Quick View
| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥1089.7B | ¥1048.2B | +4.0% |
| Operating Income | ¥213.6B | ¥217.1B | −1.6% |
| Profit Before Tax | ¥213.6B | ¥439.9B | −51.4% |
| Net Income | ¥149.7B | ¥377.2B | −60.3% |
| ROE | 18.7% | 53.5% | - |
Executive Summary
FY2026 Q3 results: Revenue 1089.7B yen (YoY +4.0%), Operating Income 213.6B yen (YoY -1.6%), Profit Before Tax 213.6B yen, and Net Income 149.7B yen (YoY -60.3%). The company achieved revenue growth while maintaining a high gross profit margin of 46.2% and operating margin of 19.6%. However, net income declined sharply primarily due to a significant decrease in equity method income from 36.2B yen in the prior year to 1.4B yen in the current period. Operating cash flow remained solid at 196.2B yen with free cash flow of 130.1B yen, supporting shareholder returns of 117.8B yen through dividends of 62.8B yen and share buybacks of 55.0B yen. The company maintains cash and equivalents of 623.7B yen but operates with elevated financial leverage at a debt-to-equity ratio of 2.70 and equity ratio of 26.3%.
Performance Drivers
Revenue increased 41.5B yen or 4.0% YoY to 1089.7B yen, demonstrating modest top-line growth. Cost of sales rose 22.0B yen to 586.0B yen, resulting in gross profit of 503.7B yen at a margin of 46.2%, which represents a slight improvement from the prior period. SG&A expenses increased 24.6B yen to 314.2B yen, representing 28.8% of revenue and outpacing revenue growth. This contributed to operating income declining 3.5B yen or 1.6% to 213.6B yen. The non-operating section showed net costs of 0.05B yen, comprising finance income of 5.0B yen, finance costs of 6.4B yen, and equity method income of 1.4B yen. The sharp decline in equity method income from 36.2B yen in the prior period to 1.4B yen represents a significant non-recurring factor impacting profitability. This 34.8B yen decrease in equity method income is the primary driver of the 60.3% decline in net income from 377.2B yen to 149.7B yen. The investing cash flow section reveals proceeds from sale of investments in equity method associates of 332.3B yen, indicating asset portfolio restructuring that likely explains the equity method income decline. Net income of 149.7B yen compared to profit before tax of 213.6B yen implies an effective tax rate of approximately 30%. The results follow a revenue up, profit down pattern, where top-line growth was offset by increased operating expenses and a substantial decline in equity method investment income.
Key Metrics
[Profitability] ROE of 18.7% demonstrates strong return on equity despite the net income decline, supported by financial leverage of 3.70 times. Operating margin of 19.6% indicates healthy operational profitability, while net profit margin of 13.7% reflects the impact of non-operating items. ROA stands at 5.0%, and gross profit margin of 46.2% remains robust. [Cash Quality] Cash and equivalents of 623.7B yen provide substantial liquidity. Operating cash flow of 196.2B yen represents 1.31 times net income, confirming cash-backed earnings quality. Free cash flow of 130.1B yen demonstrates strong cash generation capability. The cash conversion ratio of 1.31 indicates healthy translation of profits into cash. [Investment Efficiency] Total asset turnover of 0.37 reflects the company's asset-intensive business model. Inventory turnover period of 57.5 days shows efficient inventory management. However, receivables turnover period of 259 days is notably extended and warrants attention for working capital efficiency. Payables turnover of 182.8 days indicates effective supplier credit utilization. [Financial Health] Equity ratio of 26.3% and debt-to-equity ratio of 2.70 reflect elevated leverage compared to industry norms. Current ratio of 1.16 suggests adequate short-term liquidity but limited buffer. Lease liabilities total 323.8B yen (current 100.5B yen, non-current 223.4B yen), representing significant off-balance sheet commitments now recognized on the balance sheet.
