| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥12640.5B | ¥11366.8B | +11.2% |
| Operating Income | ¥814.4B | ¥751.3B | +8.4% |
| Ordinary Income | ¥782.6B | ¥718.9B | +8.9% |
| Net Income | ¥296.2B | ¥83.8B | +253.2% |
| ROE | 8.7% | 3.5% | - |
For the cumulative Q2 results for the fiscal year ending March 2026, Revenue was ¥12,640.5B (YoY +¥1,273.7B +11.2%), Operating Income ¥814.4B (YoY +¥63.1B +8.4%), Ordinary Income ¥782.6B (YoY +¥63.7B +8.9%), and Net Income attributable to owners of the parent ¥296.2B (YoY +¥212.4B +253.2%). Revenue maintained double-digit growth supported by recovery at existing stores in the restaurant chains, price revision effects, and expansion of the overseas ready-meal business. Operating Income benefited from revenue growth, but gross margin declined to 54.3% (from 54.8% YoY -0.5pt) reflecting higher raw material costs and labor cost increases; SG&A ratio marginally improved to 47.9% (from 48.1% YoY -0.2pt), resulting in a contraction of operating margin to 6.4% (from 6.6% YoY -0.2pt). Net Income expanded significantly despite recording special losses of ¥110.9B (including impairment ¥39.8B), driven by a rebound from the low prior-year Net Income of ¥83.8B and improvements in recurring earnings.
Revenue of ¥12,640.5B (+11.2%) breakdown: Global Hamazushi ¥3,203.8B (+28.9%) contributed the largest increase due to accelerated overseas expansion and strong domestic same-store performance. Global Ready Meals ¥2,219.0B (+5.7%) saw steady performance from takeout sushi operations in the US and Europe. Global Sukiya ¥3,148.3B (+6.3%) benefited from recovery in same-store customer counts and price revisions, but growth pace slowed due to a reaction to higher average spend. Restaurants ¥1,714.7B (+9.7%) and Global Fast Food ¥1,128.3B (+8.3%) also maintained revenue growth. Corporate & Support ¥4,921.2B (+19.2%) reflects increased inter-segment transactions. Others ¥534.4B (-5.5%) was affected by contraction in external sales and nursing care businesses. Segment composition of total revenue: Hamazushi 25.3%, Ready Meals 17.6%, Sukiya 24.9%, Restaurants 13.6%, Fast Food 8.9%, Corporate & Support 38.9% (including internal transactions). On an external customer basis, Hamazushi, Ready Meals, and Sukiya account for about 60%. Regionally, domestic sales predominate, but rising overseas sales ratios for Hamazushi and Ready Meals are growth drivers.
Profit and loss: Cost of sales ¥5,776.2B (prior ¥5,144.8B) led to gross margin decline to 54.3% (from 54.8% YoY -0.5pt). Food material price increases, higher logistics costs, and exchange rate effects (yen depreciation) pressured gross profit. SG&A ¥6,050.0B (prior ¥5,470.8B) produced an SG&A ratio of 47.9% (from 48.1% YoY -0.2pt), a slight improvement; the company promoted store-operation efficiency and shift optimization to absorb higher labor and rent costs, but the absolute SG&A increased by +10.6%. Operating Income ¥814.4B, operating margin 6.4% (prior 6.6%). Non-operating income ¥66.2B (interest income ¥30.1B, foreign exchange gains ¥8.9B, etc.), non-operating expenses ¥98.0B (interest expense ¥70.3B, etc.) produced Ordinary Income ¥782.6B. After special gains ¥8.1B and special losses ¥110.9B (impairment ¥39.8B, fixed asset retirement ¥28.7B, etc.), Profit before tax was ¥679.8B; Income taxes ¥222.0B (effective tax rate 32.7%) resulted in Net Income ¥296.2B (+253.2%). The gap from Ordinary Income to Net Income was mainly due to special losses and tax burden; impairment and retirement costs tend to recur each period and are incorporated as store restructuring costs. In conclusion, the company achieved revenue and profit growth, but the decline in gross margin and increase in SG&A caused operating profit growth to lag revenue growth, and the large increase in Net Income largely reflects a rebound from last year's low base.
