Yamatane Corporation FY2026 FY Earnings Report

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Executive Summary

The fiscal year ended March 2026 posted Revenue of ¥886.7B (YoY +¥77.5B +9.6%), Operating Income of ¥58.6B (YoY +¥20.9B +55.1%), Ordinary Income of ¥54.8B (YoY +¥18.3B +50.2%), and Net Income attributable to owners of the parent of ¥54.98B (YoY +¥23.9B +77.8%), achieving significant revenue and profit growth. Gross profit margin improved to 15.0% (approx. +2.5pt YoY), and operating margin expanded to 6.6% (prior year 4.7%) (+1.9pt), indicating realized operating leverage. Extraordinary gains of ¥34.4B (gain on sale of investment securities ¥16.5B, compensation income ¥17.7B, etc.) materially boosted profit before tax to ¥79.6B, while increased interest expense of ¥10.1B partially offset growth at the ordinary-income level. ROE rose to 7.6% (prior year 5.6%), driven mainly by improvement in net profit margin.

Drivers of Performance

[Revenue] Revenue of ¥886.7B (+9.6%) was led by the GroceryRelated segment at ¥562.8B (+13.5%), complemented by LogisticsRelated at ¥260.8B (+4.6%). RealEstateRelated declined slightly to ¥46.0B (-1.1%), and InformationRelated decreased slightly to ¥17.1B (-2.6%). The two major segments, GroceryRelated and LogisticsRelated, together account for approximately 93% of consolidated Revenue, and their solid performance supported top-line expansion.

[Profitability] Gross profit margin improved by approximately +2.5pt to 15.0%, directly translating into Operating Income of ¥58.6B (+55.1%). SG&A of ¥74.1B (SG&A ratio 8.4%) was absorbed by improvements in gross profit, expanding operating margin to 6.6% (prior year 4.7%) (+1.9pt). By segment, GroceryRelated generated Operating Income of ¥40.3B (+71.3%, margin 7.2%), LogisticsRelated ¥23.7B (+45.8%, margin 9.1%), while RealEstateRelated supported profit levels with Operating Income of ¥20.4B (+7.1%, high margin 44.4%). Non-operating income/expenses was a net expense of ▲¥3.8B: dividend income received ¥8.0B was outweighed by interest expense of ¥10.1B, causing Ordinary Income of ¥54.8B (+50.2%) to be somewhat lower than Operating Income. Extraordinary items included gain on sale of investment securities ¥16.5B and compensation income ¥17.7B (total extraordinary gains ¥34.4B), offset by extraordinary losses ¥9.7B (impairment losses ¥4.4B, etc.), resulting in a net positive ¥24.8B that boosted final profit. Profit before tax was ¥79.6B; after deduction of corporate taxes ¥24.6B and non-controlling interests ¥2.8B, Net Income attributable to owners of the parent was ¥54.98B (+77.8%). In conclusion, the company achieved growth in both revenue and profit, with operating-level profitability improvement and contribution from extraordinary gains acting together.

Segment Analysis

GroceryRelated reported Revenue of ¥562.8B (+13.5%) and Operating Income of ¥40.3B (+71.3%) for a margin of 7.2%, approximately +2.4pt YoY. Price pass-through and mix improvement drove gross profit expansion, realizing operating leverage. LogisticsRelated posted Revenue of ¥260.8B (+4.6%) and Operating Income of ¥23.7B (+45.8%), margin 9.1% (+~3.0pt YoY), supported by higher utilization and efficiency gains. RealEstateRelated saw Revenue of ¥46.0B (-1.1%) but Operating Income of ¥20.4B (+7.1%), maintaining an extremely high margin of 44.4% and underpinning consolidated profits. InformationRelated recorded Revenue of ¥17.1B (-2.6%) and Operating Income of ¥0.7B (+47.8%), margin 4.0%, showing efficiency improvements despite small scale. In terms of absolute profit expansion, GroceryRelated and LogisticsRelated were central, together accounting for Operating Income of ¥64B (about 109% of consolidated Operating Income, pre-adjustments), and served as the main growth engine for the company.

