| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4448.2B | ¥4318.3B | +3.0% |
| Operating Income | ¥359.7B | ¥292.3B | +23.0% |
| Ordinary Income | ¥348.4B | ¥269.4B | +29.4% |
| Net Income | ¥151.1B | ¥212.6B | -28.9% |
| ROE | 32.6% | 24.1% | - |
For the fiscal year ended March 2026, Revenue was ¥4448.2B (vs prior year +¥129.9B, +3.0%), Operating Income was ¥359.7B (vs prior year +¥67.4B, +23.0%), Ordinary Income was ¥348.4B (vs prior year +¥79.0B, +29.4%), and Net Income attributable to owners of the parent was ¥151.1B (vs prior year -¥61.5B, -28.9%). Gross profit margin improved to 20.1% (vs prior year +2.2pt) driven by improved occupancy in the Rental Business and an improved rent mix, and Operating Margin improved to 8.1% (vs prior year +1.3pt). SG&A increased by ¥532.4B (+10.8%), but gross profit growth (+15.4%) outpaced this, generating operating leverage. At the Ordinary Income level, interest expense contracted to ¥9.0B (prior year ¥14.9B), reducing financial costs; however, recognition of special losses of ¥101.7B resulted in Net Income declining 28.9% YoY. ROE remained high at 32.6%, largely reflecting capital compression from a large share buyback during the period (¥722.1B), with shareholders’ equity reduced to ¥463.9B (vs prior year -47.5%), and financial leverage rising to 3.81x. Operating Cash Flow was robust at ¥384.7B (vs prior year +48.5%), and Free Cash Flow was ¥376.5B, sufficiently covering dividend payments of ¥32.5B.
[Revenue] Revenue was ¥4448.2B (vs prior year +3.0%) with the core Rental Business accounting for ¥4296.4B (96.5% of total, +3.0%), consisting of rental income of ¥3325.1B plus ancillary services of ¥474.8B. Rental income increased +3.0% YoY, supported by net growth in managed units and improved occupancy at existing properties. Ancillary services were ¥295.1B (+1.7%), maintenance etc. ¥375.5B (+2.4%), rooftop solar power leasing ¥27.7B (+4.9%), and contracted construction ¥20.1B (+45.6%), each contributing revenue growth. The Silver Business was ¥136.5B (-0.5%) slightly down, and Other Businesses were ¥19.2B (+25.9%) up, but their impact on the consolidated result was limited. Gross profit was ¥892.1B (+15.4%), with gross margin improving to 20.1% (prior year 17.9%), reflecting cost control and a higher share of higher-margin ancillary services.
[Profitability] SG&A was ¥532.4B (+10.8% YoY), but gross profit growth outpaced SG&A, resulting in Operating Income of ¥359.7B (+23.0%), achieving double-digit growth. Operating Margin improved to 8.1% (prior year 6.8%), a +1.3pt improvement, confirming a trend of improved profitability. Major SG&A components included advertising ¥19.9B, taxes and dues ¥46.4B, retirement benefit expenses ¥11.3B, rents ¥16.8B, and commission fees ¥74.7B; increases in personnel-related expenses (including director compensation of ¥7.5B) and outsourcing costs were the main drivers of SG&A growth. Non-operating income totaled ¥12.6B (dividend income ¥1.0B, foreign exchange gains ¥4.9B, etc.), and non-operating expenses were ¥23.8B (interest expense ¥9.0B, commission fees ¥6.6B, etc.), resulting in Ordinary Income of ¥348.4B (+29.4%). Interest expense decreased from ¥14.9B in the prior year to ¥9.0B, supporting growth in Ordinary Income by reducing financial costs. Recognition of special losses of ¥101.7B (including impairment loss ¥0.9B and loss on disposal of fixed assets ¥0.1B) reduced Profit Before Tax to ¥249.2B (vs prior year -11.2%), and after income taxes of ¥90.3B (effective tax rate 36.2%), Net Income was ¥151.1B (-28.9%). Net Income attributable to owners of the parent was ¥149.3B after deducting non-controlling interests of ¥9.6B, resulting in higher operating profit but lower final profit due to special losses.
