NIPPON EXPRESS HOLDINGS,INC. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.91T
• Operating Income: ¥38.04B
• Net Income: ¥18.90B
• EPS: ¥46.00

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Nippon Express Holdings (IFRS, consolidated) delivered stable top-line performance in FY2025 Q3 YTD with revenue of 19,085.96 (100M JPY), up 0.4% YoY, while demonstrating improved operating profitability. Operating income rose 9.0% YoY to 380.39 despite only modest revenue growth, indicating successful cost control and mix management amid a soft freight environment. Gross profit came in at 1,647.93, implying a gross margin of 8.6%, and operating margin expanded to roughly 2.0% (380.39/19,085.96). EBITDA was 1,743.02 with a 9.1% margin, underscoring healthy underlying cash earnings capacity even as reported net income declined. Below the operating line, profit before tax was 287.76, suggesting net non-operating expenses between operating profit and PBT, partly offset by equity-method income of 11.89. The effective tax rate was elevated at 50.9%, and net income dropped 36.7% YoY to 115.90, implying tax effects and non-controlling interests weighed on bottom-line attribution. DuPont analysis highlights a subdued ROE of 1.4%, driven by thin net profit margin (0.6%) and moderate asset turnover (0.822), despite higher financial leverage (2.85x). Cash generation was strong: operating cash flow reached 1,462.02 (OCF margin ~7.7%), vastly exceeding net income (OCF/NI 12.61x), reflecting robust working capital inflows and non-cash charges (D&A 1,362.63). Investing cash outflows were heavy at -1,453.49, implying active investment/M&A beyond routine capex (-402.27). Free cash flow defined as OCF + investing CF was slightly positive at 8.53, tempered by the sizable investing program. Financing cash outflow of -1,191.35 reflects dividends (-262.00), share repurchases (-107.15), and likely debt/lease repayments, consistent with a cautious balance sheet stance. The balance sheet shows total assets of 23,214.74 and total equity of 8,147.94, implying an equity ratio of 34.3% and a reported debt-to-equity of 1.75x—manageable for a global logistics platform. Liquidity metrics like current and quick ratios are not directly calculable from disclosures, but cash and equivalents of 2,513.39 provide a buffer. Dividend capacity looks pressured on an earnings basis (calculated payout ratio 675.6%), but cash coverage is more comfortable given strong OCF; however, concurrent investment outlays limit FCF headroom this period. Overall, the company is navigating a normalization phase in forwarding and air/ocean markets with disciplined cost control, solid operating cash generation, and ongoing strategic investments, albeit with near-term compression at the net income level due to high taxes and below-OP items. Data gaps (non-operating details, interest, current liabilities) constrain precision on leverage, coverage, and liquidity ratios, and conclusions reflect available non-zero items only.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.6%
• asset_turnover: 0.822
• financial_leverage: 2.85x
• calculated_ROE: 1.4%
• commentary: ROE is constrained primarily by a very low net margin; asset turnover is reasonable for an asset-intensive logistics business, and leverage is elevated but not excessive. margin_quality: Gross margin at 8.6% and EBITDA margin at 9.1% indicate healthy conversion from gross to EBITDA, supported by substantial D&A (1,362.63). Operating margin improved to ~2.0% alongside revenue growth of 0.4%, signaling cost discipline and some mix improvement. The compression from operating income (380.39) to PBT (287.76) points to material below-OP costs (finance costs and other non-operating items), and the high effective tax rate (50.9%) further dampened net margin. operating_leverage: Operating income grew +9.0% on +0.4% revenue, implying positive operating leverage through SG&A control (1,211.88) and efficiency gains. However, this leverage is not translating to bottom-line growth due to elevated tax rate and non-operating headwinds.

Growth Assessment

revenue_sustainability: Top-line growth of +0.4% suggests stabilization after prior market normalization in air/ocean forwarding; domestic and contract logistics likely offset weaker rate environment. Sustainability depends on global trade volumes, rate stabilization, and contract repricing. profit_quality: Operating profit growth outpaced revenue, backed by improved cost efficiency. Yet, significant drag from non-operating items and a 50.9% effective tax rate lowered net income by 36.7% YoY, indicating profit quality below the operating line remains a watchpoint. outlook: With freight rates normalizing and demand mixed across geographies, near-term revenue is likely to remain steady to modestly improving, contingent on macro and FX. Continued cost measures could support operating margin resilience, while normalization of tax rate and non-operating charges would be key to net income recovery.

