Sakai Moving Service Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

The company continued to achieve increases in both revenue and profit, although profit growth slowed slightly relative to revenue growth due to rising costs, which was a key feature of the current period. Revenue was ¥353.1B (+4.5% year on year), Operating Income was ¥55.5B (+3.6%), Ordinary Income was ¥56.7B (+4.0%), and Net Income was ¥38.1B (+9.3%). In addition to growth in the core Moving Business, strong growth in the Electrical Construction Business drove the increase in revenue. However, the increase in cost of sales (+5.7%) exceeded revenue growth, causing the Operating Income Margin to decline from 15.87% in the same period of the previous year to 15.73%. Meanwhile, the Net Income Margin improved from 10.33% to 10.80% due to a decrease in income taxes and other taxes, and Net Income growth exceeded Operating Income growth.

Factors Affecting Financial Performance

【Revenue】Revenue was ¥353.1B (+4.5% year on year), driven by growth in the core Moving Business (85.4% of revenue, ¥301.4B, +3.9%) and the Electrical Construction Business (¥16.2B, +20.7%). The Clean Service Business (¥15.2B, +2.4%) and Reuse Business (¥17.7B, +0.5%) recorded only modest revenue increases.

【Profit and Loss】Operating Income was ¥55.5B (+3.6%), Ordinary Income was ¥56.7B (+4.0%), and Net Income was ¥38.1B (+9.3%). As cost of sales increased to ¥209.3B (+5.7%), exceeding revenue growth, the Gross Profit Margin declined by 63bp to 40.72%, while the Operating Income Margin declined by 14bp to 15.73%. Meanwhile, SG&A expenses increased by 2.6% to ¥88.2B, below the rate of revenue growth, thereby partially containing the deterioration in profit margins. Nonrecurring gains and losses were limited to a ¥0.06B gain on the sale of fixed assets and were immaterial, while the decrease in income taxes and other taxes (¥18.99B→¥18.59B) boosted the Net Income growth rate. The company achieved increases in both revenue and profit, with Net Income growth exceeding that of the upper-line metrics as a notable feature.

Segment Analysis

The Moving Business recorded revenue of ¥301.4B (+3.9%) and segment profit of ¥49.6B (+2.2%), accounting for 87.5% of consolidated Ordinary Income and representing the largest source of earnings. However, its profit margin declined by 27bp from 16.72% to 16.45%. The Electrical Construction Business reported revenue of ¥16.2B (+20.7%) and segment profit of ¥3.3B (+10.1%), maintaining a profit margin of 20.2%, the highest level across the company. The Clean Service Business recorded revenue of ¥15.2B (+2.4%), but segment profit declined by 16.3% to ¥1.2B, highlighting deteriorating profitability. The Reuse Business posted revenue of ¥17.7B (+0.5%), while segment profit improved significantly to ¥0.9B from ¥0.09B in the same period of the previous year.

Key Financial Indicators

【Profitability】The Operating Income Margin was 15.7% and the Net Income Margin was 10.8%. Compared with the same period of the previous year (15.87% and 10.33%, respectively), the Operating Income Margin declined slightly while the Net Income Margin improved. The Gross Profit Margin was 40.7%, down 63bp from 41.35% in the same period of the previous year, indicating that rising costs were the primary factor pressuring profitability.【Cash Flow Quality】Nonrecurring gains and losses and non-operating gains and losses were both immaterial (net non-operating income of ¥1.15B and nonrecurring gain of ¥0.06B), and Net Income largely reflects recurring earnings generated by the core business.【Investment Efficiency】Annualized ROE was 15.1%, comprising a Net Income Margin of 10.8%, total asset turnover of 1.15x, and financial leverage of 1.22x. This represents an ROE driven by profitability rather than high reliance on leverage.【Financial Soundness】The Equity Ratio was 81.8%, while interest-bearing debt was extremely low at ¥18.3B. The company maintained a conservative capital structure in which cash and deposits of ¥296.0B substantially exceeded short-term interest-bearing debt.

Cash Flow Analysis

As explicit data from the cash flow statement are unavailable, fund movements are analyzed based on changes in the balance sheet. Cash and deposits were ¥296.0B, remaining broadly flat compared with ¥295.3B in the same period of the previous year. Accounts receivable declined by ¥71.5B to ¥42.0B from ¥113.5B in the same period of the previous year, while accounts payable also declined by ¥44.1B to ¥32.3B from ¥76.3B, indicating a contraction in working capital on a net basis. Short-term borrowings decreased by ¥10.0B to ¥7.0B from ¥17.0B in the same period of the previous year, further reducing reliance on short-term funding. Total assets declined by 4.6% to ¥1232.2B from ¥1291.9B in the same period of the previous year, while net assets increased by 1.4% to ¥1007.6B, indicating simultaneous progress in asset reduction and capital strengthening. Property, plant and equipment increased to ¥744.3B, suggesting continued investment in operating locations, vehicles, and other assets.