Cash Flow Analysis
Operating cash flow of 196.2B yen represents 1.31 times net income, confirming earnings quality through cash conversion. The operating cash flow declined 9.2% YoY but remains substantial at 18.0% of revenue. Investing cash flow of negative 66.0B yen includes capital expenditures of 25.0B yen and was significantly offset by proceeds from sale of investments in equity method associates of 332.3B yen, indicating strategic portfolio restructuring. Free cash flow of 130.1B yen (operating CF of 196.2B yen plus investing CF of negative 66.0B yen) demonstrates strong cash generation capacity. Financing cash flow of negative 151.3B yen reflects shareholder return activities including dividends paid of 62.8B yen and share repurchases of 55.0B yen, totaling 117.8B yen in distributions. The FCF coverage of shareholder returns stands at 2.02 times, indicating sustainable capital allocation. Cash and equivalents increased from prior period levels to 623.7B yen, maintaining strong liquidity despite significant shareholder distributions. The company generated sufficient operating cash flow to fund both capital investments and substantial shareholder returns while maintaining healthy cash reserves.
Earnings Quality
Operating income of 213.6B yen closely approximates profit before tax of 213.6B yen, indicating minimal net non-operating impact. The non-operating section comprises finance income of 5.0B yen, finance costs of 6.4B yen resulting in net finance costs of 1.4B yen, and equity method income of 1.4B yen, which together produce a near-zero net effect. The significant variance from the prior period stems from equity method income declining from 36.2B yen to 1.4B yen, representing a 34.8B yen decrease that constitutes a material non-recurring factor given the concurrent sale of equity method investments totaling 332.3B yen. Non-operating items represent a minimal percentage of revenue at approximately 0.13%, indicating earnings are predominantly driven by core operations. Operating cash flow of 196.2B yen exceeds net income of 149.7B yen by a ratio of 1.31, demonstrating healthy earnings quality with profits well-supported by cash generation. The accrual component appears modest, with working capital changes including a 125.4B yen decrease in trade receivables contributing positively to operating cash flow. Overall earnings quality is sound from a cash flow perspective, though the sustainability of net income levels depends on the restoration of equity method income or the successful redeployment of proceeds from investment sales.
Guidance Update
Full-year guidance calls for revenue of 1500.0B yen and operating income of 314.0B yen (YoY +3.2%). Q3 year-to-date revenue of 1089.7B yen represents 72.6% progress toward the full-year target, which is slightly below the standard 75% expectation for Q3. Operating income of 213.6B yen represents 68.0% progress toward the 314.0B yen target, indicating a 7.0 percentage point shortfall against the standard 75% Q3 benchmark. This below-target progress rate suggests the company may face challenges meeting the full-year operating income guidance and could potentially require upward revision of approximately 10% if Q4 performance tracks similar to year-to-date run rates, or alternatively implies expectation of a strong Q4 recovery. The forecasted EPS of 140.30 yen compares to current year-to-date basic EPS of 97.13 yen, requiring significant improvement in the final quarter. Dividend forecast of 49.00 yen indicates continued commitment to shareholder returns. The investing cash flow shows proceeds from sale of equity method investments of 332.3B yen, which represents a significant one-time item that will not recur and affects comparability of the earnings trajectory. No specific order backlog data is available to assess forward revenue visibility.
Shareholder Returns
Annual dividend forecast stands at 49.00 yen per share for the full fiscal year. Dividends paid during the nine-month period totaled 62.8B yen. Based on the year-to-date net income of 149.7B yen and average shares outstanding of 150,536K, the payout ratio calculates to approximately 44.0%, which is sustainable relative to earnings. Share repurchase activity totaled 55.0B yen during the period, representing substantial capital returns to shareholders. Total shareholder returns combining dividends and buybacks amount to 117.8B yen, resulting in a total return ratio of 78.7% relative to net income. This elevated total return ratio reflects management confidence in cash generation and commitment to shareholder value, though it exceeds net income and relies on operating cash flow strength. Free cash flow of 130.1B yen covers the total shareholder distributions at a ratio of 2.02 times, indicating the returns are cash-flow sustainable despite the high payout levels. Treasury shares decreased from 55.5B yen to 29.9B yen in book value terms, reflecting the execution and retirement of repurchased shares, which reduces share count and enhances per-share metrics for remaining shareholders.
Risk Factors
Equity method investment volatility poses significant risk, as demonstrated by equity method income declining from 36.2B yen to 1.4B yen YoY, contributing directly to the 60.3% net income decline. The sale of equity method investments for 332.3B yen indicates portfolio restructuring, and future earnings depend on successful redeployment of these proceeds or restoration of investment income streams. Extended receivables collection period of 259 days, substantially above the industry median of 61 days, represents material working capital risk and potential credit exposure. The company faces elevated credit risk if customers experience financial stress, and the extended collection cycle ties up significant capital that could otherwise be deployed more productively. High financial leverage with debt-to-equity ratio of 2.70 and equity ratio of 26.3% significantly below the industry median of 59.2% creates financial stability risk. The leverage amplifies ROE but also increases financial risk, particularly if operating performance deteriorates or financing conditions tighten. Combined with aggressive shareholder returns totaling 117.8B yen representing 78.7% of net income, the capital structure leaves limited financial flexibility for adverse scenarios.
