GLOBERIDE,Inc. FY2027 Q1 Earnings Report

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Executive Summary

Despite higher revenue, substantial declines in profit caused by increased costs and expenses made deteriorating profitability the most important issue this quarter. Revenue increased to ¥337.0B (+6.3% year on year), but Operating Income fell significantly to ¥11.6B (-51.0%), Ordinary Income to ¥12.5B (-49.1%), and Net Income to ¥13.4B (-24.0%). The gross margin declined to 36.3% from 39.5% in the previous year, with higher costs weighing on profit. Meanwhile, the decline in Net Income was smaller than those at the Operating Income and Ordinary Income levels because of an extraordinary gain of ¥6.2B on the sale of investment securities.

Factors Affecting Business Performance

【Revenue】Revenue was ¥337.0B, representing a 6.3% year-on-year increase. By region, Asia and Oceania grew 30.7% and Japan grew 20.0%, while Europe increased 18.4% and the Americas 10.2%, resulting in higher revenue across all regions.

【Profit and Loss】Operating Income declined significantly to ¥11.6B (-51.0%). The gross margin fell to 36.3%, down -3.2pt from 39.5% in the previous year, primarily because of higher costs. In addition, SG&A expenses increased to ¥110.7B, rising to 32.9% of revenue from 32.0% in the previous year, which reduced the Operating Margin to 3.5% from 7.5%. Ordinary Income showed a similar trend, declining to ¥12.5B (-49.1%). However, following the recognition of an extraordinary gain of ¥6.2B on the sale of investment securities, Net Income declined by a more moderate 24.0% to ¥13.4B. The company achieved higher revenue but lower profit, with a temporary extraordinary gain partially offsetting the deterioration in recurring earnings power.

Segment Analysis

Across segments, a broad trend of declining profit despite higher revenue was evident. Japan, the largest segment, generated revenue of ¥246.9B (+20.0%), while Operating Income declined 21.5% to ¥15.3B, resulting in a 6.2% margin. Asia and Oceania delivered strong revenue growth of 30.7% to ¥148.3B, but Operating Income fell sharply by 48.8% to ¥3.9B, reducing the margin to 2.6%. Europe maintained both higher revenue and higher profit, with revenue of ¥55.5B (+18.4%) and Operating Income of ¥4.6B (+32.6%); its 8.3% margin was the highest among the four regions. The Americas were broadly flat, with revenue of ¥49.8B (+10.2%) and Operating Income of ¥2.2B (+0.9%). Corporate expenses and intersegment eliminations increased to ¥14.4B from ¥8.9B in the previous year, further pressuring consolidated Operating Income. By region, Europe’s high margin stood out, while Japan and Asia were unable to convert revenue growth into profit, representing a key feature of the current period.

Key Financial Indicators

【Profitability】The Operating Margin declined to 3.5% from 7.5% in the previous year, the Net Profit Margin declined to 4.0% from 5.6%, and ROE remained low at 2.1%. Both the deterioration in gross margin and the increase in SG&A expenses weighed on profitability. 【Cash Flow Quality】Accounts receivable totaled ¥180.2B and inventories ¥385.1B, both accumulating from the previous year, suggesting that increases in operating assets may be weighing on cash-generation capacity. 【Investment Efficiency】Revenue of ¥337.0B against total assets of ¥1224.8B indicates that asset efficiency remains low, making improvement in asset utilization a key issue. 【Financial Soundness】The Equity Ratio declined slightly to 52.9% from 54.1% in the previous year. However, liquidity remains sound, with current assets of ¥806.6B versus current liabilities of ¥351.4B, and the financial foundation itself remains stable.

Cash Flow Analysis

As no cash flow statement has been disclosed, funding trends are analyzed based on changes in the balance sheet. Accounts receivable increased to ¥180.2B from ¥155.8B in the previous year, while inventories expanded to ¥385.1B from ¥348.7B, confirming an accumulation of operating assets. Meanwhile, accounts payable stood at ¥68.8B, compared with ¥57.0B in the previous year, indicating that liabilities have not sufficiently offset the increase in assets. Cash and deposits declined to ¥118.3B from ¥130.3B in the previous year, potentially reflecting pressure from share repurchases, which increased from ¥16.5B to ¥31.6B, and the expansion of working capital. Going forward, collection of accounts receivable and optimization of inventory levels will be key areas of focus for improving funding efficiency.

