| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2800.6 B | ¥2495.2 B | +12.2% |
| Operating Income | ¥137.9 B | ¥121.3 B | +13.8% |
| Equity-method Investment Income (Loss) | ¥2.9 B | ¥4.3 B | -32.6% |
| Ordinary Income | ¥146.2 B | ¥125.2 B | +16.9% |
| Net Income (attributable to owners of the parent) | ¥72.8 B | ¥65.5 B | +11.2% |
| ROE | 5.3% | 5.0% | - |
For the fiscal year ended March 2026, Revenue was 2,800.6 B (YoY +305.3 B +12.2%), Operating Income was 137.9 B (YoY +16.7 B +13.8%), Ordinary Income was 146.2 B (YoY +21.0 B +16.9%), and Net Income attributable to owners of the parent was 72.8 B (YoY +7.3 B +11.2%), representing revenue and profit growth across all profit tiers. The core AUTOBACS Business maintained stable growth (Revenue +4.7%), while the Consumer Business expanded significantly (Revenue +80.3%, Profit +161.3%), and the Wholesaling Business improved profits by +82.0% despite Revenue decline; multiple business growth drivers lifted overall results. Gross margin improved to 35.8% from 35.4% a year earlier, and the Operating Margin was 4.9%, unchanged YoY; however, recognition of impairment losses of 11.9 B and an increase in the effective tax rate to 41.7% (prior year 37.1%) constrained Net Income growth to +11.2%.
Revenue of 2,800.6 B increased +12.2% YoY. By segment, the AUTOBACS Business posted 2,063.6 B (+4.7%) sustaining steady growth, the Consumer Business nearly doubled to 528.4 B (+80.3%) and drove overall expansion. The Wholesaling Business recorded 335.1 B (-5.7%) in Revenue decline, while the Expansion Business continued to grow to 107.2 B (+17.7%). The AUTOBACS Business operates domestic franchise wholesaling and direct retail/service stores, with high-value services such as tires and maintenance remaining resilient. The Consumer Business’s large revenue gain was primarily due to full-year contribution from Tokatsu Holdings, consolidated as a subsidiary last year, and expansion of online sales. Gross profit totaled 1,001.4 B (prior year 883.7 B), improving gross margin to 35.8% (prior year 35.4%) by 0.4 pts, supported by pricing policy implementation and a higher service mix.
Cost of goods sold was 1,799.2 B (prior year 1,611.5 B), up +11.6%, driven by higher purchases and logistics costs accompanying Revenue expansion, but gross margin was maintained. SG&A was 863.4 B (prior year 762.5 B), up +13.2%, including increased goodwill amortization of 9.7 B (prior year 3.7 B) and M&A integration costs. Operating Income rose to 137.9 B (+13.8%), with revenue gains absorbing higher SG&A, leaving operating margin at 4.9% on par with the prior year, with modest improvement on a bp basis. Non-operating items produced a net positive 8.3 B, with dividend income of 1.2 B and foreign exchange gains of 2.8 B contributing, resulting in Ordinary Income of 146.2 B (+16.9%), outpacing operating-stage growth. Extraordinary items were net -2.6 B, with negative goodwill recognized of 10.3 B and gains on sale of investment securities of 7.1 B as extraordinary gains, offset by impairment losses of 11.9 B and valuation losses on investment securities of 3.4 B as extraordinary losses. Profit before tax was 143.7 B (+10.9%); after corporate taxes and others of 59.9 B (effective tax rate 41.7%, prior year 37.1%), Net Income was 72.8 B (+11.2%), with higher tax burden tempering final profit growth. In conclusion, the company reported revenue and profit increases.
The AUTOBACS Business delivered Revenue of 2,063.6 B (+4.7%), Operating Income of 224.0 B (+1.6%), and margin of 10.9%. While Revenue grew steadily, profit increase was limited due to higher allocation of corporate expenses and front-loaded investment costs. The Consumer Business achieved Revenue of 528.4 B (+80.3%), Operating Income of 5.2 B (+161.3%), and margin of 1.0%; full-year contribution from Tokatsu Holdings and expansion of online operations drove large revenue and profit gains, but scale-related investment burdens keep margins low. The Wholesaling Business posted Revenue of 335.1 B (-5.7%), Operating Income of 9.4 B (+82.0%), and margin of 2.8%, achieving substantial profit improvement despite Revenue decline thanks to structural and mix improvements. The Expansion Business reported Revenue of 107.2 B (+17.7%), Operating Income of 7.6 B (+60.5%), and margin of 7.1%, with real estate-related and credit businesses performing steadily and maintaining high margins. Consolidated Operating Income after corporate expense allocations was 137.9 B: segment total was 246.3 B, minus corporate expenses of 108.3 B (prior year 100.7 B), resulting in consolidated profit growth (+13.8%) exceeding the sum of segments (+11.0%).
