ASICS Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥625.05B
• Operating Income: ¥127.61B
• Net Income: ¥64.96B
• EPS: ¥120.66

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

ASICS reported strong FY2025 Q3 (cumulative) results under JGAAP (consolidated), with revenue of ¥625.1bn, up 19.0% YoY, indicating robust top-line momentum across key categories and geographies. Operating income rose 39.4% YoY to ¥127.6bn, implying significant operating leverage and disciplined cost execution. Gross profit of ¥290.9bn reflects a high gross margin of 46.5%, consistent with favorable mix (performance running, DTC) and pricing power. Net income reached ¥86.3bn (+32.9% YoY), with a net margin of 13.8%, underscoring improved scalability and cost control. DuPont analysis shows ROE at 31.4%, driven by a healthy net margin (13.8%), solid asset turnover (1.128x), and moderate financial leverage (2.02x). EBITDA of ¥145.3bn (23.3% margin) indicates strong operating cash generation capacity before working capital and capex. Interest coverage is 31.2x, reflecting low financial risk from interest-bearing debt given the current profit level. Liquidity remains robust: current ratio 189.6%, quick ratio 120.8%, and working capital of ¥174.4bn signal comfortable short-term solvency. The balance sheet is balanced with total assets at ¥554.1bn and total equity at ¥274.6bn, implying a debt-to-equity ratio of 1.03x and moderate leverage. Operating cash flow of ¥86.8bn is roughly in line with net income (OCF/NI 1.01x), suggesting reasonable earnings quality and manageable working capital investment YTD. Reported investing cash flow, cash balance, equity ratio, share count, and DPS figures are unreported in the provided dataset (zeros indicate not disclosed), which limits precision on free cash flow and per-share analyses. Nonetheless, the revenue growth and margin expansion point to sustainable momentum likely aided by yen depreciation and brand strength in performance categories. The implied effective tax rate based on disclosed tax and profit figures appears around the low-20s percent, even though the calculated metric shows 0.0% (likely a placeholder). Inventory of ¥133.9bn versus cost of sales suggests improved turnover versus prior periods of normalization, though full insight requires historical context. Overall, ASICS exhibits improving profitability quality, strong balance sheet resilience, and healthy cash generation, albeit with data gaps around capex, cash, and dividends. Key watchpoints include FX sensitivity, inventory discipline, and sustaining gross margin amid competitive intensity and input cost dynamics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 13.81%
• asset_turnover: 1.128x
• financial_leverage: 2.02x
• calculated_ROE: 31.44%
• commentary: ROE strength is primarily margin-led, supported by efficient asset use and only moderate leverage, indicating quality-driven returns rather than balance-sheet risk. margin_quality:
• gross_margin: 46.5%
• operating_margin: 20.4%
• ebitda_margin: 23.3%
• net_margin: 13.8%
• drivers: ['Price/mix improvement in core footwear and DTC channel contribution', 'Operating leverage from 19% revenue growth vs. opex growth', 'Contained non-operating headwinds (ordinary income only slightly below operating income)'] operating_leverage:
• evidence: Operating income +39.4% YoY on revenue +19.0% YoY indicates meaningful fixed-cost leverage.
• interest_coverage: 31.2x (EBIT/interest), suggesting little drag from financing costs.
• notes: Further leverage may normalize if marketing and SG&A step up in H2 or if FX tailwinds fade.

Growth Assessment

revenue_sustainability: Top-line growth of 19.0% YoY appears broad-based and likely supported by favorable FX translation (weaker JPY) and sustained brand demand in performance running; sustainability hinges on DTC expansion, product cycles, and regional demand (notably North America/EMEA/Asia). profit_quality: Net income growth of 32.9% YoY outpaced sales, driven by gross margin resilience and cost discipline; ordinary income (¥124.5bn) slightly below operating income highlights modest non-operating headwinds but not material. outlook: Assuming stable FX and steady demand, margins could remain elevated, though tougher comps and potential reinvestment (R&D/marketing) may temper incremental operating leverage. Monitoring mix (premium footwear, DTC), pricing, and regional channel dynamics is essential.

