CREEK & RIVER (4763) Q2 2024 earnings summary

Executive summary

• Q2 FY02/25 net sales increased 2.3% year-over-year to ¥25,836 million, but operating profit declined 15.6% to ¥2,195 million, with ordinary profit and net profit both at 86% of the prior year.

• Creative (Japan) and Medical segments underperformed due to upfront investments, project reductions, and structural reforms, though signs of profit recovery appeared in Q2.

• Earnings per share dropped to ¥68.22 from ¥77.95 in the prior year period.

• The company is focusing on AI/DX expansion, overseas market growth, and original content development, with new initiatives in generative AI, overseas sales, and digital comics.

Financial highlights

• Sales: ¥25,836 million (102% YoY); Gross profit: ¥9,796 million (100% YoY); Gross margin: 37.9% (down from 39.0%).

• Operating profit: ¥2,195 million (84% YoY); Operating margin: 8.5% (down from 10.3%).

• Ordinary profit: ¥2,265 million (86% YoY); Net profit: ¥1,470 million (86% YoY).

• SG&A expenses rose to ¥7,601 million from ¥7,243 million.

• Total assets increased to ¥28,664 million as of August 31, 2024, up from ¥25,418 million at the previous fiscal year-end.

Outlook and guidance

• Full-year FY02/25 guidance: Sales ¥55 billion (+10.4%), operating profit ¥4.8 billion (+17%), net profit ¥3.1 billion (+16%).

• Dividend forecast raised to ¥43 per share.

• Full-year earnings per share forecasted at ¥140.93.

• Segment plans: Creative (Japan) +10%, Medical +7%, Others +37% in sales; Creative (Korea) -7%.