UCHIDA YOKO CO.,LTD. FY2026 FY Earnings Report

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Executive Summary

The results reflect higher revenue and profits, with a significant improvement in Operating Cash Flow (OCF), primarily driven by the expansion of the Public Sector-Related Business. Revenue was ¥425.73B (+26.3% YoY), Operating Income was ¥15.63B (+28.4%), Ordinary Income was ¥16.77B (+27.8%), and Net Income was ¥12.54B (+26.7%). Although the gross profit margin declined to 13.9% from the previous year, the decline in the SG&A ratio offset this impact, resulting in a slight improvement in the Operating Income margin to 3.7%.

Factors Driving Performance Changes

【Revenue】Revenue was ¥425.73B, representing a 26.3% increase YoY. The Public Sector-Related Business expanded sharply, with revenue of ¥161.04B (+73.6%), driving company-wide growth. The Information-Related Business maintained its position as the largest segment, with revenue of ¥204.45B (+11.3%), while the Office-Related Business was essentially flat at ¥59.17B (-0.4%).

【Profit and Loss】Operating Income was ¥15.63B (+28.4% YoY), Ordinary Income was ¥16.77B (+27.8%), and Net Income was ¥12.54B (+26.7%). While the gross profit margin declined to 13.9% from 15.5% in the previous year, the SG&A ratio declined to 10.2%, offsetting the impact. By segment, the Public Sector-Related Business led the increase in consolidated profits, posting Operating Income of ¥8.97B (+71.3%, profit margin 5.6%), while the Information-Related Business posted Operating Income of ¥4.29B (-6.5%, profit margin 2.1%), representing a decline in profit and suggesting lower project profitability. Gain on the sale of investment securities of ¥1.28B was recorded as extraordinary income; therefore, the pretax income of ¥18.01B includes a one-time factor. Overall, the results show higher revenue and profits.

Segment Analysis

The Public Sector-Related Business recorded revenue of ¥161.04B (+73.6% YoY) and Operating Income of ¥8.97B (+71.3%), with a profit margin of 5.6%, representing the largest growth among all segments and accounting for approximately 57% of consolidated Operating Income. This performance was supported by expanding demand for education ICT, educational facilities, and systems for central and local governments. The Information-Related Business had the largest revenue scale at ¥204.45B (+11.3%), but Operating Income was ¥4.29B (-6.5%), with a profit margin of 2.1%, resulting in higher revenue but lower profit. Changes in outsourcing costs, personnel expenses, and project mix may have pressured the profit margin. The Office-Related Business was essentially flat in terms of revenue at ¥59.17B (-0.4%), while Operating Income increased to ¥2.13B (+7.3%), with a profit margin of 3.6%, indicating progress in profitability improvement.

Key Financial Indicators

【Profitability】The Operating Income margin was 3.7% (3.6% in the previous year), the Net Income margin was 2.9%, and ROE was 14.6%. Although the gross profit margin of 13.9% declined from 15.5% in the previous year, the decline in the SG&A ratio to 10.2% (11.9% in the previous year) offset the impact and improved the Operating Income margin. 【Cash Flow Quality】OCF was ¥13.07B, exceeding Net Income of ¥12.54B, and the OCF/Net Income ratio was approximately 1.04x, indicating sound cash backing for earnings. 【Investment Efficiency】Capital expenditures of ¥0.89B were below depreciation and amortization of ¥2.24B, resulting in Free Cash Flow (FCF) of ¥11.74B, a high level. Total asset turnover was approximately 2.27x, indicating that capital efficiency is supported more by asset efficiency than by leverage. 【Financial Soundness】The Equity Ratio was 45.9% (40.3% in the previous year). With cash and deposits of ¥34.44B and minimal interest-bearing debt, the financial foundation is strong.

Cash Flow Analysis

OCF was ¥13.07B, a substantial increase from ¥0.55B in the previous year, and slightly exceeded Net Income of ¥12.54B. An increase in contract liabilities of ¥6.78B, a decrease in inventories of ¥2.41B, and a decrease in trade receivables of ¥1.95B contributed to cash inflows, while a decrease in trade payables of ¥12.05B was a negative factor, and corporate income tax payments of ¥5.12B also placed pressure on cash flow. Investing Cash Flow was negative ¥1.33B, primarily reflecting capital expenditures of ¥0.89B, which remained below depreciation and amortization of ¥2.24B. Financing Cash Flow was negative ¥3.47B, mainly due to dividend payments. As a result, FCF was ¥11.74B, and cash and deposits increased to ¥34.44B while funding dividends and working capital. The improvement in OCF during the current period was supported not only by earnings growth but also by changes in working capital, including contract liabilities and inventories; accordingly, the potential reversal of these effects in the following period warrants attention.

