YAMATO HOLDINGS (9064) FY2026 Q3 Earnings Report

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Executive Summary

Operating income increased significantly by 46.9% year on year, while net income declined due to the reversal of gains on the sale of investment securities recognized in the previous year. The results therefore represent higher revenue and higher operating income, but lower net income. Revenue was ¥1,438.76B (¥1,344.53B in the same period of the previous year, +7.0% YoY), operating income was ¥38.59B (+46.9%), and ordinary income was ¥38.29B (+43.3%). Meanwhile, net income attributable to owners of the parent was ¥25.19B, down 12.8% year on year, mainly due to the reversal of extraordinary income of ¥13.74B, including a ¥13.73B gain on the sale of investment securities recognized in the previous year. The operating margin improved to 2.7% from 1.95% in the same period of the previous year, reflecting progress in fixed-cost absorption and profitability improvement driven by higher revenue.

Factors Affecting Performance

【Revenue】Revenue was ¥1,438.76B, up 7.0% year on year. By segment, the largest segment, EXP, generated ¥1,205.91B (approximately 83.9% of total revenue) and drove overall performance, followed by Global (¥74.80B), Contract Logistics (¥124.35B), and Mobility (¥15.59B). Progress against the full-year company forecast of ¥1,860B was 77.4%, slightly exceeding the standard Q3 benchmark of 75%.

【Profit and Loss】Operating income was ¥38.59B (+46.9% year on year), and the operating margin improved by approximately 73 bp to 2.7% from approximately 1.95% in the same period of the previous year. Segment operating margins were 25.4% for Mobility, 8.9% for Global, 3.9% for Contract Logistics, and 1.5% for EXP. The Group’s overall margin is being weighed down by its structure, in which the low-margin EXP segment accounts for the majority of revenue. Ordinary income was ¥38.29B (+43.3%), with most of the improvement at the operating level being maintained, while net income was ¥25.19B (-12.8%). The decline in net income was mainly attributable to extraordinary income of ¥13.74B in the same period of the previous year, including a ¥13.73B gain on the sale of investment securities, compared with extraordinary income of only ¥2.21B in the current period (including a ¥1.84B gain on the sale of fixed assets and a ¥0.21B gain on the sale of investment securities). The results thus reflect higher revenue and higher profit at the operating and ordinary income levels, but lower net income due to the reversal of temporary factors.

Segment Analysis

EXP had revenue of ¥120.59B on a converted presentation basis versus actual revenue of ¥1,205.91B, operating income of ¥17.95B, and a margin of 1.5%. Although it has the largest revenue mix, it is the least profitable segment. Mobility is small in scale, with revenue of ¥15.59B, but is highly profitable with a margin of 25.4%. Global is also well balanced, with revenue of ¥74.80B and a margin of 8.9%. Contract Logistics ranks in the middle, with revenue of ¥124.35B and a margin of 3.9%. Improvement in the Group’s overall margin will depend on progress in price revisions and productivity improvements in the low-margin, high-mix EXP business.

Key Financial Metrics

【Profitability】The operating margin was 2.7% (improving from approximately 1.95% in the same period of the previous year), while the net margin was 1.8%; both reflect the low-margin structure characteristic of the logistics business. Annualized ROE was 5.6%, decomposed into a net margin of 1.8% × total asset turnover of approximately 1.45x × financial leverage of approximately 2.2x. 【Cash Flow Quality】Operating cash flow (OCF) was ¥28.44B, or 1.13x net income of ¥25.19B, indicating that accounting profit was supported by cash generation. However, the OCF conversion rate relative to EBITDA (approximately ¥78.0B) was low at approximately 0.36x, mainly due to an ¥86.86B increase in trade receivables. 【Investment Efficiency】Capital expenditures were ¥32.26B, within depreciation and amortization expense of ¥39.44B, indicating a conservative asset-renewal policy. Cumulative free cash flow was negative ¥9.03B. 【Financial Soundness】The equity ratio was 45.1%, slightly down from 46.5% in the same period of the previous year. However, cash and deposits of ¥165.70B significantly exceeded short-term borrowings of ¥20.33B, limiting concerns regarding short-term funding.

Cash Flow Analysis

Operating cash flow was ¥28.44B, up 299.6% year on year and exceeding net income of ¥25.19B. However, in terms of its components, against a subtotal before changes in working capital of ¥47.85B, the ¥86.86B increase in trade receivables represented a significant cash outflow, partially offset by a ¥38.89B increase in accounts payable. Investing cash flow was an outflow of ¥37.47B, of which capital expenditures accounted for ¥32.26B, representing a conservative investment stance within depreciation and amortization expense of ¥39.44B. Financing cash flow was an outflow of ¥35.27B, mainly due to share repurchases of ¥18.92B and dividend payments. As a result, free cash flow, calculated as the sum of operating cash flow and investing cash flow, was negative ¥9.03B, indicating that shareholder returns during the period were not fully funded by internally generated cash flow alone. Cash and cash equivalents declined during the period, but the period-end balance remained at ¥165.28B, maintaining short-term liquidity.