The Rental Business led the results with Revenue of ¥4296.4B (+3.0% YoY), Operating Income of ¥442.9B (+16.4%), and margin of 10.3% (prior year 9.1%). Increased rental income and ancillary service revenues, along with improved gross margin, raised the margin by 1.2pt. The Silver Business had Revenue of ¥136.5B (-0.5%) and an operating loss of ¥10.6B (worsened from a loss of ¥8.0B), with a margin of -7.8%, expanding losses and diluting consolidated profits. Other Businesses grew Revenue to ¥19.2B (+25.9%) but recorded an operating loss of ¥26.8B (flat from prior year loss of ¥26.1B), with a margin of -139.3%, continuing significant deficits. Adjustments were -¥45.9B (including corporate expenses -¥48.8B), mainly general and administrative costs for corporate functions. While the core Rental Business reliably generates profits, continued losses in the Silver and Other Businesses suppress consolidated profitability.
[Profitability] Operating Margin improved to 8.1% (prior year 6.8%), driven by improved profitability in the Rental Business. Gross margin rose to 20.1% (prior year 17.9%), up 2.2pt, aided by cost control and expansion of higher-margin services. ROE was high at 32.6%, substantially influenced by capital reduction from share buybacks; it is the product of Net Profit Margin 3.4%, Total Asset Turnover 2.52x, and Financial Leverage 3.81x. Net Profit Margin declined from 4.9% in the prior year due to special losses. [Cash Quality] Operating Cash Flow was ¥384.7B (+48.5% YoY), 2.55x Net Income of ¥151.1B, indicating high cash quality. OCF/Sales ratio was 8.6%, demonstrating stable cash generation. Adding depreciation of ¥32.5B gives EBITDA of approximately ¥392B, and OCF/EBITDA was 0.98x, a healthy level. [Investment Efficiency] Capital expenditures were ¥8.1B, 0.25x depreciation (¥32.5B), restrained and contributing to short-term FCF but raising concerns for medium- to long-term asset maintenance and renewal. [Financial Soundness] Current ratio was 110.4% (prior year 108.2%), and quick ratio was 110.4%, maintaining a minimum safety level. Cash and deposits of ¥579.1B covered 85.6% of short-term liabilities of ¥676.6B, maintaining a certain degree of liquidity. D/E ratio rose significantly to 2.81x (prior year 0.37x), with interest-bearing debt of ¥600B (short-term borrowings ¥300B, long-term borrowings ¥300B) versus Net Assets of ¥406.6B (owners’ equity), thinning the capital buffer. Equity Ratio declined to 26.3% (prior year 40.7%), and financial leverage increased. Debt/EBITDA was approximately 1.53x, and EBITDA Interest Coverage was approximately 43.6x, indicating robust ability to service interest.
Operating Cash Flow was ¥384.7B (prior year ¥259.0B, +48.5%). Profit before tax was ¥249.2B, to which depreciation ¥32.5B, equity-method investment losses ¥3.3B, impairment losses ¥0.9B and other non-cash items were added; changes in working capital included increase in trade receivables -¥5.0B, increase in advance receipts ¥15.0B, increase in inventories -¥3.5B, increase in trade payables ¥5.9B, etc. After deducting corporate tax payments of ¥5.8B, subtotal Operating Cash Flow was ¥396.5B. Investing Cash Flow was -¥8.2B, mainly capital expenditures -¥8.1B, partially offset by proceeds from sale of tangible fixed assets ¥2.0B and recovery of long-term loans ¥0.2B, resulting in restrained net outflows. Free Cash Flow was ample at ¥376.5B (prior year ¥253.9B), comfortably covering full-year dividends of ¥32.5B. Financing Cash Flow was -¥687.9B, with the largest outflow being share buybacks -¥722.1B, net increase in short-term borrowings ¥300B, net increase in long-term borrowings ¥0.2B (borrowings ¥300B, repayments -¥298.5B), dividend payments -¥32.5B, dividends to non-controlling interests -¥7.3B, and lease liability repayments -¥2.9B. As a result, Cash and Cash Equivalents declined by ¥311.5B to ¥559.2B (prior year ¥870.8B). Although the large share buyback reduced cash balances, robust Operating Cash Flow generation limits short-term liquidity risk.
