Belc CO.,LTD. FY2026 FY Earnings Report

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Executive Summary

The Company achieved increases in both revenue and earnings during the current period; however, gross margin and operating margin contracted slightly against a backdrop of rising procurement and energy costs, and earnings growth fell below revenue growth. Revenue was ¥423.43B (+9.2% year on year), operating income was ¥17.90B (+5.2%), ordinary income was ¥18.17B (+4.5%), and consolidated net income was ¥12.40B (+4.9%). Net income attributable to owners of the parent was ¥12.68B (+2.4%), while EPS was ¥608.69 (¥594.16 in the previous year). Although new store openings and resilient demand at existing stores contributed to revenue growth, the gross margin declined to 26.4% from 26.6% in the previous year. The recognition of ¥0.88B in extraordinary losses associated with store impairment and disposals also constrained growth in final earnings.

Factors Affecting Financial Performance

【Revenue】Revenue increased to ¥423.43B, representing a 9.2% year-on-year increase. The Group operates as a single retail segment and does not disclose a breakdown by business; however, new store openings and resilient demand at existing stores appear to have contributed to the increase in revenue.

【Profitability】Gross profit was ¥111.97B, and the gross margin declined to 26.4% from 26.6% in the previous year, a decrease of 0.2pt. Rising procurement prices and energy costs appear to have been the primary factors. SG&A expenses were ¥100.99B, and the SG&A ratio was 23.9%, essentially unchanged from 23.8% in the previous year. Operating income was ¥17.90B (+5.2%), while the operating margin contracted to 4.2% from 4.4% in the previous year, a decrease of 0.2pt. Ordinary income was ¥18.17B (+4.5%), with non-operating income and expenses producing a net positive contribution of ¥0.27B due to interest income, subsidy income, and other items. Extraordinary losses of ¥0.88B (¥0.70B in impairment losses on fixed assets and ¥0.17B in losses on disposals) were recognized as temporary factors, leaving profit before tax at ¥17.29B. Consolidated net income was ¥12.40B (+4.9%), while net income attributable to owners of the parent was ¥12.68B (+2.4%). As the decline in gross margin and recognition of extraordinary losses caused earnings growth to fall below revenue growth, the overall result was an increase in both revenue and earnings.

Key Financial Indicators

【Profitability】The operating margin was 4.2%, down 0.2pt from 4.4% in the previous year, while the net profit margin, based on consolidated net income, was 2.9%, down 0.1pt from 3.0% in the previous year. ROE was 10.3%, and ROA, based on ordinary income, was 8.6%.【Cash Flow Quality】Operating cash flow (OCF) was ¥20.93B, equivalent to 1.65 times net income attributable to owners of the parent of ¥12.68B, indicating sound cash-generation capacity underpinning earnings.【Investment Efficiency】Capital expenditures were ¥23.08B, reaching 2.7 times depreciation and amortization of ¥8.55B, indicating an active phase of investment in store openings and renovations.【Financial Soundness】The equity ratio was 54.5%, nearly unchanged from 54.8% in the previous year, while total assets expanded to ¥221.38B from ¥200.72B in the previous year. Current assets were ¥44.57B against current liabilities of ¥53.26B, leaving the current ratio at 83.7%; this reflects a working-capital structure primarily supported by trade payables.

Cash Flow Analysis

Operating cash flow was ¥20.93B, down 7.7% from ¥22.69B in the previous year. Contributing factors included the accumulation of working capital, such as a ¥1.53B increase in inventories and a ¥0.41B increase in trade receivables, as well as an increase in income taxes and other taxes paid to ¥5.10B from ¥3.94B in the previous year. Investing cash flow was -¥22.77B, primarily reflecting capital expenditures of ¥23.08B, which increased from ¥17.81B in the previous year. Financing cash flow was positive at ¥3.78B, as proceeds from long-term borrowings of ¥16.05B exceeded repayments of ¥9.27B. Free cash flow, calculated as operating cash flow less investing cash flow, was -¥1.84B; this was covered by financing activities, and cash and cash equivalents increased to ¥19.85B at period-end from ¥17.83B in the previous year. During this active capital investment phase, the Company is managing funding by combining operating cash flow with debt financing.

Quality of Earnings

Ordinary income of ¥18.17B consisted of operating income of ¥17.90B plus a net increase of ¥0.27B in non-operating income and expenses (non-operating income of ¥0.62B and non-operating expenses of ¥0.35B), indicating a business-centered earnings structure with low dependence on non-operating items. Meanwhile, extraordinary losses of ¥0.88B (¥0.70B in impairment losses on fixed assets and ¥0.17B in losses on disposals of fixed assets) were recognized as temporary factors, reducing profit before tax to ¥17.29B, approximately 5% below ordinary income. Comprehensive income was ¥13.37B, slightly exceeding consolidated net income of ¥12.40B and net income attributable to owners of the parent of ¥12.68B, due to an additional ¥0.07B in valuation difference on other securities and ¥0.62B in adjustments related to retirement benefits. The divergence between net income and comprehensive income was small, and earnings quality can be assessed as stable.

Shareholder Returns

The annual dividend was ¥124 (¥62 interim and ¥62 year-end), representing an increase of +¥66 from ¥58 in the previous year. The payout ratio was 20.2%, based on consolidated net income, maintaining the same level as the previous year and remaining conservative. The Company conducted ¥0.11B in share repurchases, but the scale was small; shareholder returns appear to be centered on dividends. A dividend forecast of ¥66 for the following period has been disclosed.

Risk Factors

1. Declining gross margin: The gross margin was 26.4%, down 0.2pt from 26.6% in the previous year. If increases in procurement prices and energy costs continue, profitability may come under further pressure.

2. Short-term liquidity: Current assets of ¥44.57B versus current liabilities of ¥53.26B resulted in a current ratio of 83.7%. Although this reflects a working-capital structure primarily supported by trade payables, management of payment schedules will be important.

3. Impairment and disposals of fixed assets: Of the ¥0.88B in extraordinary losses, the Company recognized ¥0.70B in impairment losses and ¥0.17B in losses on disposals of fixed assets. Temporary costs associated with store replacement through a “scrap-and-build” strategy may continue to arise.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Growth and Capital Efficiency

※Source: Compiled by the Company

Key Points from the Financial Results

1. Revenue increased by +9.2%, exceeding the industry median of +4.3%, while the operating margin of 4.2% was slightly below the industry median of 4.6%, indicating room to improve profitability relative to the pace of revenue growth.

2. Operating cash flow was equivalent to 1.65 times net income attributable to owners of the parent, providing solid support for earnings; however, free cash flow was -¥1.84B due to increases in inventories and trade receivables, making cash flow trends during this active investment phase a key point to monitor.

3. The dividend increased by +¥66 year on year, while the payout ratio of 20.2% remained at a conservative level. Extraordinary losses of ¥0.88B resulted from store impairment and disposals, indicating that the replacement of the asset base is progressing.

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This report is an automatically generated financial analysis document produced by AI based on XBRL financial results summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available financial results data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional where necessary.

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