Global Ready Meals: Revenue ¥2,219.0B (+5.7%), Operating Income ¥273.8B (+7.0%), margin 12.3%, the highest-margin segment. Maturation of US/EU takeout sushi businesses and expanding local demand contributed to profits. Global Hamazushi: Revenue ¥3,203.8B (+28.9%), Operating Income ¥267.7B (+25.4%), margin 8.4%, with large increases in both revenue and profit driven by domestic store additions, accelerated overseas openings, and double-digit same-store sales growth. Restaurants: Revenue ¥1,714.7B (+9.7%), Operating Income ¥130.0B (+14.1%), margin 7.6%, aided by price revisions and customer recovery. Global Sukiya: Revenue ¥3,148.3B (+6.3%) but Operating Income ¥93.2B (-62.0%), margin plunged to 3.0%. Intense price competition, rising ingredient and labor costs compressed profitability, worsened by adverse product mix (concentration in lower-priced menu items). Global Fast Food: Revenue ¥1,128.3B (+8.3%), Operating Income ¥33.1B (-7.3%), margin 2.9%, unable to absorb costs and saw profit decline. Retail: Revenue ¥780.3B (+1.6%), operating loss ¥10.2B (loss reduced by -42.9% YoY), margin -1.3%, recovery of supermarket business underway. Corporate & Support: Revenue ¥4,921.2B (mainly inter-segment transactions), Operating Income ¥27.8B (+137.5%), aided by optimized allocation of headquarters costs. Segment-wise, Ready Meals and Hamazushi drive earnings; recovery of Sukiya profitability is key to improving consolidated margins.
Profitability: Operating margin 6.4% down -0.2pt from 6.6%; the decline in gross margin could not be offset by the slight improvement in SG&A ratio. ROE 8.7% (Equity ¥3,414.5B, Net Income base ¥458.1B) is within a stable range compared to historical levels. EBITDA (Operating Income ¥814.4B + Depreciation ¥533.1B) ¥1,347.5B with EBITDA margin 10.7%. EPS ¥275.85 (prior ¥240.45, +14.7%), BPS ¥1,665.94. Cash quality: Operating Cash Flow (OCF) ¥1,011.8B is 2.21x of Net Income ¥458.1B (full-year base), OCF/EBITDA=0.75x; working capital outflows from increased inventory and receivables occurred but cash generation remains solid. Accrual ratio (Net Income - OCF subtotal)/Total Assets = -5.8% indicates good cash backing of profits. Investment efficiency: Total asset turnover 1.32x (Revenue ¥12,640.5B / Average Total Assets ¥9,603.6B), Capital expenditure ¥780.1B / Depreciation ¥533.1B = 1.46x indicating a growth investment phase. Intangible assets ¥2,292.7B / Total Assets ¥9,603.6B = 23.9% somewhat high; goodwill ¥101.0B is minor but impairment monitoring for trademarks etc. is necessary. Financial soundness: Equity Ratio 35.6% (prior 29.6% +6.0pt), Current Ratio 158.9%, Interest-bearing debt (short-term borrowings ¥39.4B + long-term borrowings ¥2,285.2B + corporate bonds ¥500.0B + lease current ¥224.9B + lease non-current ¥632.5B) ¥3,682.0B gives Debt/EBITDA=2.73x, Interest Coverage (EBITDA/Interest expense)=19.2x in a healthy range. Cash ¥1,280.5B / Short-term interest-bearing debt (short-term borrowings + long-term borrowings due within one year + lease current + current liabilities total) = 6.4x, indicating solid short-term liquidity.
