YAMADA HOLDINGS CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

This was a positive earnings report, with both revenue and profit increasing, as the core Electrical retail business drove growth and the reduction in the SG&A ratio secured profit growth exceeding the rate of revenue growth. Revenue was ¥4,202.2B (+11.3% YoY), Operating Income was ¥156.4B (+16.8%), Ordinary Income was ¥167.7B (+14.5%), and Net Income attributable to owners of the parent was ¥99.8B (+12.8%), with all metrics showing increases in both revenue and profit. The Operating Income margin improved to 3.7% from 3.5% in the same period of the previous year; however, this resulted from offsetting the decline in the gross profit margin through a reduction in the SG&A ratio. From the perspective of the quality of profitability improvement, attention should be paid to the high degree of dependence on SG&A efficiency gains. Progress against the full-year company forecast was ahead on the profit side, at 23.6% for Revenue versus 30.4% for Operating Income, 31.9% for Ordinary Income, and 35.9% for Net Income.

Factors Affecting Earnings

【Revenue】All segments posted revenue growth, with the core Electrical segment, accounting for approximately 81% of the revenue mix, increasing 10.5% and driving the majority of company-wide revenue growth. Housing posted the highest growth among all segments at 13.1%, followed by Environmental at 10.9% and Financial at 3.9%. However, as discussed below, Housing’s revenue growth was accompanied by deteriorating profitability, indicating differences in the quality of revenue growth.

【Profit and Loss】The gross profit margin declined 1.2pt to 29.0% from 30.2% in the same period of the previous year, while the SG&A ratio improved 1.4pt to 25.3% from 26.6%, resulting in an Operating Income margin of 3.7% (+0.2pt). Net extraordinary income and expenses were a minor negative ¥2.5B (extraordinary income of ¥1.2B and extraordinary losses of ¥3.7B), indicating a limited impact from one-time factors. Net non-operating income and expenses amounted to +¥11.3B (non-operating income of ¥26.9B and non-operating expenses of ¥15.6B), resulting in Ordinary Income of ¥167.7B. After deducting income taxes and other taxes of ¥64.1B (effective tax rate: 38.8%) from Profit Before Tax of ¥165.3B and excluding net income attributable to non-controlling interests of ¥1.3B, Net Income attributable to owners of the parent was ¥99.8B. In conclusion, both revenue and profit increased.

Segment Analysis

By segment, Electrical posted Revenue of ¥3,394.7B (+10.5%) and Operating Income of ¥147.4B (+20.3%), with its margin improving to 4.3% from 4.0% in the previous year, making it the primary driver of company-wide profit growth. Housing achieved revenue growth of 13.1% to ¥728.3B, but Operating Income fell sharply by 88.0% to ¥0.5B, with the margin declining to 0.1% from 0.6% in the previous year, impairing the quality of its revenue growth. Environmental posted Revenue of ¥110.0B (+10.9%) and Operating Income of ¥5.1B (+31.1%), with the margin steadily improving to 4.6% from 3.9%. Financial posted Revenue of ¥11.9B (+3.9%) and Operating Income of ¥2.9B (-1.0%); while its margin was high at 24.2%, its contribution to the company as a whole was limited. Overall, the improvement in the margins of Electrical and Environmental offset the deterioration in Housing’s profitability, resulting in widening margin disparities among the segments.

Key Financial Indicators

【Profitability】The Operating Income margin improved modestly to 3.7% from 3.5% in the same period of the previous year, while the Net Income margin, based on income attributable to owners of the parent, improved to 2.4% from 2.3%. The decline in the gross profit margin to 29.0% from 30.2% was absorbed by a reduction in the SG&A ratio to 25.3% from 26.6%, making SG&A efficiency the primary driver of the margin improvement. 【Cash Quality】The current ratio was 124.8% (current assets of ¥6,726.9B / current liabilities of ¥5,389.0B), while the quick ratio, calculated by excluding inventories from current assets, was 58.7%, indicating that immediate liquidity excluding inventory was somewhat limited. 【Investment Efficiency】ROE, based on quarterly results and before annualization, was 1.6%. A DuPont breakdown comprising a Net Income margin of 2.4%, total asset turnover of 0.31x, and financial leverage of 2.1x indicates that the low total asset turnover was a constraint on ROE. 【Financial Soundness】The Equity Ratio was 47.0%, down 1.6pt from 48.6% in the same period of the previous year. Interest coverage (EBIT / interest expense) was 18.8x, indicating strong debt-servicing capacity, although the company has a high degree of dependence on short-term funding, centered on short-term borrowings of ¥1,503.3B.

Cash Flow Analysis

Although the cash flow statement was not disclosed, trends in the balance sheet indicate a working-capital-driven movement of funds. Cash and deposits declined to ¥354.4B from ¥382.2B in the same period of the previous year, while inventories increased to ¥3,562.2B (¥3,161.5B in the previous year, +12.7%) and accounts payable rose significantly to ¥1,482.5B (¥873.5B in the previous year, +69.7%). Inventory buildup associated with expanded procurement increased funding needs, while the sharp increase in accounts payable supplemented funding through payment-term arrangements and mitigated the decline in cash and deposits to a certain extent. This accounts-payable-dependent funding structure could weaken cash generation if seasonality or procurement terms reverse. Trends in inventory turnover and the normalization of accounts payable will determine the quality of funding going forward.

Quality of Earnings

Current-period profit consisted primarily of Operating Income of ¥156.4B, with net non-operating income and expenses of +¥11.3B (non-operating income of ¥26.9B and non-operating expenses of ¥15.6B) added to produce Ordinary Income of ¥167.7B. Non-operating income accounted for approximately 0.6% of Revenue, indicating that the earnings structure was centered on the core business. Net extraordinary income and expenses were a minor negative ¥2.5B (extraordinary income of ¥1.2B and extraordinary losses of ¥3.7B), and the volatility of special items declined compared with the impairment loss of ¥19.4B recorded in the same period of the previous year. The difference between Ordinary Income and Net Income was primarily attributable to income taxes and other taxes of ¥64.1B (effective tax rate: 38.8%). Excluding the somewhat heavy tax burden, the factors causing the divergence between Ordinary Income and Net Income were limited. Comprehensive income attributable to owners of the parent was ¥97.2B, a difference of -¥2.7B from Net Income attributable to owners of the parent of ¥99.8B. The negative impact of valuation differences on securities and adjustments related to retirement benefits reflected changes in OCI related to other securities and retirement benefits, with the divergence between comprehensive income and Net Income remaining modest.

Earnings Forecasts and Guidance

The progress rates for the current Q1 against the full-year company forecasts (Revenue of ¥1,780.0B, Operating Income of ¥51.50B, Ordinary Income of ¥52.60B, and Net Income attributable to owners of the parent of ¥27.80B) were 23.6% for Revenue, 30.4% for Operating Income, 31.9% for Ordinary Income, and 35.9% for Net Income. Revenue progress was slightly below the simple quarterly run-rate of 25%, while all profit metrics exceeded the even-progress benchmark, with margin improvement in Electrical and SG&A efficiency contributing to the early progress in earnings. As of the current quarter, no revisions have been made to the earnings forecast or dividend forecast. It should be noted that the year-on-year increases in the full-year forecasts for Operating Income and Ordinary Income (+218.6% and +163.0%, respectively) may include the reversal of special factors recorded in the previous full year.

Shareholder Returns

The company forecasts an annual dividend of ¥17. The Payout Ratio against the company’s forecast EPS of ¥41.81 is approximately 40.7% (¥17 / ¥41.81). Considering the financial foundation of equity of ¥6,405.9B and an Equity Ratio of 47.0%, this can be considered a sustainable level based on the disclosed information. As of the current Q1, no revision has been made to the dividend forecast.

Risk Factors

1. Deterioration in Housing segment profitability: Revenue increased 13.1% to ¥728.3B, but Operating Income fell sharply by 88.0% to ¥0.5B, and the margin declined to 0.1% from 0.6% in the previous year. The gap with Electrical’s 4.3% margin has widened, making Housing a factor depressing the company-wide margin.

2. Quality of working capital: Inventories increased 12.7% YoY to ¥3,562.2B, while the quick ratio remained at 58.7%. Accounts payable surged 69.7% YoY to ¥1,482.5B, requiring monitoring of the impact on liquidity if procurement terms or payment periods reverse.

3. Dependence on short-term funding: Cash and deposits of ¥354.4B were approximately 0.24x short-term borrowings of ¥1,503.3B, indicating a high proportion of short-term funding. Interest coverage of 18.8x demonstrates strong earnings-based debt-servicing capacity, but the funding structure is weighted toward short-term financing.

Industry Benchmark (Reference, Compiled by the Company)

Profitability and Returns

The company’s Operating Income margin and Net Income margin are both slightly above the median for the retail industry.

Growth and Capital Efficiency

The Revenue growth rate is well above the industry median but remains below the upper bound of the industry IQR (14.5%).

※Source: Compiled by the Company

Key Points from the Earnings Report

1. The improvement in the margin resulting from SG&A efficiency generated an effect of -1.4pt, exceeding the -1.2pt decline in the gross profit margin, thereby increasing the Operating Income margin. Whether this improvement can continue to absorb fluctuations in the gross profit margin, which is affected by procurement prices and the competitive environment, will be a key focus in assessing future profitability trends.

2. While the improvement in the margin of the core Electrical segment from 4.0% to 4.3% was the primary driver of company-wide profit growth, Housing’s margin declined to 0.1%, widening the margin disparity among segments. The polarization of the earnings structure within the portfolio is a structural change indicated by the earnings data and warrants attention.

3. Progress against the full-year company forecast was ahead on profit, with all profit metrics exceeding 30% versus 23.6% for Revenue, while both the earnings forecast and dividend forecast remained unchanged. At the same time, changes in working capital—inventory buildup (+12.7%) and a sharp increase in accounts payable (+69.7%)—are progressing in parallel. Confirming both the progress of earnings and the quality of liquidity will be a key focus of future earnings analysis.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation for any specific investment action.

Sensitivity: ¥812–¥859 at ±1% for the cost of equity, and ¥832–¥838 at ±0.1 for ω.

Notes:

• Since Net Income progress against the full-year forecast (36%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within an upper limit of +10% (because companies with early progress tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Net Income is substantially compressed relative to Operating Income due to the tax burden, acquisition-related expenses, and non-controlling interests, among other factors (Net Income / Operating Income: 54%). This figure reflects that compression at face value; if these factors are temporary, the normalized value may be higher.
• Since forecast ROE is below the cost of equity, the theoretical value is below Book Value Per Share.
• Net assets as of the end of the quarter are used (there is a timing gap relative to the full-year forecast).

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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, consulting with professionals as necessary.

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