Profitability: Operating Margin was 4.9%, unchanged YoY. Improvement in gross margin to 35.8% (prior year 35.4%) was offset by a slight increase in SG&A ratio to 30.8% (prior year 30.5%), keeping operating-stage profitability stable. Net Profit Margin remained flat at 2.6% (prior year 2.6%), with sustained high effective tax rate of 41.7% constraining margin improvement. ROE declined to 5.3% (prior year 6.2%) due to changes in net profit margin and turnover. Total Asset Turnover improved to 1.17x (prior year 1.09x), and financial leverage was stable at 1.76x (prior year 1.73x).
Cash quality: Operating Cash Flow (OCF) was 145.9 B, twice Net Income of 72.8 B, indicating high quality, but the OCF/EBITDA ratio was 0.72x, pressured by increases in working capital. Days Sales Outstanding was 44 days (prior year 42 days), Days Inventory Outstanding was 61 days (prior year 63 days), showing improved inventory efficiency but increased receivables.
Investment efficiency: ROIC (approx., NOPAT / Invested Capital) is estimated in the 6% range; recovery of sizeable investment cash outflow of 231.8 B is a medium-term challenge. Depreciation was 63.9 B versus capital expenditure of 170.1 B (2.7x), indicating continued aggressive investment.
Financial soundness: Equity Ratio was 56.9% (prior year 57.8%), remaining high. Current Ratio was 196.4% (prior year 217.4%), and Quick Ratio was 148.1% (prior year 169.5%), reflecting a decline in liquidity due to investment outflows but still healthy. Interest-bearing debt was 384.7 B, Net Debt/EBITDA was 0.9x, and Debt/Capital was 22.0%, leaving room for additional borrowing.
Operating Cash Flow was 145.9 B (prior year 39.4 B), up +269.8%, with profit before tax of 143.7 B adjusted for non-cash expenses including depreciation of 63.9 B and goodwill amortization of 9.7 B. Working capital fluctuations included inventory increase of -16.6 B, accounts receivable increase of -36.6 B, and accounts payable increase of +9.1 B, net negative, but overall OCF improved substantially YoY. After corporate tax payments of 42.6 B, OCF remained robust. Investing Cash Flow was -231.8 B (prior year -180.2 B), with major outflows for acquisition of tangible and intangible fixed assets of 170.1 B (prior year 89.3 B), acquisition of subsidiary and affiliate shares of 49.6 B, and loans extended, partially offset by inflows such as collection of long-term loans receivable of 3.2 B and proceeds from sale of tangible fixed assets of 1.4 B. As a result, Free Cash Flow (OCF + Investing CF) was -86.0 B. Coupled with dividend payments of 47.1 B, funding needs were met by Financing Cash Flow including long-term borrowings of 70.0 B (repayments 38.1 B). Financing Cash Flow was -27.0 B (prior year +139.7 B), reflecting net borrowings of about 30 B offset by dividend payments and short-term debt repayments. Cash and cash equivalents decreased by 113.6 B from 312.9 B at the beginning of the period to 199.3 B at the end, showing temporary cash compression due to proactive investments.
Of Ordinary Income of 146.2 B, Operating Income of 137.9 B accounted for 94%, indicating core earnings are business-driven. Non-operating income of 23.2 B included dividend income of 1.2 B, foreign exchange gains of 2.8 B, and equity-method investment income of 2.9 B; these items are recurring but subject to external factors (FX and equity-method affiliates’ performance). Extraordinary gains of 12.7 B comprised negative goodwill of 10.3 B and gains on sale of investment securities of 7.1 B, which are one-time M&A-related gains with low repeatability. Extraordinary losses of 15.3 B comprised impairment losses of 11.9 B and valuation losses on investment securities of 3.4 B; impairments related to store assets in the AUTOBACS Business suggest rationalization of low-profitability stores. Comprehensive income was 91.6 B, exceeding Net Income of 72.8 B by 18.8 B, primarily due to foreign currency translation adjustments of 4.5 B and other comprehensive income attributable to equity-method affiliates of 2.8 B; unrealized gains on investment securities of 0.5 B also contributed. OCF being 2.0x Net Income indicates strong cash backing of profits; OCF of 145.9 B was composed of a subtotal (before working capital changes) of 189.3 B less working capital increase of -43.4 B, making accruals broadly neutral. Overall, recurring earnings stability is high, but fluctuations in extraordinary items drive final profits; future occurrence of impairments/valuation losses and stability of equity-method results and FX will determine earnings quality.
