| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥440.9B | ¥420.7B | +4.8% |
| Operating Income / Operating Profit | ¥5.2B | ¥9.5B | -44.7% |
| Ordinary Income | ¥5.7B | ¥9.4B | -38.8% |
| Net Income | ¥2.8B | ¥5.5B | -48.2% |
| ROE | 3.0% | 5.8% | - |
For the fiscal year ended March 2026, Revenue reached ¥440.9B (YoY +¥20.2B +4.8%) achieving top-line growth; however, Operating Income was ¥5.2B (YoY -¥4.3B -44.7%), Ordinary Income ¥5.7B (YoY -¥3.6B -38.8%), and Net Income attributable to parent company shareholders was ¥2.3B (YoY -¥4.2B -65.3%), representing substantial declines. Although revenue grew steadily, Selling, General and Administrative Expenses increased to ¥145.8B (as a percentage of sales 33.1%), compressing the Operating Margin from 2.3% to 1.2% (down 1.1pt). In Extraordinary items, Special Losses of ¥4.7B including Impairment Losses of ¥4.0B were recorded, which pressured Net Income. By segment, the core Restaurant Business accounted for 55.3% of sales, while the Real Estate Leasing Business provided strong support to the company with Operating Income of ¥3.2B (margin 45.0%). The ODM/OEM Business expanded rapidly with revenue up +29.6% YoY but recorded an Operating Loss of ¥0.7B, leaving profitability as an outstanding issue. On the balance sheet, Short-term Borrowings increased from ¥12.0B to ¥21.0B (+¥9.0B), Interest-bearing Debt stood at ¥135.4B, and the D/E ratio remained high at 2.24x. Operating Cash Flow was ¥15.9B, more than seven times Net Income of ¥2.3B, indicating solid cash generation; however, Operating Margin, ROE, and ROIC all remain at low levels, making profitability improvement urgent.
[Revenue] Revenue was ¥440.9B (YoY +4.8%), achieving growth. By segment, the Restaurant Business was ¥243.6B (YoY -0.8%) slightly down, Real Estate Leasing ¥7.2B (YoY +1.9%), and Transportation ¥5.0B (YoY +5.5%) both slightly up. Conversely, the ODM/OEM Business (included in Other segments) grew significantly to ¥45.6B (YoY +29.6%), driving company-wide revenue growth. With the core Restaurant Business in a flat range, growth in the ODM/OEM Business handling in-flight meals and frozen foods was the primary contributor to top-line expansion. Sales composition was: Restaurant 55.3%, ODM/OEM etc. 10.3%, Real Estate Leasing 1.6%, Transportation 1.1%, Other 31.7%.
[Profitability] Cost of Sales was ¥289.9B (65.8% of sales), leaving a Gross Margin of 34.2%, unchanged from 34.2% the prior year. SG&A increased to ¥145.8B (33.1% of sales), up ¥5.0B from ¥140.8B in the prior year, worsening the SG&A ratio by 0.3pt from 32.8%. As a result, Operating Income decreased significantly to ¥5.2B (YoY -44.7%), compressing the Operating Margin by 1.1pt to 1.2%. By segment, Operating Income was: Restaurant ¥2.4B (YoY -41.8%, margin 1.0%), Real Estate Leasing ¥3.2B (YoY -1.7%, margin 45.0%), Transportation -¥0.3B (deficit narrowed by 47.0% YoY), and ODM/OEM -¥0.7B (YoY -38.1%). Non-operating items produced net +¥0.5B (Non-operating Income ¥4.0B — dividends received ¥0.5B, interest income ¥0.2B, equity-method investment income ¥0.4B, etc. — versus Non-operating Expenses ¥3.5B — interest expense ¥1.9B, etc.), resulting in Ordinary Income of ¥5.7B (YoY -38.8%). Extraordinary items included Special Income ¥2.0B (gain on sale of investment securities ¥0.1B, etc.) and Special Losses ¥4.7B (Impairment Losses ¥4.0B, loss on retirement of fixed assets ¥0.5B, etc.), reducing Profit Before Tax to ¥3.0B (YoY -34.8%). After Income Taxes of ¥0.6B (effective tax rate 20.0%), Net Income attributable to parent company shareholders was ¥2.3B (YoY -65.3%). In conclusion, the company delivered higher revenue but lower profits, with increased fixed costs and Special Losses materially pressuring earnings.