There is a large divergence between Ordinary Income of ¥348.4B and Net Income of ¥151.1B, primarily due to special losses of ¥101.7B. Non-operating income was ¥12.6B, including dividend income ¥1.0B and foreign exchange gains ¥4.9B, while non-operating expenses were ¥23.8B, led by interest expense ¥9.0B and commission fees ¥6.6B; these non-operating items are generally recurring. On special items, special gains totaled ¥2.5B (including gain on sale of fixed assets ¥1.0B), while special losses were ¥101.7B (including impairment loss ¥0.9B, loss on disposal of fixed assets ¥0.1B), substantially compressing Profit Before Tax. Comprehensive Income was ¥159.2B (parent company portion ¥149.6B), ¥8.1B higher than Net Income of ¥151.1B; actuarial adjustments related to retirement benefits contributed +¥8.9B, while foreign currency translation adjustments -¥7.9B and valuation differences on securities -¥0.8B detracted. Operating Cash Flow is 2.55x Net Income, and the accrual (Net Income – OCF) is significantly negative, indicating that cash generation strongly backs reported profits and quality of earnings is high. However, the frequency and nature of special losses warrant ongoing monitoring.
Full-year guidance projects Revenue ¥4650.0B (vs prior year +4.5%), Operating Income ¥385.0B (vs prior year +7.0%), Ordinary Income ¥381.0B (vs prior year +9.3%), Net Income attributable to owners of the parent ¥222.0B (vs prior year +48.7%, compared with current period actual ¥149.3B), and EPS ¥69.88. Progress against current period results is: Revenue 95.7%, Operating Income 93.4%, Ordinary Income 91.5%, Net Income 68.1% (based on Net Income ¥151.1B), and the plan assumes the special losses were one-off and Final Profit will substantially increase. Assumptions include maintaining occupancy in the Rental Business, expanding ancillary services, and continued SG&A control. Dividend guidance is stated as annual ¥5 (current period actual ¥10), but actual payments during the period were annual ¥10, so the ¥5 in guidance may refer to the interim dividend. Against EPS guidance ¥69.88, a dividend of ¥5 implies a headline payout ratio of ~7%, but assuming continued annual dividend of ¥10, the payout ratio would be ~14%. Achieving guidance depends on avoiding recurrence of special losses, maintaining Rental Business profitability, and reducing losses in the Silver and Other Businesses.
Annual dividend is ¥10 per share (interim ¥5, year-end ¥5), with total dividends of ¥32.5B (prior year ¥32.4B). Payout ratio against Net Income attributable to owners of the parent of ¥149.3B was 21.8%, indicating sufficient capacity for dividends. The share buyback executed during the period totaled ¥722.1B (details of number of shares acquired not disclosed; treasury shares increased from ¥43.6B to ¥87.5B, an increase of ¥43.9B), and combined dividends and share buybacks totaled ¥754.6B. Total Return Ratio was approximately 499% relative to Net Income ¥151.1B, an extremely high, one-off return. The dividend payout ratio of 21.8% corresponds to 8.4% of Operating Cash Flow ¥384.7B and 8.6% of Free Cash Flow ¥376.5B, so ordinary dividends are well covered by OCF and FCF. Following the share buyback, shares outstanding were 334.4 million, treasury shares 16.7 million, and the weighted average shares during the period were 330.8 million. BPS declined to ¥127.98 (prior year ¥255.81), halved due to share buybacks and changes in capital structure. Next fiscal year dividend guidance is stated as annual ¥5, but maintenance of the ¥10 level on an actual basis is expected.