Quality of Earnings

Pretax income of ¥18.01B includes the one-time gain on the sale of investment securities of ¥1.28B; therefore, Operating Income and Ordinary Income should be used as the basis for assessing recurring earnings power. Non-operating income was ¥1.32B, primarily consisting of dividend income of ¥0.61B, while non-operating expenses were small at ¥0.18B. The difference between Ordinary Income and Operating Income therefore mainly consisted of stable dividend and interest income. Comprehensive income was ¥18.05B, exceeding Net Income of ¥12.54B, with valuation difference on securities of ¥1.62B and adjustments related to retirement benefits of ¥3.43B serving as contributing factors. Since OCF exceeded Net Income, accruals—the divergence between accounting profit and cash—were limited, and the quality of earnings can be assessed as sound.

Earnings Forecasts and Guidance

For the following period (FY2027), the company forecasts Revenue of ¥400.00B (-6.0% YoY), Operating Income of ¥15.00B (-4.0%), and Ordinary Income of ¥16.00B (-4.6%), anticipating lower revenue and profits compared with the current-period results. The primary factor is believed to be the reversal of the timing effect from the recognition of large projects in the Public Sector-Related Business. The forecast Operating Income margin is 3.75%, slightly above the FY2026 actual result of 3.7%, indicating that the plan assumes continued profitability and cost control even amid declining revenue. The EPS forecast is ¥212.89, and the dividend forecast is ¥76.00, both maintained at the planned levels.

Shareholder Returns

The year-end dividend is ¥76.00 per share, with a Payout Ratio of 30.0%. Share repurchases were virtually negligible (¥0.0B), and the Total Return Ratio was effectively at the same level as the Payout Ratio. Against FCF of ¥11.74B, total dividends were limited to approximately ¥3.75B, providing ample dividend funding. Retained earnings accumulated to ¥66.68B (+¥9.53B YoY), leaving substantial room to continue dividend payments. The company plans to maintain the dividend at ¥76.00 per share in its forecast for the following period, implying a Payout Ratio of approximately 35.7% against forecast EPS of ¥212.89. The company conducted a stock split during the current period (1 share → 5 shares); on a pre-split basis, the year-end dividend corresponds to ¥380.

Risk Factors

1. Timing fluctuations in the recognition of Public Sector-Related Business projects: The Public Sector-Related Business accounts for revenue of ¥161.04B and Operating Income of ¥8.97B, representing approximately 57% of consolidated Operating Income. Projects for education and central and local governments are susceptible to budget execution, bidding, and inspection timing, and the forecast for lower revenue and profits in the following period incorporates this reversal effect.

2. Deterioration in the profitability of the Information-Related Business: The Information-Related Business recorded revenue of ¥204.45B (+11.3%) but Operating Income of ¥4.29B (-6.5%) and a profit margin of 2.1%, resulting in higher revenue but lower profit. If the decline in project profitability due to changes in outsourcing costs, personnel expenses, and project mix continues, it could hinder improvement in the company-wide profit margin.

3. Declining gross profit margin and reliance on expense absorption: The gross profit margin declined to 13.9% from the previous year, creating a structure in which the impact is absorbed through a lower SG&A ratio. Whether the company can continue to absorb expenses in the same manner during the following period, when revenue growth is expected to slow, will be a key focus.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (trading)

Profitability and Returns

Both the Operating Income margin and Net Income margin are slightly above the industry median.

Growth and Capital Efficiency

The Revenue growth rate is substantially above the industry median, demonstrating exceptional growth within the industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. FY2026 delivered higher revenue and profits due to the rapid expansion of the Public Sector-Related Business. However, the company’s forecast for the following period calls for lower revenue and profits, making the incorporation of the reversal effect from large projects an important change in the financial results data.

2. The Information-Related Business has the largest revenue scale but delivered higher revenue and lower profit. As the structure of offsetting the decline in the gross profit margin through a lower SG&A ratio continues, profitability trends in this business will influence the future direction of the overall profit margin.

3. OCF exceeded Net Income, and cash and deposits also increased, indicating sound cash conversion quality for current-period earnings.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,832–¥1,939 at ±1% for the cost of equity, and ¥1,881–¥1,890 at ±0.1 for ω.

(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 does not constitute a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share 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 discretion and responsibility, after consulting with professionals as necessary.

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