The Restaurant Business recorded Revenue of ¥243.6B (YoY -0.8%) and Operating Income of ¥2.4B (YoY -41.8%), leaving a low margin of 1.0%. The main driver was increased fixed costs such as personnel and utilities, and improving same-store profitability remains a challenge. Real Estate Leasing had Revenue of ¥7.2B (YoY +1.9%) and Operating Income ¥3.2B (YoY -1.7%), maintaining a high margin of 45.0% and serving as a major support for company profits. The Transportation Business showed Revenue of ¥5.0B (YoY +5.5%) and an Operating Loss of ¥0.3B (deficit narrowed 47.0% YoY), indicating improvement but still in the red. The ODM/OEM Business (included in Other) grew rapidly to Revenue ¥45.6B (YoY +29.6%) but posted an Operating Loss of ¥0.7B (YoY -38.1%), failing to reach profitability due to start-up costs and allocation of corporate overhead. In segment profit composition, Real Estate Leasing is the largest source of Operating Income, and recovering Restaurant profitability plus ODM/OEM achieving profitability are key to improving company margins.
[Profitability] Operating Margin was 1.2% (prior year 2.3%), deteriorating by 1.1pt. With Gross Margin 34.2% unchanged, the rise in SG&A ratio to 33.1% (prior year 32.8%) was the primary cause of margin compression. ROE was 3.0% (prior year 7.2%), remaining low as a combination of worsened Net Profit Margin and financial leverage of 3.24x reduced capital efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥15.9B, generating 5.7x Net Income of ¥2.8B, and OCF/EBITDA was 1.02x, indicating good cash conversion. The accrual ratio was -4.4%, signaling no issues with cash conversion of profits. [Investment Efficiency] Capital expenditures were ¥12.6B, 1.2x depreciation of ¥10.5B, representing maintenance plus incremental investment. A simple ROIC equivalent—Operating Income ¥5.2B divided by Tangible Fixed Assets ¥159.5B—yields 3.3% (tangible asset basis), low and indicating room to improve asset efficiency. [Financial Health] Equity Ratio was 30.9% (prior year 29.9%) with slight improvement but still low. Interest-bearing Debt was ¥135.4B, D/E ratio 2.24x, and Debt/EBITDA 7.0x, leaving a high leverage structure. Current Ratio was 103.1% and Quick Ratio 99.5%, with short-term liquidity at a borderline level. Interest Coverage (EBIT / Interest Expense) was 2.76x, indicating interest burden is weighing on profits.
Operating Cash Flow was ¥15.9B (YoY -3.4%), a slight decline, but still generated 5.7x Net Income of ¥2.8B, maintaining solid cash generation. Operating CF subtotal (before working capital changes) was ¥16.0B, adding back non-cash expenses such as Depreciation ¥10.5B and Impairment Losses ¥4.0B, and after deducting corporate taxes paid ¥0.6B. Working capital changes were modest: Inventories +¥-0.5B (increase), Accounts Receivable +¥0.5B (decrease), Accounts Payable -¥0.6B (decrease), totaling -¥0.6B as a minor burden. Investing CF was -¥11.7B, mainly CapEx -¥12.6B, collection of long-term loans ¥1.6B, and subsidy receipts ¥0.6B. As a result, Free Cash Flow was ¥4.2B (prior year ¥0.9B), improving by ¥3.3B YoY and covering dividend payments of ¥1.6B by 2.6x. Financing CF was -¥7.7B, with proceeds from long-term borrowings ¥8.0B, repayment of long-term borrowings -¥23.1B, net increase in short-term borrowings ¥2.6B, and dividend payments -¥1.6B being the main items. Cash and Cash Equivalents decreased from ¥50.7B at the beginning of the period to ¥47.3B at the end, a decline of ¥3.4B, but on the back of solid OCF and restrained investment, liquidity remained at a certain level.
Ordinary Income of ¥5.7B is Operating Income ¥5.2B adjusted by Non-operating Income ¥4.0B (dividends received ¥0.5B, interest income ¥0.2B, equity-method investment income ¥0.4B, etc.) and Non-operating Expenses ¥3.5B (interest expense ¥1.9B, etc.), with non-operating income representing 0.9% of sales and not indicating excessive reliance. However, Extraordinary items resulted in Special Losses ¥4.7B (Impairment Losses ¥4.0B, loss on retirement of fixed assets ¥0.5B, etc.) and Special Income ¥2.0B (gain on sale of investment securities ¥0.1B, etc.), producing net extraordinary losses of -¥2.7B and compressing Profit Before Tax to ¥3.0B. The Impairment Losses of ¥4.0B are one-off costs associated with declining store profitability and do not reflect recurring earning power. Comprehensive Income was ¥2.9B, with Net Income ¥2.8B plus Other Comprehensive Income including Foreign Currency Translation Adjustments ¥0.6B, indicating a small divergence between Comprehensive Income and Net Income and limited impact from valuation differences. The fact that OCF is 5.7x Net Income indicates a significant impact from non-cash expenses such as impairment losses, and together with an accrual ratio of -4.4%, the cash conversion quality of earnings is assessed as healthy. However, continued occurrence of impairment losses creates volatility in asset efficiency, so selection and concentration of the store portfolio will be important to stabilize earnings quality.