Industry Benchmark (Reference - Proprietary Data)
[Industry Position] (Reference - Proprietary Analysis) The company demonstrates strong profitability metrics relative to the IT and Telecom industry while operating with notably higher financial leverage. Profitability: ROE of 18.7% substantially exceeds the industry median of 8.3% (2025-Q3, n=104), placing the company in the top quartile for return on equity. Operating margin of 19.6% significantly outperforms the industry median of 8.2%, while net profit margin of 13.7% doubles the industry median of 6.0%, indicating superior operational efficiency and pricing power. Financial Health: Equity ratio of 26.3% falls well below the industry median of 59.2%, indicating higher financial leverage than typical industry peers. The debt-to-equity ratio of 2.70 and financial leverage of 3.70 times both exceed industry norms, with financial leverage approximately double the industry median of 1.66. This aggressive capital structure amplifies returns but increases financial risk. Efficiency: Asset turnover of 0.37 tracks below the industry median of 0.67, reflecting the company's more asset-intensive business model. Receivables turnover period of 259 days substantially exceeds the industry median of 61 days, representing a significant outlier that warrants management attention. Operating working capital days are elevated compared to typical industry practices. Cash Generation: Operating cash flow to net income ratio of 1.31 aligns with the industry median of 1.31, confirming earnings quality. Free cash flow yield and cash conversion are within industry norms, supporting the company's substantial shareholder return program. Revenue growth of 4.0% trails the industry median of 10.4%, suggesting the company is growing more slowly than peers in the current period. (Industry: IT and Telecom, N=104 companies, Comparison: 2025-Q3, Source: Proprietary analysis)
Key Takeaways from Earnings
The company exhibits exceptional profitability with ROE of 18.7% and operating margin of 19.6%, both significantly exceeding industry medians, indicating strong competitive positioning and operational excellence in its core business. This profitability advantage has historically supported substantial shareholder returns and merits recognition as a key strength. However, the sustainability of net income levels faces uncertainty following the 60.3% decline driven by equity method income decreasing from 36.2B yen to 1.4B yen, coinciding with 332.3B yen in proceeds from equity method investment sales. The company's ability to redeploy these proceeds effectively or restore investment income streams will determine future earnings trajectory. Cash flow generation remains robust with operating CF of 196.2B yen representing 1.31 times net income and free cash flow of 130.1B yen comfortably covering total shareholder returns of 117.8B yen. This cash flow strength supports the aggressive capital return program comprising both dividends and share buybacks totaling 78.7% of net income. However, financial leverage of 2.70 debt-to-equity and equity ratio of 26.3% position the company well above industry leverage norms, creating financial structure risk that constrains strategic flexibility. The extended receivables collection period of 259 days compared to the industry median of 61 days represents a material working capital efficiency issue requiring management focus, as this extended cycle ties up significant capital and may indicate credit quality concerns within the customer base.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI Financial Analysis
Executive Summary
Relo Group delivered resilient top-line growth in FY2026 Q3, but operating profit softened and net income was sharply lower due primarily to the absence of prior-year non-recurring and equity-method contributions. Revenue increased 4.0% year on year to ¥108.97bn on a cumulative nine-month basis. Operating income declined 1.6% to ¥21.36bn, despite the revenue increase. Gross profit rose to ¥50.37bn from ¥47.45bn in the prior period. The gross margin expanded by 90bp to 46.2%, indicating favorable underlying gross-profit generation. However, SG&A expenses rose 8.6% to ¥31.42bn, materially outpacing revenue growth. Consequently, the operating margin compressed by 100bp to 19.6% from 20.7%. Profit before tax fell 51.4% to ¥21.36bn, almost matching operating income because net finance costs were modest. Net income attributable to owners declined 60.8% to ¥14.62bn, with the prior-year comparison benefiting from substantially higher equity-method income and other gains. Equity-method investment income decreased to ¥1.40bn from ¥36.24bn, accounting for a substantial part of the year-on-year earnings decline. Operating cash flow of ¥19.62bn exceeded net income, producing an OCF/net-income ratio of 1.34x and supporting the quality of reported current-period earnings. Free cash flow was robust at ¥13.01bn after ¥2.50bn of capital expenditure. The balance sheet remains leveraged, with a 2.70x debt-to-equity ratio and an equity ratio of 26.3%, although equity increased ¥9.60bn year on year. Receivables remain structurally significant at ¥77.31bn, equal to 26.1% of assets, and annualized DSO of 194 days is a material working-capital monitoring point. FY2026 full-year guidance implies revenue of ¥150.00bn, operating income of ¥31.40bn, and attributable net income of ¥21.00bn. Nine-month progress is broadly on track for revenue but slightly behind a standard Q3 pace for operating profit and net income, requiring stronger fourth-quarter conversion. The forward earnings trajectory depends on controlling SG&A growth, maintaining gross-margin strength, and avoiding further volatility in affiliate-related and other non-operating earnings.
