| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2305.3B | ¥2083.7B | +10.6% |
| Operating Income | ¥118.6B | ¥109.6B | +8.3% |
| Ordinary Income | ¥125.3B | ¥116.3B | +7.7% |
| Net Income | ¥78.8B | ¥76.3B | +3.4% |
| ROE | 12.1% | 12.6% | - |
For the fiscal year ended March 2026, Revenue was ¥2,305.3B (YoY +¥221.6B, +10.6%), Operating Income was ¥118.6B (YoY +¥9.1B, +8.3%), Ordinary Income was ¥125.3B (YoY +¥9.0B, +7.7%), and Net income attributable to owners of parent was ¥74.5B (YoY +¥1.7B, +2.4%), delivering both top-line and bottom-line growth. Revenue achieved double-digit growth for the second consecutive year, driven by expansion of logistics center operations and transportation services. Operating Income increased due to an improvement in SG&A ratio (4.4%, down from 5.0% prior year, a 0.6pt improvement), although Operating Margin declined 0.2pt to 5.1% (prior year 5.3%). Gross margin fell 0.7pt to 9.6% (prior year 10.3%), impacted by delayed price pass-through against higher freight and labor costs and underutilization during ramp-up periods of new centers. Net income growth was limited to +2.4% due to an impairment loss on customer-related assets of ¥5.5B (M·K Logi specific shipper contract revision) and a higher effective tax rate of 34.7%.
[Revenue] Revenue was ¥2,305.3B (YoY +10.6%), achieving double-digit growth for the second consecutive year. By segment, the Logistics Business accounted for ¥2,274.5B (+10.6%, 98.4% of total), driven by expanded center operations and trunk-line / last-mile transportation. Other businesses (document storage, real estate leasing, etc.) grew strongly to ¥36.3B (+12.8%). Gross profit was ¥220.7B (YoY +¥6.6B, +3.1%), lagging revenue growth (+10.6%), and gross margin declined 0.7pt to 9.6% (prior year 10.3%). The pattern reflects delayed price pass-through for freight, subcontracting and labor cost increases typical in logistics, and elevated cost ratios due to lower initial utilization at newly opened centers.
[Profitability] SG&A was ¥102.1B (YoY -¥2.5B, -2.4%), improving SG&A ratio by 0.6pt to 4.4% (prior year 5.0%). Goodwill amortization increased by ¥1.3B to ¥5.7B (prior year ¥4.4B), but overall efficiencies progressed due to economies of scale and strict expense control. Operating Income was ¥118.6B (+8.3%), while Operating Margin declined 0.2pt to 5.1% (prior year 5.3%). Non-operating net items contributed +¥6.7B, with interest income ¥1.4B, dividend income ¥3.0B, equity-method investment income ¥0.4B, and interest expense of ¥2.9B being modest. Ordinary Income was ¥125.3B (+7.7%). Extraordinary items were net -¥4.8B, including an impairment loss on customer-related assets of ¥5.5B (M·K Logi), partially offset by ¥3.1B gain on sale of investment securities. Profit before tax was ¥120.6B; after income taxes of ¥41.8B (effective tax rate 34.7%), Net income attributable to owners of parent was ¥74.5B (+2.4%). In conclusion, while the company delivered revenue and profit increases, declining gross margin constrained profit growth relative to revenue, and extraordinary losses further dampened Net income growth.
The Logistics Business reported Revenue ¥2,274.5B (YoY +10.6%), Operating Income ¥116.5B (+2.9%), and margin 5.1% (prior year 5.2%). Revenue growth substantially outpaced Operating Income growth, resulting in a 0.1pt margin decline. Top-line was supported by center operations and expanded transport demand, but margin compression was driven by rising cost ratios. Other Businesses achieved Revenue ¥36.3B (+12.8%), Operating Income ¥5.3B (+26.1%), and margin 14.5% (prior year 14.6%), with higher-value services such as document storage and real estate leasing supporting group margins. The Logistics Business accounts for 98.2% of consolidated Operating Income, indicating high segment concentration.