Financial Health

liquidity:

• current_ratio: 189.6%
• quick_ratio: 120.8%
• working_capital: ¥174.4bn
• commentary: Short-term liquidity is ample, providing cushion for inventory seasonality and promotional calendars. solvency:
• debt_to_equity: 1.03x
• interest_coverage: 31.2x
• equity_ratio_note: Reported equity ratio of 0.0% is unreported; based on totals, equity/asset is approximately 49.6%.
• commentary: Leverage is moderate with strong coverage, suggesting low solvency risk given current profitability. capital_structure:
• assets: ¥554.1bn
• liabilities: ¥284.1bn
• equity: ¥274.6bn
• commentary: Balanced structure; incremental capacity exists for reinvestment while maintaining conservative risk.

Cash Flow Quality

earnings_quality:

• ocf_to_net_income: 1.01x
• commentary: OCF closely tracks net income, indicating limited accrual distortion in the period-to-date. fcf_analysis:
• free_cash_flow: Not determinable (investing cash flows/capex not disclosed; reported FCF=0 reflects missing data).
• investing_cf: Unreported (0 indicates not disclosed).
• commentary: Underlying FCF likely positive given EBITDA and OCF strength, but capex intensity and growth investments cannot be quantified. working_capital:
• inventories: ¥133.9bn
• inventory_turnover_comment: Against COGS of ¥234.5bn YTD, implied inventory turns are healthy, though annualization and historical comparison are needed for precise assessment.
• notes: Further clarity on receivables/payables would improve assessment of cash conversion.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is unreported (displayed 0.0% due to missing DPS). With net income at ¥86.3bn and strong OCF, coverage potential appears ample, but actual policy and declared DPS are not provided. fcf_coverage: Not assessable due to unreported investing CF/capex; reported FCF=0 reflects data gaps, not actual cash generation. policy_outlook: ASICS historically targets stable/gradual dividends with profitability; current earnings strength supports flexibility, but confirmation depends on disclosed guidance and capital allocation priorities (growth capex, marketing, buybacks, debt).

Risk Assessment

Business Risks:

• Demand cyclicality in performance footwear and apparel, particularly in North America and Europe
• Intense competition from global brands (Nike, Adidas, Puma, New Balance) potentially pressuring pricing and marketing spend
• Product cycle and innovation risk in running and training categories
• Channel mix shifts (DTC vs. wholesale) affecting margin and working capital dynamics
• Brand and athlete/sponsorship ROI variability
• Supply chain and logistics volatility, including freight normalization and lead-time risks
• China and broader Asia demand sensitivity amid macro uncertainty

Financial Risks:

• FX volatility (USD/JPY, EUR/JPY) impacting reported revenue and gross margin via translation and sourcing costs
• Inventory normalization risk affecting discounting and gross margin
• Potential increase in marketing and SG&A reinvestment diluting operating leverage
• Moderate leverage (D/E ~1.03x) could rise with buybacks or acquisitions
• Interest rate environment affecting borrowing costs, albeit currently well covered

Key Concerns:

• Sustaining elevated gross margin amid competitive discounting and input cost changes
• Managing inventory and receivables to preserve OCF as growth moderates
• Dependence on FX tailwinds; adverse currency moves could compress margins and growth

Investment Implications

Key Takeaways:

• Strong top-line growth (+19% YoY) coupled with outsized operating income growth (+39%) demonstrates operating leverage.
• High gross margin (46.5%) and EBITDA margin (23.3%) point to improved mix and pricing.
• ROE at 31.4% is driven by quality factors (margin, turnover) with only moderate leverage.
• Liquidity is robust (current ratio ~190%, quick ratio ~121%), limiting near-term balance sheet risk.
• OCF tracks net income (1.01x), indicating solid earnings quality; full FCF cannot be assessed due to missing capex data.
• FX remains a double-edged sword—supportive for reported revenue but a risk to gross margin if the yen strengthens.
• Data limitations (cash balance, investing CF, DPS, share count) constrain per-share and FCF-based assessments.

Metrics to Watch:

• Gross margin trend and drivers (price/mix, input costs, freight, FX)
• OCF/Net income and working capital days (inventory, receivables, payables)
• DTC penetration and marketing expense ratio
• Capex and investing cash flows (to assess true FCF and reinvestment rate)
• FX rates (USD/JPY, EUR/JPY) and hedging effectiveness
• Inventory levels vs. sales growth to gauge discounting risk

Relative Positioning: ASICS currently exhibits above-sector ROE and margin momentum versus Japanese apparel/footwear peers, supported by brand strength in performance running and a balanced capital structure; sustaining this positioning will depend on continued innovation, DTC execution, and disciplined working capital management.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis