Nakanishi (7716) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 net sales rose 2.1% year-over-year to ¥18,542M, maintaining record-high levels, but profitability declined across key metrics; double-digit growth in Surgical, flat Dental and DCI, decline in Industrial.

• EBITDA decreased 10.1% year-over-year to ¥4,755M, exceeding internal plan; operating profit dropped 15.7% to ¥3,361M.

• Net profit plunged 86.8% year-over-year to ¥440M, mainly due to foreign exchange losses and a one-time ¥1.2B tax expense.

• Comprehensive income turned negative at -¥2,658M, driven by foreign currency translation losses.

• Financial forecast revised downward for net profit, reflecting the tax adjustment; sales and profit growth expected for the full year, but with lower margins.

Financial highlights

• Net sales: ¥18,542M (+2.1% YoY); Gross profit: ¥11,076M (+1.0% YoY, 59.7% margin).

• EBITDA: ¥4,755M (-10.1% YoY, 25.6% margin); Operating profit: ¥3,361M (-15.7% YoY, 18.1% margin).

• Ordinary profit: ¥2,626M (-47.9% YoY); Net profit: ¥440M (-86.8% YoY); EPS: ¥5.23.

• Total assets as of Mar 31, 2025: ¥151,834M (down from ¥158,300M at year-end 2024); equity ratio 75.5%.

• Gross margin slightly decreased as cost of sales increased to ¥7,466M from ¥7,188M YoY.

Outlook and guidance

• FY2025 net sales forecast at ¥80,655M (+4.7% YoY); EBITDA forecast at ¥18,932M (-7.5% YoY); net profit revised to ¥8,372M (-12.5% vs previous forecast).

• Operating income projected to fall 9.9% and net income attributable to owners of parent to decrease 2.4% for the year.

• Q2 FY2025 net sales forecast at ¥38,616M; net profit forecast at ¥2,727M (-30.6% YoY).

• Growth investments in U.S. and surgical businesses to continue, with higher SGA expenses planned.

• U.S. tariff policy poses a risk but not yet reflected in forecasts due to uncertainty.