Earnings Quality

Current-period Net Income of ¥13.4B includes an extraordinary gain of ¥6.2B on the sale of investment securities and therefore needs to be assessed separately from recurring earnings power. The extraordinary gain, exceeding half of Operating Income of ¥11.6B, made a substantial contribution, and temporary factors accounted for a relatively large portion of Profit Before Tax of ¥18.5B. Non-operating income of ¥2.9B includes dividend income of ¥0.7B and foreign exchange gains of ¥0.5B, although these remained limited at less than 1% of revenue. The reversal whereby Net Income exceeded Operating Income because of the extraordinary gain is an important consideration in assessing earnings quality. It will therefore be important to monitor the trend in recurring earnings power excluding extraordinary factors from the next period onward.

Earnings Forecast and Guidance

Q1 progress against the full-year plan—Revenue of ¥1340.0B, Operating Income of ¥70.0B, and Ordinary Income of ¥64.0B—is approximately 25.2%, 16.6%, and 19.5%, respectively. Revenue is progressing at a standard quarterly pace, but Operating Income is under-running the standard 25% level by 8.4pt, reflecting the deterioration in gross margin and the increase in SG&A expenses. Net Income progress was 24.5%, a standard level, supported by the extraordinary gain. Achieving the full-year plan will require improvements in costs and expenses toward the second half of the year.

Shareholder Returns

The annual dividend forecast under the company’s plan is ¥100 per share, with no revision to the dividend forecast during the current quarter. Based on the full-year Net Income plan of ¥55.0B and approximately 21.20 million shares outstanding after deducting treasury shares, the annual total dividend is calculated at approximately ¥21.2B, resulting in a Payout Ratio of approximately 38.5%. Treasury shares increased to ¥31.6B from ¥16.5B in the same period of the previous year, indicating progress in share repurchases. The Payout Ratio based solely on dividends is 38.5%, while the Total Return Ratio including share repurchases is considered to be above this level.

Risk Factors

1. Deterioration in profitability due to rising costs: The gross margin declined to 36.3% from 39.5% in the previous year, while the Operating Margin contracted to 3.5% from 7.5%. If improvements to the cost and expense structure do not progress, profitability may continue to deteriorate.

2. Accumulation of working capital: Accounts receivable of ¥180.2B and inventories of ¥385.1B both increased from the previous year, potentially leading to lower funding efficiency. The increase in accounts payable to ¥68.8B has not sufficiently offset this accumulation.

3. Temporarily elevated earnings due to reliance on extraordinary gains: Net Income of ¥13.4B includes a ¥6.2B gain on the sale of investment securities, and the company has not secured profit at a level comparable to the previous year based solely on recurring earnings power. Restoring earnings power excluding extraordinary factors will be a key issue going forward.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Margin and Net Profit Margin are below the industry median, placing the company’s profitability at a relatively low level within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate is broadly in line with the industry median, placing top-line growth at a standard level within the industry.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The pattern of higher revenue but lower profit has become clear. Revenue increased 6.3%, but the Operating Margin contracted sharply to 3.5% from 7.5% in the previous year because of the deterioration in gross margin and the increase in SG&A expenses.

2. Net Income was supported by an extraordinary gain—the ¥6.2B gain on the sale of investment securities—and the recovery of recurring earnings power will be a key point to monitor. The reversal in the levels of Operating Income and Net Income due to extraordinary factors is important in assessing earnings quality.

3. By region, Europe was the only region to maintain both higher revenue and higher profit, as well as a high margin of 8.3%. Japan and Asia were unable to convert revenue growth into profit. In terms of full-year progress, Operating Income is under-running the standard 25% level, making improvement in profitability in the second half a prerequisite for achieving the plan.

Theoretical Stock Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market price or a recommendation of any specific investment action.

Sensitivity: ¥2,881–¥3,047 at ±1% for the cost of equity, and ¥2,959–¥2,964 at ±0.1 for ω.

Notes:

• Because 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 relative to the full-year forecast.
• As net assets include non-controlling interests, the theoretical value may be calculated at a somewhat higher level.

(Calculation model: Residual Income Model / Interest Rate Base Month: 2026-07 / This value does not predict or guarantee future stock prices)

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This report is an earnings analysis document automatically generated by AI based on 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 a professional as necessary.

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