7199.T

• One-off System Transition Impact:

  • Parallel operation of new and old core systems during Q1 and Q2 created a total 1.1 billion yen one-off negative pre-tax profit impact through Q2, with 720 million yen impact in Q1 and 380 million yen impact in Q2. The full switch back to the old system was completed in September 2025, so system-related costs are expected to drop sharply from Q3 onward. Excluding this one-off impact, pre-tax profit grew 18.5% year-over-year, and operating expense growth (excluding the impact) was 13% year-over-year, showing continued cost efficiency progress.

  • The system failure was caused by errors and operational issues from two external vendors hired for the core system renewal. Premier Group has filed damage claims against both vendors, and will disclose updates as they become available.

  • Business Performance:

  • New and used vehicle sales volumes saw a slight year-over-year increase with no major change to overall market conditions. New credit transaction volume grew only 4.1% year-over-year, due to temporary new application pauses during the system switchback and redirection of resources to receivable collection, but the company prioritized gross profit protection and captured market-driven profit gains.

  • Delinquent receivables normalization is progressing: early-stage delinquency resolution and collection have largely returned to pre-failure levels. The company targets a delinquent receivable ratio below 3% by the end of the current fiscal year, and a full return to pre-failure conditions by the 2027 March fiscal year. No impact on insurance premium rates is expected, as delinquency has not reached the level that requires insurance claims.

  • The allowance for bad debt reversal reached 710 million yen, outperforming the original plan, and will offset the slightly higher-than-planned system-related costs to keep the full-year one-off impact on track to hit the original 1.21 billion yen target.

  • Strategic Developments:

  • Entered into a joint venture agreement with Bike Ohn & Company, a well-known motorcycle brand, to jointly develop two- and four-wheeler store networks and integrate Premier Group's Car Premier Club membership business know-how to develop next-generation products and services.

  • Formed a dedicated joint team with Itochu Corporation (following an August 2025 capital and business alliance) to identify and evaluate domestic and international business opportunities to maximize synergies.

  • Released the 2025 Integrated Report in both Japanese and English on November 10, 2025.

• Full-year 2026 March fiscal year results are still expected to be broadly in line with original plans. Pre-tax profit progress through the first half is 41.4% of the full-year target, with recovery expected in H2. Any excess system-related cost will be fully covered by the larger-than-planned bad debt allowance reversal and core business profitability.
• The company aims to return credit transaction volume to its prior growth trend for the full fiscal year.
• The next mid-term management plan (covering the 2027 March fiscal year to 2030 March fiscal year) is currently being developed. It will continue to center on the growth strategy of "mobility × finance × IT", and target an average annual pre-tax profit growth rate of 20% to 30%. The plan will be announced at the time of full-year 2026 March fiscal year results release.
• System-related costs are expected to continue decreasing quarter-over-quarter, with a sharp decline from Q3 onward.

1. Finance Segment: Operating revenue maintained double-digit growth, though top-line growth slowed temporarily due to system transition impacts. Increased delinquent receivables created a 280 million yen negative impact on revenue recognition timing, which is not counted as a one-off system impact. Gross margin had declined through the end of Q1 due to market interest rate increases, but recovered significantly after hiking the new lump-sum gross margin, with further improvement expected going forward. 2. Warranty Business (under Automobility Services): Total warranty transaction value grew 18.7% year-over-year, with cumulative contracted units exceeding 2,000,000 units. In-house proper warranty grew 44.4% year-over-year, and OEM warranty also maintained growth driven by retailer product setting adjustments. Operating revenue grew 13.6% year-over-year, and pre-tax profit grew 31.5% year-over-year, with operating margin rising due to continued cost reduction and operating expense control. 3. Automobility Service Segment (overall): Pre-tax profit grew 46.1% year-over-year. Stable operating revenue is supported by growing Car Premier Club membership and continued strong performance of the subscription business. Software sales revenue and profit improved after a prior order-delivery timing gap was resolved. Vehicle sales and maintenance saw per-unit gross profit recover to an upward trend driven by improved inventory turnover and strict pricing strategy. Auto parts had a slight negative impact from lower material prices but no material issues. 4. Car Premier Club: Total dealer members grew by over 1,000 year-over-year to ~4,000 total, with 200 new Diamond members and 908 new Gold members. Car Premier Garage membership also grew steadily with product line expansion underway.

• Core system renewal by external vendors caused a major system failure, leading to one-off incremental costs of 1.1 billion yen through Q2, temporary suspension of new credit business, and a period of interrupted billing that increased delinquent receivables.
• The temporary shift of operational resources to receivable collection reduced resources available for new credit business, leading to slower near-term credit transaction growth.
• Market interest rate increases created near-term pressure on finance segment gross profit margins, though this impact has been largely mitigated by new business pricing adjustments.
• Auto parts segment has seen a slight negative impact from declining material prices.

There is no Q&A section included in the provided earning call transcript.