined by -0.44pt to 29.4% from 29.8% in the previous year, suggesting pressure on profitability from product mix and price competition.

2. Inventory accumulation and working capital headwinds: Inventories increased 3.3% YoY to ¥28.6B, while accounts payable decreased 2.2% to ¥55.6B. The extension of inventory turnover and shortening of payment terms are creating pressure for working capital outflows.

3. Thin-margin structure and rising interest burden: The operating margin remained low at 1.6%, while interest expenses increased to ¥0.3B from ¥0.2B in the previous year, combining the vulnerability of the earnings structure with the impact of rising interest costs.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

The Company’s profitability is below the industry median, with both its operating and net margins ranking in the lower tier of the industry.

Growth and Capital Efficiency

The revenue growth rate is significantly below the industry median, placing the Company in the low-growth group within the industry.

※Source: Compiled by the Company

Key Points from the Results

1. The improvement in the SG&A ratio (-0.57pt) was a factor behind the increase in the operating margin, and the efficiency improvement in the cost structure is noteworthy as the primary driver of earnings growth this time.

2. The decline in the gross margin (-0.44pt) and the extension of inventory days (approximately 61 days) progressed simultaneously, indicating room for improvement in working capital efficiency.

3. The slow start in full-year progress, at 23.8% for revenue and 17.2% for operating income, makes the extent of any recovery in the second half a key point for future monitoring.

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 share price or a recommendation of any specific investment action.

Sensitivity: ¥3,283–¥3,471 at ±1% for the cost of equity, and ¥3,356–¥3,388 at ±0.1 for ω.

Notes:

• As 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 discrepancy with the full-year forecast).

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

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary 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, after consulting with professionals as necessary.

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