Key Financial Metrics

[Profitability] Operating margin improved to 6.6% (prior year 4.7%) (+1.9pt), Net Profit Margin expanded to 6.2% (prior year 3.8%) (+2.4pt), and ROE increased to 7.6% (prior year 5.6%). Dupont decomposition of ROE is Net Profit Margin 6.2% × Total Asset Turnover 0.499× × Financial Leverage 2.80×, with the largest driver being the improvement in Net Profit Margin. ROA rose to 3.1% (prior year 2.2%) (+0.9pt). [Cash Quality] Operating Cash Flow (OCF) / Net Income ratio is 1.48x, indicating good cash generation quality. OCF/EBITDA is 0.88x, slightly below the benchmark (≥0.9x), but excluding inventory increases (working capital change ▲¥1.36B), cash generation is at a healthy level. [Investment Efficiency] Total Asset Turnover is 0.499x; standard for a business with a high fixed-asset weight, though levels of inventories, investment securities, and land & buildings cap turnover. ROIC (approx.: EBIT ÷ (Interest-bearing debt + Equity)) is roughly 3.3%, indicating room for improvement. [Financial Health] Equity Ratio is 35.8% (prior year 35.0%) (+0.8pt). D/E ratio rose to 1.06× (prior year 0.85×), driven by increased borrowings: short-term borrowings +32.2% (¥101.8B) and long-term borrowings +36.8% (¥573.95B). Current ratio stands at 94.7%, below 1.0×, indicating short-term liquidity is at a cautionary level. Interest coverage is 5.83× (EBIT ÷ interest expense), showing near-term capacity to cover interest payments, but monitoring is required in a rising-rate environment.

Cash Flow Analysis

Operating Cash Flow was ¥81.5B (YoY +40.7%), 1.48× Net Income of ¥54.98B, indicating high-quality cash generation. OCF before working capital changes was ¥95.8B, at a level after adding back non-cash expenses such as depreciation ¥33.8B, goodwill amortization ¥4.3B, and impairment losses ¥4.4B. In working capital, an increase in inventories of ▲¥13.6B was a primary cash outflow, partially offsetting OCF. After corporate tax payments of ¥20.5B, interest and dividend income received ¥8.1B, and interest paid ¥10.2B, OCF was ¥81.5B. Investing Cash Flow was ▲¥33.3B, with major outflows of acquisition of tangible and intangible fixed assets ▲¥26.4B and acquisition of investment securities ▲¥7.3B, partially offset by proceeds from sale of investment securities ¥17.98B and proceeds from sale of fixed assets ¥1.03B. Free Cash Flow was ¥48.2B (OCF ¥81.5B + Investing CF ▲¥33.3B), maintaining a healthy level. Financing Cash Flow was ▲¥18.3B: long-term borrowings raised ¥190B and net increase in short-term borrowings ¥17.3B contributed to funding, while repayments of long-term borrowings ▲¥71.2B, redemption of corporate bonds ▲¥109.8B, dividend payments ▲¥14.7B, and share buybacks ▲¥26.4B were recorded as outflows. Cash and deposits at year-end increased to ¥80.3B (YoY +¥30.5B), improving liquidity while conducting dividends and buybacks within Free Cash Flow.

Quality of Earnings

The reduction from Operating Income ¥58.6B to Ordinary Income ¥54.8B (▲¥3.8B) was due to non-operating expenses ¥13.5B (including interest expense ¥10.1B) exceeding non-operating income ¥9.7B (including dividend income ¥8.0B). Non-operating income relative to Revenue is limited at about 1.1%, and improvements at the ordinary-income level are mainly driven by operating improvements. The increase from Ordinary Income ¥54.8B to Profit before Tax ¥79.6B (+¥24.8B) was due to extraordinary gains ¥34.4B (gain on sale of investment securities ¥16.5B, compensation income ¥17.7B, etc.) greatly exceeding extraordinary losses ¥9.7B (impairment losses ¥4.4B, loss on disposal of fixed assets ¥3.5B, etc.). The contribution from extraordinary gains is temporary; sustainable profit levels for next fiscal year should be assessed focusing on operating-to-ordinary income (around the ~¥55B range). The accrual ratio ((Net Income − OCF) ÷ Total Assets) is about ▲1.5%, favorable, with OCF ¥81.5B exceeding Net Income ¥54.98B, indicating healthy cash backing. OCF/EBITDA ratio of 0.88x slightly misses the benchmark (≥0.9x), but excluding inventory increases, core cash-generation aligns with Operating Income growth. Comprehensive income attributable to owners of the parent was ¥90.1B, approximately ¥35.1B higher than Net Income ¥54.98B, mainly due to an increase of ¥32.6B in unrealized gains on other securities, with market valuation gains on investment securities boosting equity.

Outlook & Guidance

The company’s plan for the fiscal year ending March 2027 projects Revenue of ¥985.6B (YoY +11.1%), Operating Income of ¥41.1B (YoY ▲29.9%), Ordinary Income of ¥36.1B (YoY ▲34.1%), and Net Income attributable to owners of the parent of ¥44.0B. The plan anticipates significant profit declines despite revenue growth, conservatively factoring in the loss of this year’s extraordinary gains (net increase approx. +¥24.8B), higher interest burden and costs, and inventory normalization. Operating margin is expected to compress to about 4.2% (down ▲2.4pt from this year’s 6.6%), indicating conservative margin assumptions. EPS is forecast at ¥209.26, and annual dividend is forecast at ¥35 (post-split basis).

