MATSUYA FOODS HOLDINGS CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

While Revenue increased by +17.4%, Operating Income declined by -28.0%, making deteriorating profitability due to cost inflation the most important point in the current-period results. Against Revenue of ¥506.6B (¥431.6B in the previous year, +17.4%), Operating Income was ¥7.0B (¥9.7B in the previous year, -28.0%) and Ordinary Income was ¥8.5B (down -25.7% year on year), indicating a declining earnings trend. Meanwhile, Net Income turned to an increase at ¥7.0B (+26.8%) due to the recognition of ¥2.8B in extraordinary gains, including a ¥2.1B gain on the sale of fixed assets. The gross margin was nearly flat at 62.6% (62.8% in the previous year), but the SG&A ratio rose to 61.3% (60.6% in the previous year), causing the Operating Income margin to decline to 1.4% (2.2% in the previous year).

Factors Affecting Results

【Revenue】Revenue was ¥506.6B, an increase of +17.4% year on year. As the company operates in a single Food Service Business segment, the recovery in customer traffic and average spending per customer at existing stores, as well as price revisions, are believed to have contributed to the increase in Revenue.

【Profit and Loss】Operating Income declined to ¥7.0B (¥9.7B in the previous year, -28.0%). While the cost-of-sales ratio was nearly flat at 37.4% (37.2% in the previous year), SG&A expenses increased to ¥310.4B (¥261.5B in the previous year, +18.7%), outpacing Revenue growth. The resulting increase in the SG&A ratio to 61.3% (60.6% in the previous year) was the primary cause of the earnings decline. The net balance of non-operating income and expenses was +¥1.6B, resulting in Ordinary Income of ¥8.5B (-25.7%). After adding ¥2.8B in extraordinary gains, including a ¥2.1B gain on the sale of fixed assets, Profit Before Income Taxes was ¥11.3B (¥11.4B in the previous year, nearly flat). Net Income after income taxes was ¥7.0B (+26.8%). The company experienced higher Revenue but lower operating earnings, and the increase in Net Income was primarily attributable to a temporary boost from extraordinary gains.

Segment Analysis

The Group operates in a single Food Service Business segment and does not disclose results by segment.

Key Financial Metrics

【Profitability】The Operating Income margin declined by -0.8pt to 1.4% (2.2% in the previous year). Although the gross margin was nearly flat at 62.6% (62.8% in the previous year), the increase in the SG&A ratio to 61.3% (60.6% in the previous year) was the primary cause of the deterioration in profitability. The Net Income margin improved slightly to 1.4% (1.3% in the previous year), supported by the recognition of extraordinary gains. 【Cash Flow Quality】Cash and deposits declined to ¥225.8B, down ¥81.1B year on year (-26.4%), while accounts payable increased by +37.0% to ¥55.2B, suggesting greater reliance on trade payables for liquidity management. 【Investment Efficiency】ROE remained at only 1.2%. Combined with total asset turnover of 0.37x and financial leverage of 2.34x, capital efficiency remained at a low level. 【Financial Soundness】The Equity Ratio improved to 42.6% (41.0% in the previous year), and the current ratio of approximately 141.6% indicates that short-term payment capacity is secured. However, the company carries ¥391.0B in long-term borrowings, and interest expenses increased to ¥1.8B (¥0.8B in the previous year), indicating an upward trend in interest burden.

Cash Flow Analysis

As the statement of cash flows has not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits declined to ¥225.8B, down ¥81.1B from the previous year (-26.4%), indicating continuing cash outflows. Meanwhile, accounts payable increased to ¥55.2B (+37.0%), suggesting that trade payables are increasingly supplementing liquidity. Construction in progress increased by ¥5.9B (+41.3%), indicating that investments in new store openings and renovations are continuing. Given the decline in the Operating Income margin and the increase in interest expenses, the company’s cash-generation capacity from its core business is under pressure, and it may be financing part of its investment spending through increased trade payables.

Quality of Earnings

The current period’s recurring earnings power is represented by Ordinary Income of ¥8.5B, comprising Operating Income of ¥7.0B and a net balance of non-operating income and expenses of +¥1.6B, a decline of -25.7% from the previous year. In contrast, ¥2.8B in extraordinary gains, including a ¥2.1B gain on the sale of fixed assets, was recognized, allowing Profit Before Income Taxes to remain nearly unchanged from the previous year at ¥11.3B. Approximately 3割 of Net Income of ¥7.0B was effectively supported by extraordinary gains, indicating that the increase in Net Income (+26.8%) was not due to improvement in the core business and that earnings remain highly dependent on temporary factors. Non-operating income consisted of relatively small and stable items, including ¥0.3B in interest income, ¥0.03B in dividend income, and ¥0.5B in rental income, and its impact on the recurring earnings base is limited. Comprehensive Income was ¥7.2B, nearly equivalent to Net Income of ¥7.0B, with no significant divergence attributable to foreign currency translation adjustments or other factors.