[Profitability] Operating Margin 5.1% (down 0.2pt from 5.3%), Net Margin 3.2% (down 0.3pt from 3.5%), reflecting pressure from lower gross margin and extraordinary losses. ROE 12.1% declined 0.8pt from prior year 12.9% but remains double-digit, indicating maintained capital efficiency. ROA was 8.5% (on an Ordinary Income basis), reflecting solid asset efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥133.6B, 1.79x Net income ¥74.5B, indicating high cash backing of profits. OCF/EBITDA ratio was 0.84x, reflecting working capital and tax payments during a growth investment phase. [Investment Efficiency] Total Asset Turnover was 1.48x, slightly down from 1.50x due to a large asset increase (+¥17.11B). EBITDA was ¥159.9B (Operating Income + depreciation ¥41.3B + goodwill amortization ¥5.7B - double-counting adjustments), with goodwill amortization representing 3.6% of EBITDA, a modest burden. [Financial Soundness] Equity Ratio 42.0% (down 1.6pt from 43.6%), Current Ratio 141.9%, indicating maintained financial soundness. D/E ratio 1.38x, Debt/EBITDA 1.49x, Interest Coverage 40.8x (EBIT / interest expense), placing leverage within investment-grade ranges. Issuance of convertible bonds ¥220B secured additional funding capacity.
OCF was ¥133.6B (YoY +50.2%). Subtotal (pre-tax CF) was ¥173.2B, less corporate tax payments ¥40.2B. OCF / Net income ratio was 1.79x, indicating very strong cash conversion. In working capital, changes in trade receivables +¥7.2B and trade payables -¥2.8B were nearly neutral, showing no material operational expansion. Investing Cash Flow was -¥391.7B (prior year -¥106.1B), a large outflow primarily due to Capital Expenditure -¥278.4B (prior year -¥87.1B). CapEx / Depreciation ratio was high at 6.74x, reflecting accelerated construction of new logistics centers and equipment renewal. Acquisitions of investment securities -¥8.3B and acquisitions of subsidiary shares -¥1.6B were also included. Free Cash Flow was -¥258.1B, a significant deficit reflecting the growth investment phase. Financing Cash Flow was +¥46.5B, driven by long-term borrowings ¥142.3B, long-term debt repayments -¥66.2B, and dividend payments -¥43.3B. Issuance of convertible bonds ¥220B is confirmed in the financial statement notes as a funding source for growth investment. Cash and deposits at fiscal year-end were ¥202.2B, down ¥211.7B year-on-year, but liquidity remains adequate.
Of Ordinary Income ¥125.3B, Operating Income ¥118.6B (94.7%) was from core operations. Non-operating income ¥11.7B (0.5% of Revenue) comprised dividend income ¥3.0B, interest income ¥1.4B, equity-method investment income ¥0.4B, etc., with few highly non-recurring items. Extraordinary items were net -¥4.8B, where an impairment loss on customer-related assets of ¥5.5B (M·K Logi specific shipper contract revision) reduced Net income by approximately ¥3.4B after tax effects, partially offset by ¥3.1B gain on sale of investment securities. The impairment is a one-time item and does not affect recurring earning power from the next fiscal year onward. OCF ¥133.6B is 1.79x Net income ¥74.5B, showing very strong cash backing. The accrual ratio ((OCF - Net income) / Total assets) is approximately -3.8%, within a healthy range, indicating high quality of earnings. EBIT-based interest coverage is 40.8x, providing a wide safety margin and strong tolerance for interest burden. The ¥46.1B gap between Ordinary Income and Net income is explainable by a 34.7% tax burden and extraordinary items, with no evidence of a structural decline in quality.
The company plan for the fiscal year ending March 2027 forecasts Revenue ¥2,500B (YoY +8.4%), Operating Income ¥138B (+16.3%), Ordinary Income ¥140B (+11.7%), Net income attributable to owners of parent ¥83B (+11.4%), and EPS ¥61.63. The plan assumes an Operating Margin of 5.52% (improvement of 0.4pt from current 5.1%), contingent on price revisions, improved contract mix, and higher utilization at new sites to absorb fixed costs. Against incremental Revenue of about ¥19.5B, Operating Income is expected to increase about ¥1.94B, implying an incremental margin of about 10% in this optimistic plan. Progress to date is 92.2% for Revenue, 86.0% for Operating Income, and 89.5% for Ordinary Income; Operating Income progress is somewhat lagging, but given the typical concentration of profits in Q4, this is considered acceptable. Achievement of the full-year guidance depends on recovery of gross margin (accelerated price pass-through) and improved utilization rates at new centers.
