Asukanet's Operating Loss Widens to ¥65 Million as Both Profitable Segments Shrink

Revenue grew 4.8%; every line below it went backwards

Asukanet Company, Limited (TSE: 2438), the Hiroshima-based operator of three unrelated businesses — digital processing of memorial portrait photographs and print and transmission services for funeral homes, photobook production for professional photographers and consumers, and the ASKA3D aerial-imaging plate — published consolidated results for the three months to July 31, 2026 on September 8, 2026 under Japanese GAAP. Revenue rose 4.8% to ¥1,726 million, but the operating loss widened from ¥17 million to ¥65 million, the ordinary loss from ¥1 million to ¥62 million and the net loss attributable to owners of the parent from ¥6 million to ¥46 million. The loss per share went from ¥0.43 to ¥3.09, and comprehensive income was a ¥33 million loss against ¥1 million a year earlier.

The mechanism sits in two lines. Gross profit rose only 1.7%, to ¥727 million, on revenue up 4.8% — the gross margin fell from 43.4% to 42.1% — while selling, general and administrative expenses rose 8.1% to ¥792 million. About ¥12 million of extra gross profit met about ¥59 million of extra overhead. Depreciation on its own rose to ¥83 million from ¥68 million, and the company names a newly commissioned printing press as one reason.

A subsidiary changed segments, and the prior year has been restated

From this quarter a consolidated subsidiary has been moved out of the Photobook segment and into Aerial Display, following a change in how the group manages it. The filing states that the prior-year segment figures — and therefore every comparison below — have been recast onto the new basis, so Aerial Display's growth is like-for-like rather than an artefact of the transfer. Segment revenue is stated including inter-segment sales; those eliminations are small, ¥2 million in each period.

Both profitable segments earned less

Funeral, the largest business, held revenue almost flat at ¥764 million (+0.5%) while segment profit fell 44.0% to ¥55 million. New contracts with funeral homes came in steadily, and sales of funeral staging content and of "tsunagoo", the group's digital-transformation service for funeral operators, grew — but the national decline in the number of funerals held continued, income from processing memorial portrait photographs fell, and hardware sales were weak. On costs the company names higher personnel expenses, higher cloud-service fees, and fees arising from a pet funeral and cemetery business it took over in June. In the same month it exhibited at the Funeral Business Fair 2026, released "Dear Song", a generative-AI content product, and announced a VR training package for funeral staff.

Photobook grew revenue 7.5% to ¥863 million and still saw profit fall 20.3% to ¥111 million. The professional market served under the ASUKABOOK brand progressed on contracts won after a competitor withdrew and on growth in outsourced production work; the consumer side, sold as MyBook and through OEM supply, declined on both channels. Four costs are named for the profit decline: raw-material prices, depreciation on the new printing press, double rent while the Tokyo branch prepares to relocate, and higher advertising.

The only improvement came from the business that is still losing money

Aerial Display lifted revenue 18.6% to ¥101 million and narrowed its segment loss to ¥72 million from ¥93 million. Glass ASKA3D plates sold above the prior year as higher-value packages aimed at tourism, entertainment and education venues; the resin plate is still at the stage where the Chinese licensee is building production capacity. Subsidiary BET Inc. runs a VTuber agency, which opened a United States office during the quarter. The narrower loss came from closing the technology development centre at the end of May, tighter project management protecting the gross margin, and lower advertising after the company entered fewer trade shows.

The three segments together earned ¥95 million of profit, against ¥146 million a year earlier. Unallocated head-office selling and administrative costs of ¥160 million — ¥163 million a year earlier — are what turn that into a consolidated operating loss. On this cost structure the group needs roughly ¥160 million of quarterly segment profit merely to break even at the operating line, and it produced ¥95 million.

Why the ordinary loss widened more than the operating loss

The operating loss deteriorated by ¥47 million but the ordinary loss by ¥60 million, and the difference is entirely non-operating income, which fell to ¥2 million from ¥15 million: the year-earlier quarter contained ¥11 million of insurance proceeds that did not recur. Below that line a ¥4 million gain on the sale of fixed assets and a ¥0.9 million disposal loss left a pre-tax loss of ¥59 million, and a tax benefit of ¥12 million — quarterly tax is computed by applying an estimated full-year effective rate — produced the ¥46 million net loss. The per-share loss widened faster than the absolute loss because the average share count fell 4.3%, to 14,998,095 from 15,679,470.

A near debt-free balance sheet, and guidance left alone

Total assets fell ¥256 million to ¥5,966 million, almost entirely because cash and deposits fell ¥271 million to ¥1,117 million. Liabilities fell ¥117 million to ¥767 million, on ¥73 million less income tax payable and a ¥90 million smaller bonus provision. Net assets fell ¥138 million to ¥5,198 million, mostly the ¥105 million dividend paid during the quarter. Because assets shrank faster than equity, the equity ratio rose to 87.1% from 85.8%. Goodwill stood at ¥225 million against ¥221 million at the year-end even after absorbing ¥10 million of amortisation in the quarter — the only visible balance-sheet trace of the pet funeral acquisition.

Full-year guidance, first published on June 9, 2026, is unchanged: revenue of ¥7,860 million (+10.7%), operating profit of ¥460 million (+17.4%), ordinary profit of ¥475 million (+10.8%) and net profit of ¥315 million (+7.6%), for earnings per share of ¥21.13. The first quarter delivered 22.0% of that revenue target and a ¥65 million operating loss, which leaves ¥525 million of operating profit to be earned in the remaining nine months. The company did not revise the forecast and the filing says nothing further about the shape of the year. The dividend forecast is also unchanged at ¥7.00 per share — nothing at the interim, ¥7.00 at the year-end — matching FY4/2026.

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.