AS ONE CORPORATION FY2027 Q1 Earnings Report

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Executive Summary

In addition to higher revenue, operating leverage from improved gross margin and controlled SG&A expenses resulted in a high-quality earnings performance, with the rate of profit growth exceeding the rate of revenue growth. Revenue was ¥300.0B (¥256.4B in the same period last year, YoY +17.0%), Operating Income was ¥39.8B (+27.3%), Ordinary Income was ¥41.4B (+26.3%), and Net Income was ¥28.5B (+25.2%). The Operating Income margin improved to 13.3%, from 12.2% in the same period last year, an improvement of +1.1pt, indicating that, in addition to the benefit of higher revenue, greater cost-structure efficiency boosted profit growth.

Factors Affecting Earnings

【Revenue】Revenue increased 17.0% year on year to ¥300.0B. The Company’s principal business is the wholesale of equipment, consumables, and other products for the laboratory, industrial, and medical/nursing care fields. Since its reportable segments are consolidated into a single segment, factors affecting changes by business are not disclosed; however, demand appears to have remained firm across its main product fields.

【Profit and Loss】The gross margin was 30.9%, improving +0.15pt from 30.7% in the same period last year, while the SG&A expense ratio declined to 17.6% from 18.5%, a decrease of -0.9pt. As a result, Operating Income was ¥39.8B (+27.3%) and the Operating Income margin was 13.3% (12.2% in the same period last year, +1.1pt), demonstrating a profit-growth profile in which the profit growth rate exceeded the revenue growth rate of +17.0%. Ordinary Income was ¥41.4B (+26.3%). Non-operating income of ¥2.4B, including dividend income of ¥0.9B, provided a modest uplift, while extraordinary losses were limited to a ¥0.01B loss on the disposal of fixed assets, indicating minimal impact from one-time factors. Net Income was ¥28.5B (+25.2%); the difference from Ordinary Income was primarily attributable to the ordinary tax burden of ¥1.29B in income taxes and other taxes (effective tax rate: 31.1%), with no distortion in the earnings structure. Overall, the Company can be characterized as being in a phase of higher revenue and profits, supported by effective operating leverage.

Segment Analysis

The Group consolidates its reportable segments into a single segment because its products handled, procurement methods, and sales methods are similar. A breakdown of revenue and profit or loss by business is not disclosed. Accordingly, changes by segment cannot be analyzed, but higher revenue and profits are confirmed on a consolidated company-wide basis.

Key Financial Indicators

【Profitability】The Operating Income margin was 13.3%, improving +1.1pt from 12.2% in the same period last year, while the Net Income margin increased to 9.5% from 8.9%, up +0.6pt. The gross margin was 30.9% (30.7% in the same period last year, +0.15pt), representing a slight improvement while remaining broadly flat. The SG&A expense ratio declined to 17.6% (18.5% in the same period last year, -0.9pt), indicating that expense growth was contained at a pace below revenue growth; this was the primary factor behind the improvement in profit margins. 【Cash Flow Quality】Cash and deposits increased 14.6% year on year to ¥229.6B, while the Equity Ratio remained high at 69.5%. Inventories increased to ¥128.3B (+6.3%), whereas accounts payable declined to ¥151.5B (-10.7%); from a working-capital perspective, the increase in inventory and reduction in trade payables have somewhat intensified the use of funds. 【Investment Efficiency】ROE was 3.9% (quarterly result, not annualized), and EPS increased 25.9% to ¥40.04 from ¥31.81 in the same period last year. Total assets increased only +2.8% compared with the growth in revenue and profit, indicating an improving trend in asset efficiency. 【Financial Soundness】Interest-bearing debt (short-term borrowings of ¥45.1B, long-term borrowings of ¥46.3B, for a total of ¥91.4B) was below cash and deposits of ¥229.6B, and the Company maintained a net cash financial structure. Interest coverage based on Operating Income was extremely high at 361.8x, calculated as ¥39.8B ÷ ¥0.11B, indicating substantial capacity to absorb interest costs.

Cash Flow Analysis

Because the Cash Flow Statement is not disclosed by category, cash trends are analyzed based on changes in the Balance Sheet. Cash and deposits increased by ¥29.3B (+14.6%) year on year to ¥229.6B. One factor behind this increase was the substantial expansion of short-term borrowings to ¥45.1B (+¥23.9B, +112.5%) and long-term borrowings to ¥46.3B (+¥20.0B, +76.2%), respectively, suggesting that financing through borrowings likely supported the increase in cash and deposits. From a working-capital perspective, inventories increased by +¥7.6B and accounts payable decreased by -¥18.2B, which appears to have had a cash-consuming effect through operating activities. The combined balance of accounts receivable and electronically recorded monetary claims was ¥371.9B, broadly unchanged from the same period last year (-¥0.7B), indicating limited cash pressure related to collections. Investment securities also increased by +¥6.9B year on year to ¥123.4B, indicating that funds were increasingly allocated to the management of surplus cash. Overall, the structure can be summarized as borrowings being used to fund inventory accumulation and investments, resulting in an expansion of on-hand liquidity.

