Inui Global Logistics (9308) FY2026 Q3 Earnings Report

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Executive Summary

The Company reported higher revenue but substantially lower profits due to deteriorating profitability in its core ocean-going shipping business. Revenue increased slightly to ¥24.699B (+1.1% YoY), while Operating Income fell significantly to ¥1.003B (-73.3%), Ordinary Income to ¥0.911B (-76.9%), and Net Income to ¥0.611B (-85.9%). The primary factor was a 15.5% YoY increase in cost of sales, which exceeded the pace of revenue growth, causing the gross profit margin to plunge from 20.1% to 8.7%. In addition, Net Income for the same period of the previous year included a net extraordinary factor of approximately ¥1.8B, comprising gains on the sale of fixed assets and impairment losses. Consequently, the YoY comparison of Net Income makes the deterioration in actual business performance appear more severe than it was.

Factors Affecting Performance

【Revenue】Revenue was ¥24.699B (+1.1% YoY). By segment, the Ocean-Going Shipping Business generated ¥18.86B (76.4% of total revenue, +2.6% YoY), the Warehousing and Transportation Business generated ¥2.89B (11.7%, +2.5%), and the Real Estate Business generated ¥2.98B (12.1%, -9.0%). While the core Ocean-Going Shipping Business drove revenue growth, the Real Estate Business experienced a decline in revenue due to changes in operating conditions and other factors.

【Profit and Loss】Operating Income was ¥1.003B (-73.3% YoY). The Ocean-Going Shipping Business fell from Operating Income of ¥2.69B in the same period of the previous year to an Operating Loss of ¥0.03B, explaining most of the deterioration in consolidated profits. The Real Estate Business maintained high profitability, with Operating Income of ¥1.49B and a margin of 50.0%, although this represented a 6.3% decline YoY. The Warehousing and Transportation Business posted Operating Income of ¥0.26B, up 21.0% YoY, providing a certain degree of support. Ordinary Income was ¥0.911B (-76.9% YoY), with the ¥0.53B interest expense representing a significant burden. Net Income was ¥0.611B (-85.9% YoY); however, the same period of the previous year included nonrecurring gains on the sale of fixed assets of ¥4.29B and impairment losses of ¥2.49B. In the current period, virtually no such extraordinary gains or losses occurred, apart from ¥0.03B in extraordinary losses. In conclusion, the Company recorded higher revenue but lower profits, primarily due to deteriorating profitability in the Ocean-Going Shipping Business.

Segment Analysis

The Ocean-Going Shipping Business generated revenue of ¥18.86B (76.4% of total revenue, +2.6% YoY), while its operating result deteriorated from a profit of ¥2.69B in the same period of the previous year to a loss of ¥0.03B. This reflects the emergence of a business structure that is highly susceptible to market fluctuations in freight rates, fuel costs, and vessel supply and demand. The Warehousing and Transportation Business achieved higher revenue and profit, with revenue of ¥2.89B (+2.5% YoY) and Operating Income of ¥0.26B (9.0% margin, +21.0% YoY), functioning as a stable earnings source. The Real Estate Business generated revenue of ¥2.98B (-9.0% YoY) and Operating Income of ¥1.49B (50.0% margin, -6.3% YoY). Although it maintained high profitability, its scale contracted slightly. Most of the decline in consolidated Operating Income resulted from the sharp deterioration in the Ocean-Going Shipping Business, while the other two businesses partially offset the impact.

Key Financial Indicators

【Profitability】The Operating Income margin declined to 4.1% from 15.4% in the same period of the previous year, while the Net Income margin declined to 2.5% from 17.7%. The gross profit margin also fell to 8.7% from 20.1%. ROE remained at 2.2% on an annualized basis. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥2.97B, approximately 4.9 times Net Income of ¥0.61B, indicating that the conversion of earnings into cash itself remained sound. Depreciation and amortization of ¥2.96B supported cash generation in this capital-intensive business. 【Investment Efficiency】Acquisitions of fixed assets totaling ¥3.83B exceeded depreciation and amortization, resulting in investment cash outflows of ¥4.31B and negative free cash flow of ¥1.33B. 【Financial Soundness】The Equity Ratio was 47.9% (approximately 48.5% in the previous year), showing no major change. However, interest-bearing debt increased to ¥28.35B, while long-term borrowings expanded to ¥25.64B from ¥21.72B in the previous year. Although short-term liquidity remained strong, with cash and deposits of ¥17.93B and a current ratio of 244.5%, the debt burden relative to earnings capacity has increased.

Cash Flow Analysis

Operating Cash Flow was ¥2.97B, down 57.4% from ¥6.97B in the same period of the previous year. However, it remained approximately 4.9 times Net Income of ¥0.61B, and no issue was evident with the conversion of earnings into cash itself. Depreciation and amortization of ¥2.96B supported OCF as a noncash expense. Investment Cash Flow represented an outflow of ¥4.31B, primarily consisting of ¥3.83B in acquisitions of fixed assets, reflecting continued investment in vessels, real estate, and other assets. As a result, free cash flow was negative ¥1.33B, indicating that investment and shareholder returns could not be fully funded through internal funds alone. Financing Cash Flow was an outflow of ¥0.17B, reflecting ¥4.70B in long-term borrowings, repayments of ¥3.03B, dividend payments, and other items. Although cash and cash equivalents decreased by ¥1.11B, the period-end balance remained at ¥17.54B, securing short-term funding stability.

