Kamigumi (9364) FY2026 Q3 Earnings Report

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Executive Summary

Revenue growth and margin improvement centered on the logistics business resulted in double-digit increases in Operating Income, Ordinary Income, and Net Income. Revenue was ¥2,224.6B (+5.9% YoY), Operating Income was ¥287.9B (+12.7%), Ordinary Income was ¥321.9B (+13.6%), and Net Income attributable to owners of the parent was ¥226.9B (+10.6%). The growth rate of operating costs, including cost of sales, was below the Revenue growth rate, and the Operating Income margin improved to 12.9% from 12.2% in the same period of the previous year.

Factors Affecting Performance

【Revenue】Revenue was ¥2,224.6B (+5.9% YoY). While the core logistics business drove Revenue growth, with sales to external customers of ¥1,970.9B (+8.0%) accounting for 88.6% of company-wide Revenue, Other Businesses posted a decline in Revenue to ¥253.8B (▲7.7%).

【Profit and Loss】Operating Income was ¥287.9B (+12.7%), Ordinary Income was ¥321.9B (+13.6%), and Net Income was ¥226.9B (+10.6%). Segment profit in the logistics business was ¥249.5B (+13.9%), with a margin of 12.6%, an improvement of approximately 60bp, making it the primary driver of profit growth. SG&A expenses increased to ¥187.3B (+13.3%), exceeding the Revenue growth rate, and the SG&A ratio rose to 8.4%; however, non-operating income, consisting of dividend income of ¥17.4B and equity in earnings of affiliates of ¥14.6B, lifted Ordinary Income. The net contribution from extraordinary gains and losses was small at ¥0.99B, supporting the conclusion that the results reflected both Revenue and profit growth.

Segment Analysis

The logistics business reported sales to external customers of ¥1,970.9B (+8.0% YoY) and segment profit of ¥249.5B (+13.9%), accounting for 86.7% of total segment profit. The segment profit margin improved to 12.6% from 12.0% in the same period of the previous year, indicating simultaneous progress in scale expansion and profitability improvement. Other Businesses recorded a decline in Revenue to ¥253.8B (▲7.7%), but segment profit increased to ¥38.2B (+5.4%), and the profit margin remained at 15.0%, above the level of the logistics business. In the logistics business, Saurashtra Freight Pvt.Ltd in India became a subsidiary during Q3, resulting in goodwill of ¥165.95B (provisional measurement).

Key Financial Metrics

【Profitability】The Operating Income margin was 12.9% (12.2% in the same period of the previous year), the Ordinary Income margin was 14.5% (13.5% in the same period of the previous year), and the Net Income margin was 10.2% (9.8% in the same period of the previous year), with all metrics continuing to improve.【Cash Flow Quality】Non-operating income of ¥37.5B accounted for only 1.7% of Revenue and consisted primarily of dividend income and equity in earnings of affiliates; the contribution of extraordinary gains to Net Income was limited to ¥0.99B.【Investment Efficiency】Annualized ROE was 7.8%, and total asset turnover was approximately 0.57x. If assets such as investment securities and goodwill increase at a faster pace than profit growth, there may be room to improve asset efficiency.【Financial Soundness】The Equity Ratio was 74.5%. Current assets of ¥1,395.3B compared with current liabilities of ¥486.5B indicate high liquidity, while leverage remains low under a funding structure centered on long-term borrowings of ¥604.8B.

Cash Flow Analysis

As individual data from the statement of cash flows have not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits declined to ¥627.9B from ¥750.9B in the same period of the previous year, while investment securities increased to ¥1,274.3B (more than ¥974B in the same period of the previous year) and intangible assets expanded to ¥235.5B (¥66.8B in the same period of the previous year). Accordingly, funds appear to have been allocated to investment activities, including the acquisition of Saurashtra Freight Pvt.Ltd as a subsidiary. Long-term borrowings increased to ¥604.8B from ¥400.0B in the same period of the previous year, suggesting that part of the investment funding was obtained through long-term liabilities. Retained earnings accumulated to ¥3,225.0B, indicating that the strengthening of the capital base through retained earnings is continuing.