Profitability Analysis
Annualized DuPont ROE is 24.3%, comprising a 13.4% net profit margin, 0.490x asset turnover, and 3.70x financial leverage. The result exceeds the 15% benchmark for strong ROE, but leverage is a meaningful contributor to the return profile rather than operating efficiency alone. The 13.4% net margin remains high despite the sharp year-on-year decline in net income, reflecting a still-profitable service-oriented earnings base. Annualized asset turnover of 0.490x is modest, consistent with a balance sheet containing sizable receivables, right-of-use assets, investment property, and financial assets. Financial leverage of 3.70x is the principal amplifier of ROE and also the principal constraint on balance-sheet flexibility. Gross margin improved 90bp year on year to 46.2%, demonstrating favorable pricing, mix, or delivery economics at the gross-profit level. In contrast, operating margin contracted 100bp to 19.6% because SG&A increased 8.6%, more than twice the 4.0% revenue growth rate. This negative operating leverage is the key recurring profitability concern. The tax burden was 0.684, below the 0.70 normal benchmark, corresponding to a 29.9% effective tax rate. Interest burden was effectively 1.000x because finance income and other income broadly offset finance costs, so financing costs did not materially dilute EBIT during the period. The largest earnings movement was below operating profit: equity-method investment income fell from ¥3.62bn to ¥0.14bn, while other income also declined from ¥3.59bn to ¥2.53bn. Accordingly, the year-on-year net-income decline overstates deterioration in the operating franchise, but it also demonstrates that prior-year earnings contained material non-core support. Sustained margin recovery requires SG&A discipline and continued gross-margin resilience rather than reliance on affiliate income or asset-related gains.
Growth Assessment
Revenue growth of 4.0% to ¥108.97bn demonstrates continued expansion, but the pace is moderate relative to the increase in SG&A. The gross-profit increase of 6.2% exceeded revenue growth, validating the expansion in gross margin. Operating income nevertheless declined 1.6%, showing that overhead and growth investment have not yet been fully absorbed by revenue growth. Full-year revenue guidance of ¥150.00bn implies a nine-month progress rate of 72.6%, 2.4 percentage points below the standard 75% Q3 progress rate. Full-year operating-income guidance of ¥31.40bn implies 68.0% progress, 7.0 percentage points below the standard Q3 pace. Full-year attributable-net-income guidance of ¥21.00bn implies 69.6% progress, 5.4 percentage points below the standard Q3 pace. The implied Q4 requirement is ¥41.03bn of revenue, ¥10.04bn of operating income, and ¥6.38bn of attributable net income. This requires a Q4 operating margin of approximately 24.5%, above the nine-month 19.6% margin, so execution on costs, mix, and seasonal revenue conversion will be important. The forecast calls for full-year operating-income growth of 3.2% despite the nine-month decline, implying a meaningful fourth-quarter improvement. Net-income guidance still calls for a 51.5% year-on-year decline, indicating that management does not expect a full restoration of the prior year's non-operating or affiliate-related contribution. The revenue base appears more stable than headline net-income growth, while profit quality will be determined by the ability to convert gross-profit growth into operating-profit growth.
