YAMATO HOLDINGS CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Although Revenue increased, losses at the operating and ordinary income levels continued to narrow, while the recognition of extraordinary losses caused final earnings to deteriorate instead, resulting in an earnings profile characterized by higher revenue but lower net income. Revenue was ¥443.33B (+1.4% YoY), the Operating Loss was ¥4.87B (compared with a loss of ¥6.49B in the previous year, representing a 25.0% reduction in the loss), and the Ordinary Loss was ¥4.94B (a 25.8% reduction). Meanwhile, consolidated Net Income for the period, including non-controlling interests, was ¥-5.83B (previous year: ¥-5.39B, YoY -8.2%). The recognition of ¥1.86B in extraordinary losses, including an impairment loss of ¥1.61B associated with a change in the use of assets in the Express Business, was a factor behind the deterioration in final earnings. Net Income attributable to owners of the parent was ¥-5.89B (previous year: ¥-5.42B, YoY -8.5%), while EPS was ¥-18.59 (previous year: ¥-17.01).

Factors Driving Earnings Changes

【Revenue】Company-wide Revenue was ¥443.33B, an increase of +1.4% YoY. While Express, the largest segment accounting for 82.3% of the revenue mix, remained nearly flat at +0.4%, non-core segments drove revenue growth, with Contract Logistics increasing +9.1%, Mobility +8.7%, and Global +6.1%. The Other segment recorded a revenue decline of -13.8%.

【Earnings】The Operating Loss was ¥4.87B, a 25.0% reduction from the previous year’s loss of ¥6.49B, while the Ordinary Loss narrowed by 25.8% to ¥4.94B. Non-operating income and expenses were nearly offset, with income of ¥1.46B (including dividend income of ¥0.40B, etc.) against expenses of ¥1.53B (including interest expense of ¥0.74B and foreign exchange losses of ¥0.34B, etc.), resulting in an improvement at the ordinary income level approximately in line with that at the operating level. However, extraordinary losses of ¥1.86B, including an impairment loss of ¥1.61B associated with a change in the use of assets in the Express Business, substantially exceeded extraordinary gains of ¥0.09B. Consequently, Profit Before Tax deteriorated from the Ordinary Loss to ¥-6.70B, and consolidated Net Income was ¥-5.83B (YoY -8.2%), worse than the previous year. Given that final earnings deteriorated despite the increase in revenue, this quarter’s results are ultimately characterized as higher revenue but lower net income.

Segment Analysis

By segment, Express generated Revenue of ¥364.68B (82.3% of the total, YoY +0.4%) and an Operating Loss of ¥13.14B (a 2.2% reduction in the loss from the previous year; operating margin of -3.6%), making it the largest drag on company-wide earnings. By contrast, Global recorded Revenue of ¥26.33B (+6.1%) and Operating Income of ¥2.66B (+2.1%, operating margin 10.1%); Mobility generated Revenue of ¥5.54B (+8.7%) and Operating Income of ¥2.05B (+27.6%, operating margin 37.0%); and Contract Logistics posted Revenue of ¥41.17B (+9.1%) and Operating Income of ¥1.91B (+57.3%, operating margin 4.6%). All three segments achieved higher earnings and supported company-wide results. The Other segment generated Revenue of ¥5.62B (-13.8%) and Operating Income of ¥1.52B (-6.9%), indicating a modest slowdown. The gap in operating margins between segments is substantial, and structural improvements in Express represent the largest lever for improving company-wide earnings.

Key Financial Indicators

【Profitability】The Operating Margin was -1.1%, improving by approximately +0.4pt from -1.5% in the previous year, but it remained negative. The consolidated Net Profit Margin was -1.3%, slightly worse than -1.2% in the previous year. ROE was -1.0% based on Net Income attributable to owners of the parent and remained low due to the recorded loss. 【Cash Flow Quality】Operating Cash Flow (OCF) was positive at ¥9.19B, but the gap versus consolidated Net Income of ¥-5.83B exceeded ¥15.0B. Fluctuations in working capital, including a ¥15.02B decrease in trade payables and the reversal of accrued bonuses, contributed to this gap, limiting the quality of earnings as supported by cash. 【Investment Efficiency】Capital expenditures were ¥3.52B, only approximately 0.27 times depreciation and amortization of ¥13.21B, indicating a strongly restrained investment stance. Free Cash Flow remained positive at +¥1.06B, but investment restraint was the primary reason. 【Financial Soundness】The Equity Ratio declined slightly to 44.3% from 44.6% in the previous year (-0.3pt), but remained at a high level. Interest-bearing debt—comprising short-term borrowings of ¥32.41B, long-term borrowings of ¥74.05B, and ¥20B in bonds, for a total of approximately ¥126.47B—was at a level that could be almost offset by cash, against cash and deposits of ¥231.96B. However, Debt/EBITDA was approximately 15 times, based on EBITDA of approximately ¥8.34B (Operating Income + depreciation and amortization), representing a heavy credit metric.

Cash Flow Analysis

Operating Cash Flow was ¥9.19B, a decline of -50.3% from ¥18.48B in the previous year. After deducting ¥4.63B in income taxes paid from OCF before changes in working capital of ¥13.90B, working-capital headwinds—including a ¥15.02B decrease in trade payables and the reversal of accrued bonuses—were partly offset by factors such as an increase in accrued expenses. Ultimately, the company generated OCF of ¥9.19B. Investing Cash Flow was -¥8.13B. Capital expenditures were ¥3.52B, remaining below depreciation and amortization of ¥13.21B, indicating a restrained investment stance. Financing Cash Flow was -¥8.15B, mainly due to dividend payments and other items, including shareholder returns in the previous year. As a result, Free Cash Flow (OCF + Investing Cash Flow) remained positive at +¥1.06B. However, investment restraint was the main supporting factor, and balancing this with medium-term facility renewal and automation investment will require attention going forward.

