Performance Trend 1. Overview of performance for FY3/2024 Consolidated performance for FY3/2024 of G-7 Holdings <7508> was 192,992 million yen in increased operating income of 9.1% over the previous year, and increased ordinary income of 7.4% to 7,318 million yen, and attributed to the parent company's net income of 5,175 million yen, an increase of 35.3% over the previous year. Sales were driven by the Business Supermarket Business and the Meat Business, and continued to set a new record high, exceeding the company's plan by 4.3%. However, in terms of profits, the automobile-related business was affected by a decrease in profits due to poor sales of winter tires due to a warm winter, and could not reach the company's plan, it turned to a profit increase for the second time due to the growth of other businesses centered on the Business Supermarket business. The sales cost ratio has increased by 0.8 points over the previous year due to changes in the sales composition ratio; however, the selling, general and administrative expense ratio decreased by 0.7 points due to the effect of increased earnings, and the operating margin decreased by 0.1 points to 3.6%. The main reasons for the increase/decrease of selling, general and administrative expenses were a decrease of 600 million yen in energy costs due to subsidies from rising electricity prices, and an increase of 1 billion yen in labor costs due to improvements in employee treatment and increased education costs. In addition to this, depreciation expenses increased by nearly 600 million yen due to rising construction material costs and rising costs of opening stores etc. The EBITDA margin has increased by 0.1 points from the previous year. Also, the reason for the large increase in the net income of the parent company's shareholders attributable to the current period is due to the elimination of 500 million yen in retirement benefits paid to executives that were recorded as special losses in the previous year, a decrease of 455 million yen in impairment losses, and a gain of 127 million yen on the sale of investment securities in FY3/2024.
3. Financial Condition and Management Indicators
The total assets of Futsho Trading Co., Ltd. (6257) at the end of March 2024 were ¥51,344 million, an increase of ¥1,840 million from the previous period. Looking at the main fluctuations, current assets increased by ¥843 million due to an increase in inventories, while cash and deposits decreased by ¥269 million and accounts receivable decreased by ¥1,650 million, respectively. In fixed assets, deferred tax assets decreased by ¥468 million, while investment securities increased by ¥989 million mainly due to the purchase of business bonds, and long-term prepaid expenses increased by ¥621 million due to the acquisition of popular content IP (new and continuation).
Total liabilities decreased by ¥2,969 million from the previous period to ¥8,403 million. In current liabilities, accounts payable decreased by ¥1,795 million, accrued expenses decreased by ¥572 million, and corporate taxes payable decreased by ¥209 million. Total net assets increased by ¥31,530 million to ¥42,941 million. This is due to a recorded net income of ¥3,643 million attributable to the parent company's shareholders, despite dividend payments of ¥1,044 million, and an increase of ¥554 million in accumulated other comprehensive income.
In terms of financial indicators, the equity ratio rose again to the 80% range from the previous period's 77.8%, reaching 83.6%. The company's sound financial health is ensured by its debt-free management and abundant cash on hand, which exceeds ¥20 billion. Regarding profitability, the company's operating margin reached more than 10% for two consecutive periods, achieving 13.2%, indicating that the company's revenue is increasing due to the creation of hit models, even in a difficult industry environment.
In order to improve capital efficiency and pursue flexible capital policies, the company conducted a repurchase of 1.5 million shares, valued at ¥2,361 million, as of February 28, 2023. In addition, on March 17, 2023, the company issued first subscription rights with exercise price adjustment clauses utilizing treasury stock, with a total of 1,500,000 shares. However, due to the subsequent decline in stock price, the company purchased and cancelled all subscription rights and repurchased 1.5 million of its own shares as of May 27, 2024.
(Written by FISCO guest analyst, Jo Sato)