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.

2024 FY Performance Overview 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. Changes in the ratio of revenues - while the revenue composition ratio increased by 0.8 points from the previous year, 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 factors affecting selling, general and administrative expenses were a drop of 600 million yen in energy costs due to subsidies from rising electricity rates and an increase of 1 billion yen in labor costs due to increases in treatment and education expenses for employees. Depreciation expenses also rose by just under 600 million yen due to increased costs of construction materials and opening new stores. The EBITDA (earnings before interest, taxes, depreciation, and amortization) margin rose 0.1 points from the previous year. Lastly, the reason for the increase in the net income of the parent company's shareholders attributable to the current period was due to the elimination of the 500 million yen for executive retirement bonuses paid in the previous period, the reduction of impairment losses by 455 million yen, and the realization of gains on investment securities of 127 million yen in FY3/2024.

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Changes in Performance 1. Outline of performance for FY3 / 2024 Consolidated FY March 2024 performance of G-7 Holdings Co., Ltd. <7508> was 192,992 million yen in increased operating income of 9.1% YoY, 6,920 million yen in operating income, up 6.4% YoY, 7,318 million yen in current income, up 7.4% YoY, and 5,175 million yen in net income attributable to the parent company's shareholders, up 35.3% YoY. Sales have continuously hit new record highs supported by the Business Supermarkets and Meat businesses, 4.3% higher than the business plan. However, on the other hand, the car-related business was affected by lower profits due to poor sales of winter tires amid warm winter and missed the business performance plan. Nevertheless, due to the growth of other sectors such as Business Supermarkets, the company turned to profit increase after 2 terms. The sales composition ratio increased by 0.8 points YoY as a result of a change in revenue composition, while the selling, general and administrative expenses ratio decreased by 0.7 points YoY due to the increase in earnings effect. The operating profit margin was down 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.

Inauguration and retirement movement for FY3/2024 New stores increased by 24 stores, while closures were 13 stores. The YE store count increased by 11 stores from the previous year to 608 stores. (Compared to 27 new stores and 30 closures in the previous year.) The breakdown of new stores is 9 Business Supermarkets stores, 12 Meat stores, 2 Bike World stores in Malaysia, and 1 Chateraise store. There was no change to the number of Autobacs stores across Japan. Same-store sales fell by 1.1% over the previous year, roughly in line with the overall same-store sales across the Autobacs Group.

(1) Automotive-related business Sales of the automotive-related business, while at a continuous all-time high with a YoY 6.3% increase to 43,386 million yen, saw a continued profit reduction for the second term in a row with YoY 28.0% down to 1,598 million yen in ordinary income. Sales were driven by the overseas used car market of G-7 Crown Trading, but profits were curtailed by G-7 Auto Service, and G-7 Bike World. G-7 Auto Service performance was a decrease in revenue of about 1% YoY and a reduction of double digits in operating profit. It was mainly due to the slowdown in sales of winter products such as winter tires and tire chains with good profitability and the decrease in service revenues, such as tire fitting charges, that accompanied it. The YoY growth rate of monthly sales was a decrease of more than 10% in both December 2023 and January 2024, indicating sluggish winter business performance. Among the major categories, tire sales decreased by 5.1% YoY and car AV sales decreased by 7.5. On the other hand, consumables such as oil increased by 8.5% and batteries by 7.4%, due to the recovery of demand for driving, and for car sales and purchases, the results were solid, increasing 2.2%. The number of Autobacks stores across Japan remained flat at 69 YE compared to the previous year-end. Other than Autobacs, two stores were opened for the cake shop Chateraise, but had little impact on performance.

Although the sales of automobile-related business increased by 6.3% compared to the previous year, reaching a record high of JPY 43,386 million, the operating profit decreased for the second consecutive term, down 28.0% to JPY 1,598 million. While the revenue increased due to the successful sale of used automobiles for overseas at G-7.CrownTrading, G-7 Auto Service and G-7 Bike World dragged down the profit.

G-7 Auto Service's revenue decreased by about 1% YoY, and ordinary income decreased by double digits. Winter-dependent products, such as winter tires and tire chains with favorable profitability, were slow to sell due to the warm winter months, resulting in a decrease in service revenue, such as income from tire mounting. The YoY growth rate of monthly sales was a decrease of more than 10% in both December 2023 and January 2024, indicating sluggish winter business performance.

The percentage increase/decrease of major categories from the previous year was a 5.1% decrease in tire sales, a 7.5% decrease in car AV sales, a 1.7% decrease in services, and a 0.9% decrease in accessories. Conversely, consumables showed growth due to a recovery in driving, with an 8.5% increase in oil and a 7.4% increase in batteries. Even for vehicle trading and sales, there was a solid increase of 2.2%. There were no outflows or inflows of stores, and the YE total number of Autobacs stores in Japan remained at the same 69 stores as it was for the previous YE. On the other hand, same-store sales fell by 1.1% YoY, roughly in line with the overall same-store sales across the Autobacs Group.

G-7 Bike World's revenue decreased by nearly 10% compared to the previous period, and the decrease in gross profit due to the decrease in revenue also affected the decline in profits. The reasons for the decrease in revenue were the peaking of motorcycle commuting demand due to the end of the spread of the new coronavirus infection, and the low foot traffic due to the hot summer season. Same-store sales revenue decreased by 8.7% compared to the previous period, but the year-on-year growth rate of monthly sales revenue has stopped declining in recent months, turning positive for the first time in 17 months with a 0.7% increase in March 2024. The number of stores at the end of the term remained unchanged from the previous period, at 15 stores.

Among its overseas operations, G-7.CrownTrading, which exports and sells automobiles, saw its revenue double compared to the previous period thanks to the depreciation of the yen, and profits also increased. On the other hand, "Bike World," which is expanding in Malaysia, is also steadily increasing its profits and has opened a total of five stores, including one each in July 2023 and March 2024. Although "Autobacs" in Malaysia saw an increase in revenue, growth was slower than expected, with only one of the three stores being profitable.

(Written by FISCO guest analyst, Jo Sato)