Financial Health

liquidity: Current and quick ratios are not calculable given unreported current liabilities and cash detail breakdowns. Cash and equivalents of 2,513.39 provide a liquidity cushion. Accounts receivable of 5,203.40 are sizable relative to revenue, typical for B2B logistics; working capital dynamics appear supportive given strong OCF. solvency: Equity ratio is 34.3%, and reported debt-to-equity is 1.75x, consistent with moderate leverage for the sector. Interest coverage cannot be computed due to unreported interest expense, but EBITDA of 1,743.02 and OCF of 1,462.02 imply solid capacity to service obligations. capital_structure: Total assets 23,214.74 vs total equity 8,147.94 indicate financial leverage consistent with DuPont (2.85x). Financing CF of -1,191.35 suggests deleveraging and shareholder returns in tandem, balanced against elevated investment needs.

Cash Flow Quality

earnings_quality: OCF/Net income at 12.61x and D&A of 1,362.63 signal high cash conversion and meaningful non-cash charges. The gap between operating profit and PBT coupled with high taxes depresses accounting earnings relative to cash generation. FCF_analysis: Operating CF 1,462.02 and investing CF -1,453.49 yield FCF (OCF + investing CF) of 8.53, reflecting heavy investment/M&A beyond routine capex (-402.27; ~2.1% of revenue). On an OCF - capex basis, pre-M&A FCF would be robust, but total FCF is essentially breakeven due to strategic investments. working_capital: Accounts receivable 5,203.40 and accounts payable 2,684.23 indicate a typical logistics cash cycle; strong OCF implies favorable working capital movements this period. Inventory is minimal at 126.50, consistent with the service nature of the business.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio of 675.6% reflects depressed earnings rather than an outsized ordinary dividend policy; reported annual DPS is unreported, and consolidated attribution effects may also influence the ratio. FCF_coverage: FCF coverage using OCF + investing CF is weak at 0.01x amid heavy investment outflows. However, dividends paid of 262.00 are well covered by OCF (coverage ~5.6x), suggesting capacity to fund dividends from ongoing cash generation, notwithstanding concurrent capex/M&A. policy_outlook: Given strong operating cash flow but near-term earnings pressure and sustained investment needs, management may prioritize a balanced approach between stable dividends and funding growth capex/M&A; scope for buybacks may be more tactical given current FCF dynamics.

Risk Assessment

Business Risks:

• Freight rate normalization and volume softness in air and ocean forwarding
• Exposure to global trade cycles, geopolitical disruptions, and route bottlenecks
• Fuel cost volatility and energy surcharges pass-through effectiveness
• Domestic wage inflation and labor shortages impacting logistics cost base
• Execution risk in large-scale capex/M&A and integration of acquired assets
• FX fluctuations (notably JPY) affecting overseas revenue translation and costs

Financial Risks:

• High effective tax rate (50.9%) depressing net profitability
• Non-operating expense drag between operating income and PBT
• Moderate leverage (D/E 1.75x) with potential refinancing and interest-rate exposure
• Thin operating margin (~2.0%) providing limited buffer against shocks
• FCF sensitivity to sustained elevated investment outflows

Key Concerns:

• Sustainability of operating margin gains if volumes weaken further
• Normalization of tax rate and clarity on non-operating items to support NI recovery
• Balance between shareholder returns and funding of growth investments

Investment Implications

Key Takeaways:

• Revenue is broadly stable (+0.4% YoY) with operating profit improving (+9.0% YoY) on cost discipline
• Net income decline (-36.7% YoY) driven by high taxes (50.9% ETR) and below-OP items
• OCF is strong (1,462.02; OCF/NI 12.61x), but heavy investing CF (-1,453.49) caps FCF (8.53)
• Balance sheet is sound (equity ratio 34.3%, D/E 1.75x) with cash of 2,513.39
• Dividend affordability is better on a cash basis than on earnings, but concurrent investments limit discretionary returns

Metrics to Watch:

• Operating margin and SG&A ratio trajectory
• Non-operating items and interest expense disclosure to assess coverage
• Effective tax rate normalization path
• Order intake/volume trends in forwarding and contract logistics
• OCF, capex, and M&A cash outflows; working capital turns
• Net leverage and liquidity headroom

Relative Positioning: A diversified Japanese logistics leader with resilient operating cash generation and moderate leverage, navigating a post-pandemic normalization in forwarding with tighter margins than peak cycles but better stability than smaller peers due to scale and contract logistics mix.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
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