KOMERI CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The Company posted higher revenue and earnings in Q1, with Operating Income growth exceeding Revenue growth, primarily due to improved SG&A efficiency. Revenue was ¥114.65B (up ¥5.40B, or +4.9% YoY), Operating Income was ¥10.88B (up ¥0.87B, or +8.8%), Ordinary Income was ¥10.86B (up ¥0.75B, or +7.4%), and Net Income attributable to owners of the parent was ¥7.24B (up ¥0.36B, or +5.2%). The Operating Margin improved to 9.5% from 9.2% in the same period of the previous year, with both a slight increase in the gross profit margin and a decline in the SG&A ratio contributing to the improvement. Progress against the full-year company plan reached 28.6% for Revenue and 45.3% for Operating Income, indicating that profit progress is at a favorable level even after taking Q1 seasonality into account.

Factors Affecting Results

【Revenue】Revenue increased 4.9% YoY to ¥114.65B. The reported segments have been consolidated into the Home Center Business, and breakdowns by segment and region have not been disclosed. The gross profit margin improved slightly to 30.6% from 30.5% in the same period of the previous year, suggesting that restrained discounting and changes in the product mix contributed to the increase in revenue.

【Profit and Loss】Operating Income increased 8.8% YoY to ¥10.88B, expanding at a pace exceeding Revenue growth (+4.9%). The SG&A ratio declined to 24.5% from 24.9% in the same period of the previous year, and improved cost efficiency supported the increase in Operating Income. Non-operating income and expenses were broadly balanced, with income of ¥0.14B, including ¥0.07B in dividend income, against expenses of ¥0.16B, including ¥0.07B in interest expense. Ordinary Income was ¥10.86B (+7.4%). Although the Company recorded ¥0.13B in extraordinary losses, including ¥0.11B in disaster-related losses, extraordinary income was limited to ¥0.04B, resulting in a net ¥0.09B temporary downward factor for profit before tax. Net Income attributable to owners of the parent after income taxes was ¥7.24B (+5.2%), slightly below the growth rates of Operating Income and Ordinary Income. In conclusion, the Company recorded higher revenue and earnings in the quarter.

Key Financial Indicators

【Profitability】The Operating Margin was 9.5%, improving by 0.3pt from 9.2% in the same period of the previous year, while the Net Profit Margin remained broadly flat at 6.3%. ROE was 2.8% on a Q1 (three-month) basis. 【Cash Quality】Comprehensive Income was ¥7.22B, broadly in line with Net Income attributable to owners of the parent of ¥7.24B. Apart from a ¥0.03B adjustment related to retirement benefits, there were no significant sources of divergence, indicating stable earnings quality. 【Investment Efficiency】The ratio of Revenue to total assets (on a quarterly basis) was only 0.29x, while inventories of ¥130.43B accounted for 32.6% of total assets, weighing on asset efficiency. 【Financial Soundness】The Equity Ratio rose to 65.6% from 65.2% in the same period of the previous year. The current ratio was 193.1% and the quick ratio was 60.7%, indicating substantial short-term payment capacity. Total borrowings (short-term and long-term combined) were ¥28.46B, and the interest coverage ratio, calculated as the multiple of interest expense covered by Operating Income, was approximately 157x, indicating ample capacity to bear interest costs.

Cash Flow Analysis

As an individual cash flow statement has not been disclosed, cash movements are analyzed based on changes in the balance sheet. Cash and deposits were ¥14.84B, up ¥2.71B (+22.3%) from ¥12.13B in the same period of the previous year, suggesting that cash generation through operating activities has continued. Within trade payables, electronically recorded obligations increased to ¥32.04B (+¥6.48B, +25.3%), while accounts payable declined to ¥24.50B (-¥6.71B, -21.5%). This presentation-related change indicates a shift in payment methods from accounts payable to electronically recorded obligations. Inventories were ¥130.43B, broadly flat from ¥132.40B in the same period of the previous year, with no sharp buildup in inventory levels observed. Property, plant and equipment was ¥182.68B and remained broadly flat, suggesting that cash outflows from large-scale capital expenditure were limited. Overall, although the composition of payment methods changed, the increase in cash and deposits confirms that the Company’s liquidity position remained stable.

