Hikari Tsushin's Growth Comes From Electricity, Its Profit From Finance and the Investment Book

Three quarters of the revenue growth came from the segment earning the least

HIKARI TSUSHIN, INC. (TSE: 9435), the Tokyo-based group that sells electricity and gas, telecom lines, home-delivered mineral water, insurance and microfinance mainly to Japan's small and medium enterprises, published consolidated results for the three months to June 30, 2026 on August 13, 2026 under IFRS. Revenue rose 15.2% to ¥192,563 million, operating profit 6.1% to ¥29,181 million, pre-tax profit 40.5% to ¥49,952 million, quarterly profit 28.9% to ¥37,683 million and profit attributable to owners of the parent 30.1% to ¥36,656 million, for basic earnings per share of ¥837.15 against ¥641.83. Total comprehensive income was ¥78,750 million, up 49.4%.

Electricity & Gas supplied ¥18,973 million of the group's ¥25,391 million revenue increase — 74.7% of it. Segment revenue rose 29.5% to ¥83,290 million on a larger contract base and higher unit selling prices, and the segment is now 43.3% of group revenue. Its profit nonetheless fell 17.9% to ¥6,420 million, because the company says it deliberately spent on customer acquisition as an investment in future growth. Insurance shows the same trade: revenue up 20.6% to ¥9,794 million as recurring profit grew with the contract base, profit down 16.2% to ¥1,679 million as acquisition costs rose alongside strong selling. The mix change is visible at the top of the income statement — gross profit rose only 6.8% to ¥93,101 million on 15.2% more revenue, so the gross margin fell from 52.1% to 48.3% and the operating margin from 16.5% to 15.2%.

The profit is made below the operating line

Operating profit grew 6.1% and pre-tax profit 40.5%. The gap between the two lines widened from ¥8,045 million to ¥20,771 million, and the filing shows exactly where the extra ¥12,726 million came from. Finance income rose to ¥24,187 million from ¥18,678 million, an increase the company attributes to the weaker yen; the cash flow statement shows dividends received of ¥20,314 million against ¥15,926 million. Finance costs fell to ¥10,520 million from ¥13,295 million. Share of profit of equity-method investees rose to ¥6,503 million from ¥4,228 million, of which ¥278 million was a bargain purchase gain on newly equity-accounted associates, against ¥929 million of the same item a year ago. Other non-operating items swung to ¥599 million of income from ¥1,566 million of expense. Tax expense nearly doubled, to ¥12,269 million from ¥6,308 million.

The ¥78,750 million of comprehensive income is more than twice the ¥37,683 million of profit, and the difference is the investment book being marked rather than sold. After-tax other comprehensive income was ¥41,067 million, of which ¥32,886 million can never be recycled through profit or loss: ¥31,409 million of revaluation on equity instruments measured at fair value through OCI, plus ¥1,477 million from equity-method associates. The recyclable ¥8,180 million is mostly ¥6,183 million of foreign-currency translation and ¥2,156 million of cash-flow hedges. None of that reached the income statement; separately, ¥32,699 million was transferred out of accumulated other comprehensive income straight into retained earnings during the quarter.

Two of the seven businesses are still telecommunications

Telecommunications, the business the company is named after, grew revenue 3.0% to ¥32,921 million and profit 8.2% to ¥8,338 million as contract growth lifted recurring profit — it is still the largest single segment profit. Agency Sales, the resale of carriers' and manufacturers' products, fell 2.3% on both lines, to ¥25,368 million and ¥2,733 million. Together the two telecom businesses are 30.3% of group revenue. Finance is the profit engine: revenue up 42.3% to ¥13,266 million and profit up 69.3% to ¥7,810 million on business the company describes only as progressing smoothly — 25.3% of the ¥30,910 million of segment profit on 6.9% of revenue. Beverages grew 5.1% on both lines, to ¥21,765 million and ¥2,743 million, and Solutions fell on both, revenue 9.2% to ¥6,156 million and profit 11.8% to ¥1,184 million. Unallocated corporate items of −¥1,729 million reconcile the segment total to the group's ¥29,181 million.

Total assets rose ¥27,716 million to ¥2,881,583 million, which the company attributes to higher financial assets. Liabilities fell ¥38,618 million to ¥1,597,598 million — interest-bearing debt rose, including ¥20,000 million of unsecured bonds issued on May 1, 2026 at 2.823% due 2031 and 3.51% due 2033, but income taxes payable dropped from ¥35,150 million to ¥10,211 million. Equity rose ¥66,335 million to ¥1,283,985 million, equity attributable to owners to ¥1,252,340 million from ¥1,185,668 million, and the equity ratio improved to 43.5% from 41.5%. Operating cash flow was negative ¥18,083 million against positive ¥14,431 million a year earlier, on ¥43,985 million of income tax paid; the investing outflow of ¥90,753 million reflects ¥148,512 million of investment securities bought against ¥60,724 million sold. Cash and equivalents closed at ¥433,609 million.

Full-year guidance is unchanged from the May 13, 2026 forecast: revenue of ¥775,000 million (+5.5%), operating profit of ¥130,000 million (+11.4%) and profit attributable to owners of ¥120,000 million (−20.5%), for earnings per share of ¥2,742.77. A quarter that grew attributable profit 30.1% therefore sits inside a year guided to shrink it 20.5%, while operating profit is guided up 11.4% — the filing does not reconcile the two, and the tension sits in the same non-operating lines that carried this quarter. The dividend was revised upward: ¥800.00 for the year, ¥200.00 at each of the four quarter-ends, against ¥751.00 paid for FY3/2026, with payment of the first-quarter dividend due to start on September 11, 2026.

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.