Quality of Earnings

Net Income of ¥38.1B includes only limited temporary factors: a ¥0.06B nonrecurring gain from the sale of fixed assets and no nonrecurring losses. It therefore largely reflects recurring earnings power. Net non-operating gains and losses amounted to a gain of ¥1.15B, consisting of items including dividend income of ¥0.19B and other non-operating income of ¥0.9B. However, this amounted to only 0.3% of revenue and was not large enough to materially supplement core operating profit. The difference between Ordinary Income of ¥56.7B and Net Income of ¥38.1B was primarily attributable to income taxes and other taxes (¥18.6B, effective tax rate of 32.8%). The decline from ¥18.99B in the same period of the previous year was the primary reason that Net Income growth (+9.3%) exceeded Operating Income growth (+3.6%). Comprehensive Income was ¥38.1B, approximately in line with Net Income, and the change in valuation difference on securities (-¥0.1B) was small, resulting in a limited divergence between Net Income and Comprehensive Income.

Earnings Forecast and Guidance

The Q1 progress rates against the full-year company plan (Revenue of ¥1300.1B, Operating Income of ¥130.5B, Ordinary Income of ¥133.7B, and Net Income of ¥87.4B) were 27.2% for Revenue, 42.6% for Operating Income, 42.4% for Ordinary Income, and 43.6% for Net Income, substantially exceeding the standard progress rate of 25%. There was no revision to the earnings forecast or the dividend forecast. Although seasonality, including the April–June period when moving demand is concentrated, must be taken into account, Q1 actual Operating Income growth of +3.6% was broadly in line with the full-year plan’s Operating Income growth rate of +3.8%. Maintaining profit margins after the peak season will be the key to achieving the full-year plan.

Shareholder Returns

The full-year dividend forecast is ¥117.0 per share, while the full-year EPS forecast is ¥215.8, implying a Payout Ratio of 54.2%. This is below the commonly cited sustainability benchmark of 60%. The actual dividend in the same period of the previous year was ¥30 per share. In addition to its conservative financial structure, comprising an Equity Ratio of 81.8%, cash and deposits of ¥296.0B, and interest-bearing debt of ¥18.3B, the company has accumulated retained earnings of ¥955.6B. From the perspective of available dividend resources, this provides a foundation supporting the continuation of dividend payments.

Risk Factors

1. Margin pressure from rising costs: Labor shortages, wage increases, and higher outsourcing costs, particularly in the core Moving Business, are pushing up the cost ratio. In Q1, revenue increased by +4.5%, while the Gross Profit Margin declined by 63bp and the Operating Income Margin declined by 14bp. The ability to absorb costs will be a key focus going forward.

2. High dependence on the Moving Business: The Moving Business accounts for 85.4% of consolidated revenue and 87.5% of consolidated Ordinary Income. Its segment profit margin declined from 16.72% to 16.45%, and fluctuations in housing demand and operating conditions during the peak season could have a significant impact on overall performance.

3. Deteriorating profitability in the Clean Service Business: While revenue increased by +2.4% year on year, segment profit declined by 16.3%, and the profit margin fell to 8.1%. Cost control and appropriate pricing in this low-profitability business remain challenges.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (transport)

Profitability and Returns

The company’s Operating Income Margin and Net Income Margin both substantially exceed the industry median, indicating a high level of profitability within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate is slightly above the industry median but has not reached the upper end of the industry IQR (7.6%).

※Source: Company research

Key Takeaways from the Financial Results

1. The Operating Income Margin of 15.7%, Net Income Margin of 10.8%, and annualized ROE of 15.1% are substantially above the industry median, confirming the high profitability of the business structure. However, the 63bp decline in the Gross Profit Margin warrants close monitoring as a change in the cost structure.

2. While the core Moving Business accounts for 87.5% of consolidated Ordinary Income, the Electrical Construction Business (20.2% profit margin) and the Reuse Business (improved profit) serve as supplementary earnings sources, indicating progress in diversifying the business portfolio.

3. Q1 progress rates for both Operating Income and Net Income against the full-year plan were above 40%, representing favorable levels. The conservative financial position, including an Equity Ratio of 81.8% and interest-bearing debt of ¥18.3B, can be identified as a structural characteristic supporting resilience to cost and demand fluctuations.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,416–¥2,553 at ±1% for the cost of equity, and ¥2,482–¥2,483 at ±0.1 for ω.

Notes:

• As Net Income progress against the full-year forecast (44%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a range capped at +10% (because companies with progress ahead of forecast tend to outperform forecasts. In businesses with strong seasonality, the adjustment may be excessive).
• As forecast ROE is below the cost of equity, the theoretical value is below Book Value Per Share.
• Net assets as of the quarter-end are used (there is a time lag relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated at a somewhat high level.

(Valuation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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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 securities. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and, where necessary, after consulting with a professional advisor.

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