■Performance Trends
1. Summary of consolidated financial results for the fiscal year ending March 31, 2024
Higashi TwentyOne's consolidated financial results for the fiscal year ended 2024/3 were sales of 40,635 million yen, up 16.7% from the previous fiscal year, operating profit of 2190 million yen, up 14.8% from the same period, ordinary profit of 2,309 million yen, and net income attributable to parent company shareholders up 18.8% to 1,506 million yen. Generally, in the upward revised forecast for 2023/10/27, sales reached a record high with sales of 40,000 million yen, operating income of 2,200 million yen, ordinary income of 2,300 million yen, and net income attributable to parent company shareholders of 1445 million yen, and a significant increase in sales and profit at the same level.
All businesses expanded in terms of sales. In particular, transactions with Amazon Japan expanded in the warehouse business, sales activities due to personnel strengthening remained strong in the office service business, and there was a significant increase in sales due to the fact that travelers consolidated for the full year (the first half was consolidated from the second half) in other businesses. In terms of profit, in addition to increases in labor costs, etc. associated with growth investments and staff increases, the occurrence of initial costs (equipment, furniture, warehouse consumables, etc.) associated with the opening of a large 3PL center (Kita-Osaka LC, Nagareyama LC, Naruohama LC, and Kobe West LC opened in 2024/3) was a cost increase factor, but it was absorbed by significant sales increase effects and receipt of appropriate fares. Gross profit increased 10.9% from the previous fiscal year, but gross profit margin fell 1.0 point from the same period to 19.1%. SG&A expenses increased 9.5% from the same period, but the SG&A fee ratio decreased by 1.0 point to 13.7%. While subsidy revenue decreased by 19 million yen from non-operating income, insurance cancellation refunds of 15 million yen were recorded. As a result, the operating profit margin fell 0.1 points to 5.4%, and the ordinary profit margin fell 0.1 points to 5.7%.
Profit declined in the warehouse business due to temporary expenses, but sales increased drastically
2. Trends by reporting segment
Sales in the transportation business increased 9.0% from the previous fiscal year to 22,911 million yen, and segment profit (operating profit before adjustments to company-wide expenses, etc.) increased 19.8% from the same period to 2,800 million yen. Although there was a decline in reaction from large office relocation projects in the Kansai area in the previous fiscal year, as office relocation projects in the Tokyo metropolitan area expanded due to the results of sales activities, new orders for digital signage kitting operations from major convenience stores, and expansion of mail room operations in the building delivery business also contributed. Sales in the warehouse business were 10,693 million yen, up 33.9% from the same period, and profit decreased 10.5% to 854 million yen. Sales increased drastically due to the expansion of transactions with Amazon Japan and major machine tool manufacturers, etc., but profit declined due to the effects of initial costs associated with the opening of a large 3PL center. Sales in the product sales business were 4,435 million yen, up 10.6% from the same period, and profit was 225 million yen, up 18.6% from the same period. Sales and profit increased by 2 digits due to the expansion of Kansai Electric Power's material procurement 3PL business. Sales in the welfare business increased 9.2% to 1,066 million yen, and profit increased 12.8% to 159 million yen. New rental of welfare equipment increased with the opening of the Nagoya Minami Depot in 2023/6. Other sales were 1,527 million yen, up 87.8% from the same period, and profit was 304 million yen, up 174.1% from the same period. There was a significant increase in sales and profit due to Tabito's full-year consolidation.
Significant increase in sales in the 3PL business and IT service business
3. Trends by business area
Sales in the office services business were 6,547 million yen, up 8.2% from the previous fiscal year. Office relocation projects in the Tokyo metropolitan area have steadily expanded. Sales in the 3PL business were 10,743 million yen, up 37.2% from the same period. There was a significant increase in sales due to the opening of large 3PL centers, etc. Sales in the IT service business were 3,563 million yen, up 45.7% from the same period. Sales increased drastically due to new digital signage kitting business orders from major convenience stores, full-year consolidation of travelers, etc. Sales in the building delivery business increased 13.6% from the same period to 2,008 million yen. Sales increased by 2 digits due to new contracts for mail room operations and expansion of transactions with tenant companies residing in existing building delivery bases. Sales in the nursing care service business were 1,066 million yen, up 9.2% from the same period. Sales increased due to an increase in welfare equipment rentals. Core business sales were 16,705 million yen, up 6.2% from the same period last year. It steadily expanded due to acceptance of orders for catalog shipping operations by large customers and an increase in overall volume of goods handled.
Progress has been made in maintaining financial soundness and improving capital efficiency
4. Financial Status
On the financial side, total assets at the end of the 2024/3 fiscal year increased 4,308 million yen from the end of the previous fiscal year to 25,535 million yen. Mainly, unearned operating income and contract assets increased by 658 million yen, machinery and equipment increased by 774 million yen with the opening of warehouses, land increased by 646 million yen due to the purchase of land for new warehouse construction, and construction provisional accounts increased by 1,350 million yen due to deposit payments, etc. associated with the construction of new warehouses. Total liabilities increased by 2,867 million yen from the same period to 13,223 million yen. Mainly, unpaid operating expenses increased by 358 million yen, and fixed lease liabilities increased by 404 million yen due to new lease agreements, etc. Also, the balance of interest-bearing debt (total of long and short term loans) increased by 1,447 million yen due to capital investment appropriations, etc., to 5,192 million yen. Total net assets increased by 1440 million yen due to an increase in retained earnings, etc., to 12,311 million yen.
As a result, the capital adequacy ratio fell 3.0 points to 48.2%, but we believe that financial soundness will continue to be good since the increase in assets associated with business expansion is mainly due to the fact that cash flow from operating activities continues to be positive, etc. Also, ROE (net return on equity) rose 0.8 points from the same period to 13.0%. In addition to maintaining financial soundness, we are also evaluating that capital efficiency has improved.
(Author: FISCO Visiting Analyst Masashi Mizuta Exhibition)