UORIKI CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Although revenue and profit increased, the growth in ordinary income and net income was largely driven by higher non-operating income, while improvement in core earnings power remains gradual. Revenue was ¥105.8B (+4.0% YoY), operating income was ¥2.8B (+18.1%), ordinary income was ¥5.7B (+32.5%), and net income was ¥3.9B (+29.5%). While the gross profit margin improved to 41.3%, boosting operating income, non-operating income of ¥3.1B at the ordinary income level—including ¥1.0B in dividend income and ¥1.6B in gains on sales of investment securities—made a contribution and exceeded operating income (¥2.8B), which is a notable feature.

Factors Affecting Performance

【Revenue】Revenue was ¥105.8B (+4.0% YoY), led by the core Retail Business (86.7% of total revenue, ¥92.6B, +3.7%). The Wholesale Business increased revenue to ¥9.7B (+4.7%), while the Food Service Business increased revenue to ¥4.3B (+3.3%); however, the Food Service Business recorded lower profit despite the increase in revenue.

【Profit and Loss】The gross profit margin improved from the previous year to 41.3%, and gross profit expanded to ¥43.7B. Although the SG&A expense ratio increased slightly to 38.7%, the improvement in gross margin more than offset this increase, and the operating margin expanded to 2.6% (+approximately 0.3pt YoY). Non-operating income of ¥3.1B—including ¥1.0B in dividend income and ¥1.6B in gains on sales of investment securities—contributed to ordinary income of ¥5.7B (+32.5%) and net income of ¥3.9B (+29.5%). The growth rate of ordinary income exceeded that of operating income, and the significant contribution from non-operating factors should be noted. In conclusion, revenue and profit increased.

Segment Analysis

The Retail Business is the core business, generating nearly all of the Company’s profit, with revenue of ¥92.6B (+3.7%), operating income of ¥4.0B (+9.7%), and a profit margin of 4.3%. The Wholesale Business achieved a high profit growth rate, with operating income increasing 39.0% to ¥0.1B against revenue of ¥9.7B (+4.7%), indicating progress in improving profitability. The Food Service Business increased revenue to ¥4.3B (+3.3%) but turned to an operating loss of ¥0.0B, deteriorating from the prior-year profit. With 86.7% of revenue dependent on the Retail Business, the business portfolio is highly susceptible to trends in the Retail Business.

Key Financial Indicators

【Profitability】The operating margin improved to 2.6% (2.3% in the previous year), while the net profit margin improved to 3.6% (2.9% in the previous year); however, the absolute level of the operating margin remains low. ROE was 2.0%, based on a conservative capital structure with an equity ratio of 76.8%. 【Cash Quality】Cash and deposits were ¥109.0B, accounting for 43.5% of total assets, while the current ratio was approximately 296%, securing a high level of liquidity. Accounts receivable were ¥29.9B and inventories were ¥5.3B, both declining from the previous year, which is positive from a working capital perspective. 【Investment Efficiency】Investment securities were ¥50.9B, accounting for 20.3% of total assets, while dividend income of ¥1.0B and gains on sales of securities of ¥1.6B boosted ordinary income. Total asset turnover is low, indicating room for improvement in asset efficiency. 【Financial Soundness】Long-term borrowings were ¥0.1B, and interest-bearing debt was negligible. The equity ratio of 76.8% indicates high financial safety. Asset retirement obligations of ¥6.3B exist as part of non-current liabilities and are recognized as future funding requirements.

Cash Flow Analysis

Although the statement of cash flows has not been disclosed, cash trends can be inferred from changes in the balance sheet. Cash and deposits decreased slightly to ¥109.0B from ¥112.6B in the previous year, while investment securities increased from ¥42.3B to ¥50.9B, suggesting that a portion of cash on hand may have been allocated to securities investments. Accounts receivable decreased from ¥31.5B to ¥29.9B, inventories decreased from ¥5.8B to ¥5.3B, and accounts payable increased from ¥22.1B to ¥23.2B, indicating a working capital reduction structure that is positive for operating cash flow. The Company maintains substantial liquidity, with ¥109.0B in cash against current liabilities of ¥50.6B, indicating a high capacity to respond to short-term funding needs.