Earnings Quality

The Company’s earnings for the quarter were primarily driven by its core operating activities. Non-operating income was ¥0.14B, centered on ¥0.07B in dividend income, while non-operating expenses were ¥0.16B, centered on ¥0.07B in interest expense. Consequently, the difference between Ordinary Income (¥10.86B) and Operating Income (¥10.88B) was minimal. Extraordinary losses of ¥0.13B, including ¥0.11B in disaster-related losses, exceeded extraordinary income of ¥0.04B by ¥0.09B, creating a temporary factor that reduced profit before tax. After deducting income taxes of ¥3.52B (an effective tax rate of approximately 32.7%) from profit before tax of ¥10.77B, Net Income attributable to owners of the parent was ¥7.24B. Comprehensive Income of ¥7.22B was broadly in line with Net Income, and the impact of other comprehensive income items, including adjustments related to retirement benefits, was minor. Accordingly, earnings distortion arising from accounting accruals is considered limited.

Earnings Forecasts and Guidance

Progress against the full-year company plan was 28.6% for Revenue (¥114.65B/¥400.80B), 45.3% for Operating Income (¥10.88B/¥24.00B), and 45.4% for Ordinary Income (¥10.86B/¥23.90B). Even after taking into account that Q1 is a period when demand tends to be concentrated, profit progress exceeded Revenue progress, indicating favorable progress toward the full-year plan (Operating Income +4.1%, Ordinary Income +2.2%). No revisions were made to the earnings forecast or dividend forecast during the quarter.

Shareholder Returns

Under the Company’s plan, annual dividends are expected to be ¥29 (+¥1 from the ¥28 recorded in the previous fiscal year), and no revision to the dividend forecast had been made as of the end of the quarter. Based on forecast full-year EPS of ¥319.44, the Payout Ratio is approximately 9.1% (¥29/¥319.44), a conservative level relative to earnings. The Company held 6,829 thousand treasury shares (12.7% of issued shares), and no new information regarding treasury share repurchases during the quarter was identified. The low Payout Ratio is consistent with maintaining financial soundness, as reflected in the 65.6% Equity Ratio, through retained earnings.

Risk Factors

1. Inventory level: Inventories were ¥130.43B, accounting for 32.6% of total assets, a relatively high level for a retailer. If markdown sales or product obsolescence occur, the gross profit margin could come under pressure.

2. Short-term funding structure: Of interest-bearing liabilities, short-term borrowings were ¥13.50B and current maturities of long-term borrowings were ¥1.85B, indicating relatively high dependence on short-term liabilities. Funding costs may be susceptible to changes in the interest rate environment.

3. Future cash outflows related to asset retirement obligations and other items: Asset retirement obligations were ¥14.53B, accounting for 10.5% of total liabilities (¥137.78B), and may represent a future cash expenditure when stores are demolished or restored to their original condition.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Profitability significantly exceeded the industry median, with both the Operating Margin and Net Profit Margin at high levels within the industry.

Growth and Capital Efficiency

Revenue growth was slightly below the industry median, indicating a relatively moderate pace of Revenue growth.

※Source: Compiled by the Company

Key Points in the Financial Results

1. The Operating Margin improved to 9.5% (9.2% in the same period of the previous year), primarily due to a decline in the SG&A ratio (24.9%→24.5%). Whether the earnings growth trend driven by improved cost efficiency will continue is a key point of focus.

2. Profit progress against the full-year plan was in the mid-45% range, significantly exceeding Revenue progress (28.6%). Even after allowing for Q1 seasonality, profit progress was at a favorable level.

3. While inventories accounted for 32.6% of total assets, trade payables continued to shift from accounts payable to electronically recorded obligations, confirming changes in the working capital structure on both the asset and liability sides.

Theoretical Stock Price (Reference Value)

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

Sensitivity: ¥4,918–¥5,211 at ±1% for the cost of equity, and ¥5,042–¥5,074 at ±0.1 for ω.

Notes:

• Because progress of Net Income against the full-year forecast (48%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with progress ahead of plan tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing gap relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated at a somewhat high level.

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value is not intended to forecast or guarantee the future stock price)

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This report is an automatically generated financial results analysis document in which AI analyzed XBRL financial results summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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