Quality of Earnings

Earnings were primarily generated by operating activities. Non-operating income and expenses were less than 1% of revenue, and extraordinary losses were limited to a ¥0.01B loss on the disposal of fixed assets; consequently, profit distortion from one-time factors was extremely limited. Net Income of ¥28.5B was approximately 31.1% below Ordinary Income of ¥41.4B, which was broadly consistent with the effective tax rate of 31.1% on income taxes and other taxes. This confirms that the decline from Ordinary Income to Net Income was attributable to the ordinary tax burden. Comprehensive Income was ¥44.5B, exceeding Net Income of ¥28.5B by +¥16.0B. This difference was primarily attributable to a +¥15.0B increase in valuation difference on securities associated with the expansion of unrealized gains on investment securities; this valuation-related increase should be distinguished from the earnings power of the underlying business activities. Non-operating income consisted mainly of dividend income of ¥0.9B and interest income of ¥0.3B and was recurring in nature. No particular concerns were identified regarding the quality of accruals.

Earnings Forecast and Guidance

The Q1 progress rates against the Full-Year forecast were 25.5% for Revenue (¥300.0B/¥1178.5B), 30.8% for Operating Income (¥39.8B/¥129.0B), 31.0% for Ordinary Income (¥41.4B/¥133.5B), and 31.8% for Net Income (¥28.5B/¥89.7B). Progress for the profit items exceeded revenue progress by 5–6pt. Since progress for the profit items exceeded the simple quarterly linear progress benchmark of 25%, the effects of improved gross margin and controlled SG&A expenses appear to have emerged ahead of plan during the first half. No revisions were made to the earnings forecast or dividend forecast during the quarter.

Shareholder Returns

The annual dividend forecast disclosed by the Company is ¥66.00, with no revision to the dividend forecast during the quarter. The Payout Ratio against forecast EPS of ¥125.86 is approximately 52.4% (¥66.00/¥125.86). Since the Company has a net cash financial structure, with cash and deposits of ¥229.6B compared with interest-bearing debt of ¥91.4B, the stability of dividend funding appears to be secured.

Risk Factors

1. Working-capital funding requirements: Inventories increased to ¥128.3B (+6.3% year on year), while accounts payable declined to ¥151.5B (-10.7% year on year), with both inventory accumulation and the reduction in trade payables increasing working-capital funding requirements.

2. Increase in interest-bearing debt: Short-term borrowings increased to ¥45.1B (+112.5%) and long-term borrowings to ¥46.3B (+76.2%), resulting in an increase of +¥43.9B in total interest-bearing debt from the previous year. Although the Company remains in a net cash position because cash and deposits of ¥229.6B exceed debt, the change in its funding structure requires ongoing monitoring.

3. Changes in earnings forecast assumptions: The Company states that its earnings forecast consists of forward-looking information based on available information and reasonable assumptions and does not guarantee its realization. Since profit progress of over 30% is ahead of revenue progress of 25.5%, the pace of progress may change depending on developments in demand and other factors in the second half.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (trading)

Profitability and Returns

Both the Operating Income margin and Net Income margin were substantially above the industry median, placing the Company among the industry’s more profitable companies.

Growth and Capital Efficiency

The Revenue growth rate also substantially exceeded the industry median, demonstrating a high growth rate within the industry.

※Source: Compiled by the Company

Key Earnings Highlights

1. The Operating Income margin improved to 13.3% (12.2% in the same period last year, +1.1pt), with a slight increase in gross margin (+0.15pt) and a decline in the SG&A expense ratio (-0.9pt) enabling profit growth to exceed revenue growth.

2. Progress against the Full-Year earnings forecast exceeded 30% on a profit basis, above the revenue progress rate of 25.5%, indicating that the effects of cost efficiency improvements during the first half are appearing ahead of schedule in the reported figures.

3. Although interest-bearing debt increased by +¥43.9B from the previous year, cash and deposits remained ample at ¥229.6B, maintaining a net cash financial structure.

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 five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,100–¥1,164 at ±1% for the cost of equity, and ¥1,129–¥1,135 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the Full-Year forecast).
• Since 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 is not a forecast or guarantee of 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 responsibility, after consulting professionals as necessary.

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