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.

1. Summary of Performance for the Second Quarter Ended December 2024

SBS Holdings <2384>' consolidated performance for the second quarter of the fiscal year ending December 2024 showed a 0.4% decrease in revenue compared to the same period last year, totaling 221.739 billion yen, a 23.1% decrease in operating profit to 10.958 billion yen, a 20.7% decrease in ordinary profit to 11.385 billion yen, and a 21.1% decrease in quarterly net profit attributable to the parent company's shareholders to 6.456 billion yen. Overseas volume declined due to global inflation and economic slowdown from monetary tightening measures in Europe and America, along with a decrease in sea freight rates. Additionally, the opening costs of new business locations and increases in rent expenses domestically led to a decrease in main logistics business revenue by 653 million yen and a 2020 million yen decrease in operating profit. Furthermore, in the real estate business, the decrease in the liquidity implementation amount resulted in a 397 million yen decline in revenue and a 1,216 million yen decrease in operating profit, causing a decline in revenue and profit for the two main businesses.

Compared to the company's plan, the real estate and other businesses generally progressed as planned. However, due to the underperformance in the logistics business, there was a 1.9% decrease in revenue and a 4.7% decrease in operating profit. Particularly, the performance of SBS Toshiba Logistics significantly fell below the planned target. Nevertheless, equity method investment income increased by 97 million yen compared to the same period last year, and subsidy income increased by 231 million yen, leading to an improvement in non-operating income and expenses compared to the plan. As a result, ordinary profit and quarterly net profit attributable to the parent company's shareholders slightly exceeded the company's plan.

Looking at the performance of each group company, SBS Toshiba Logistics Group recorded a 2.7% decrease in revenue compared to the same period last year, totaling 56.986 billion yen, due to the decrease in sea freight rates and volume of semiconductors, electronics, etc. Along with this, increased costs related to new business openings resulted in a 43.3% decrease in operating profit to 1.425 billion yen. Similarly, SBS Ricoh Logistics Group also experienced a 3.4% decrease in revenue to 50.691 billion yen and a 6.0% decrease in operating profit to 1.873 billion yen, mainly due to the drop in sea freight rates and overseas volume. The temporary halt of routes from Southeast Asia to Europe due to heightened geopolitical risks seemed to contribute to the decrease in volume. SBS LogiCom Group saw an increase in acquiring new domestic customers and progress in fee rationalization, leading to a steady performance with a 5.3% increase in revenue to 36.492 billion yen and a 6.4% increase in operating profit to 2.915 billion yen. The collective performance of other subsidiaries showed a 0.7% increase in revenue to 77.569 billion yen and a 32.2% decrease in operating profit to 4.744 billion yen. The main factor for the profit decline was the reduction in real estate liquidity amount, but it also appeared that the logistics subsidiaries faced a decrease in profit due to increased upfront investment burdens.

(Written by FISCO guest analyst, Jo Sato)