Full Year guidance is set at Revenue 3,000.0 B (+7.1%), Operating Income 150.0 B (+8.7%), Ordinary Income 150.0 B (+2.6%), and Net Income attributable to owners of the parent 90.0 B (EPS 114.61 yen, dividend guidance annual 30 yen). Progress against the guidance based on this period’s results is: Revenue 93.4%, Operating Income 92.0%, Ordinary Income 97.5%, and Net Income attributable to owners of the parent 80.9% (actual 72.8 B / forecast 90.0 B), indicating upside is required in the remaining period to achieve full-year targets. Revenue and Operating Income growth rates for the period (Revenue +12.2%, Operating Income +13.8%) exceed the full-year forecasts (Revenue +7.1%, Operating Income +8.7%), showing the current growth pace outperformed plan. Ordinary Income of 146.2 B is close to the 150.0 B forecast, but Net Income faces downside risk due to higher-than-expected tax burden (effective tax rate 41.7%) relative to forecast assumptions. The full-year forecast may not have assumed extraordinary items; recurrence of impairments or valuation losses could cause variability in achieving Net Income targets.
Annual dividend is 60 yen (interim 30 yen, year-end 30 yen), unchanged from prior year dividend of 60 yen. Total dividends amounted to 47.1 B (same as prior year), and the dividend payout ratio on Net Income attributable to owners of the parent of 72.8 B is 64.7% on an actual basis. The full-year forecast implies annual dividend of 30 yen (with forecast EPS 114.61 yen); based on actual EPS of 106.39 yen, the payout ratio is 56.3%. The dividend policy emphasizes stable dividends and shareholder returns, with adjustments based on profit levels. However, Free Cash Flow was negative at -86.0 B this period, and dividend payments of 47.1 B were funded in part by external financing (borrowings). If investment pace normalizes and OCF increases, dividend coverage on a cash basis should improve; currently dividend sustainability depends on profit levels and borrowing capacity. No share buybacks were confirmed; total return is dividend-centric.
Business portfolio concentration risk: The AUTOBACS Business accounts for 73.7% of Revenue and 91.0% of Operating Income on a segment-sum basis, making performance highly sensitive to that business’s market environment (new vehicle sales, consumer demand for auto goods, weather factors). Year-on-year Revenue growth of +4.7% is stable, but the 10.9% margin has only modestly improved and remains vulnerable to cost increases and corporate expense allocations. Developing and scaling new businesses (Consumer / Expansion) to expand their contribution is key to diversification.
Inventory and working capital efficiency risk: Inventory was 299.9 B (prior year 276.5 B), up +8.5%, and Days Inventory Outstanding was 61 days, improved from 63 days, but may still exceed appropriate levels. Accounts receivable increased to 328.8 B (prior year 285.8 B), with DSO extending to 44 days. Working capital increases pressure OCF and contribute to the low OCF/EBITDA of 0.72x. Inventory obsolescence risk and delays in receivable collections could negatively affect profitability and cash flow.
Investment recovery and impairment risk: Capital expenditure of 170.1 B this period (2.7x depreciation of 63.9 B) and large investments including acquisitions of affiliate shares were executed, with goodwill of 82.2 B (6.0% of net assets) recorded. An impairment loss of 11.9 B was recognized this period; if investments or new stores underperform relative to plan, additional impairment risk exists. Prolonged investment recovery periods could depress ROIC and ROE, damaging shareholder value.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.9% | 3.4% (1.4%–5.0%) | +1.6pt |
| Net Profit Margin | 2.6% | 2.3% (1.0%–4.6%) | +0.3pt |
Operating Margin exceeds the industry median by 1.6 pts, supported by stable gross margins and scale advantages. Net Profit Margin also exceeds the median but the gap narrowed due to increased tax burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.2% | 5.9% (0.4%–10.7%) | +6.3pt |
Revenue Growth Rate outperforms the industry median by 6.3 pts, driven by large Consumer Business expansion and steady AUTOBACS performance. The company ranks toward the upper end of the industry in growth.
※ Source: Company compilation
Accelerating growth in the Consumer and Expansion businesses provides diversification of the business portfolio and upside to medium-term growth. The Consumer Business grew substantially (Revenue +80.3%, Profit +161.3%), and future scale expansion and margin improvement are anticipated. The AUTOBACS Business maintains a stable earnings base, and corporate-wide growth driven by multiple businesses is expected.
While high-quality profit generation continues (OCF 145.9 B, 2.0x Net Income), aggressive investing (Investing CF -231.8 B) resulted in FCF of -86.0 B. Normalization of investment pace (CAPEX/depreciation converging to 1.0–1.5x) and improvement in inventory efficiency (DSI under 60 days) should enable FCF positive conversion and strengthen cash-based dividend coverage. Normalization of the effective tax rate (41.7% → around 35%) is also an important catalyst for improving Net Profit Margin and ROE.
Recording of impairment losses of 11.9 B suggests rationalization of low-profitability stores and can be viewed as a positive signal for asset efficiency improvement. Goodwill of 82.2 B (6.0% of net assets) is at an appropriate level, and realization of M&A integration effects and investment recovery should drive ROIC improvement (target above 7%) and shareholder value creation. The company maintains a favorable position in the industry on both Operating Margin and Growth, with the balance of profitability and growth as key evaluation points.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmark data are compiled by the Company based on publicly disclosed financial statements and are provided for reference. Investment decisions are your own responsibility; consult a professional advisor as needed.