The full-year outlook targets Revenue ¥447.0B (YoY +1.4%), Operating Income ¥7.6B (YoY +45.1%), Ordinary Income ¥6.6B (YoY +15.1%), and Net Income attributable to parent company shareholders ¥2.6B (YoY +15.6%). Progress toward these targets stands at: Revenue 98.6%, Operating Income 68.7%, Ordinary Income 86.7%, and Net Income 86.5%, with Operating Income progress relatively low. This implies assumptions of improved profit margins in the second half through SG&A restraint and higher operating rates in the ODM/OEM Business. Full-year Operating Margin is expected to improve to 1.7% (from 1.2% currently), a 0.5pt increase, contingent on fixed-cost absorption, price pass-through, and mix improvements. For growth in a high interest-rate environment, lengthening loan maturities and reducing interest costs will also be effective. The dividend forecast is no dividend (prior year year-end 7 yen), signaling a change in dividend policy.
This period the year-end dividend of 7 yen (interim 0 yen) was paid, with total dividends approximately ¥1.6B. The Payout Ratio was 24.7% (XBRL data value; however, based on Net Income attributable to parent company shareholders ¥2.3B it would be about 70%), somewhat high relative to current net income levels. Dividend coverage by FCF was 2.6x (FCF ¥4.2B ÷ dividends ¥1.6B), indicating that dividend sustainability is currently supported by cash generation. However, the full-year outlook plans a year-end dividend of 0 yen (no dividend), suggesting a review of dividend policy under a low-profit environment. With the Payout Ratio remaining relatively high, improving Operating Margin and stable FCF generation are prerequisites for future dividend resumption or increases. No treasury share repurchases were confirmed; shareholder returns consist solely of dividends.
Revenue concentration risk in the Restaurant Business: The Restaurant Business accounts for 55.3% of revenue and is vulnerable to macroeconomic fluctuations, adverse weather, and changes in consumer preferences. With Revenue flat YoY at -0.8%, slow recovery in same-store traffic and spending per customer could visibly constrain company-wide revenue growth.
High leverage and rising interest burden risk: With a D/E ratio of 2.24x and Debt/EBITDA of 7.0x, the company remains highly leveraged and interest expense of ¥1.9B represents 36.3% of Operating Income of ¥5.2B. Interest Coverage (EBIT / Interest Expense) is low at 2.76x, and in a rising rate environment interest payments could substantially compress Net Income. Short-term Borrowings increased +75.0% YoY, raising refinancing and interest-reset risks.
Continued impairment losses and asset-efficiency deterioration risk: Impairment Losses of ¥4.0B this period (prior year ¥5.2B) accounted for 85.0% of Special Losses and have been recurring with declining store profitability. Frequent impairments create swings in asset efficiency and reduce predictability of Net Income. Asset retirement obligations of ¥18.6B (8.7% of liabilities) remain as potential future cash outflows during store closures or renovations, and delayed concentration/optimization of the store portfolio could increase financial burdens from both impairments and asset retirement obligations.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.2% | 4.6% (1.7%–8.2%) | -3.4pt |
| Net Profit Margin | 0.6% | 3.3% (0.9%–5.8%) | -2.7pt |
Both Operating Margin and Net Profit Margin are well below industry medians, indicating inferior profitability within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.8% | 4.3% (2.2%–13.0%) | +0.5pt |
Revenue growth slightly exceeds the industry median, maintaining top-line expansion at an industry-average pace.
※ Source: Company compilation
Structure of higher revenue but lower profit and sharp contraction in Operating Margin: Revenue grew +4.8% but Operating Income fell -44.7%, with Operating Margin declining from 2.3% to 1.2% (down 1.1pt). The primary cause was higher SG&A (+¥5.0B), and the delay in fixed-cost absorption and price pass-through clearly squeezed profits. Compared to industry benchmarks, Operating Margin is 3.4pt below the median of 4.6%, making profitability improvement an urgent priority.
Solid cash generation and dividend sustainability: Operating Cash Flow was ¥15.9B, generating 5.7x Net Income of ¥2.8B, with OCF/EBITDA 1.02x and Accrual Ratio -4.4%, indicating healthy cash quality. Free Cash Flow was ¥4.2B, covering dividends of ¥1.6B by 2.6x, supporting current dividend sustainability from a cash-generation perspective. However, the full-year forecast plans no dividend, signaling a reassessment of dividend policy in a low-profit environment. Improvement in Operating Margin and stabilization of FCF are prerequisites for dividend resumption.
Manifestation of high leverage and interest burden: With D/E ratio 2.24x and Debt/EBITDA 7.0x, leverage remains high and Interest Coverage at 2.76x is low. Interest expense ¥1.9B accounts for 36.3% of Operating Income ¥5.2B, with interest burden weighing on profits. Short-term Borrowings increased +75.0% YoY, raising refinancing and interest-reset risks. Strengthening financial capacity and lengthening debt maturity are preconditions for profit recovery and dividend resumption.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional if necessary.