Quality of Earnings

The decline in net income for the current period was not attributable to recurring business operations, but was mainly due to the reversal of extraordinary gains, a temporary factor. In the same period of the previous year, extraordinary income of ¥13.74B, including a ¥13.73B gain on the sale of investment securities, was recognized. In the current period, extraordinary income was only ¥2.21B (including a ¥1.84B gain on the sale of fixed assets and a ¥0.21B gain on the sale of investment securities), while extraordinary losses of ¥1.55B were incurred (including impairment losses of ¥0.28B, losses on disposal of fixed assets of ¥0.33B, and valuation losses on investment securities of ¥0.30B). Non-operating income was ¥4.05B (including dividend income of ¥1.30B), compared with non-operating expenses of ¥4.35B (including interest expense of ¥1.83B and foreign exchange losses of ¥1.15B), resulting in a slight net negative. Ordinary income therefore remained broadly in line with operating income at ¥38.29B. OCF was 1.13x net income, providing accounting support, but it was accompanied by a significant increase in trade receivables; from an accrual perspective, normalization of working capital should be monitored. Comprehensive income was ¥29.10B, slightly above net income of ¥25.19B. Valuation difference on securities of ¥5.71B was a positive factor, while the adjustment amount related to retirement benefits of negative ¥2.99B was a negative factor.

Earnings Forecast and Guidance

The Q3 cumulative progress rates against the full-year company forecast were 77.4% for revenue, 137.8% for operating income, 141.8% for ordinary income, and 167.9% for net income. Profit items have already significantly exceeded the full-year forecasts. Given that the standard Q3 progress benchmark is approximately 75%, revenue is broadly on track, while the outperformance of profit items is pronounced. Improvement at the operating and ordinary income levels, excluding the reversal of the large gain on the sale of investment securities recorded in the same period of the previous year, is contributing to results. Unless seasonal expenses or temporary losses are expected in Q4, the current full-year profit forecasts may have upside potential.

Shareholder Returns

The disclosed Q2 dividend was ¥23.00 per share. The full-year company forecast for annual dividends is ¥46.00, and the forecast payout ratio calculated from the full-year net income forecast of ¥15.0B and the average number of shares outstanding during the period of 317.39 million shares is approximately 97.3%. Even considering dividends alone, this represents a significant burden relative to forecast earnings. However, Q3 cumulative net income has already reached ¥25.19B, exceeding the full-year forecast, and the burden of dividends may decline when based on actual earnings. Cumulative dividend payments of ¥14.19B and share repurchases of ¥18.92B resulted in total shareholder returns of ¥33.11B. This figure should be viewed as the Total Return Ratio relative to Q3 cumulative net income and distinguished from the payout ratio. Given that cumulative free cash flow was negative ¥9.03B, shareholder returns during the period were not funded solely by internally generated cash flow and involved the use of cash on hand.

Risk Factors

1. Low-margin structure and price pass-through risk: The operating margin of 2.7% and gross margin of 5.8% are below industry-average levels. If increases in personnel expenses, outsourcing costs, and fuel costs cannot be passed on through pricing, the impact on profit could be significant.

2. Increase in trade receivables and low cash conversion: Trade receivables increased 37.6% from the end of the same period of the previous year, while the increase in trade receivables recorded in OCF reached ¥86.86B. The OCF conversion rate relative to EBITDA remained low at approximately 0.36x, requiring monitoring of collection conditions.

3. Reversal of reliance on temporary gains: Net income declined due to the reversal of the ¥13.73B gain on the sale of investment securities recognized in the same period of the previous year. Changes in the level of extraordinary income and losses therefore have a significant impact on year-on-year profit comparisons.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (transport)

Profitability and Returns

The Company’s profitability metrics are below the industry median, reflecting the low-margin structure of the logistics business.

Growth and Capital Efficiency

The displayed revenue growth rate corresponds to +7.0% year on year and is above the industry median.

※Source: Compiled by the Company

Key Earnings Highlights

1. Operating income increased 46.9% year on year and the operating margin improved by approximately 73 bp, confirming profitability improvement accompanying revenue growth. Meanwhile, net income declined 12.8% due to the reversal of extraordinary income. The differing directions of operating metrics and net income are important when assessing earnings quality.

2. The operating income progress rate of 137.8% and net income progress rate of 167.9% against the full-year forecasts are significantly ahead of the revenue progress rate of 77.4%. The Company’s revision trend for its forecasts and the recognition of seasonal expenses in Q4 will therefore be key points to monitor.

3. Although OCF was maintained at 1.13x net income, cash conversion was low, mainly due to the increase in trade receivables, and cumulative free cash flow was negative ¥9.03B. The sustainability of shareholder returns, including share repurchases of ¥18.92B under these conditions, should be evaluated together with future cash flow trends.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,530–¥1,615 at cost of equity ±1%; ¥1,562–¥1,578 at ω±0.1.

Notes:

• Goodwill amortization of ¥4.7 per share is added back to profit (for non-cash expense treatment and comparability with IFRS companies).
• Because net income progress against the full-year forecast (168%) exceeds the standard level (75%), forecast EPS is adjusted upward within a maximum range of +10% (because companies with progress ahead of plan tend to exceed their forecasts. Adjustments may be excessive for businesses with strong seasonality).
• Net income is significantly compressed relative to operating income (net income ÷ operating income: 54%) due to tax burden, acquisition-related expenses, non-controlling interests, and other factors. This figure reflects that compression at face value; if the factors are temporary, normalized earnings may be higher.
• Because 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 timing gap relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest-rate reference month: 2026-07 / 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 through analysis of XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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