Kamigumi Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Kamigumi’s Q1 of the fiscal year ending March 2027 recorded higher revenue but lower profit due to deteriorating profitability. Revenue increased to ¥74.92B (+3.1% YoY), while Operating Income declined to ¥8.71B (-9.5%), Ordinary Income to ¥10.36B (-7.3%), and Net Income to ¥7.17B (-10.4%; Net Income attributable to owners of the parent was ¥7.11B, down 10.8% YoY). The primary factor was a year-on-year decline of approximately 1.6pt in the Operating Income margin due to cost inflation and a higher SG&A ratio. At the ordinary-income level, non-operating income, including dividend income and interest income, partially mitigated the decline in profit.

Factors Affecting Performance

【Revenue】Revenue was ¥74.92B, an increase of +3.1% YoY. The core Distribution Business, at ¥67.09B (+3.5% YoY), accounted for approximately 89% of total revenue and drove growth, while Other Businesses remained at ¥7.83B.

【Profit and Loss】Operating Income declined to ¥8.71B (-9.5% YoY), Ordinary Income to ¥10.36B (-7.3%), and Net Income to ¥7.17B (-10.4%). The Operating Income margin declined to 11.6% from 13.2% in the previous year, a decrease of approximately 1.6pt. SG&A expenses increased by +13.3% to ¥6.61B from ¥5.83B in the previous year, outpacing revenue growth and resulting in negative operating leverage. At the ordinary-income level, non-operating income of ¥1.96B, including dividend income of ¥1.10B and interest income of ¥0.16B, provided support, narrowing the decline in Ordinary Income relative to Operating Income. Extraordinary items were limited, with extraordinary income of ¥0.02B and extraordinary losses of ¥0.03B, indicating a limited impact from temporary factors. In conclusion, the results represent higher revenue but lower profit.

Segment Analysis

The business is effectively centered on Distribution. While revenue increased to ¥67.09B (+3.5% YoY), Operating Income declined to ¥7.57B (-10.7%), and the profit margin decreased to 11.3% from 13.1% in the previous year. Other Businesses generated revenue of ¥7.83B and Operating Income of ¥1.13B, making only a limited contribution to company-wide profit. Given the high degree of business concentration, improvement in the profitability of the Distribution Business is directly linked to the recovery of overall corporate profitability.

Key Financial Indicators

【Profitability】The Operating Income margin was 11.6%, down approximately 1.6pt from 13.2% in the previous year, while the Net Income margin also narrowed to 9.6% from 11.0%. 【Cash Quality】Inventories were small at ¥1.19B, indicating a business model with a light working-capital burden. Dividend income of ¥1.10B and interest income of ¥0.16B have also been steadily recorded as non-operating income. 【Investment Efficiency】ROE was 1.8%. Based on a DuPont decomposition into a Net Income margin of 9.6%, total asset turnover of 0.14x, and financial leverage of 1.32x, the decline in profitability is analyzed as the primary factor behind the low ROE. 【Financial Soundness】The Equity Ratio was extremely high at 75.6%. With cash and deposits of ¥62.43B against current liabilities of ¥50.95B, the company has substantial short-term liquidity.

Cash Flow Analysis

Although the cash flow statement has not been separately disclosed, the movement of funds can be inferred from changes in the balance sheet. Cash and deposits were ¥62.43B, a decrease of ¥13.85B from ¥76.28B in the previous year, while short-term securities also contracted significantly to ¥2.56B. Meanwhile, property, plant and equipment increased to ¥238.35B from ¥225.40B in the previous year, suggesting that progress in capital investment was one factor behind the reduction in cash. Current liabilities declined to ¥50.95B, partly due to a decrease in long-term borrowings due within one year, reducing the short-term repayment burden. In addition to its business structure, characterized by small inventories of ¥1.19B and strong cash-generation capacity, the company’s substantial capital base, reflected in an Equity Ratio of 75.6%, supports the balance between investment and liquidity management.

