SHOEI FOODS CORPORATION FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥124.90B
• Operating Income: ¥4.94B
• Net Income: ¥1.99B
• EPS: ¥181.31

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

Shorei Foods (8079) delivered FY2025 Q4 consolidated JGAAP results marked by solid top-line growth but modest profit progression and weaker cash conversion. Revenue rose 8.4% YoY to 1,248.97, supported by steady demand across food materials and confectionery channels. Gross profit increased to 196.49, implying a gross margin of 15.7%, which remains thin for a branded-foods benchmark but consistent with an importer/processor mix. Operating income rose 2.0% YoY to 49.42, translating to an operating margin of 4.0%, indicating partial pass-through of input cost inflation but some compression vs. sales growth. Ordinary income increased slightly to 49.92 (+0.8% YoY), while profit before tax was 45.21, suggesting the presence of net extraordinary losses within the period. Net income declined 4.2% YoY to 30.35, with an effective tax rate of roughly 30.8%, consistent with Japan’s statutory range. DuPont analysis indicates ROE of 5.4% (net margin 2.4%, asset turnover 1.293x, financial leverage 1.73x), highlighting adequate efficiency but subdued profitability relative to capital intensity. Liquidity is strong: current ratio 194.7% and quick ratio 125.5%, backed by sizeable working capital of 319.93 and cash/deposits of 115.05. Capital structure remains conservative with total liabilities/equity of 0.73x and estimated net debt of about 79.8 (short- and long-term loans of 194.8 minus cash of 115.1), implying ample balance sheet flexibility. Cash flow quality was weak this year: operating CF was -6.10 despite positive earnings, and FCF was -24.66 due to capex of 17.64 and working capital absorption. Financing CF was +26.17, reflecting incremental borrowings that funded capex and share repurchases of 11.23. EBITDA was 77.73, with a 6.2% margin and a strong interest coverage ratio of 20.7x, underscoring manageable financial risk despite short-term OCF pressure. Dividend data were not fully disclosed; however, the calculated payout ratio is 28.2%, implying coverage by earnings though not by free cash flow this year (FCF coverage -2.88x). Inventory and receivables balances are substantial at 233.74 and 237.54, respectively, consistent with import-heavy operations but heightening working-capital sensitivity. Overall, the company exhibits sound solvency and liquidity, moderate ROE, and resilient albeit margin-constrained profitability, with the key near-term focus on normalizing operating cash flow and managing input-cost/FX volatility. Data limitations exist for certain SG&A line items, DPS specifics, and some reported ratios, but the available figures provide a robust basis for analysis.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.4% (30.35 / 1,248.97)
• asset_turnover: 1.293x (Revenue / Assets; provided)
• financial_leverage: 1.73x (Total Assets 965.86 / Equity 559.31)
• calculated_ROE: 5.4% (matches reported 5.4%) margins:
• gross_margin: 15.7% (196.49 / 1,248.97)
• operating_margin: 4.0% (49.42 / 1,248.97)
• ordinary_income_margin: 4.0% (49.92 / 1,248.97)
• net_margin: 2.4% (30.35 / 1,248.97)
• EBITDA_margin: 6.2% (77.73 / 1,248.97) margin_quality_and_drivers: Gross margin indicates partial pass-through of higher input costs but remains constrained by product mix (imported nuts, cocoa, dried fruits) and competitive pricing., Operating margin growth (+2.0% YoY OI vs +8.4% sales) suggests negative mix/price-cost lag or elevated SG&A (rent 4.94 reported; other items undisclosed)., Ordinary-to-PBT gap (~4.7) implies extraordinary losses or valuation effects, pressuring bottom line., Interest burden is low (2.39) relative to EBIT, supporting 20.7x interest coverage. operating_leverage: Revenue +8.4% YoY vs operating income +2.0% YoY indicates limited operating leverage in the period., Depreciation and amortization of 28.31 supports EBITDA uplift, but SG&A absorption appears weaker than sales growth., Further margin expansion likely depends on improved procurement/FX hedging and disciplined price pass-through.

Growth Assessment

revenue_trend_and_sustainability: Top-line growth of 8.4% indicates healthy demand and/or pricing effects across core categories., Inventory and receivables levels suggest robust activity but increase the risk of normalization-driven working-capital outflows. profit_trend_and_quality: Operating income +2.0% YoY lags sales growth, pointing to margin pressure from costs and mix., Net income -4.2% YoY reflects extraordinary items and a normalized tax rate (~30.8%)., EBITDA growth appears modest; interest coverage remains strong, supporting earnings resilience. outlook_commentary: Near-term growth hinges on continued cost pass-through, FX management (JPY weakness), and stable import procurement for nuts/cocoa., Normalization of logistics costs and improved sourcing could support margin recovery., Tighter working-capital discipline will be important to translate earnings into cash.

