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. Performance overview for the fiscal year ending May 2024.

The consolidated performance of First Corporation <1430> for the fiscal year ending in May 2024 was as follows: sales increased by 11.5% compared to the previous year to 28,485 million yen, operating profit decreased by 26.7% to 1,453 million yen, ordinary profit decreased by 28.1% to 1,422 million yen, and net income attributable to parent company shareholders decreased by 30.8% to 944 million yen. The main construction business showed strong performance with a sales increase of 11.0%. In addition, the sales of the real estate business also increased by 25.8% compared to the previous year due to strong joint venture income. In terms of profit, although the growth of selling expenses was appropriately controlled in comparison to the growth of sales, gross profit decreased and operating profit was pushed down. As for net income attributable to parent company shareholders, it was impacted by recording an impairment loss of 43 million yen for certain fixed assets of consolidated subsidiaries.

When comparing the consolidated actual results and the performance forecast at the beginning of the period, the sales decreased by 12.6%, gross profit decreased by 14.5%, operating profit decreased by 22.3%, ordinary profit decreased by 21.9%, and net income attributable to parent company shareholders decreased by 23.2%. The construction business mostly achieved the expected results, but the real estate business significantly fell below the initial plan in terms of sales and profit, which had an impact. While the consolidated operating profit was expected to decrease from the beginning due to factors such as high material prices in the construction business, the real estate business, which was expected to increase its profit, turned into a decrease, resulting in an expanded decline in profit.

The performance by business segment showed that completed construction amounted to 21,981 million yen, an increase of 11.0% compared to the previous year, and the gross profit from completed construction decreased by 15.2% to 1,952 million yen. As for sales, the continuing projects from the previous period and the smooth start of new projects contributed to the expansion in top line. The new projects started in the fiscal year ending in May 2024 are Le Jade City Hashimoto III, Unihime Machida Ichihara 3-chome Project (tentative name), Suncradle Tsudanuma III, Minamiazabu 1-chome Project in Kohoku Ward (tentative name), and Bunkyo Ward Hongoin 2-chome Project (tentative name). In addition, the increase in construction material prices was also a factor in boosting completed construction. On the other hand, in terms of profit, the high material prices and a decrease in the ratio of orders received had an impact.

As for the order status, the actual progress was 7 out of the planned 8 cases, and the actual amount was 20,882 million yen out of the planned 21,000 million yen, which was generally in line with the plan. It should be noted that one of the planned 8 cases was delayed in terms of the timing of the order and was received in early August 2024. As a result, the order backlog at the end of the fiscal year ending in May 2024 was 34,460 million yen, which was below the 36,678 million yen at the end of the previous period but still at a high level. The performance is expected to expand as these orders are sequentially started.

The sales of real estate increased by 2.1% compared to the previous year to 3,951 million yen, and the gross profit from real estate sales decreased by 0.5% to 629 million yen. Although there was a slight increase in revenue and a slight decrease in profit, both fell below the initial plan due to the timing difference in the sale of business land as mentioned earlier. However, the ability to acquire land has steadily increased, and in the fiscal year ending in May 2024, 9 pieces of business land were acquired, an increase of 3 from before. In the future, sales and profits are expected to increase as these sale destinations are gradually found.

The joint venture income increased by 108.5% to 2,333 million yen, and the gross profit from joint venture income increased by 19.7% to 420 million yen. The sales of condominiums through joint venture projects exceeded expectations, contributing to the increase in revenue and profit. In addition, the completion and handover of projects such as Le Jade City Hashimoto I and II, Bausu Higashi Hayama, and Bausu Fujisawa contributed to the expansion of performance.

As a result, the performance of each segment was as follows: construction business revenue increased by 11.0% to 21,981 million yen compared to the previous period, segment profit decreased by 15.5% to 1,894 million yen, real estate business revenue increased by 25.8% to 6,285 million yen, and segment profit increased by 50.2% to 1,026 million yen.

With regard to trading partners, the company has expanded its business to include Yamaitchi Unihomestate, Tochin Partners Corporation, and other new partners, reaching a total of 38 companies.

(Written by FISCO Guest Analyst Yoichiro Shimizu)