These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥3977.7B | ¥3758.1B | +5.8% |
| Operating Income | ¥24.6B | ¥38.4B | -35.8% |
| Equity-Method Investment Gains (Losses) | - | - | - |
| Ordinary Income | ¥38.1B | ¥44.4B | -14.1% |
| Net Income | ¥23.5B | ¥33.6B | -29.9% |
| ROE | 0.9% | 1.2% | - |
The Company posted higher revenue but lower earnings for the quarter, as the decline in gross margin, which exceeded the rate of revenue growth, and an increase in extraordinary losses weighed on net income. Revenue was ¥3,977.7B (+5.8% YoY), Operating Income was ¥24.6B (-35.8%), Ordinary Income was ¥38.1B (-14.1%), and Net Income attributable to owners of the parent was ¥23.5B (-29.9%). While the core Pharmaceutical Wholesale Business drove revenue growth, the gross margin declined to 7.4% from 8.0% in the same period of the previous year. In addition, the expansion of intersegment eliminations and corporate expenses, together with the recognition of ¥6.2B in extraordinary losses, resulted in earnings-reducing factors outweighing the benefit of higher revenue.
【Revenue】Revenue increased 5.8% YoY to ¥3,977.7B. The core Pharmaceutical Wholesale Business, which accounted for 92.9% of the revenue mix, drove overall growth with revenue of ¥3,845.7B (+6.2%). The Dispensing Pharmacy Business secured revenue growth at ¥249.8B (+1.5%), while the Pharmaceutical Manufacturing and Marketing Business recorded revenue of ¥29.5B (+0.2%). Meanwhile, Other Peripheral Businesses posted lower revenue of ¥15.1B (-7.3%).
【Profit and Loss】Operating Income declined 35.8% YoY to ¥24.6B. Gross profit was ¥294.8B, with a gross margin of 7.4%, down 0.6pt from 8.0% in the previous year. Although the SG&A ratio improved to 6.8% from 7.0%, or by 0.2pt, this was insufficient to absorb the deterioration in gross margin. Segment Operating Income was ¥31.1B (-25.2%) for Pharmaceutical Wholesale, ¥1.1B (-38.6%) for Dispensing Pharmacies, ¥0.9B (+85.7%) for Manufacturing and Marketing, and ¥0.5B (-68.9%) for Other Peripheral Businesses. Intersegment eliminations and corporate expenses expanded to -¥8.96B from -¥6.95B in the previous year, further compressing consolidated Operating Income. Supported by ¥14.4B in non-operating income, including ¥4.6B in dividends received, Ordinary Income remained at ¥38.1B (-14.1%). However, the recognition of ¥6.2B in extraordinary losses, compared with ¥2.3B in the previous year, resulted in Profit Before Tax of ¥32.0B, while Net Income attributable to owners of the parent was ¥23.5B (-29.9%). In conclusion, the Company achieved revenue growth but experienced earnings decline.
The Pharmaceutical Wholesale Business recorded revenue of ¥3,845.7B (+6.2%) and Operating Income of ¥31.1B (-25.2%), resulting in a profit margin of 0.8%. Although it accounted for the majority of consolidated Operating Income, its profit margin declined. The Dispensing Pharmacy Business posted revenue of ¥249.8B (+1.5%), while Operating Income declined 38.6% to ¥1.1B, reducing its profit margin to 0.5% and making it the segment with the most pronounced deterioration in profitability among the four segments. The Pharmaceutical Manufacturing and Marketing Business improved its Operating Income by 85.7% to ¥0.9B despite revenue of ¥29.5B (+0.2%), securing a profit margin of 3.1%; however, its impact on the consolidated scale remained limited. Other Peripheral Businesses contracted, with revenue of ¥15.1B (-7.3%) and Operating Income of ¥0.5B (-68.9%). The adjustment for intersegment internal transaction eliminations and corporate expenses was -¥8.96B, expanding from -¥6.95B in the previous year. Consequently, consolidated Operating Income was limited to ¥24.6B versus combined segment profit of ¥33.6B.
【Profitability】The Operating Income margin was 0.6%, down 0.4pt from 1.0% in the same period of the previous year, while the Net Income margin also declined 0.3pt to 0.6% from 0.9%. The gross margin deteriorated by 0.6pt to 7.4% from 8.0%, indicating that the decline in profitability was primarily attributable to an increase in the cost-of-sales ratio.【Cash Quality】Cash and deposits increased by ¥146.98B (+16.8%) from the end of the previous fiscal year to ¥1,020.6B. At the same time, trade receivables increased to ¥3,582.5B (+3.2%), inventories to ¥972.9B (+8.3%), and accounts payable to ¥4,570.7B (+10.3%), indicating continued expansion of working capital.【Investment Efficiency】ROE was 0.9% on a Q1 actual-results basis, with ¥4.6B in dividends received within non-operating income supporting Ordinary Income.【Financial Soundness】The Equity Ratio was 34.4%, down 2.2pt from 36.6% in the same period of the previous year. However, interest-bearing debt remained modest at approximately ¥54B in total short- and long-term debt, and interest coverage based on Operating Income remained high at approximately 117x (¥24.6B Operating Income ÷ ¥0.2B interest expense).
