| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥3000.9B | ¥2691.6B | +11.5% |
| Operating Income | ¥-8.5B | ¥-35.0B | +75.7% |
| Profit Before Tax | ¥65.5B | ¥47.8B | +37.0% |
| Net Income | ¥17.1B | ¥22.6B | -24.0% |
| ROE | 1.8% | 2.6% | - |
For the fiscal year ended March 2026, Colowide Co., Ltd. consolidated results were: Revenue of ¥3,000.9B (YoY +¥309.3B +11.5%), operating loss of ¥8.5B (YoY improvement of ¥26.5B, loss reduction of 75.7%), ordinary loss of ¥2.3B (YoY improvement of ¥30.3B, loss reduction of 92.9%), and Net Income Attributable to Owners of Parent of ¥22.3B (YoY +¥9.8B +78.7%). Revenue achieved double-digit growth; operating-level results remained in loss but improved significantly, and the company progressed to profitability at the pre-tax/other-income stage. The final profit increased by about 80% year-on-year due to contributions from non-operating income and relatively lower tax burden, indicating ongoing improvement in the profit-loss structure.
Revenue: Revenue reached ¥3,000.9B (+11.5%), achieving double-digit growth. By segment, consolidation of Seagrass Holdco (an Oceania steakhouse operator) as a wholly owned subsidiary in Q1 added ¥200.4B of revenue, and the six existing segments collectively grew +10.9% year-on-year. By geography, Japan was ¥2,446.3B (YoY +3.5%), North America ¥190.3B (YoY +9.1%), Asia ¥180.8B (YoY +18.1%), and Oceania ¥183.5B (not consolidated in the prior year). Both overseas expansion and domestic demand recovery contributed. Major segments: Reins International Co., Ltd. ¥912.9B (+2.9%), Kappa Create Co., Ltd. ¥723.5B (▲0.1%), Ootoya Holdings Co., Ltd. ¥370.2B (+17.9%) showing mixed results. Existing-business revenue, representing 85% of external-customer revenue, held firm; recovery in customer traffic and partial price pass-through drove the top-line increase.
Profitability: Cost of goods sold was ¥1,213.5B (YoY +8.0%), gross profit was ¥1,787.5B (+14.0%), and gross margin improved to 59.6% (from 58.2% prior year, +1.4ppt), reflecting effective cost control and price pass-through. Selling, general and administrative expenses were ¥1,662.2B (+12.7%), rising with revenue, but as a percentage of revenue were 55.4% (from 54.8% prior year, +0.6ppt), indicating limited scale effects. As a result, EBITDA/segment profit (business profit) was ¥125.3B (from ¥93.1B prior year, +34.6%), and IFRS Operating Income improved to ¥94.1B (from ¥77.1B prior year, +22.0%). The gap between IFRS Operating Income and business profit is attributable to other operating income of ¥11.8B versus other operating expenses including impairments of ¥42.9B (net ▲¥31.2B); on a business-profit basis the company is profitable. Under Japanese standards, Operating Income remained a loss of ¥8.5B but improved significantly from a loss of ¥35.0B the prior year. At the ordinary level, financial income of ¥17.4B (from ¥4.1B prior year, +¥13.3B) was outweighed by financial expense of ¥46.0B (from ¥33.4B prior year, +¥12.6B), resulting in net financial costs of ¥28.6B. Profit Before Tax was ¥65.5B (from ¥47.8B prior year, +37.0%); after income tax expense of ¥48.3B, Net Income was ¥17.1B (from ¥22.6B prior year, ▲24.0%). However, Net Income Attributable to Owners of Parent was ¥22.3B (from ¥12.5B prior year, +78.7%), boosted by a change in loss allocation to non-controlling interests of ▲¥5.2B (prior year allocation to profit ¥10.1B). Improvement from ordinary loss of ▲¥2.3B to Profit Before Tax of ¥65.5B reflects a turnaround in business profit and increased financial income, indicating that improvements outside core operations supported the profit structure. No special items were disclosed, so the difference between ordinary income and profit before tax appears to be a matter of accounting alignment. Overall, revenue growth and gross-margin improvement substantially reduced operating losses, but SG&A growth and financial expenses remain, so while top-line trends are positive profit structure improvement is still in progress.
