Smile Holdings FY26 Sales Rise 6.3%; One-Off M&A Costs Mask 62% Underlying Operating-Profit Jump as Childcare Operator Acquires WITH Holdings

Smile Holdings Co., Ltd. (TSE: 7084), which operates licensed nursery and childcare groups and premium-education groups across Japan, reported consolidated full-year results for the fiscal year ended March 31, 2026 (FY3/2026) under Japanese GAAP. Net sales rose 6.3% year-on-year to ¥14,517 million from ¥13,656 million, driven by strong occupancy across its licensed-nursery and premium-education operations. Net profit attributable to owners of the parent rose 45.6% to ¥220 million from ¥151 million, lifting basic EPS to ¥68.42 from ¥46.99.

One-off M&A costs mask a strong underlying year

Headline operating profit dipped 9.9% to ¥370 million and ordinary profit fell 15.1% to ¥350 million — but the decline was driven purely by ¥352 million of one-time costs tied to the acquisition of WITH Holdings, which was completed on May 8, 2026. Excluding those costs, the underlying picture was sharply positive: operating profit jumped 61.8% to ¥664 million, ordinary profit climbed 70.1% to ¥703 million, EBITDA rose 19.7% to ¥1,402 million, and net profit surged 206.3% to ¥464 million. Even on a reported basis, net profit attributable to owners still rose 45.6%.

Balance sheet and cash flow

Total assets stood at ¥16,701 million and net assets at ¥6,149 million, leaving an equity ratio of 36.8% and book value per share of ¥1,918.52. Operating cash flow was a positive ¥577 million, investing cash flow was an outflow of ¥967 million, and financing cash flow was a positive ¥1,437 million, reflecting funding for the acquisition. Period-end cash and equivalents reached ¥5,718 million.

Dividend held at ¥95

The company held its FY3/2026 annual dividend at ¥95.00 per share (¥47.50 interim + ¥47.50 year-end), unchanged year-on-year, for a consolidated payout ratio of 139.4%. The FY3/2027 dividend is also forecast at ¥95.00.

FY27 guidance withheld pending WITH Holdings consolidation

Full-year FY3/2027 guidance is undetermined. The company says forecasts are being withheld pending the consolidation of WITH Holdings, which was acquired just before year-end, while its existing nursery and premium-education businesses are expected to maintain high occupancy and strong performance. Management said guidance will be released once it has been finalized.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.