■Performance Trends

1. Past performance trends

Looking back on the performance for 6 periods from the fiscal year ending 2019/6, including the medium-term management plan period (fiscal year ending 2022/6 to the fiscal year ending 2024/6) of View Inc Cardan Holdings ＜3041＞, sales for the fiscal year ended 2019/6 were 5,874 million yen, and sales remained sluggish, with 5,344 million yen, 5,348 million yen, and 5,857 million yen respectively for the 3 periods from the fiscal year ending 2023/6 It is 6,982 million yen, and it is following an upward trend in sales along with the end of the COVID-19 pandemic. In particular, the fact that the main “flower altar business” has remained steady in terms of both the number of cases and unit price can be said to be bright material for the future.

Meanwhile, in terms of profit, operating income for the fiscal year ended 2019/6 was 19 million yen, but when operating losses of 158 million yen and 27 million yen were recorded for 2 consecutive terms from the 2020/6 fiscal year, which was affected by the COVID-19 pandemic, operating income from the 2022/6 fiscal year to the 2024/6 fiscal year became profitable at 103 million yen, 124 million yen, and 84 million yen. The gross profit margin and operating margin bottomed out of 14.1% and -3.0% in the fiscal year ending 2020/6, and temporarily recovered to 15.4% and 1.8% in the 2022/6 fiscal year. However, after the 2023/6 fiscal year, the effects of rising prices, depreciation of yen, and increases in labor costs led to a slump in gross profit margin and operating profit margin, and the 2024/6 fiscal year remained 14.7%, 1.9%, and the 2024/6 fiscal year was 14.2% and 1.2%.

On the financial side, the capital adequacy ratio has remained in the 20% range, excluding 14.6% for the fiscal year ending 2020/6 and 16.5% for the fiscal year ending 2021/6. Meanwhile, ROE, which indicates capital efficiency, was unstable due to changes in profit margins, and was -1.0% for the fiscal year ending 2019/6 and -50.9% for the fiscal year ending 2020/6. Although the 3-year period from the 2021/6 fiscal year secured 2-digit levels of 24.0%, 19.4%, and 17.2%, the 2024/6 fiscal year declined significantly to 5.2% due to rising purchase costs and declining profits associated with increased labor costs.

2. Summary of financial results for the fiscal year ending 2024/6

Financial results for the fiscal year ending 2024/6, which is the final year of the medium-term management plan, declined as sales increased 8.9% from the previous fiscal year to 6,982 million yen, operating profit decreased 31.8% to 84 million yen, ordinary profit decreased 26.3% to 99 million yen, and net income attributable to parent company shareholders decreased 67.9% to 28 million yen. Although it also exceeded the target value of the medium-term management plan in terms of sales, the results fell short in terms of profit.

The expansion of the main “fresh flower altar business” and “fresh flower wholesale business” contributed to the increase in sales. In particular, sales of the “fresh flower altar business” increased in both the number of fresh flower altars and the average unit price, and achieved 2-digit growth for 2 consecutive terms. Meanwhile, sales of the “bridal flower arrangement business” declined in each area when compared to the previous fiscal year, when there was a large increase in reaction from the COVID-19 pandemic. As for the “other business,” the system development business performed well.

Meanwhile, profit declined in terms of profit because the cost ratio deteriorated due to the effects of the depreciation of the yen and soaring transportation costs, and that sales and administration costs increased due to increased labor costs. The operating margin also declined to 1.2% (1.9% in the previous fiscal year).

On the financial side, in addition to cash and deposits, total assets expanded to 2,717 million yen, an increase of 255 million yen from the end of the previous fiscal year due to increases in vehicle carriers and software associated with system development. Meanwhile, since equity capital remained almost flat at 544 million yen from 545 million yen in the previous fiscal year, the equity ratio declined to 20.0% (22.2% in the previous fiscal year). Also, interest-bearing debt (excluding lease debt) was 1,439 million yen, an increase of 132 million yen from the end of the previous fiscal year, and the net D/E ratio was held down 0.68 times, the interest coverage ratio was 7.1 times, and the current ratio was secured at 140.3%, so there are no concerns about financial safety. Meanwhile, ROE, which indicates capital efficiency, fell to 5.2% (17.2% in the previous fiscal year) due to a drop in profit levels.