Dividends are ¥32 per share annually (interim ¥16, year-end ¥16), with a Payout Ratio of 59.3%, a high level. Total dividends ¥43.3B are 32.4% of OCF ¥133.6B, meaning dividends are well-covered on an OCF basis. However, Free Cash Flow is negative at -¥258.1B, so dividend funding relies on OCF and external financing (long-term borrowings and convertible bonds). DOE (Dividend on Equity) is approximately 7.5%, indicating a shareholder return stance mindful of capital efficiency. No share buybacks were conducted; Total Return Ratio is at the same level as the payout ratio. Maintaining a payout ratio above 50% during the growth investment phase signals an aggressive shareholder return policy, but monitoring the balance between investment and returns is necessary until FCF normalizes. If FCF recovers as new centers contribute, dividend sustainability would further improve.
Gross Margin Decline Risk: Gross margin 9.6% (down 0.7pt from 10.3%) was driven by delayed price pass-through against higher freight, subcontract and labor costs, and underutilization during new center ramp-up. Future progress on price revisions and utilization improvement are key to gross margin recovery. Continued competitive pressure in logistics or customer resistance to price increases could further squeeze margins.
Large Investment Recovery Risk: Capital Expenditure ¥278.4B (6.74x depreciation) reflects aggressive investment, resulting in Free Cash Flow -¥258.1B. If new center ramp-up is delayed and fixed cost absorption lags, recovery of invested capital could be postponed, worsening ROIC and financial leverage. Issued convertible bonds ¥220B carry potential dilution risk depending on stock price movements.
Customer & Segment Concentration Risk: The Logistics Business accounts for 98.4% of Revenue and 98.2% of Operating Income, indicating high segment concentration. This term, the company recorded an impairment of ¥5.5B due to revision of transactions with certain shippers. A decline in volumes from major customers or deterioration in contract terms could materially affect revenue and profits. Economic shifts or shippers’ insourcing of logistics functions could create downside risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.1% | 6.3% (3.7%–8.5%) | -1.2pt |
| Net Margin | 3.4% | 2.7% (1.6%–4.7%) | +0.7pt |
Operating Margin is 1.2pt below the industry median of 6.3%, reflecting relative underperformance due to rising cost ratios. Net Margin exceeds the median by 0.7pt, indicating maintained competitiveness at the bottom-line, as impacts from non-operating and extraordinary items are limited.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.6% | 5.0% (-0.4%–9.4%) | +5.6pt |
Revenue growth of 10.6% substantially outpaces the industry median of 5.0%, reflecting high growth driven by aggressive center expansion and capture of transport demand.
※ Source: Company compilation
While the company achieved both revenue and profit increases, a 0.7pt decline in gross margin and a 0.2pt decline in Operating Margin resulted in profitability falling below the industry median. OCF ¥133.6B (1.79x Net income) provides strong cash backing, and financial soundness (Equity Ratio 42.0%, Debt/EBITDA 1.49x, Interest Coverage 40.8x) is within investment-grade ranges. The company’s guidance for next fiscal year targeting Operating Margin 5.52% (+0.4pt) focuses on gross margin recovery via price revisions, improved contract mix, and higher utilization at new sites.
The company executed large-scale CapEx ¥278.4B (6.74x depreciation), resulting in Free Cash Flow deficit of -¥258.1B, but front-loaded growth investment was funded by convertible bonds ¥220B and long-term borrowings. If new centers come online successfully, fixed cost absorption should improve, enabling margin improvement and capital recovery. Conversely, continued underutilization could impair ROIC and financial leverage, and convertible bond dilution risk may emerge. Monitoring investment recovery progress and utilization trends is critical.
The Logistics Business accounts for 98.4% of Revenue, and the company recorded a ¥5.5B impairment due to renegotiation with specific shippers. Revenue growth of 10.6% exceeds the industry median of 5.0%, demonstrating success in expansion, but rising cost ratios have left Operating Margin 1.2pt below the industry median. With a high Payout Ratio of 59.3%, the company maintains strong shareholder returns while balancing growth investment and margin recovery, which will be key to sustainable value creation.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary before making decisions.
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