Sun Frontier Fudousan (8934) Q1 2024 earnings summary

Executive summary

• Q1 FY2024 net sales fell 19.4% YoY to ¥18,452 million; operating profit declined 36.9% to ¥4,206 million, ordinary profit was ¥4,184 million, and profit attributable to owners of parent fell 33.2% to ¥3,134 million.

• Results reflected fewer Real Estate Revitalization sales than in a prior-year quarter with concentrated sales; hotel sales and tourism recovery partly offset the decline.

Financial highlights

• Gross profit was ¥6,306 million, down from ¥8,519 million; SG&A increased 13.5% to ¥2,099 million, reflecting planned human-capital and systems investment.

• Operating, ordinary and net profit margins were 22.8%, 22.7% and 17.0%, respectively; basic EPS was ¥64.60 versus ¥96.45 a year earlier.

• Comprehensive income was ¥3,168 million, down 35.8% YoY.

Outlook and guidance

• FY2024 forecasts remain unchanged at net sales of ¥83,000 million, operating profit of ¥16,500 million, ordinary profit of ¥16,000 million and profit attributable to owners of parent of ¥11,000 million; forecast EPS is ¥226.72.

• Q1 achievement rates were 22.2% for sales, 25.5% for operating profit, 26.2% for ordinary profit and 28.5% for profit attributable to owners of parent; results were described as on plan.

• Replanning sales are expected to begin in earnest in Q2; full-year sales are planned to rise 10% YoY.

• FY2025/3 targets are ¥100 billion net sales, ¥20 billion ordinary profit and ¥14 billion net profit, with a 20% ordinary profit margin target.

• FY2024/3 inventory target is ¥95–100 billion; the inventory outlook shows forecast net sales of ¥125–140 billion and an assumed gross profit margin of 25–30%.