Credit Saison Co.,Ltd. FY2027 Q1 Earnings Report

Quick View

Executive Summary

The Company reported higher revenue and earnings, driven by increased profits in the Finance Business and Global Business. Revenue was ¥1284.9B (+4.6% YoY), profit before tax was ¥313.4B (+37.1%), net income was ¥222.1B (+37.4%), and net income attributable to owners of the parent was ¥217.5B (+35.1%). The fact that earnings growth substantially exceeded revenue growth was attributable to increased profitability in the Finance Business and an improvement in the Global Business, confirming qualitative improvement in the top line that exceeded cost increases.

Factors Affecting Performance

【Revenue】Revenue increased 4.6% YoY to ¥1284.9B. By segment, the Global Business and Finance Business grew substantially, by +35.9% and +29.8%, respectively, while the Leasing Business also increased by +16.1%. Meanwhile, the Payment Business (54.8% of total revenue) increased revenue by +5.6%, and the Real Estate-Related Business increased revenue by +4.2%, indicating that the two core businesses achieved relatively modest growth. In addition, the Entertainment Business (previous-year revenue of ¥95.8B) was excluded from consolidation following the transfer of shares in Concerto Co., Ltd. in April 2026. Accordingly, the effective growth rate of existing businesses slightly exceeded the disclosed consolidated company-wide growth rate.

【Profit and Loss】Profit before tax increased 37.1% YoY to ¥313.4B, while net income increased 37.4% to ¥222.1B, substantially exceeding the rate of revenue growth. Business profit in the Finance Business was ¥138.5B (+53.3% YoY), with a margin of 59.2%, the highest among all segments, making the largest contribution to consolidated business profit. The Global Business turned profitable, generating profit of ¥22.8B compared with a loss in the previous-year period, making a significant contribution to earnings growth. On the other hand, despite higher revenue, business profit in the Payment Business declined by -3.7%, while the Real Estate-Related Business also reported a decline of -8.7%, indicating that profitability improvement is concentrated in the Finance and Global Businesses. Although one-time factors included a gain on the sale of property, plant and equipment of ¥12.7B, the difference between profit before tax and business profit (¥304.4B) was small at ¥9.0B, indicating that the primary driver of earnings growth was increased profit from the core businesses. Accordingly, the quarter is concluded to have produced higher revenue and earnings.

Segment Analysis

Among the five segments, the Finance Business (revenue of ¥233.9B, 18.2% of total revenue) was the largest profit-contributing segment, generating business profit of ¥138.5B and a margin of 59.2%. The Global Business (revenue of ¥192.0B, 14.9% of total revenue) generated business profit of ¥22.8B, turning profitable from a loss of ¥8.7B in the previous-year period. The Payment Business (revenue of ¥704.7B, 54.8% of total revenue) was the largest segment by revenue, but business profit declined to ¥116.9B (-3.7% YoY), with a margin of only 16.6%. The Real Estate-Related Business (revenue of ¥114.3B) also reported lower business profit of ¥17.3B (-8.7% YoY). The Leasing Business (revenue of ¥40.1B) remained stable, with business profit of ¥11.2B (+3.2% YoY) and a margin of 28.1%. Overall, profit growth is dependent on the Finance and Global Businesses, while declining profitability in the core Payment Business will be a key area of focus going forward.

Key Financial Indicators

【Profitability】The net profit margin was 17.3% based on profit attributable to owners of the parent, up from 13.1% in the previous-year period, while the profit-before-tax margin also improved to 24.4% from 18.6%. The business profit margin was 23.7%, expanding by 502bp from 18.7% in the previous year.【Cash Quality】Cash and cash equivalents were ¥1039.0B, down ¥84.2B from ¥1123.2B at the beginning of the fiscal period, reflecting funding needs associated with a ¥693.1B increase in trade and other receivables.【Investment Efficiency】Annualized ROE was 11.3%. Although total asset turnover remained low, this was offset by a high net profit margin and high financial leverage. Basic EPS was ¥151.42 (¥108.85 in the previous year, +39.1%).【Financial Soundness】The equity ratio was 15.4%, remaining at approximately the same level as in the previous year. However, total liabilities were ¥42325.6B and accounted for the majority of assets, while bonds and borrowings increased by ¥861.3B from the beginning of the fiscal period. Given the structure of the financial services business, leverage is high, and monitoring is required because finance costs of ¥154.3B substantially exceeded finance income of ¥22.3B.