Shareholder Returns

Annual dividend is ¥75 (Year-end ¥40, Interim ¥35); on a practical basis after the 1-for-2 share split effective June 1, this equates to ¥37.5 (pre-split equivalent ¥75). Next fiscal year’s forecast dividend is ¥35 (post-split basis), equivalent to ¥70 pre-split, representing an effective dividend cut but reflecting a conservative stance given the disappearance of this year’s extraordinary gains. Payout Ratio is approximately 30.9% (total dividends ¥14.74B against Net Income attributable to owners of the parent ¥54.98B, based on weighted average shares outstanding 21,550 thousand shares), which is healthy. Coverage of dividends by Free Cash Flow is about 3.3x (Free Cash Flow ¥48.2B vs dividend payments ¥14.7B), indicating ample room. Share buybacks of ¥26.4B were executed; total shareholder returns (dividends ¥14.7B + share buybacks ¥26.4B) amount to about ¥41.1B, roughly 85% of Free Cash Flow and within FCF. Total Return Ratio (total shareholder returns ÷ Net Income attributable to owners of the parent) is approximately 74.8%, a level that allows balancing growth investment and shareholder returns.

Risk Factors

1. Short-term liquidity risk: Current ratio is 94.7% and Quick ratio 71.2%, both below 1.0×, with current assets ¥323.9B versus current liabilities ¥342.0B, indicating a maturity mismatch. Cash and deposits of ¥80.3B versus short-term borrowings ¥101.8B give a cash / short-term liabilities ratio of 0.79×, implying a relatively high dependence on refinancing. Ensuring short-term funding flexibility is a challenge.

2. Inventory build-up and turnover risk: Inventories increased to ¥80.5B (+60.0%), and working capital change ▲¥13.6B pressured OCF. Continued deterioration in inventory turnover could lead to valuation losses or additional cash outflows. Appropriate inventory management and turnover improvement in line with demand are required.

3. Rising interest burden risk: Interest expense increased to ¥10.1B (prior year ¥7.2B) (+40.5%), and interest-bearing debt totaling ¥675.8B (long-term borrowings ¥573.95B, short-term borrowings ¥101.8B, corporate bonds ¥3.2B) is weighing on Ordinary Income. Interest coverage of 5.83× shows near-term capacity, but in a rising-rate environment further increases in interest payments could offset operating income growth. Debt/EBITDA ratio of 7.31× indicates a highly leveraged profile; optimizing capital structure and managing interest-rate sensitivity are important.

Industry Benchmark (Reference, Company Research)

Profitability & Returns

Profitability metrics significantly exceed industry medians, driven by operating leverage in GroceryRelated and LogisticsRelated and high-margin contribution from RealEstateRelated.

Growth & Capital Efficiency

Revenue growth also outpaces industry median, supported by expansion in GroceryRelated and LogisticsRelated.

※ Source: Company compilation

Points of Note in the Financial Results

1. Operating-level profitability improvement is notable: Operating margin expanded to 6.6% (prior year 4.7%) (+1.9pt) and ROE rose to 7.6% (prior year 5.6%). Operating leverage in GroceryRelated and LogisticsRelated and maintenance of high margins in RealEstateRelated have produced profitability well above industry medians. However, final profit was materially boosted by extraordinary gains of ¥34.4B (net increase approx. +¥24.8B); the company’s plan for next year shows profit declines (Operating Income ¥41.1B, ▲29.9%) reflecting the loss of these one-off gains. Sustainable core earnings are best viewed around operating-to-ordinary income levels (approx. ¥55B), and next year will focus on margin retention and strengthening the operating base.

2. Managing liquidity and leverage is a medium-term issue. Current ratio of 94.7% indicates short-term liquidity at a cautionary level, and cash / short-term liabilities ratio of 0.79× signals high refinancing dependence. Interest-bearing debt totals ¥675.8B and Debt/EBITDA of 7.31× show a highly leveraged profile; interest expense of ¥10.1B (YoY +40.5%) is pressuring Ordinary Income. Inventory build-up (inventories +60.0%) is straining working capital and OCF/EBITDA of 0.88x narrowly misses the benchmark. Free Cash Flow of ¥48.2B can cover dividends and buybacks, but a rising-rate environment or prolonged inventory turnover deterioration could constrain capital efficiency and cash quality. Areas to monitor include normalization of inventory levels, interest-rate sensitivity (fixed/variable composition), and improvement trends in Debt/EBITDA and current ratio.

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This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions are your own responsibility; please consult professionals as necessary before making investment decisions.