Segment concentration risk: The Rental Business accounts for 96.5% of Revenue and the majority of Operating Income, creating very high dependence on a single business. Cyclical changes in the real estate market, occupancy declines, or rent decreases directly threaten consolidated earnings. The Silver Business (Operating Loss ¥10.6B, margin -7.8%) and Other Businesses (Operating Loss ¥26.8B, margin -139.3%) continue to incur losses, so if Rental Business profitability weakens, consolidated results could deteriorate rapidly.
High leverage and reduced capital buffer: A large share buyback (¥722.1B) reduced shareholders’ equity to ¥463.9B (prior year ¥882.7B), a 47.5% decline, and D/E ratio rose to 2.81x (prior year 0.37x). With interest-bearing debt of ¥600B (short-term ¥300B, long-term ¥300B) versus Net Assets ¥406.6B (owners’ equity), the capital buffer is thin, lowering resilience to additional external shocks or performance deterioration. Short-term liabilities ratio is 50.0%, indicating maturity mismatch and necessitating vigilance regarding refinancing risk.
Reduced investment raising medium- to long-term competitiveness concerns: Capital expenditures of ¥8.1B are only 0.25x depreciation (¥32.5B), extremely suppressed. While this helps FCF generation in the short term, it raises concerns about asset aging, delayed digital investment, and widening facility gaps versus competitors. Continuous asset renewal and maintenance are essential to sustain competitiveness in the Rental Business; the low investment level may undermine the long-term revenue base.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.1% | 10.7% (6.8%–17.9%) | -2.6pt |
| Net Profit Margin | 3.4% | 5.8% (2.5%–11.9%) | -2.4pt |
Operating Margin is 2.6pt below the industry median, and Net Profit Margin is 2.4pt below the median. The Rental Business standalone margin of 10.3% is healthy, but losses in the Silver and Other Businesses and corporate cost allocation compress consolidated margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.0% | 12.8% (4.2%–29.2%) | -9.8pt |
Revenue growth lags the industry median by 9.8pt, indicating conservative growth relative to peers. The Rental Business shows stable growth, but there is no meaningful acceleration from new businesses or large M&A.
※ Source: Company aggregation
Improved Rental Business profitability and strong cash generation: The core Rental Business improved Operating Margin to 10.3% (prior year 9.1%), and Operating Cash Flow of ¥384.7B generates 2.55x Net Income, indicating a solid earnings base. Improvement in gross margin to 20.1% and reduction in interest expense (¥14.9B → ¥9.0B) have improved the earnings structure. Free Cash Flow of ¥376.5B covers dividend payments of ¥32.5B by 11.6x, indicating very high sustainability of ordinary dividends. If occupancy and rent mix improvements continue, core business earnings stability is expected to remain high.
Change in capital policy and increased leverage due to large share buyback: The ¥722.1B buyback reduced shareholders’ equity to ¥463.9B (vs prior year -47.5%), D/E ratio rose to 2.81x, and Equity Ratio fell to 26.3%. ROE of 32.6% is high but significantly driven by Financial Leverage of 3.81x; reduced capital buffer and the one-off Total Return Ratio of ~499% indicate a policy prioritizing short-term shareholder returns. Cash of ¥579.1B provides short-term liquidity against interest-bearing debt ¥600B, but the 50% short-term debt ratio raises refinancing risk concerns. Whether return policy reverts to ordinary dividend levels (payout ratio around 20%) or additional large returns continue will determine sustainability of capital strategy.
Low capital expenditures and losses in non-core segments pose medium- to long-term challenges: CapEx of ¥8.1B is only 0.25x depreciation (¥32.5B), very low; while supporting FCF in the short term, it raises risks of asset aging and competitiveness decline. The Silver and Other Businesses generate combined operating losses of ¥37.4B, diluting consolidated profits and indicating need for portfolio review. Next fiscal year guidance of Operating Income ¥385.0B (+7.0%) assumes avoidance of recurring special losses and recovery of loss-making segments; feasibility requires close monitoring.
This report is an earnings analysis prepared automatically by AI analyzing XBRL earnings release data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on publicly disclosed financial data. Investment decisions are your responsibility; consult a professional advisor as necessary.