Quality of Earnings

The deterioration in Operating Income during the current period was attributable to market conditions in the Ocean-Going Shipping Business and should be viewed as a decline in recurring business earnings power. Non-operating income of ¥0.51B included dividend income of ¥0.17B and foreign exchange gains of ¥0.14B, while most of non-operating expenses of ¥0.60B comprised interest expense of ¥0.53B. The increased financial burden associated with higher interest-bearing debt pressured Ordinary Income. Extraordinary items were very limited, consisting of no extraordinary income and ¥0.03B in extraordinary losses from valuation losses on investment securities. By contrast, the same period of the previous year included extraordinary gains on the sale of fixed assets of ¥4.29B and impairment losses of ¥2.49B, representing net extraordinary income of approximately ¥1.80B. Accordingly, the 85.9% decline in Net Income largely reflects the disappearance of this nonrecurring factor, and the deterioration in underlying earnings power is more appropriately assessed based on Operating Income (-73.3%). Comprehensive Income of ¥1.46B exceeded Net Income of ¥0.61B, aided by a ¥0.94B increase in valuation difference on securities. This represents an increase in unrealized gains due to market price fluctuations and is separate from business earnings power.

Earnings Forecast and Guidance

Progress against the full-year company forecast after nine months was 75.1% for Revenue, 75.7% for Operating Income, 79.4% for Ordinary Income, and 71.9% for Net Income. Compared with the standard progress rate of 75% after nine months, Revenue, Operating Income, and Ordinary Income were broadly in line with the forecasts, while Net Income was slightly below expectations. The company’s full-year forecasts already incorporate substantial declines, with Operating Income projected at ¥1.325B (-63.8% YoY) and Ordinary Income at ¥1.148B (-70.1% YoY). The plan appears to assume that weak profitability in the Ocean-Going Shipping Business will continue into the second half. The extent of earnings improvement in the Ocean-Going Shipping Business during the remaining quarter will be the key determinant of whether the forecasts are achieved.

Shareholder Returns

The Q2 dividend was ¥3.00 per share, and the company’s forecast annual dividend is ¥10.13. Based on forecast Net Income of ¥0.850B and the average number of shares outstanding during the period, the forecast Payout Ratio is approximately 30.0%, representing a restrained dividend burden relative to accounting earnings. No share repurchases were conducted during the period, and dividends remain the primary form of shareholder returns. However, free cash flow was negative ¥1.33B during the period, meaning that dividend payments were supported in part by the substantial cash and deposits balance of ¥17.93B and borrowings. Dividend sustainability is expected to depend on earnings recovery in the Ocean-Going Shipping Business and the extent of improvement in free cash flow.

Risk Factors

1. Ocean-going shipping market fluctuation risk: The operating result of the Ocean-Going Shipping Business, which accounts for 76.4% of total revenue, deteriorated from a profit of ¥2.69B in the same period of the previous year to a loss of ¥0.03B. Fluctuations in freight rates, vessel supply and demand, fuel prices, and foreign exchange rates have a significant impact on consolidated performance.

2. Financial leverage and interest burden: Interest-bearing debt increased to ¥28.35B, and interest expense of ¥0.53B represents a substantial burden relative to Operating Income of ¥1.00B. Long-term borrowings increased to ¥25.64B from ¥21.72B in the previous year, and any delay in earnings recovery will further highlight the burden of financing costs.

3. Investment burden and negative free cash flow: Acquisitions of fixed assets totaling ¥3.83B exceeded depreciation and amortization of ¥2.96B, resulting in negative free cash flow of ¥1.33B. Whether investments in vessels, real estate, and other assets translate into future earnings will be a key consideration from the perspectives of funding and capital efficiency.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Return

Profitability was below the industry median, with the gap particularly pronounced for the Net Income margin.

Growth and Capital Efficiency

The Revenue growth rate was also substantially below the industry median, placing the Company among the lower-growth companies in the industry.

※Source: Compiled by the Company

Key Takeaways from the Results

1. Although Revenue remained up 1.1% YoY, the Operating Income margin declined to 4.1%, indicating that revenue growth has not translated into profit growth, which is a defining feature of these results.

2. While the core Ocean-Going Shipping Business turned loss-making, the Real Estate Business’s high profit margin of 50.0% and the Logistics Business’s profit growth of +21.0% supported consolidated earnings.

3. OCF of ¥2.97B indicates that earnings conversion into cash itself remained sound; however, increased investment in fixed assets resulted in negative free cash flow of ¥1.33B. Improvement in the profitability of the Ocean-Going Shipping Business will be the key to achieving the full-year forecast.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,135–¥1,200 at ±1% for the cost of equity, and ¥1,157–¥1,173 at ±0.1 for ω.

Notes:

• 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 have been used; there is a timing difference relative to the full-year forecast.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, nor does it forecast 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 discretion and responsibility, in consultation with a professional advisor as necessary.

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