Although an individual Cash Flow Statement disclosure is not available, an examination of changes in the Balance Sheet indicates that cash and deposits increased by ¥146.98B (+16.8%) from the end of the previous fiscal year to ¥1,020.6B. Meanwhile, trade receivables increased by ¥111.66B (+3.2%) and inventories by ¥74.63B (+8.3%), indicating that the accumulation of working capital associated with business expansion is increasing funding needs. In contrast, accounts payable increased by ¥428.23B (+10.3%), meaning that the growth in trade payables offset a certain portion of the cash burden resulting from the increase in working capital. Interest-bearing debt remained limited at approximately ¥54B in total short- and long-term debt, suggesting that liquidity is being maintained through internal funds and the use of trade terms rather than financing through borrowings.
Recurring earnings are secured primarily through the core Pharmaceutical Wholesale Business. However, the recognition of ¥6.2B in extraordinary losses, compared with ¥2.3B in the previous year, reduced Profit Before Tax, indicating that the impact of one-time factors increased from the previous year. Non-operating income was ¥14.4B, equivalent to only 0.36% of revenue, and dividends received of ¥4.6B constituted a major component, indicating limited reliance on non-operating income. Comprehensive income was ¥8.5B, substantially below Net Income attributable to owners of the parent of ¥23.5B, mainly due to the deterioration in the valuation difference on other securities to -¥14.7B. This divergence between net income and comprehensive income indicates that changes in the market value of held securities are affecting the accounting quality of earnings.
Progress against the full-year Company plan as of Q1 was 24.9% for revenue (¥3,977.7B/¥16,010.0B), 16.7% for Operating Income (¥24.6B/¥148.0B), 23.0% for Ordinary Income (¥38.1B/¥166.0B), and 18.3% for Net Income (¥23.5B/¥129.0B). While revenue was broadly in line with the simple 25% progress benchmark, progress for Operating Income and Net Income was below this level, as the decline in gross margin and recognition of extraordinary losses delayed earnings progress. As of Q1, the Company had not revised either its earnings forecast or dividend forecast.
The Company plans to pay an annual dividend of ¥180.00 per share and had not revised its dividend forecast as of Q1. Based on forecast EPS of ¥197.67 for the full year, the Payout Ratio is high at approximately 91.1% (¥180/¥197.67). There was no mention of share repurchases, and shareholder returns consist solely of dividends. The conservative financial structure, comprising cash on hand of ¥1,020.6B and interest-bearing debt of approximately ¥54B, supports the funding of dividends. However, Q1 progress toward full-year Net Income was only 18.3%, making the realization of full-year earnings an important premise for the future dividend policy.
Profitability (Gross Margin) Decline Risk: The gross margin was 7.4%, down 0.6pt from 8.0% in the previous year. The business structure is such that spread contraction in the Pharmaceutical Wholesale Business due to changes in transfer prices and drug prices directly affects profit margins.
Business Segment Concentration Risk: The Pharmaceutical Wholesale Business accounts for 92.9% of revenue (¥3,845.7B), and its Operating Income declined 25.2% YoY. The high degree of dependence on a single business is therefore a factor contributing to volatility in consolidated earnings.
Working Capital Increase Risk: Trade receivables increased to ¥3,582.5B (+3.2%) and inventories to ¥972.9B (+8.3%). If funds become tied up at a rate exceeding revenue growth, this could affect capital efficiency.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 0.6% | 4.3% (1.7%–6.9%) | -3.6pt |
| Net Income Margin | 0.6% | 3.8% (1.5%–5.1%) | -3.2pt |
Both the Operating Income margin and Net Income margin are substantially below the industry median, placing profitability at the lower end of the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.8% | 3.1% (-0.6%–11.7%) | +2.7pt |
The revenue growth rate exceeds the industry median, indicating that the pace of top-line expansion is relatively high within the industry.
※Source: Compiled by the Company
Although revenue increased 5.8%, Operating Income declined 35.8% as the gross margin fell 0.6pt, confirming an earnings structure in which revenue growth does not necessarily translate into earnings growth.
Due to the recognition of ¥6.2B in extraordinary losses and the deterioration in the valuation difference on other securities (-¥14.7B), Comprehensive Income (¥8.5B) was substantially below Net Income attributable to owners of the parent (¥23.5B). The impact of one-time factors should therefore be considered when evaluating earnings quality.
Progress against the full-year plan was 24.9% for revenue, versus 16.7% for Operating Income and 18.3% for Net Income, indicating that earnings progress is somewhat delayed. The trend in gross margin in the second half of the fiscal year will be a key determinant of full-year performance.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade period). It is not a forecast of the market price or a recommendation of any specific investment action.
| Scenario | Theoretical Stock Price |
|---|---|
| bear (bearish) | ¥3,598 |
| base (base case) | ¥3,617 |
| bull (bullish) | ¥3,650 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥4,073 |
| Adjusted Forecast EPS | ¥204.9 |
| Cost of Equity r | 9.27% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 91.1% |
| Forecast EPS Confidence Adjustment | ×1.037 (based on the historical guidance achievement rate of peer companies) |
| implied PBR / PER |
Sensitivity: ¥3,522–¥3,716 for Cost of Equity ±1%; ¥3,603–¥3,626 for ω ±0.1.
Notes:
(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee the future stock price)
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 available earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.
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| 0.89x / 17.6x |