Results by business are as follows.

(1) Fresh flower altar business

Sales increased 11.5% from the previous fiscal year to 3,864 million yen, and segment profit increased 3.3% to 332 million yen. Sales increased for each group (Beauty Kadan East Japan and Beauty Kadan West Japan), with the exception of the Okinawa area. As the number of deaths increased moderately and funeral unit prices picked up, both fresh flower altar sales and sales of flower offerings grew. In particular, the number of altar cases in fresh flower altar sales was 20,803 (up 4.4% from the previous fiscal year) on the old standalone basis before becoming a holding company, and the average unit price was 57,858 yen (up 5.8% from the same period), both of which increased. Meanwhile, in terms of profit, although an increase in profit was secured due to an increase in earnings due to an increase in sales, the segment profit margin fell to 8.6% (9.3% in the previous fiscal year) due to the effects of the depreciation of the yen, deterioration in the cost ratio due to soaring transportation costs, and an increase in labor costs.

(2) Fresh flower wholesale business

Sales increased 8.5% from the previous fiscal year to 2,239 million yen, and segment profit increased 2.8% to 32 million yen. As for sales, an increase in sales volume and an increase in sales unit prices contributed to the increase in sales. The rise in unit sales prices is due to insufficient supply due to weak yen and lack of growth due to high summer temperatures, etc. Meanwhile, in terms of profit, although an increase in profit was secured due to an increase in earnings due to an increase in sales, the segment profit margin was 1.5% (1.5% in the previous fiscal year) due to rising costs.

(3) Bridal flower arrangement business

Sales decreased 5.7% from the previous fiscal year to 353 million yen, and segment loss was 2 million yen (profit of 18 million yen in the previous fiscal year), and sales declined and segment losses were recorded. The bridal business remained slightly sluggish in each area (Kansai/Kyushu) compared to the previous fiscal year when there was a large increase in reaction from the COVID-19 pandemic. Meanwhile, with regard to the retail business, store sales grew due to the recovery of existing stores and the opening of new stores, and although the landscaping business also secured an increase in sales, EC sales are struggling due to intensifying competition. On the profit side, profit in the bridal business declined due to a decline in earnings due to a decrease in sales and an increase in labor costs, etc., and it fell into segment losses.

(4) Other businesses

Sales increased 3.2% from the previous fiscal year to 525 million yen, and segment losses increased to 2 million yen (profit of 18 million yen in the previous fiscal year), and segment losses were recorded. As for SHF (system development business), system sales for funeral homes remained flat, while systems for the construction industry steadily expanded. Meanwhile, sales of ceremony services (planning and consultancy services related to ceremonial occasions) declined due to intensifying competition, and sales of career life support (continuous employment support business) declined due to disability welfare service remuneration revisions (Reiwa 6). On the profit side, although SHF secured an increase in profit, ceremony services and career life support declined, and agricultural flower (flower production/sales business) saw a drastic decline in profit due to continuous cropping failure*.

※ It is a disorder where growth is poor due to continuing to grow the same crop repeatedly in the same field, and yield drops.

3. Summary for the 2024/6 fiscal year

Summarizing the 2024/6 fiscal year from the above, the fact that sales growth exceeding the plan was realized for 2 consecutive terms along with the recovery of the COVID-19 pandemic is a point that can be greatly evaluated in confirming the progress and superiority of the company's strategy. Meanwhile, the decline in terms of profit due to external factors such as cost increases and labor costs, including the effects of the depreciation of the yen, can be said to be future issues. In terms of activities, as the final year of the medium-term management plan, we were able to leave certain results in efforts aimed at expanding the core business (area expansion, etc.) and development of new services (details described later).

(Written by FISCO Visiting Analyst Ikuo Shibata)