Earnings Forecast and Guidance

Against the full-year plan of Revenue of ¥2,150B, Operating Income of ¥82.0B, Ordinary Income of ¥84.0B, and EPS of ¥184.51, Q1 progress rates were 23.6% for Revenue, 8.5% for Operating Income, 10.2% for Ordinary Income, and 18.5% for Net Income. Revenue was close to the simple pro rata benchmark of 25%, but Operating Income and Ordinary Income were substantially below that level, making earnings improvement in the second half a prerequisite for achieving the full-year plan. No revisions were made to either the earnings forecast or the dividend forecast.

Shareholder Returns

The company’s forecast annual dividend is ¥26 (¥24 in ordinary dividends and ¥2 in commemorative dividends), and the Payout Ratio based on forecast EPS of ¥184.51 remains conservative at approximately 14.1%. While the previous-year dividend was ¥12, consisting solely of ordinary interim and year-end dividends, the current period includes a planned dividend increase incorporating a commemorative dividend. The company holds ¥225.8B in cash and deposits, providing a certain level of distribution capacity; however, given the delay in Operating Income progress and the increase in interest expenses, free cash flow trends require close monitoring. No share repurchase has been disclosed, and the Payout Ratio is the appropriate metric for evaluating shareholder returns.

Risk Factors

1. Profitability deterioration risk: The SG&A ratio rose to 61.3% (60.6% in the previous year), while the Operating Income margin declined to 1.4% (2.2% in the previous year). The company may not be fully passing through increases in costs such as labor and utilities, making profitability improvement in the second half a prerequisite for achieving the plan.

2. Liquidity and interest burden risk: Cash and deposits declined by -26.4% year on year to ¥225.8B, while accounts payable increased by +37.0%, indicating greater reliance on trade payables. Interest expenses also increased to ¥1.8B (¥0.8B in the previous year), and the upward trend in the interest burden should be monitored in light of long-term borrowings of ¥391.0B.

3. Earnings quality risk: Extraordinary gains of ¥2.8B, including a ¥2.1B gain on the sale of fixed assets, contributed to Net Income of ¥7.0B, indicating a high degree of reliance on temporary factors. Ordinary Income declined by -25.7%, and it should be noted that the increase in Net Income (+26.8%) does not reflect improvement in the core business.

Industry Benchmark (For Reference; Company Research)

Profitability and Returns

Profitability metrics are below the industry median, positioning the company unfavorably in terms of its cost structure.

Growth and Capital Efficiency

The Revenue growth rate significantly exceeded the industry median, placing the company at a high level within the industry in terms of top-line growth.

※Source: Company research

Key Points in the Financial Results

1. While Revenue growth of +17.4% exceeded the industry median, the SG&A expense growth rate (+18.7%) outpaced Revenue growth, causing the Operating Income margin to decline to 1.4%. The time lag between cost increases and price pass-through underlies the coexistence of Revenue growth and earnings decline.

2. The increase in Net Income (+26.8%) was largely attributable to ¥2.8B in extraordinary gains, including a gain on the sale of fixed assets, while Ordinary Income, which reflects the core business’s recurring earnings power, declined by -25.7%. When evaluating Net Income growth, the contribution of temporary factors should be distinguished.

3. Q1 profit progress rates against the full-year plan were 8.5% for Operating Income and 10.2% for Ordinary Income, significantly behind the Revenue progress rate of 23.6%. Improvement in the SG&A ratio and greater efficiency in inventory and supplier payment terms during the second half are observed as structural challenges for achieving the full-year plan.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,500–¥2,648 at Cost of Equity ±1%; ¥2,564–¥2,578 at ω±0.1.

Notes:

• Net Income is substantially compressed relative to Operating Income due to tax burden, acquisition-related expenses, non-controlling interests, and other factors (Net Income ÷ Operating Income 46%). This value reflects that compression at face value; if these factors are temporary, underlying earnings power may be higher.
• As 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 difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data and is not a forecast of the market share price, a recommendation of any specific investment action, or a forecast or guarantee of future share prices.)

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This report is an automatically generated earnings analysis document created by AI based on 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 professionals as necessary.

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