Earnings Quality

Against Operating Income of ¥287.9B, the non-operating balance was a surplus of ¥34.0B, primarily comprising dividend income of ¥17.4B and equity in earnings of affiliates of ¥14.6B. In addition to the earnings power of the core business, stable income from investments and equity-method investees supported Ordinary Income. Extraordinary income of ¥1.7B, consisting of a gain on sales of investment securities of ¥0.8B and a gain on sales of property, plant and equipment of ¥0.6B, among others, and extraordinary losses of ¥0.7B made a small net contribution of less than ¥1B. Accordingly, the difference between Profit Before Tax of ¥322.9B and Ordinary Income of ¥321.9B was limited. The difference between Net Income of ¥226.9B and Ordinary Income was primarily attributable to income taxes of ¥95.1B, resulting in an effective tax rate of approximately 29.5%, within the normal range. Comprehensive income was ¥306.3B, exceeding Net Income, primarily due to an increase in the valuation difference on other securities. Accordingly, it should be noted that changes in net assets include the effects of market price fluctuations in addition to business earnings.

Earnings Forecast and Guidance

The progress rates for the nine months ended Q3 against the full-year company forecasts of Revenue of ¥2,871.0B, Operating Income of ¥350.0B, and Ordinary Income of ¥392.0B were 77.5% for Revenue, 82.3% for Operating Income, 82.1% for Ordinary Income, and 77.2% for Net Income (based on Net Income attributable to owners of the parent), all exceeding the standard 75% progress rate. The company has not revised its earnings forecasts, and the required Operating Income margin in Q4 is 9.6%, below the cumulative 12.9% level. This difference appears to incorporate seasonality and expense increases, and progress remains steady.

Shareholder Returns

The interim dividend was ¥90.00 per share, while the full-year dividend forecast is ¥185.00 (the disclosed data indicate a previous-year dividend of ¥50, but the number of periods should be noted). The Payout Ratio based on the interim dividend against nine-month Net Income attributable to owners of the parent of ¥226.9B was 42.3%, while the projected Payout Ratio against the full-year forecast Net Income of ¥294.0B is approximately 63.5%. Although the company has substantial dividend-paying capacity, supported by cash and deposits of ¥627.9B and retained earnings of ¥3,225.0B, the projected Payout Ratio of 63.5% is slightly above the general benchmark of 60% and warrants monitoring. Treasury shares increased compared with the same period of the previous year, and a separate assessment is required of the Total Return Ratio, including dividends and share repurchases.

Risk Factors

1. Concentration risk in the logistics business: Since the logistics business accounts for 88.6% of sales to external customers and 86.7% of segment profit, a slowdown in cargo movements and trade activity could have a significant impact on company-wide performance.

2. Cost increases and price pass-through: SG&A expenses increased by +13.3% YoY, exceeding the Revenue growth rate of +5.9%, and the SG&A ratio rose to 8.4%. If increases in fuel, transportation, and personnel costs cannot be passed through to prices, maintaining the Operating Income margin of 12.9% will be a challenge.

3. M&A integration risk: The acquisition of Saurashtra Freight Pvt.Ltd as a subsidiary resulted in provisional goodwill of ¥165.95B. The purchase price allocation has not been finalized, and the progress of overseas business integration and realization of synergies will be areas for future evaluation.

Industry Benchmark (Reference; Company Research)

Industry Benchmark (transport)

Profitability and Returns

The Operating Income margin is significantly above the industry median, while the Net Income margin is slightly below the industry median.

Growth and Capital Efficiency

The Revenue growth rate is below the industry median, placing the company in the lower half of the industry in terms of growth speed.

※Source: Company research

Key Takeaways from the Results

1. In addition to Revenue growth, the logistics business achieved an approximately 60bp improvement in its segment profit margin. The simultaneous progress in scale expansion and profitability improvement was a key feature of these results.

2. The company achieved profit growth under a low-leverage financial structure, characterized by an Equity Ratio of 74.5% and a funding structure centered on long-term borrowings. This confirms that profitability is improving without assuming additional financial risk.

3. Although progress against the full-year forecasts exceeded the standard level for all metrics, the required Operating Income margin in Q4 is assumed to be below the cumulative level. Whether the company forecasts incorporate conservative expenses and seasonality will be a key point to monitor in future results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,675–¥3,882 at ±1% for the cost of equity, and ¥3,771–¥3,779 at ±0.1 for ω.

Notes:

• As 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 relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict 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 responsibility, and, where necessary, after consulting with a professional advisor.

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