OCF ¥1,011.8B was calculated from Profit before tax ¥679.8B plus depreciation ¥533.1B, impairment ¥40.2B and other non-cash expenses, offset partly by working capital increases (inventory -¥132.8B, receivables -¥23.4B, payables +¥12.3B), and after corporation tax payments -¥284.9B. From OCF subtotal ¥1,341.8B, working capital movement -¥330.0B was deducted; while cash generation is solid, inventory and receivables increases tied to revenue growth temporarily absorbed funds. Investing CF was -¥780.9B including capital expenditure -¥780.1B (new openings, refurbishments, logistics network upgrades), intangible asset acquisitions -¥24.2B, short-term securities purchases -¥550.0B offset by sales +¥600.0B, long-term loans +¥337.9B, etc. Free Cash Flow (OCF + Investing CF) ¥230.9B exceeded dividends ¥125.7B (interim ¥35 + year-end estimated ¥40) and share buybacks ¥19.1B totaling ¥144.8B, enabling both growth investment and shareholder returns. Financing CF ¥198.2B included long-term borrowings procured +¥335.8B, long-term borrowings repayments -¥406.9B, corporate bond issuance +¥198.4B, corporate bond redemption -¥100.0B, lease repayments -¥235.8B, dividend payments -¥125.7B, and share buybacks -¥19.1B. Ending cash balance ¥1,280.5B (from opening ¥796.9B +¥483.6B) rose substantially due to combined operating cash flow and financing, strengthening financial flexibility.
Most of Ordinary Income ¥782.6B is composed of Operating Income ¥814.4B; non-operating income ¥66.2B (interest income ¥30.1B, foreign exchange gains ¥8.9B, other ¥18.2B) is minor at 0.5% of revenue. Non-operating expenses ¥98.0B (interest expense ¥70.3B, other ¥27.7B) remain within recurring ranges. Special gains ¥8.1B (gain on sale of marketable securities ¥1.4B, gain on sale of fixed assets ¥0.9B, etc.) are temporary and small. Special losses ¥110.9B (impairment ¥39.8B, fixed asset retirement ¥28.7B, loss on sale of fixed assets ¥2.5B, etc.) are related to store restructuring and tend to recur annually, becoming quasi-permanent. The divergence from Ordinary Income ¥782.6B to Net Income ¥296.2B (Profit before tax ¥679.8B → Net Income ¥296.2B, difference ¥383.6B) is mainly due to net special items -¥102.8B and income taxes ¥222.0B. OCF ¥1,011.8B / Net Income ¥296.2B = 3.4x indicates strong cash backing for profits; accrual ratio (Net Income - OCF subtotal)/Total Assets = -5.8% shows no aggressive accounting. Comprehensive income ¥664.2B (Net Income ¥296.2B + OCI ¥368.0B) includes foreign currency translation adjustments ¥195.8B, deferred hedge gains/losses ¥10.7B, etc.; FX effects from overseas expansion boost comprehensive income but are valuation items not directly tied to cash flows. Earnings quality is high, centered on recurring operating income, one-off losses are already factored in, and strong OCF underpins profit quality.
Full-year forecast: Revenue ¥14,240.0B (YoY +12.7%), Operating Income ¥920.0B (YoY +13.0%), Ordinary Income ¥840.0B (YoY +7.3%), EPS ¥296.19. Progress rate for the cumulative Q2: Revenue 88.8%, Operating Income 88.5%, Ordinary Income 93.2%, generally on track. Assumed operating margin is 6.46% (¥920B/¥14,240B), a slight improvement from current 6.44%, assuming continued SG&A ratio improvement and pricing initiatives. Assumptions include sustained high growth in Hamazushi and Ready Meals, recovery of Sukiya profitability (product-mix improvement, labor efficiency, price optimization), and steady performance in Fast Food and Restaurants. External assumptions: stabilization of food and energy prices, no large exchange rate movements, continued recovery in customer counts. Dividend forecast annual ¥40 (including interim ¥35 already paid) implies a Payout Ratio of 13.5% (based on forecast EPS ¥296.19), conservative. Given interim results, achieving the full-year forecast is within range, but recovery pace in Sukiya profitability and renewed raw material inflation are upside/downside risks.
Interim dividend ¥35 already paid; year-end dividend forecast ¥40 for total annual dividend ¥75 (same as prior year). Payout Ratio based on current EPS ¥275.85 is 27.2%, and based on full-year forecast EPS ¥296.19 is 25.3%, conservative levels. Total dividends ¥125.7B (interim actual + year-end estimate) are well covered by OCF ¥1,011.8B and FCF ¥230.9B (OCF dividend coverage 8.0x, FCF dividend coverage 1.8x). Share buybacks ¥19.1B were conducted; combined returns (dividends + buybacks) ¥144.8B yield a Total Return Ratio of 48.9% based on Net Income ¥296.2B (or 31.6% on a full-year base Net Income ¥458.1B). With cash ¥1,280.5B, continued positive FCF, and Debt/EBITDA 2.73x, financial soundness is high and dividend sustainability and potential for dividend increases are solid. Even in a growth investment phase with CapEx/Depreciation 1.46x, the company is balancing returns and investment, indicating a stable shareholder-return stance.
