YAMATO HOLDINGS (9064) FY2027 Q1 Earnings Report

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Executive Summary

Although the Company achieved higher revenue and a narrower operating loss, net loss increased year on year due to the recognition of extraordinary losses, including impairment losses. Revenue was ¥4433.3B (+1.4% YoY), Operating Income was ¥-48.7B (an improvement of ¥+16.2B from ¥-64.9B in the previous year), and Ordinary Income was ¥-49.4B (an improvement of ¥+17.2B). Meanwhile, quarterly net income attributable to owners of the parent was ¥-58.9B, deteriorating from ¥-54.2B in the previous year. The improvement in operating results was driven by higher revenue and profit in the Contract Logistics, Global, and Mobility Businesses; however, the core Express Business, which accounts for more than 80% of consolidated revenue, continued to record a segment loss of ¥131.4B. Improvement in profitability from Q2 onward is essential to achieve the full-year Operating Income forecast of ¥420B.

Factors Affecting Performance

【Revenue】Revenue was ¥4433.3B, representing a +1.4% YoY increase. By segment, non-core businesses led growth, with Contract Logistics at +9.1%, Mobility at +8.7%, and Global at +6.1%, while the Express Business, which accounts for 82.3% of consolidated revenue, recorded growth of only +0.4%.

【Profit and Loss】Operating Income was ¥-48.7B, improving by ¥16.2B from ¥-64.9B in the previous year, while the Operating Income margin improved to -1.1% from -1.5%. The main improvements came from Contract Logistics (profit +57.3%) and Mobility (+27.6%), while the Express Business also reduced its loss by ¥2.98B. Ordinary Income was ¥-49.4B, remaining at approximately the same level as operating results, with non-operating income and expenses broadly balanced. However, due mainly to the recognition of ¥18.6B in extraordinary losses, including an impairment loss of ¥16.1B related to assets whose intended use was changed in the Express Business, net loss expanded 8.2% year on year to ¥58.9B. Overall, the results consisted of higher revenue, improved operating results, and an expanded net loss for the current period; excluding the temporary extraordinary losses, underlying profitability is gradually improving.

Segment Analysis

The Express Business generated revenue of ¥364.7B (+0.4%) and a segment loss of ¥131.4B (margin of -3.6%). It is the largest segment, accounting for 82.3% of consolidated revenue, but remains in the red. Contract Logistics recorded revenue of ¥41.2B (+9.1%) and profit of ¥19.1B (+57.3%, margin of 4.6%), achieving both revenue and profit growth. The Global Business generated revenue of ¥26.3B (+6.1%) and profit of ¥26.6B (+2.1%, margin of 10.1%), maintaining the highest profit margin. The Mobility Business generated revenue of ¥5.5B (+8.7%) and profit of ¥20.5B (+27.6%, margin of 37.0%), reflecting high profitability. Other segments generated revenue of ¥5.6B (-13.8%) and profit of ¥15.2B (-6.9%, margin of 27.1%), maintaining a high profit margin despite lower revenue. The structure is one in which the profits of the other four businesses partially offset the loss in the core Express Business.

Key Financial Indicators

【Profitability】The Operating Income margin improved modestly from the previous year to -1.1% from -1.5%, while the Net Profit margin was -1.3%, also representing a slight improvement year on year; however, both remain in negative territory. Annualized ROE was -4.1%, mainly due to the recognition of a net loss.【Cash Flow Quality】Operating Cash Flow (OCF) was positive at ¥91.9B, securing cash generation against the net loss; however, it declined significantly by -50.3% year on year and was dependent on a ¥460.5B increase in accrued expenses. Capital expenditures were limited to ¥35.2B against depreciation and amortization of ¥132.1B, indicating a declining investment scale.【Investment Efficiency】Free Cash Flow (FCF) remained positive at ¥10.6B, although its scale was limited.【Financial Soundness】The Equity Ratio remained high at 44.3% (44.6% in the previous year). Cash and deposits of ¥2319.6B significantly exceeded short-term borrowings of ¥324.1B, providing financial flexibility for short-term funding needs; however, short-term borrowings increased 51.3% year on year, warranting attention as a change in the financing structure.

Cash Flow Analysis

Operating Cash Flow (OCF) was positive at ¥91.9B, securing cash generation exceeding the net loss of ¥58.3B, but decreased 50.3% from ¥184.8B in the same period of the previous year. This surplus was supported by non-cash expenses such as depreciation and amortization of ¥132.1B and impairment losses of ¥16.1B, as well as a ¥46.0B increase in accrued expenses. However, a ¥15.0B decrease in accounts payable, a ¥0.8B increase in accounts receivable, and an ¥18.1B decrease in the provision for bonuses were sources of cash outflow, indicating that cash flow was affected by working-capital timing. Investing Cash Flow was ¥-81.3B, of which capital expenditures were ¥35.2B, substantially below depreciation and amortization, indicating a restrained investment level. Financing Cash Flow was ¥-81.5B, with dividend payments of ¥71.3B as the main source of outflow. Net Free Cash Flow remained positive at ¥10.6B, while cash and cash equivalents at the end of the period remained a substantial liquidity buffer at ¥2311.8B.

