Tear's Operating Profit Halves on 3.6% Fewer Funerals, and Full-Year Guidance Is Cut

An acquisition held the top line; volume took the profit

Tear Co., Ltd. (TSE: 2485), the Nagoya-based operator of the Tia chain of funeral halls and listed on both the Tokyo and Nagoya exchanges, published consolidated results for the nine months from October 1, 2025 to June 30, 2026 on August 13, 2026 under Japanese GAAP. Revenue fell 2.0% to ¥16,419 million, operating profit 48.6% to ¥936 million, ordinary profit 56.3% to ¥787 million and net profit attributable to owners of the parent 66.6% to ¥378 million, for earnings per share of ¥16.80 against ¥50.27. Comprehensive income was ¥560 million, down 47.0%. The operating margin fell from 10.9% to 5.7%.

Funeral Services, which supplies roughly 90% of group revenue, is where the profit went. Revenue fell 4.3% to ¥14,755 million and segment profit 27.8% to ¥2,193 million. The group conducted 14,768 funerals, down 3.6%, and the average price per funeral fell a further 0.9%. Directly managed halls did worse than the segment as a whole — 11,710 funerals, down 4.9% — because newly opened halls contributed but existing halls fell below the prior year; within their average price, revenue per funeral from floral tributes rose while altar and ancillary-goods prices both fell. Among the group companies, Hakkoden and its related brands conducted 1,670 funerals (−4.4%), Tokai Tenrei and its related brands 1,250 (−1.3%), and Tia Hokkaido — the former Memoria Japan Co., Ltd., made a subsidiary on July 1, 2025 — 138.

The network itself still grew. Two directly managed halls opened in Aichi, one in Mie and one in Saitama, Tia Kasadera reopened after renovation, Tokai Tenrei added one hall in Aichi and a franchisee one in Tokyo, taking the group to 225 halls: 100 directly managed, 75 franchised, 21 Hakkoden, 26 Tokai Tenrei and 3 Tia Hokkaido. Franchise revenue nonetheless fell 11.3% to ¥375 million and its profit 24.7% to ¥53 million, as lower sales at existing franchised halls cut both royalty revenue and goods sales. Other — real estate and reuse — was the one line that grew: revenue rose 40.8% to ¥1,288 million and profit 117.5% to ¥145 million, the real-estate business increasing both purchases and sales and the reuse business lifting purchases through promotion aimed at repeat customers. It is not yet large enough to offset the rest: the cost-of-sales ratio rose 1.9 points year on year and SG&A rose 9.3%, on advertising for sales promotion, a revised wage system and a full period of Tia Hokkaido's costs.

Management concedes the year

On the same day, Tear revised the consolidated and non-consolidated forecasts it had published on November 13, 2025. Full-year FY9/2026 guidance is now revenue of ¥21,950 million (+1.8%), operating profit of ¥1,075 million (−34.6%), ordinary profit of ¥875 million (−44.5%) and net profit of ¥500 million (−43.9%), for earnings per share of ¥22.22. Against the original plan that is revenue ¥1,750 million lower, operating profit ¥960 million lower, ordinary profit ¥950 million lower and net profit ¥550 million lower — close to half of the profit the company expected in November has been taken out.

The reasoning is volume first. Even with Tia Hokkaido contributing for a full year, the company now expects funerals conducted to grow only 0.4% over the year, 10.8% below the original assumption, because the prior year's rise in funerals creates a reaction. Costs are expected to come in ¥338 million below plan, but that is not enough to offset the revenue shortfall on top of a cost-of-sales ratio running 2.7 points above the original assumption. The backdrop the company describes has not changed: latent demand for funerals is estimated to rise year by year with the demographics, but smaller households and smaller ceremonies keep pushing the average price down, and recent funeral demand and industry revenue have both been running below the prior year.

The dividend is held, and the balance sheet barely moves

The dividend forecast is unrevised despite the profit cut. ¥10.00 was paid at the interim and ¥13.00 is guided for the final — ¥10.00 ordinary plus a ¥3.00 commemorative dividend for the company's 30th anniversary — for an annual ¥23.00 against ¥20.00 last year. On the balance sheet, total assets fell ¥630 million to ¥27,238 million: current assets down ¥578 million as cash and deposits fell ¥726 million against a ¥139 million rise in inventories, and fixed assets down ¥52 million as ¥313 million less goodwill outweighed ¥199 million more in buildings and structures and ¥94 million more in other investments. Liabilities fell ¥741 million to ¥18,524 million, on ¥291 million less income taxes payable, ¥134 million less bonus provision and ¥435 million less long-term debt, against ¥207 million more short-term borrowings. Net assets rose ¥110 million to ¥8,713 million — ¥378 million of net profit less ¥450 million of dividends — and because the asset base shrank faster, the equity ratio improved to 32.0% from 30.9%. Two subsidiaries, Kyoso Co., Ltd. and the newly established Tia Next Co., Ltd. for real-estate brokerage and inheritance support, entered the consolidation in the period; one, Memorial Hall Nishinoyamanote Co., Ltd., left it.

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.