Financial Health
Liquidity is adequate but not especially conservative. Current assets totaled ¥155.34bn against estimated current liabilities of ¥114.90bn, yielding a current ratio of approximately 1.35x. This is above the 1.0x warning threshold, but below the 1.5x healthy benchmark. Cash and cash equivalents of ¥62.37bn provide meaningful liquidity, while trade receivables of ¥77.31bn represent a substantial additional current-asset component. Short-term bonds and borrowings were ¥11.74bn and current lease liabilities were ¥10.05bn; these are covered by cash alone, although cash must also fund normal operating needs. The reported D/E ratio of 2.70x exceeds the 2.0x threshold and signals aggressive leverage. This is the principal financial-health alert because high leverage increases sensitivity to earnings volatility, refinancing conditions, and any deterioration in cash conversion. Interest expense was limited at ¥0.64bn relative to operating income of ¥21.36bn, indicating that near-term interest-servicing capacity remains strong. Lease liabilities totaled ¥32.38bn, and right-of-use assets were ¥34.49bn, making lease commitments a significant component of the capital structure. Other financial liabilities totaled ¥29.59bn across current and non-current classifications, reinforcing the need to evaluate financial obligations beyond conventional bonds and borrowings. The equity ratio improved to 26.3% from 22.5% a year earlier, supported by retained-earnings growth and lower total assets, but liabilities still represent 73.0% of total assets. Retained earnings increased ¥8.34bn to ¥71.35bn, strengthening internal capital generation. Treasury stock declined in absolute magnitude from negative ¥5.55bn to negative ¥2.99bn, a 46.1% change that reflects a lower treasury-share balance and reduces the scale of prior repurchase-related capital deployment. Inventories rose 26.2% to ¥9.24bn; while still only 3.1% of total assets, the increase should be monitored for alignment with revenue growth and service-delivery needs. Goodwill of ¥17.03bn equals 21.3% of equity and 5.7% of assets, remaining within the healthy benchmark range and limiting near-term M&A-related impairment concentration risk.
Notable B/S Changes
Inventories: +¥1.92bn (+26.2%) to ¥9.24bn - inventory growth materially exceeded revenue growth; monitor whether the build supports service delivery and converts into cash without write-down risk. Treasury stock: +¥2.56bn in equity value (negative balance reduced from ¥5.55bn to ¥2.99bn; +46.1%) - the lower treasury-stock balance reduces the scale of prior buyback-related capital deployment and contributed to stronger equity. Retained earnings: +¥8.34bn (+13.2%) to ¥71.35bn - cumulative profitability after shareholder distributions increased internal capital and supported the equity-ratio improvement to 26.3%.
Cash Flow Quality
Cash-flow quality is favorable in the current period. Operating cash flow was ¥19.62bn, exceeding attributable net income of ¥14.62bn by 1.34x. This is above the 1.0x high-quality benchmark and does not indicate an accrual-driven earnings shortfall. The accruals ratio was negative 1.7%, also consistent with sound cash realization. Operating cash flow was supported by a ¥12.54bn receivables inflow, which was the largest working-capital contributor. This cash inflow is positive for reported cash generation, but the 194-day annualized DSO alert means receivable collection velocity remains a key risk metric. Inventory movements used ¥1.92bn of cash, consistent with the 26.2% year-on-year rise in inventory. Payables declined by ¥4.25bn, consuming cash and indicating that operating cash flow was not being enhanced by stretching supplier payments. Other working-capital movements consumed ¥3.83bn, while cash taxes paid were ¥9.52bn. Capital expenditure was ¥2.50bn and intangible-asset purchases were ¥1.75bn. Free cash flow was ¥13.01bn, equivalent to 89.0% of attributable net income and demonstrating strong post-investment cash conversion. Investing cash outflow of ¥6.60bn included investment-property purchases of ¥7.24bn, partly offset by ¥4.00bn of investment-property sale proceeds and ¥1.36bn of PPE sale proceeds. Financing cash outflow of ¥15.13bn reflected dividends and ¥6.24bn of long-term borrowing repayments, partially offset by a modest ¥0.41bn of borrowing proceeds. Cash decreased by ¥1.65bn during the period to ¥62.37bn; therefore, strong operating cash generation was directed toward investment and shareholder or creditor distributions rather than cash accumulation.