On a business-profit basis: Colowide MD Co., Ltd. (MD & logistics) ¥50.8B (from ¥46.6B prior year, +9.2%), Atom Co., Ltd. ¥0.2B (from ▲¥0.6B prior year, turned profitable), Reins International Co., Ltd. ¥47.8B (from ¥59.9B prior year, ▲20.2%), Kappa Create Co., Ltd. ¥3.5B (from ¥15.1B prior year, ▲77.0%), Ootoya Holdings Co., Ltd. ¥17.9B (from ¥13.0B prior year, +37.3%), Seagrass Holdco (newly consolidated) ¥25.8B, and Others ¥20.1B (from ▲¥3.1B prior year, turned profitable). Reins International delivered revenue growth but margin compression due to cost increases and intensified competition in core formats such as Gyukaku and On-Yasai. Kappa Create showed slight revenue decline and large profit deterioration, indicating delayed structural improvement at Kappa Sushi. Ootoya Holdings achieved both revenue growth and margin improvement, benefiting from brand recovery and efficiency gains. Seagrass’s new contribution recorded ¥25.8B of business profit, clarifying the Oceania business’s earnings contribution. Overall, profitability divergence across segments widened, and addressing the main businesses such as Reins and loss-making Kappa Create remains a priority.
Profitability: ROE was 2.8% (from 2.0% prior year, +0.8ppt), comprised of net profit margin 0.6%, total asset turnover 0.86x, and financial leverage 3.75x. Operating margin was ▲0.3% (from ▲1.3% prior year, +1.0ppt), reducing the deficit but remaining well below the industry median of 4.6%. Ordinary margin was ▲0.1% (from ▲1.2% prior year, +1.1ppt), and net margin was 0.6% (from 0.5% prior year, +0.1ppt), supported by improvements in non-operating items and the higher ratio of profit attributable to owners of the parent. Return on Assets (ROA) was 0.02%, extremely low, indicating significant room to improve asset efficiency.
Cash Quality: Operating Cash Flow (OCF) was ¥287.1B compared with Net Income of ¥17.1B, yielding an OCF/Net Income multiple of 16.8x, a high level driven by non-cash expenses (depreciation ¥273.0B, impairments ¥32.3B, etc.), demonstrating strong cash generation relative to accounting profit. Accrual (Net Income − OCF) was ▲¥270.0B and the accrual ratio was ▲87.5%, indicating cash generation substantially exceeded profit recognition, which is favorable.
Investment Efficiency: Total asset turnover was 0.86x (virtually unchanged from 0.87x prior year), a standard level for foodservice/retail. Total assets expanded to ¥3,509.3B (YoY +12.4%), driven by Seagrass consolidation and capex accumulation. ROA at 0.02% is low and improving asset efficiency depends on turning the operating loss into operating profit.
Financial Soundness: Equity ratio was 24.0% (from 24.8% prior year, ▲0.8ppt), reflecting a persistently high-leverage structure inherent to the sector. Interest-bearing debt (bonds and borrowings) was ¥1,457.9B (from ¥1,293.2B prior year, +12.7%), and net interest-bearing debt was ¥1,426.0B (from ¥1,221.6B prior year, +16.7%), indicating rising indebtedness even after subtracting cash and cash equivalents of ¥631.9B (from ¥715.4B prior year, ▲11.7%). Financial leverage rose to 3.75x (from 3.58x prior year), reflecting asset growth from investment with relatively slower equity growth. Current ratio was 86.2% (current assets ¥918.8B / current liabilities ¥1,065.5B), indicating a short position, but cash levels are ample and short-term liquidity risk is limited.
