| Metric | Current Period | YoY (Prior-Year Period) | YoY |
|---|---|---|---|
| Revenue | ¥325.9B | ¥347.1B | -6.1% |
| Operating Income | ¥13.9B | ¥17.9B | -22.2% |
| Ordinary Income | ¥15.8B | ¥19.7B | -19.6% |
| Net Income | ¥11.2B | ¥13.3B | -15.8% |
| ROE | 6.9% | 7.1% | - |
For FY2026 Q3 YTD, Revenue was ¥325.9B (down ¥21.2B YoY, -6.1%), Operating Income was ¥13.9B (down ¥4.0B, -22.2%), Ordinary Income was ¥15.8B (down ¥3.9B, -19.6%), and Net Income was ¥11.2B (down ¥2.1B, -15.8%), resulting in lower revenue and earnings. The primary drivers of the revenue decline were deterioration in the sales mix and lower sales volumes; the main cause of the earnings decline was a drop in gross margin (16.4%) and a relative increase in fixed-cost burden. The operating margin was 4.3%, narrowing by -1.2pt from the prior-year period, indicating deteriorating profitability. The company forecasts Full Year Revenue of ¥469.0B (YoY +0.6%) and Operating Income of ¥19.5B (YoY -19.5%), implying a recovery in sales in the second half.
[Profitability] ROE 6.9% (down -0.3pt YoY), Operating Margin 4.3% (down -0.9pt from last year’s 5.2%), Net Margin 3.4% (down -0.4pt from last year’s 3.8%), and Return on Assets 4.2%. In the DuPont analysis, ROE of 6.9% is composed of Net Margin 3.4% × Asset Turnover 1.225x × Financial Leverage 1.64x, with the decline in profitability mainly driven by margin compression. Gross margin was 16.4%, below the prior-year period, and the lower gross margin led to a decline in operating profit. [Cash Quality] Cash and Cash Equivalents were ¥58.0B (down -28.6% from ¥81.3B in the prior-year period), and the Operating Cash Flow/Net Income ratio was 0.54x, indicating weak cash backing for earnings; the accounts receivable collection period was approximately 78 days, highlighting issues in working capital efficiency. Cash coverage of short-term liabilities was 5.8x, ensuring adequate on-hand liquidity. [Investment Efficiency] Asset Turnover was 1.225x (a slight increase from 1.193x last year), while Capex/Depreciation was 0.01x, indicating very limited growth investment and raising concerns about maintaining future production capacity. [Financial Soundness] Equity Ratio was 60.8% (down -3.4pt from 64.2% last year), Current Ratio 227.9%, and Quick Ratio 190.1%, reflecting strong liquidity metrics. Interest-bearing debt was ¥10.5B, and Net Debt/EBITDA was 0.67x, a low level indicating a light financial burden; however, the Short-term Debt Ratio was 95.2%, and the high share of short-term borrowings entails maturity risk. The Debt-to-Equity ratio was 0.64x, indicating a conservative profile.
Operating Cash Flow was ¥6.0B, amounting to 0.54x of Net Income of ¥11.2B, indicating weak cash backing for earnings. The main reasons were a lengthening of the accounts receivable collection period (approximately 78 days) and low working capital efficiency. Investing Cash Flow was -¥22.0B, primarily due to subsidiary acquisitions during the period. Financing Cash Flow was -¥7.3B, including shareholder returns consisting of dividend payments of ¥13.8B and share buybacks of ¥2.5B, along with debt repayments, etc. Free Cash Flow was -¥16.0B, and the combined dividends and share buybacks of ¥16.3B were not covered by Operating Cash Flow, necessitating the use of existing cash. Cash and deposits decreased by ¥23.2B YoY to ¥58.0B, as investment outflows and shareholder returns drove cash outflows. While cash coverage of short-term liabilities was 5.8x and liquidity is secured, continued negative FCF is a factor that pressures funding sustainability.
Against Ordinary Income of ¥15.8B, Operating Income was ¥13.9B, with a net increase of ¥1.9B in non-operating income. The breakdown mainly consists of interest and dividend income, with financial income supporting Ordinary Income. Non-operating income accounts for approximately 0.6% of Revenue, and operating profit and loss remain the core of the earnings structure. Special gains and losses include one-off items such as gains on sale of investment securities, with limited ongoing earnings contribution. With Operating Cash Flow/Net Income at 0.54x, the gap between earnings and cash is large, indicating low earnings quality. The accrual ratio is 1.9%, not extremely high, but weak Operating Cash Flow primarily causes a timing mismatch between earnings recognition and cash collection. Delays in collecting accounts receivable and electronically recorded monetary claims, and inefficiencies in working capital management, are deteriorating earnings quality, leaving significant room for improvement.
[Position within Industry] (Reference Information; Our Research) Profitability: ROE 6.9% (above the industry median of 3.7% and at a high level), Operating Margin 4.3% (+1.1pt above the industry median of 3.2%), and Net Margin 3.4% (+1.4pt above the industry median of 2.0%), indicating relatively solid profitability within the industry. Soundness: Equity Ratio 60.8% (+13.0pt above the industry median of 47.8%, reflecting a strong financial base), Current Ratio 227.9% (well above the industry median of 188.0%, indicating high liquidity). Net Debt/EBITDA of 0.67x is a positive value compared to the industry median of -2.14x, but remains low, implying a light financial burden. Efficiency: Asset Turnover 1.225x (above the industry median of 1.06x, indicating good asset efficiency). Accounts receivable days of approximately 78 days (above the industry median of 73.6 days, indicating somewhat slower collection), while inventory days can be assessed relative to the industry median of 51.0 days. Growth: Revenue growth rate of -6.1% (below the industry median of +2.6%, indicating revenue decline) shows underperformance within the industry. EPS growth rate was negative YoY, below the industry median of +0.31. Note: Industry: Wholesale Trade (N=15), Comparison: 2025 Q3 YTD, Source: Our compilation
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 statements. Investment decisions are your own responsibility; please consult a professional as needed before making any decisions.