Cash Flow Analysis

Although an explicit statement of cash flows was not disclosed, analysis of funding trends based on changes in the balance sheet indicates that cash and cash equivalents declined by ¥84.2B, from ¥1123.2B at the beginning of the fiscal period to ¥1039.0B in the current period. This was attributable in part to a ¥693.1B increase in trade and other receivables, suggesting that funds were invested in the expansion of lending- and credit-guarantee-related assets within the financial services business. This asset expansion was primarily funded by an ¥861.3B increase in bonds and borrowings, indicating that the funding structure is becoming more dependent on liabilities. Actual share repurchases were effectively zero in the current period, and cash outflows related to shareholder returns primarily consisted of dividend payments of ¥190.1B. The cancellation of treasury shares totaling ¥688.1B was a non-cash item and, although it changed the capital structure, did not directly affect cash flow.

Quality of Earnings

The primary driver of earnings growth was the expansion of business profit to ¥304.4B (+32.7% YoY). The difference from profit before tax of ¥313.4B was small at ¥9.0B, indicating that overall earnings quality was favorable. However, other income included a gain on the sale of property, plant and equipment of ¥12.7B, resulting in a certain amount of non-recurring earnings support. Equity-method investment income contributed steadily at ¥45.6B (¥41.5B in the previous year). Meanwhile, impairment losses on financial assets increased to ¥167.3B (+11.6% YoY), a rate exceeding revenue growth, warranting close attention to credit-related accruals (future credit costs). Comprehensive income was ¥292.9B, exceeding net income of ¥222.1B. The difference was attributable to increases in other comprehensive income, including ¥27.9B from cash flow hedges and ¥24.2B from foreign currency translation adjustments, indicating that capital volatility associated with market fluctuations has increased somewhat.

Earnings Forecast and Guidance

The full-year forecast for profit attributable to owners of the parent is ¥755.0B (+22.3% YoY), representing progress of 28.8% against current Q1 results of ¥217.5B, ahead of the simple progress benchmark of 25%. The full-year EPS forecast is ¥525.68, and the dividend forecast is ¥160.00. Neither the earnings forecast nor the dividend forecast has been revised. Whether the pace of earnings growth generated by the Finance and Global Businesses can be maintained throughout the full year will be a key focus for monitoring future progress.

Shareholder Returns

The full-year dividend forecast is ¥160.00 per share, implying a forecast payout ratio of approximately 30.4% against the full-year EPS forecast of ¥525.68. No share repurchases were conducted during the quarter. The substantial decrease in treasury shares of ¥689.7B was attributable not to repurchases but to the cancellation of treasury shares totaling ¥688.1B and therefore does not represent a shareholder-return action in itself. Dividend payments of ¥190.1B were recorded. The forecast payout ratio of approximately 30.4% is conservative relative to the earnings level, and even considering funding needs associated with the expansion of trade receivables, no significant constraint on dividend sustainability is apparent.

Risk Factors

1. Rising credit costs: Impairment losses on financial assets were ¥167.3B, increasing by +11.6% YoY and at a faster pace than revenue growth of +4.6%. As trade and other receivables (¥3934.6B, 78.4% of total assets) continue to expand, deterioration in credit quality could increase impairment expenses going forward.

2. Rising funding costs and high leverage: Finance costs were ¥154.3B (+27.4% YoY), substantially exceeding finance income of ¥22.3B. Bonds and borrowings totaled ¥36689.8B, an increase of +¥861.3B from the beginning of the fiscal period. Under a structure with an equity ratio of 15.4%, changes in the interest-rate environment could have a significant impact on earnings.

3. Declining profitability of the core businesses: Despite revenue growth of +5.6% in the Payment Business, business profit declined by -3.7%. Similarly, the Real Estate-Related Business recorded revenue growth of +4.2%, while business profit declined by -8.7%. Consolidated profit growth remains dependent on the Finance and Global Businesses, making recovery in the profitability of the core businesses an ongoing challenge.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (insurance)

Profitability and Returns

The Company’s net profit margin is substantially above the industry median and ranks among the higher levels within the industry.

Growth and Capital Efficiency

The Company’s revenue growth rate is below the industry median and ranks at or below the middle of the industry in terms of growth speed.

※Source: Company analysis

Key Takeaways from the Earnings Results

1. The drivers of profit growth were the Finance Business (business profit of ¥138.5B, +53.3% YoY) and the Global Business (turnaround to a profit of ¥22.8B from a loss in the previous year). The concentration of consolidated profit growth in these two businesses is a structural consideration when assessing earnings quality.

2. The full-year progress rate of 28.8% exceeds the standard benchmark of 25%. However, the full-year plan assumes a +22.3% increase in profit attributable to owners of the parent. Whether the quarterly growth pace of +35.1% can be maintained throughout the full year will be an item for monitoring.

3. Impairment losses on financial assets (+11.6%) and finance costs (+27.4%) are each increasing at a faster pace than revenue growth (+4.6%). Trends in credit costs and funding costs associated with asset expansion will remain subject to continuous monitoring when assessing the sustainability of earnings growth.

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 discretion and responsibility, after consulting a professional advisor where necessary.

---End of Report---