Financial Health

liquidity:

• current_ratio: 194.7% (657.64 / 337.71)
• quick_ratio: 125.5% ((657.64 - 233.74) / 337.71)
• working_capital: 319.93
• cash_and_deposits: 115.05
• commentary: Ample short-term liquidity; inventory-heavy model requires vigilant turns management. solvency_and_capital_structure:
• total_liabilities_to_equity: 0.73x (406.56 / 559.31)
• gross_interest_bearing_loans: 194.82 (ST 140.33 + LT 54.49)
• net_debt: ≈79.77 (loans 194.82 - cash 115.05)
• net_debt_to_equity: ≈0.14x
• interest_coverage: 20.69x (Operating income / Interest expense)
• commentary: Balance sheet is conservative with moderate leverage and strong coverage; refinancing risk appears low.

Cash Flow Quality

earnings_to_cash:

• OCF: -6.10
• net_income: 30.35
• OCF_to_net_income: -0.20x
• commentary: Negative operating cash despite profits indicates working-capital build (likely in inventories/receivables); monitor normalization. free_cash_flow:
• FCF: -24.66 (OCF -6.10 minus capex 17.64)
• capex: 17.64
• capex_intensity_comment: Capex appears moderate relative to scale; FCF shortfall primarily from OCF weakness. working_capital_dynamics: Inventories at 233.74 and receivables at 237.54 are sizeable versus revenue, consistent with import-heavy operations., Payables at 107.45 provide partial funding but likely lag inventory/AR growth, contributing to OCF drag., Improved turns and collection could restore positive OCF. financing_bridge: Financing CF +26.17 (increased borrowings) funded capex and share repurchases (11.23)., Reliance on financing was tactical; sustained OCF recovery is important to reduce dependence.

Dividend Sustainability

payout_ratio_assessment:

• calculated_payout_ratio: 28.2%
• reported_payout_ratio: 0.3% (reported value likely reflects disclosure classification; treat with caution)
• EPS: 181.31 JPY; DPS undisclosed FCF_coverage:
• FCF: -24.66
• coverage: -2.88x
• commentary: Dividends (amount undisclosed) are covered by earnings but not by free cash flow this year due to OCF shortfall. policy_outlook: With strong liquidity and modest leverage, near-term dividend capacity is supported by the balance sheet., For sustainable increases, management should prioritize OCF normalization and stable margin delivery., Lack of DPS disclosure limits precision; monitor upcoming filings for payout policy clarity.

Risk Assessment

Business Risks:

• Input cost volatility for imported nuts, cocoa, dried fruits, and sugar.
• Foreign exchange risk (JPY depreciation) affecting COGS.
• Customer pricing power and pass-through timing in retail/wholesale channels.
• Inventory obsolescence and quality risks in perishable/seasonal products.
• Food safety/recall risk impacting brand and costs.
• Logistics and freight cost volatility.
• Seasonality around holiday gifting and confectionery demand.

Financial Risks:

• Working-capital driven OCF volatility, particularly in inventories and receivables.
• Short-term loan concentration (140.33) exposes to rollover and rate reset risk.
• Extraordinary loss volatility impacting PBT and net income.
• Valuation risk on investment securities (46.93) amid market fluctuations.
• Potential FX translation/hedging mismatches affecting margins.

Key Concerns:

• Negative operating cash flow versus positive earnings.
• Margin compression despite strong sales growth.
• Dependence on financing inflows to fund capex and shareholder returns this period.

Investment Implications

Key Takeaways:

• Solid top-line growth (+8.4%) but modest operating profit growth (+2.0%) indicates near-term margin pressure.
• ROE at 5.4% is moderate, driven more by asset turnover than margin strength.
• Liquidity and solvency are strong, with net debt low relative to equity and high interest coverage.
• Cash flow conversion was weak (OCF/NI -0.20x), resulting in negative FCF.
• Extraordinary items reduced PBT below ordinary income, weighing on bottom line.
• Balance sheet flexibility enabled continued capex and buybacks despite FCF shortfall.

Metrics to Watch:

• OCF/Net income and free cash flow trajectory.
• Inventory and receivables days; overall working-capital turns.
• Gross and operating margins (price pass-through vs. input/FX trends).
• USD/JPY and key commodity prices (cocoa, nuts).
• Short-term debt mix and refinancing schedule; interest rate sensitivity.
• Extraordinary items and their recurrence.
• Dividend disclosure (DPS) and payout policy updates.

Relative Positioning: Within Japan-listed food materials/importers, Shorei Foods shows solid growth and strong liquidity with moderate leverage, but profitability (margins, ROE) and cash conversion trail higher-margin branded peers; execution on working-capital and cost pass-through is key to closing the gap.

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
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