Quality of Earnings

As part of the recurring earnings base, in addition to Operating Income from the core business, non-operating income such as dividend income of ¥1.10B and interest income of ¥0.16B accounted for approximately 2.6% of revenue and supported Ordinary Income. Dependence on non-operating income is not excessive, and earnings cannot be characterized as being heavily skewed toward non-core sources. Extraordinary items were limited, consisting of extraordinary income of ¥0.02B and extraordinary losses of ¥0.03B, indicating a limited impact from temporary factors on earnings fluctuations during the period. The difference between Ordinary Income of ¥10.36B and Net Income of ¥7.17B was primarily attributable to income taxes of ¥3.17B, with the effective tax burden remaining broadly within a reasonable range. Comprehensive Income was ¥5.39B, below Net Income of ¥7.17B. The primary reason for the difference was a ¥2.13B decline in valuation difference on securities, meaning that market-price fluctuations exerted downward pressure on Comprehensive Income.

Earnings Forecast and Guidance

Progress against the full-year plan was 24.6% for revenue, 25.4% for Operating Income, 27.6% for Ordinary Income, and 26.0% for Net Income attributable to owners of the parent, calculated as ¥7.11B ÷ ¥27.34B. All figures were therefore tracking around the simple 25% progress level. The relatively high progress rate for Ordinary Income appears to reflect the contribution of non-operating income, such as dividend income, which tends to be concentrated near the beginning of the fiscal year. There were no revisions to the earnings forecast or dividend forecast, and management maintained its initial plan.

Shareholder Returns

The full-year dividend forecast announced by the company is ¥205 per share. Using the full-year forecast EPS of ¥276.94, the Payout Ratio is approximately 74.0%, above the generally accepted guideline of approximately 60%. No share repurchases have been disclosed, and the Payout Ratio in this report is based solely on dividends. The company’s substantial financial foundation, including an Equity Ratio of 75.6% and cash and deposits of ¥62.43B, is viewed as supporting the sustainability of this dividend level.

Risk Factors

1. Profitability Decline Risk: SG&A expenses increased +13.3% YoY, exceeding the revenue growth rate of +3.1%, causing the Operating Income margin to contract to 11.6% from 13.2% in the previous year. The ability to absorb cost increases will be a key focus going forward.

2. Capital Efficiency Challenge: ROE was 1.8%. The DuPont decomposition consists of a Net Income margin of 9.6% × total asset turnover of 0.14x × leverage of 1.32x, indicating that the level of earnings generation relative to the asset base is comparatively low.

3. Securities Valuation Risk: The company holds investment securities of ¥120.82B, and the valuation difference on securities decreased by ¥2.13B during the period (OCI), weighing on Comprehensive Income. The company has a structure in which fluctuations in market prices affect shareholders’ equity.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (transport)

Profitability and Returns

Both metrics exceed the industry median, indicating a high level of profitability relative to peers.

Growth and Capital Efficiency

The revenue growth rate is broadly in line with the industry median, and no particular advantage in growth pace is apparent.

※Source: Company analysis

Key Points in the Financial Results

1. Despite higher revenue, the Operating Income margin declined approximately 1.6pt YoY, while the SG&A growth rate (+13.3%) exceeded the revenue growth rate (+3.1%), resulting in negative operating leverage. This is an important point in assessing the company’s ability to absorb costs.

2. Ordinary Income was partially supported by non-operating income, including dividend income and interest income, and progress against the full-year plan was somewhat ahead at the ordinary-income level. The trajectory of core-business margin recovery will determine the reliability of future progress.

3. Although financial soundness, including an Equity Ratio of 75.6% and ample liquidity, is among the stronger levels within the industry, ROE was only 1.8%, leaving capital efficiency relative to profitability as an area requiring observation.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥3,668–¥3,873 at ±1% for the cost of equity, and ¥3,762–¥3,773 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 are used; there is a timing gap relative to the full-year forecast.
• Because 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 solely from publicly disclosed data; this is not a forecast of the market stock price or a recommendation of any specific investment action, and does not forecast or guarantee the future stock price.)

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This report is an automatically generated earnings analysis document produced by AI analysis of XBRL earnings summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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