| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥175.5B | ¥182.3B | -3.7% |
| Operating Income | ¥0.2B | ¥-1.5B | +63.2% |
| Ordinary Income | ¥-1.3B | ¥-2.5B | +14.8% |
| Net Income | ¥-15.1B | ¥3.5B | +12.9% |
| ROE | -17.8% | 3.2% | - |
Consolidated results for FY2025: Revenue ¥175.5B (YoY -¥6.8B -3.7%), Operating Income ¥0.2B (YoY +¥1.7B +63.2%), Ordinary Income -¥1.3B (YoY +¥1.2B +14.8%), Net Income -¥15.1B (YoY -¥18.6B +12.9%). Operating profit turned positive, but a total of ¥22.7B in extraordinary losses, including impairment losses of ¥10.6B and structural reform expenses of ¥12.0B, expanded the net loss for the period. Company guidance for next fiscal year calls for Revenue of ¥180B (+2.6%), Operating Income of ¥7.0B, and Net Income of ¥4.0B, implying a return to profitability.
[Profitability] Operating margin 0.1% (improved from -0.8% in the prior year), Gross margin 18.7%, Ordinary income margin -0.7%. ROE -30.6% (DuPont: Net profit margin -14.8% × Asset turnover 1.180x × Financial leverage 1.76x), significantly negative. The main driver of the deterioration in net profit margin was the recognition of ¥22.7B in extraordinary losses; within non-operating expenses, interest expense of ¥1.6B weighed on ordinary income. [Cash Quality] Cash and deposits ¥36.1B, short-term liability coverage 1.41x. Operating Cash Flow (OCF) was ¥5.7B, remaining positive, but at -0.22x relative to net income, raising concerns about earnings quality. Cash conversion ratio 0.64x; Free Cash Flow ¥4.7B secured. Interest coverage 0.15x, indicating extremely limited interest payment capacity. [Investment Efficiency] Asset turnover 1.180x; capital expenditures of ¥4.5B were below depreciation of ¥8.7B, with a Capex/Depreciation ratio of 0.52x signaling underinvestment. [Financial Soundness] Equity Ratio 57.0% (slightly down from 57.3% in the prior year), Current Ratio 196.9%, Quick Ratio 163.2%, indicating solid short-term liquidity. Interest-bearing debt ¥30.3B, Debt to Equity Ratio 0.76x, Debt-to-Capital Ratio 26.4%. Short-term debt ratio 84.2% indicates high reliance on short-term borrowings and refinancing risk. Working capital ¥52.4B, with inventories down -35.7% YoY, improving efficiency.
OCF was ¥5.7B, remaining positive and demonstrating cash-generating ability despite a large net loss for the period. Drivers included non-cash expenses such as depreciation of ¥8.7B and impairment losses of ¥10.6B supporting OCF; on working capital, inventories decreased by ¥10.2B YoY (-35.7%), with inventory reduction contributing to improved capital efficiency. Investing CF was an outflow of ¥1.0B; capital expenditures of ¥4.5B were below depreciation. Details for Financing CF were not disclosed, but interest-bearing debt was roughly flat YoY, with no evidence of large changes in borrowings. FCF of ¥4.7B was secured; cash and deposits increased to ¥36.1B, representing 24.3% of total assets and maintaining a liquidity buffer. However, the OCF/Net Income ratio of -0.22x is a concern as an earnings quality indicator, and it is necessary to confirm the sustainability of underlying operating cash generation excluding one-off losses.
Against Ordinary Income of -¥1.3B and Operating Income of ¥0.2B, non-operating loss was ¥1.5B. The breakdown includes interest expense of ¥1.6B and interest and dividend income of ¥0.1B, resulting in a negative financial balance of ¥1.5B; heavy interest burden is pressuring earnings. Non-operating income is approximately 0.3% of revenue and is small; the earnings structure relies on core operations. The main factors behind extraordinary losses of ¥22.7B (12.9% of revenue) were impairment losses of ¥10.6B and structural reform expenses of ¥12.0B, representing one-off costs associated with asset value adjustments and business reorganization. The structure wherein OCF of ¥5.7B significantly exceeds Net Loss of ¥15.1B is due to non-cash expenses (impairment and depreciation totaling ¥19.3B); on a cash basis, the earnings foundation is marginally secured at the operating level. However, the operating margin of 0.1% is extremely thin, confirming structural weakness in recurring profitability.
[Positioning within Industry] (Reference information; our analysis) Note: Due to large one-off losses in this fiscal year, comparisons with a normal period are difficult; profitability indicators are outliers. We focus primarily on comparisons with the company’s historical trend. Profitability: Operating margin 0.1% (improved from the company’s 5-year median of -0.8% but still at the lowest level), Net profit margin -8.6% (lowest in the past 5 years) Soundness: Equity Ratio 57.0% (roughly in line with the company’s historical average; financial base itself is maintained) Growth: Revenue growth -3.7% (second consecutive year of decline over the past 5 years) Industry: Wholesale (limited reference set), Comparison period: company’s past 5 years, Source: our compilation of public financial data
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; please consult a professional as necessary before making any decisions.