Raw material / food price volatility and FX risk: Gross margin 54.3% (YoY -0.5pt) reflects higher food prices and yen weakness; further resource price or FX movements could further compress gross margin and make maintaining operating margin 6.4% difficult. Effectiveness of hedging measures (forward procurement, price pass-through) will be critical.
Labor cost increases: SG&A ¥6,050.0B (+10.6%) is largely driven by higher labor costs; if minimum wage hikes and tight labor markets persist, room for improving SG&A ratio 47.9% is limited. Delays in automation investments (self-checkouts, cooking automation) pose downside risk to margins.
Deterioration in Global Sukiya segment profitability: Operating Income ¥93.2B (-62.0%), margin 3.0%, a substantial deterioration, and contributing only 11.4% of consolidated Operating Income, reducing earnings contribution. Prolonged price competition and lower average spend could derail consolidated margin improvement scenarios and depress ROE and EPS. Success of product-mix improvements and store-operation efficiency initiatives will be closely watched.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.4% | 4.6% (1.7%–8.2%) | +1.8pt |
| Net Margin | 2.3% | 3.3% (0.9%–5.8%) | -1.0pt |
Operating margin outperforms the industry median 4.6% by 1.8pt and is in the upper group, but Net Margin 2.3% lags the median 3.3%, reflecting the impact of special losses and tax burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.2% | 4.3% (2.2%–13.0%) | +6.9pt |
Revenue growth rate 11.2% substantially exceeds the industry median 4.3%, driven by Hamazushi and Ready Meals overseas expansion and same-store recovery.
※Source: Company aggregation
Re-optimizing the segment mix is pivotal for next-period profit expansion: Ready Meals (margin 12.3%) and Hamazushi (8.4%) account for 66% of consolidated profits, while Sukiya’s sharp margin decline (3.0%) is pressuring overall margins. Recovery of Sukiya margins through product-mix improvement (introducing higher-priced items), operational efficiency (shift optimization, automation), and pricing strategy revision is a condition for improving consolidated operating margin above the full-year target of 6.5% from the current 6.4%. Rising overseas sales ratios for Ready Meals and Hamazushi are sensitive to FX; a stronger yen would reduce their profit contribution.
OCF generation and FCF maintenance enable continuation of growth investment alongside returns: OCF ¥1,011.8B (2.21x of Net Income), FCF ¥230.9B exceed dividend and buyback outflows ¥144.8B, enabling CapEx ¥780.1B (1.46x depreciation) and shareholder returns concurrently. Working capital outflows due to inventory and receivables increases are temporary, and if revenue growth stabilizes, working capital efficiency can improve. With Debt/EBITDA 2.73x, Interest Coverage 19.2x, and Equity Ratio 35.6%, financial health is strong; under rising interest rates, interest expense burden remains light at Interest expense ¥70.3B / EBITDA ¥1,347.5B = 5.2%. Future CapEx pace (new store openings, digital investment) and working capital management will determine FCF stability and dividend sustainability.
Achieving full-year forecast requires simultaneous defense of gross margin and SG&A improvement: Achieving full-year Operating Income ¥920B (operating margin 6.46%) assumes defending gross margin near 54.3% (via procurement and price pass-through) and SG&A ratio improvement of -0.1~0.2pt from 47.9%. H1 saw gross margin down -0.5pt and SG&A ratio improved -0.2pt partially offsetting; if raw material inflation or labor cost increases accelerate in H2, maintaining operating margin 6.4% will be difficult. Additional price revisions, labor productivity improvements (standardizing store operations, IT investment), and accelerated exits of low-profit stores are key for H2 results. EPS forecast ¥296.19 (from ¥275.85 +7.4%) is based on operating profit growth, but delays in Sukiya recovery or recurrence of special losses present downside risk.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.