NISSEN INC. Q4 FY2025 earnings call

• Overall Financial Performance

  • Nissen achieved record-high consolidated results for the 2025 February term: net sales of 5.533 billion yen (+5.9% YoY), operating profit of 393 million yen (+31% YoY), ordinary profit of 410 million yen (+43.9% YoY), and net income of 248 million yen (+25.9% YoY). Operating margin expanded 1.4pp to 7.1%.
  • Cost control on cost of goods sold and SG&A improved profit margins, with double-digit profit growth across all line items. Extraordinary items included a full 31 million yen impairment loss on shares of Rugran Co., Ltd.

• Core Growth Strategy Execution

  • Launched the new Fan-Based Marketing (FBM) business focused on activating fan communities and brand loyalty, covering all fan-building activities from SNS operation, in-store design, fan program development to product planning. Client growth is strong, centered on major food chain brands, and the company expects continued rapid growth. FBM revenue is projected to reach 1.2 billion yen next term.
  • Launched CCG, an industry-first LINE communication CRM tool for cable television operators, leveraging Nissen's deep industry expertise and existing client relationships from its channel guide magazine business. Over 30 operators had placed orders by the end of February 2025, with a target of 60 orders by February 2026.
  • Executed M&A to acquire 100% of Asti, a marketing firm with deep connections to major developers and strengths in luxury urban condominium promotion, which is highly aligned with Nissen's community-focused strategy. Past M&A has already delivered synergies, such as a large 100th anniversary project win with Maeda Road, enabled by acquired client relationships.

• Enabling Initiatives

  • Launched the NLP leadership development program to nurture management talent, with up to 120 million yen in total incentives for high-performing employees. 90% of the FBM team is in their 20s, with early promotion for top performers, creating a strong pipeline for growth.
  • Advanced ESG initiatives, including co-founding a new municipal power company Kuki New Power with Kuki City to advance local carbon neutrality and regional revitalization, via Nissen's joint venture Hometown Energy.

For the 2025 February term, total consolidated net sales reached 5.533 billion yen, with the following segment performance:

1. Home & Living Segment: Net sales increased by 138 million yen year-over-year. This includes 90 million yen in revenue from the newly acquired Asti via M&A. This segment contributed ~25.3% of total company revenue.
2. Medical & Health Segment: Net sales decreased by 123 million yen year-over-year, due to lower orders from large clients and the Pacoma business divestiture. This segment contributed ~19.8% of total company revenue.
3. Other Segment: Net sales increased by 323 million yen year-over-year. Half of this increase came from the newly launched Fan-Based Marketing (FBM) business, with additional strong growth from large food service chain client projects. The FBM business itself reached 120 million yen in revenue this term, contributing ~21.7% of total company revenue.

• For the 2026 February term, Nissen projects continued record-high results: net sales of 7.0 billion yen (+26.5% YoY), operating profit of 460 million yen (+17% YoY), ordinary profit of 470 million yen (+14.6% YoY), and net income of 320 million yen (+29% YoY). All projected results are on track to meet or exceed the current medium-term management plan targets.
• The company updated its dividend policy to switch from annual dividend payments to semi-annual (interim + year-end) payments, with a target 3% dividend on equity (DOE).
• For the 2025 February term, Nissen will pay a full-year dividend of 27 yen per share (a 1 yen increase YoY). For the 2026 February term, the company projects a full-year dividend of 29 yen per share (a 2 yen increase), marking three consecutive years of dividend increases, with 14 yen interim dividend and 15 yen year-end dividend.
• Nissen will continue to evaluate additional shareholder return measures including share buybacks going forward.

• A 31 million yen full impairment loss was recognized on the company's holding of Rugran Co., Ltd. shares, booked as an extraordinary loss this term.
• The medical & health segment saw a material year-over-year revenue decline from lower large client orders and a completed business divestiture.
• The overall marketing services industry faces structural headwinds from declining mass media advertising influence and growing distrust of digital advertising, requiring the company to continue shifting its business model to community-focused services.

Q: What synergies does Nissen expect from the acquisition of Asti? / A: Asti has a strong client base of major real estate developers and unique expertise marketing to wealthy urban communities, which is highly aligned with Nissen's community-focused growth strategy. Nissen expects to expand into new full-service end-to-end marketing offerings for the growing urban real estate market, combining Asti's client relationships with Nissen's broader marketing capabilities. The acquisition directly drove the year-over-year revenue growth in the home & living segment this term.

Q: What are Nissen's future plans for shareholder returns beyond the stated dividend increase? / A: Nissen has formally adopted a 3% DOE target to deliver stable, gradual dividend growth, and added semi-annual dividends to improve return frequency for shareholders. Management confirms that share buybacks will be considered and implemented when appropriate as an additional return measure, alongside continued steady dividend increases. The company prioritizes expanding shareholder returns alongside its ongoing growth investments.