Dividend Sustainability
The FY2026 full-year dividend forecast is ¥49.0 per share. Against forecast EPS of ¥140.3, the implied dividend payout ratio is approximately 34.9%, comfortably below the 60% sustainability benchmark. Cumulative dividends paid were ¥6.28bn, while free cash flow was ¥13.01bn, providing approximately 2.1x FCF coverage. This indicates that the current distribution level is covered by internally generated cash after capital expenditure. Dividend payments represented 43.0% of nine-month attributable net income, although this cumulative comparison should not be interpreted as the full-year payout ratio because dividend timing may differ from earnings recognition. The absence of a Q2 DPS in the supplied data is not sufficient to assess the interim-versus-year-end payment pattern. Financing cash flow also included debt repayment, meaning cash commitments extend beyond dividends alone. Given the 2.70x D/E ratio, maintaining dividend coverage through free cash flow and preserving retained earnings should remain important for balance-sheet resilience. The forecast payout ratio appears sustainable on the provided earnings and cash-flow data, subject to operating-profit recovery in Q4 and stable working-capital collection.
Risk Assessment
Business risks include Operating-leverage risk: SG&A rose 8.6% while revenue increased 4.0%, causing a 100bp operating-margin decline to 19.6%. If revenue growth remains moderate, fixed-cost absorption could continue to pressure operating profit., Receivables-collection risk: annualized DSO of 194 days materially exceeds the 60-day alert threshold. Receivables of ¥77.31bn represent 26.1% of assets, creating exposure to delayed customer collection, credit losses, and cash-flow volatility., Affiliate and other-income volatility: equity-method investment income declined from ¥3.62bn to ¥0.14bn, and other income also fell year on year. The gap between operating-income resilience and the 60.8% drop in attributable net income shows sensitivity to non-core earnings components., Industry-specific service and real-estate-related asset risk: investment property of ¥23.62bn and right-of-use assets of ¥34.49bn create exposure to occupancy, lease-demand, valuation, and counterparty conditions across corporate relocation and related service activities..
Financial risks include High leverage: the 2.70x D/E ratio exceeds the 2.0x alert threshold. Although current interest expense is manageable, leverage reduces financial flexibility if profits, asset values, or funding conditions weaken., Lease-obligation exposure: current and non-current lease liabilities total ¥32.38bn, constituting a substantial fixed-commitment burden alongside conventional borrowings., Liquidity-buffer risk: the current ratio is approximately 1.35x, above the warning threshold but below the 1.5x healthy benchmark. A material slowdown in receivable conversion could tighten short-term liquidity., Goodwill and intangible-asset risk: goodwill and intangibles total ¥26.55bn. Current ratios are moderate, but future acquisition underperformance could still result in impairment charges..
Key concerns include The highest-priority issue is whether Q4 can deliver the approximately 24.5% operating margin required to achieve full-year operating-income guidance., The second priority is receivable quality and collection speed, given the 194-day annualized DSO and the importance of receivable movements to operating cash flow., The third priority is capital-structure discipline, as a 2.70x D/E ratio leaves less room for earnings volatility than a more conservatively financed peer., A fourth priority is the sustainability of earnings excluding prior-year equity-method and other-income support..
Investment Implications
Key takeaways include Revenue growth and a 90bp gross-margin expansion indicate that the underlying revenue engine remains constructive., SG&A growth above revenue growth caused negative operating leverage and reduced operating income by 1.6%., The severe net-income decline is largely below the operating line, including a ¥3.48bn year-on-year reduction in equity-method investment income., Operating cash flow and free cash flow are strong, with 1.34x OCF/net-income conversion and ¥13.01bn of FCF., The balance sheet has improved in equity-ratio terms, but 2.70x D/E and 194-day annualized DSO remain material risk factors., The forecast dividend payout ratio of approximately 34.9% and FCF coverage of approximately 2.1x support distribution capacity on the supplied figures..
Metrics to watch include Q4 revenue and operating-profit conversion versus the ¥41.03bn revenue and ¥10.04bn operating-income implied requirements, SG&A growth relative to revenue growth and resulting operating-margin trend, Annualized DSO, receivable balances, and bad-debt or collection indicators, Equity-method investment income and other-income composition, D/E ratio, lease liabilities, long-term borrowing repayments, and cash balances, Free cash flow after investment-property spending and dividend payments.
Regarding relative positioning, Relo Group exhibits above-benchmark profitability, with a 19.6% operating margin, 13.4% net margin, and annualized 24.3% ROE. Its relative profile is tempered by leverage-driven ROE, a current ratio below the 1.5x healthy benchmark, and unusually long receivable days. Cash conversion is a relative strength, while the sustainability of earnings depends more on restoring operating leverage than on replicating prior-year affiliate and other-income gains.