Quality of Earnings

While the company recorded extraordinary losses of ¥1.86B against an Ordinary Loss of ¥4.94B, primarily consisting of an impairment loss of ¥1.61B associated with a change in the use of assets in the Express Business, extraordinary gains were minimal at ¥0.09B. Consequently, Profit Before Tax deteriorated further from the Ordinary Loss to ¥-6.70B. A substantial portion of consolidated Net Income of ¥-5.83B was therefore depressed by temporary impairment factors, creating a gap between recurring earnings power—an Operating Loss of ¥4.87B and an Ordinary Loss of ¥4.94B—and final earnings. Comprehensive Income was ¥-2.44B (¥-2.48B attributable to owners of the parent). An increase of +¥3.67B in valuation differences on securities and other factors contributed to a positive gap of approximately ¥3.35B versus consolidated Net Income of ¥-5.83B. This reflects changes in the fair value of assets and does not directly reflect the underlying business performance, which should be noted. In addition, the gap between OCF of ¥9.19B and consolidated Net Income of ¥-5.83B was largely attributable to temporary fluctuations in working capital, such as the decrease in trade payables and reversal of accrued bonuses. Continuous monitoring is therefore necessary when evaluating the quality of earnings.

Earnings Forecast and Guidance

The Full-Year earnings forecast is Revenue of ¥1,918.0B, Operating Income of ¥42.0B (YoY +48.4%), Ordinary Income of ¥42.0B (YoY +59.9%), EPS of ¥50.52, and a dividend of ¥46. There were no revisions to the earnings or dividend forecasts during Q1. Q1 Revenue progress was 23.1% (¥443.33B/¥1,918.0B), slightly below the simple four-quarter benchmark of 25%. Meanwhile, the company recorded an Operating Loss of ¥4.87B as of Q1, resulting in negative progress against the Full-Year plan for Operating Income of ¥42.0B. This suggests a second-half-weighted earnings plan premised on the penetration of price revision effects and increased demand during the peak season. The pace of improvement in operating earnings from Q2 onward will be a key point for assessing whether the plan can be achieved.

Shareholder Returns

The company’s annual dividend forecast is ¥46 per share, representing an increase from the previous fiscal year’s actual dividend of ¥23. Based on the company’s forecast Net Income attributable to owners of the parent of ¥16.0B and EPS of ¥50.52, the Payout Ratio will be approximately 91.0% (¥46/¥50.52), a high level. Based on approximately 0.317B shares outstanding after deducting treasury shares, the estimated total annual dividend would be approximately ¥14.57B. Relative to cash and deposits of ¥231.96B, there is no significant constraint on the funding source. However, given the Q1 results, which recorded a loss in Net Income attributable to owners of the parent, the probability of achieving a Full-Year return to profitability will determine the sustainability of the Payout Ratio. As there were no share repurchases during the current period (¥18.92B repurchased in the previous period), shareholder returns are evaluated based on the Payout Ratio.

Risk Factors

1. Continued structural losses in the Express Business: The Express Business, which accounts for 82.3% of Revenue, recorded an Operating Loss of ¥13.14B (operating margin of -3.6%) and remains the largest constraint on company-wide earnings improvement.

2. Vulnerability of credit metrics: Interest-bearing debt, consisting of short-term borrowings, long-term borrowings, and bonds, totaled approximately ¥126.47B against EBITDA of approximately ¥8.34B (Operating Income + depreciation and amortization), resulting in a high Debt/EBITDA ratio of approximately 15 times. Interest coverage is also insufficient due to the operating loss.

3. Possibility of recurring temporary losses: The company recorded an impairment loss of ¥1.61B during the period in connection with a change in the use of assets in the Express Business. One-time expenses associated with site restructuring and asset efficiency initiatives may continue to affect earnings going forward.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Company’s Operating Margin and Net Profit Margin are substantially below the industry median, placing its profitability at a relatively low level within the transportation industry.

Growth and Capital Efficiency

The Revenue Growth Rate also falls below the industry median, placing the Company’s revenue growth among the relatively slower rates within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The Operating Loss narrowed by 25.0% from the previous year. However, the Express Business, which accounts for 82.3% of the revenue mix, recorded a loss of ¥13.14B and remains the largest lever for improving company-wide earnings. Progress in improving the segment’s earnings structure will be the key focus going forward.

2. Q1 progress against the Full-Year plan was 23.1% for Revenue, while Operating Income progress was negative, confirming that the plan is weighted toward the second half. The extent to which price revision effects and peak-season demand materialize will be critical to achieving the Full-Year target.

3. The company forecast-based Payout Ratio is high at approximately 91.0%. The probability of a Full-Year return to profitability and the stability of OCF will be key considerations in evaluating the sustainability of this level of shareholder returns.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type model with an explicit five-year fade period). It is not a forecast of the market share price or a recommendation to take any specific investment action.

Sensitivity: ¥1,472–¥1,554 at ±1% for the cost of equity, and ¥1,503–¥1,518 at ±0.1 for ω.

Notes:

• Goodwill amortization of ¥0.3 per share has been added back to earnings (as a non-cash expense and for comparability with IFRS companies).
• Net Income is substantially compressed relative to Operating Income due to tax burdens, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income: 38%). This value reflects that compression at face value; if the factors are temporary, normalized earnings power 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 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 / Interest rate reference month: 2026-06 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional advisor as necessary.

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