Earnings Quality

The current-period results reflect the coexistence of an improvement in recurring operating performance and an expansion of temporary extraordinary losses. The operating loss improved by ¥16.2B from the previous year; however, net loss increased year on year due to the recognition of ¥18.6B in extraordinary losses, including an impairment loss of ¥16.1B related to assets whose intended use was changed in the Express Business. This impairment loss was a temporary factor, and the improvement in underlying earnings would be more evident if it were excluded. Non-operating income and expenses were broadly balanced, with income of ¥14.6B and expenses of ¥15.3B; foreign exchange losses of ¥3.4B accounted for part of the expenses. OCF was supported by non-cash expenses and an increase in accrued expenses. Given the inclusion of accrual-related factors, caution is required when evaluating profitability based solely on current-period net income and loss.

Earnings Forecasts and Guidance

The full-year forecasts are Revenue of ¥19180B, Operating Income of ¥420B (+48.4% YoY), Ordinary Income of ¥420B (+59.9%), and EPS of ¥50.52, with no revisions to either the earnings or dividend forecasts. Q1 revenue progress was approximately 23.1%, slightly below the standard 25%, while Operating Income was at a loss of ¥-48.7B as of Q1. Accordingly, substantial profitability improvement over the remaining three quarters is required to achieve full-year profitability. In particular, the pace of improvement in the Express Business, which accounts for more than 80% of consolidated revenue, is the most important issue for achieving the full-year plan.

Shareholder Returns

The full-year dividend forecast is ¥46.0 per share, with no revision to the dividend forecast. Based on average shares outstanding during the period of 316,677 thousand shares and the full-year net income forecast of ¥160B, the projected Payout Ratio is approximately 91.0%, exceeding general benchmarks for sustainability. The Company recorded quarterly net loss attributable to owners of the parent in Q1, making it difficult to directly assess dividend funding from quarterly earnings; however, the substantial cash and deposits of ¥2319.6B provide the source of dividend payments. No share buybacks were conducted during the quarter, and the above Payout Ratio does not include share buybacks. Dividend sustainability depends on the extent to which the full-year Operating Income plan of ¥420B is achieved.

Risk Factors

1. Continued low profitability in the core Express Business: The Express Business, which accounts for 82.3% of consolidated revenue, recorded a segment loss of ¥131.4B, with a margin of -3.6%. Any delay in improving this business represents the largest risk factor for consolidated performance.

2. Divergence between the full-year plan and Q1 progress: Against the full-year Operating Income forecast of ¥420B, Q1 recorded a loss of ¥-48.7B, with progress significantly below the standard 25%. The plan is predicated on substantial earnings improvement during the remaining period.

3. Changes in the financing structure and restrained investment: Short-term borrowings increased 51.3% year on year, while capital expenditures remained at approximately 27% of depreciation and amortization of ¥132.1B. Although cash and deposits remain substantial and near-term liquidity is secured, continued investment restraint could result in a future burden from equipment replacement.

Industry Benchmark (Reference; Prepared by the Company)

Industry Benchmark (transport)

Profitability and Return

The Company's profitability is significantly below the industry median and diverges from peers in that it remains in negative territory.

Growth and Capital Efficiency

Revenue growth also falls below the industry median, indicating that top-line growth is relatively moderate.

※Source: Prepared by the Company

Key Points from the Financial Results

1. Although the Operating Income margin improved from the previous year, it remained at -1.1%. The financial results confirm that the segment loss of ¥131.4B in the core Express Business is the primary factor behind consolidated profitability.

2. Against the full-year Operating Income forecast of ¥420B, Q1 results were a loss of ¥-48.7B, with progress below the standard level. Actual earnings improvement from Q2 onward will be a key focus for achieving the full-year plan.

3. Capital expenditures remained at 27% of depreciation and amortization, while OCF was supported by an increase in accrued expenses. The sustainability of the cash flow composition and future trends in the investment level are monitoring points.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,467–¥1,549 at ±1% Cost of Equity, and ¥1,498–¥1,513 at ω±0.1.

Notes:

• Goodwill amortization of ¥0.3 per share is added back to earnings (due to its nature as a non-cash expense and to improve comparability with IFRS companies).
• Net income is significantly compressed relative to Operating Income due to tax burden, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income 38%). This figure reflects that compression at face value; if the factors are temporary, underlying earnings capacity may be higher.
• Because forecast ROE is below the Cost of Equity, the theoretical value is below book value per share.
• Net assets at the end of the quarter are used (there is a timing difference from 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 / This is a mechanically calculated value based solely on publicly disclosed data and does not constitute a forecast of the market share price or a recommendation of any specific investment action, nor does it 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 release data. It does not recommend investment in any specific security. 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, after consulting professionals as necessary.

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