OCF was ¥287.1B (YoY ▲0.3%), essentially flat. Profit Before Tax ¥65.5B plus depreciation ¥273.0B and impairments ¥32.3B of non-cash items, adjusted for working capital changes (inventories ▲¥12.4B, trade receivables ▲¥22.0B, trade payables +¥14.8B, etc.), produced this result. Within OCF, pretax profit increased from ¥47.8B to ¥65.5B, improving cash-generating capability of operations, while working-capital changes remained a modest outflow consistent with sales growth. Investing Cash Flow was ▲¥307.6B (expansion from ▲¥216.1B prior year), mainly due to tangible fixed-asset acquisitions ▲¥122.0B, acquisitions of consolidated subsidiaries ▲¥186.6B (including Seagrass), and business acquisitions ▲¥2.7B. Proceeds from disposals were limited at ¥7.1B, indicating growth investments led cash outflows. Free Cash Flow was ▲¥20.4B (from +¥72.0B prior year), as investment cash outflow exceeded OCF. Financing Cash Flow was ▲¥67.7B (from +¥179.5B prior year); despite new long-term borrowings of ¥491.7B and bond issuance of ¥30.4B, outflows included borrowings repayments ▲¥368.2B, bond redemptions ▲¥63.2B, lease liability repayments ▲¥157.6B, and dividend payments ▲¥10.6B, resulting in net repayment. Cash and cash equivalents declined ¥83.5B from opening ¥715.4B to closing ¥631.9B; even after FX effects +¥4.7B, net outflow occurred. Paying dividends in a FCF-negative period was absorbable from cash reserves, but going forward expanding OCF and moderating investment pace are key to cash stability.
Operating-level result was an operating loss of ¥8.5B, but business-profit basis shows a ¥125.3B surplus; other operating expenses (including impairments ¥32.3B) depressed operating profit. Financial income increase to ¥17.4B (from ¥4.1B prior year) may reflect FX gains and valuation gains on equity holdings and is likely episodic. Profit Before Tax of ¥65.5B versus income tax expense ¥48.3B yields an effective tax rate of 73.8%, high and suggesting issues around recoverability of deferred tax assets or temporary differences. OCF is 16.8x Net Income and the accrual ratio of ▲87.5% indicates a cash-led earnings profile, so earnings quality is strong on a cash basis. The difference between comprehensive income ¥72.1B and Net Income ¥17.1B (difference ¥54.9B) stems from other comprehensive income of ¥54.9B (foreign currency translation adjustments ¥51.9B, cash flow hedges ¥2.5B, etc.), with FX impacts from expanded overseas consolidation lifting comprehensive income. The divergence between ordinary income and net income is small; tax burden and allocation to non-controlling interests primarily adjust final profit. Overall, non-operating and comprehensive-income items show high variability; attention should focus on the improving trend in business profit as the basis for sustainable earnings.
Full-year guidance: Revenue ¥3,516.4B, Net Income Attributable to Owners of Parent ¥26.7B, EPS ¥19.56, Dividend ¥0. Actuals vs guidance: Revenue ¥3,000.9B (progress 85.3%), Net Income Attributable to Owners of Parent ¥22.3B (progress 83.7%), both about 15ppt below standard progress, indicating a risk that Q4 ramp-up assumptions may not be met. Shortfalls relative to guidance are attributed to delayed margin recovery at the operating level, persistent elevated costs, and variability in non-operating income. The company projects a dividend of ¥0, reflecting a conservative distribution policy given profit levels and FCF instability. Achieving future targets will hinge on improving existing-store utilization, reducing SG&A, and sustaining non-operating income.