Quality of Earnings

The operating margin, which indicates recurring earning power, remained at 2.6%, while non-operating income of ¥3.1B—including gains on sales of investment securities of ¥1.6B and dividend income of ¥1.0B—made a significant contribution to ordinary income of ¥5.7B. Non-operating income exceeded operating income of ¥2.8B and was a factor behind the growth rates of ordinary income and net income (+32.5% and +29.5%, respectively) exceeding the operating income growth rate (+18.1%). Gains on sales of securities are susceptible to market conditions, and there is no assurance that they will recur at the same level in subsequent periods. The difference between pretax income of ¥5.7B and net income of ¥3.9B after deducting income taxes and other taxes of ¥1.9B is approximately standard based on the effective tax rate. Declines in accounts receivable and inventories can be viewed as factors supporting earnings quality from an accrual perspective.

Earnings Forecast and Guidance

The full-year forecast is a conservative plan calling for revenue of ¥447.0B (+2.5% YoY), operating income of ¥12.1B (-22.1%), and ordinary income of ¥16.7B (-26.5%), indicating an expected decline in profit despite higher revenue. Q1 progress rates were 23.7% for revenue and 22.9% for operating income, slightly below the standard 25% progress level, while ordinary income and net income significantly exceeded it at 34.4% and 34.9%, respectively. This excess progress was largely attributable to the early recognition of non-operating income (dividends and gains on sales of securities) in the initial period, and it should be noted that this may be normalized over the full year. The earnings forecast has been revised this time.

Shareholder Returns

The full-year dividend forecast is ¥52, representing an increase from the previous year’s actual dividend of ¥26 (combined interim and year-end dividends). The payout ratio against forecast EPS of ¥77.37 is approximately 67.2%, a somewhat high level. There has been no revision to the dividend forecast, and the conservative financial structure of ¥109.0B in cash and deposits and ¥0.1B in interest-bearing debt supports the continuation of dividends.

Risk Factors

1. Business concentration risk: The Retail Business accounts for 86.7% of revenue, while the Wholesale and Food Service Businesses remain complementary. This structure makes the Company’s overall performance highly susceptible to fluctuations in the Retail Business.

2. Market fluctuation risk for securities: Investment securities of ¥50.9B account for 20.3% of total assets, and valuation differences increased from ¥9.7B in the previous year to ¥11.9B. Gains on sales of ¥1.6B also contributed to ordinary income, meaning that market fluctuations could affect both profit and net assets.

3. Working capital and future cost management: Asset retirement obligations of ¥6.3B account for 10.8% of non-current liabilities and are recognized as future equipment renewal and restoration costs. The Food Service Business has turned to an operating loss, making the execution of profitability improvement measures a key issue.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Return

The operating margin is slightly below the industry median, while the net profit margin exceeds the industry median, partly due to the contribution from non-operating income.

Growth and Capital Efficiency

The revenue growth rate is below the industry median, indicating a relatively slower growth pace.

Source: Compiled by the Company

Key Points from the Earnings Results

1. The operating margin expanded from the previous year, primarily due to improved gross margin. However, the growth in ordinary income and net income is highly dependent on non-operating income (dividends and gains on sales of securities), showing a divergence from the pace of improvement in core earnings power.

2. Full-year progress for ordinary income and net income was in the 34% range due to the early recognition of non-operating income, while revenue and operating income remained around 23%, in line with seasonality. The full-year plan anticipates higher revenue but lower profit, making cost trends from the second half onward a key determinant of whether the plan will be achieved.

3. The conservative financial structure—an equity ratio of 76.8%, cash of ¥109.0B, and interest-bearing debt of ¥0.1B—supports a payout ratio of approximately 67%. At the same time, the high ratio of investment securities should be monitored as a source of volatility in profit and net assets.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,198–¥1,265 at ±1% in the cost of equity, and ¥1,226–¥1,234 at ±0.1 in 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 quarter-end are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual income model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and 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 responsibility, after consulting with a professional as necessary.

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