This period’s dividend was year-end ¥5 (interim ¥0), totaling ¥531M (ordinary shares ¥0, preferred shares ¥531M). Dividend payout ratio relative to Net Income Attributable to Owners of Parent ¥22.3B is 23.8%, indicating modest burden on earnings. Against OCF ¥287.1B, total dividends disclosed ¥12.2B (including ordinary and preferred shares) yield a cash flow payout ratio of 4.2%, low and indicating sufficient dividend-paying capacity. However, Free Cash Flow is ▲¥20.4B, and on an FCF basis dividend coverage is ▲1.67x, raising sustainability concerns. No share buybacks were recorded; total return ratio equals the dividend payout ratio at 23.8%. The forecast dividend of ¥0 reflects a cautious capital allocation stance given continued operating losses and expanded investing CF, prioritizing internal cash retention and financial soundness. Resumption of dividends would require sustained operating profit and consistent FCF positivity.
Input cost and energy/logistics cost inflation risk: Cost of goods sold ratio is 40.4% (improved from 41.8% prior year) but volatility in raw material prices and transport costs could compress gross margin. Combined with persistently high SG&A ratio of 55.4% (personnel, rent, promotions, etc.), cost increases may impede margin improvement. While gross margin improved this period, the balance between pass-through ability and demand elasticity is critical going forward.
Burden of fixed costs from unprofitable segments/stores: Kappa Create’s business profit fell from ¥15.1B to ¥3.5B (▲77.0%), evidencing slow structural improvement. Impairment loss of ¥32.3B suggests processing of unprofitable assets, and future portfolio rationalization and exit costs could pressure finances. In high-fixed-cost foodservice models, traffic fluctuations directly impact profitability, increasing sensitivity to economic cycles and weather.
Financial expense burden and weak capital efficiency: Financial expense ¥46.0B (from ¥33.4B prior year, +37.8%) reflects increased interest-bearing debt of ¥1,457.9B and rising interest rates. The structure of operating loss ▲¥8.5B alongside financial expense ¥46.0B highlights vulnerability in interest coverage, and rising rates could further raise financing costs. With ROE at 2.8%, improving capital efficiency will be difficult without operating-profit turnaround.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 2.8% | 5.9% (2.6%–12.0%) | -3.1pt |
| Operating Margin | -0.3% | 4.6% (1.7%–8.2%) | -4.9pt |
| Net Margin | 0.6% | 3.3% (0.9%–5.8%) | -2.8pt |
Profitability metrics are below industry medians across the board; operating margin at ▲0.3% is negative and about 5ppt below industry norm. ROE is 3.1ppt below the median, and improving profitability is a prerequisite to reaching industry levels.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.5% | 4.3% (2.2%–13.0%) | +7.2pt |
Revenue growth of +11.5% substantially outperformed the industry median +4.3%, driven by new consolidation and recovery in existing operations. The company ranks high on growth metrics.
※ Source: Company compilation
While revenue growth and contraction of operating losses indicate an improving trajectory, operating-level profitability has not yet been achieved; securing profitability on a business-profit basis remains the top priority. Sustained reduction in SG&A ratio and maintenance/improvement of gross margin are key to durable profit improvement. Seagrass consolidation broadened geographic diversification, but profitability gaps across segments widened; structural reform of loss-making segments (e.g., Kappa Create) is essential to lift consolidated profitability.
Cash-generating ability is strong relative to accounting profit: OCF ¥287.1B and accrual ratio ▲87.5% indicate high cash quality, but FCF turned negative at ▲¥20.4B as growth investment outpaced OCF. Cash balance ¥631.9B provides short-term liquidity, but recovery speed of investment returns and improved cash generation at existing stores are necessary to stabilize FCF. The dividend forecast of ¥0 reflects conservative capital allocation; restarting shareholder returns presumes operating profit stabilization and sustained FCF positivity.
Financial expense burden of ¥46.0B and high effective tax rate of 73.8% are headwinds to profit growth; improving interest coverage and normalizing tax burden are required to enhance capital efficiency. The company is strong on growth metrics compared with peers but lags on profitability, necessitating a qualitative transformation in management to convert top-line expansion into margin improvement.
This report is an AI-generated earnings analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on publicly disclosed financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.