itamiarts Grows Half-Year Revenue 39% After an Acquisition, but Operating Profit Falls 33% on Depreciation and Labour Costs

Revenue up 39.4%, and every profit line down

itamiarts inc. (TSE: 168A), the Okayama-based group that plans, produces and sells sales-promotion (SP) goods, published consolidated results for the first half of its fiscal year ending January 31, 2027 — the six months from February 1 to July 31, 2026 — on September 14, 2026, under Japanese GAAP. Revenue rose 39.4% to ¥2,913 million, operating profit fell 33.3% to ¥71 million, ordinary profit fell 38.8% to ¥67 million and profit attributable to owners of the parent fell 73.0% to ¥32 million, or ¥22.28 per share against ¥82.40. The company reports a single segment and is listed on the Tokyo Stock Exchange; the earnings release was not subject to review by an auditor.

The comparison has to be read with one adjustment. itamiarts acquired all the shares of Tokyo Neo Print on June 30, 2025 and made it a consolidated subsidiary, but in the prior-year half it consolidated only that company's balance sheet: Tokyo Neo Print's results are absent from last year's interim income statement and present in this one. Part of the 39.4% revenue growth is therefore the addition of a company rather than growth of the existing business, and the filing does not say how much. The prior-year figures also reflect the finalisation, at the end of FY1/2026, of the provisional accounting for a business combination, and the filing prints no year-on-year changes for that earlier half because it was the first for which interim consolidated statements were prepared.

Cost of sales grew faster than revenue

Cost of sales rose 57.5% to ¥1,968 million, well ahead of revenue, and absorbed 67.6% of revenue against 59.8% a year earlier. Gross profit rose only 12.5% to ¥944 million, and the gross margin narrowed from 40.2% to 32.4%. Selling, general and administrative expenses grew 19.2% to ¥873 million. In yen, gross profit added about ¥105 million while SG&A added about ¥141 million, which accounts for the whole of the roughly ¥36 million fall in operating profit; the operating margin went from 5.1% to 2.5%.

The filing gives its own reasons on both sides. Revenue grew on active promotion and search-engine optimisation, a sales push towards corporate customers and the contribution of newly consolidated Tokyo Neo Print. Profit fell because higher production costs — heavier depreciation after the renewal of printing equipment and rising personnel costs — outweighed the extra revenue. The cash-flow statement puts depreciation at ¥163.5 million against ¥116.6 million, up 40.2%; the filing does not quantify the increase in personnel costs or split either item between cost of sales and SG&A. On its market, the company says businesses are still spending on promotion and brand building but, with prices and wages rising, are weighing the cost-effectiveness of that spending more closely, and that demand is growing for campaigns that combine physical promotional materials with digital measures.

Interest costs and a one-off in the base deepen the fall further down

Below the operating line, non-operating income rose to ¥20.7 million from ¥15.3 million, but non-operating expenses doubled to ¥24.5 million from ¥11.9 million, mostly interest expense of ¥18.3 million against ¥6.9 million. The net non-operating result swung from +¥3.4 million to −¥3.8 million, taking ordinary profit down 38.8%. Extraordinary gains were ¥19.8 million, all from sales of fixed assets, against ¥46.6 million a year earlier, when they included a ¥44.6 million gain on bargain purchase — close to 29% of that half's pre-tax profit, booked in the half in which Tokyo Neo Print was acquired. Pre-tax profit therefore fell 45.2% to ¥84 million.

Taxes widened the gap again. Income taxes rose 58.7% to ¥51 million despite the lower profit, including a deferred tax charge of ¥8.0 million against a ¥4.5 million credit a year earlier, so the tax charge equalled 61.0% of pre-tax profit against 21.1%. The filing does not explain the rate. Net profit, all of it attributable to owners of the parent, fell 73.0% to ¥32 million, and comprehensive income fell 71.8% to ¥34 million.

Borrowing paid for a heavy investment half

Total assets rose 14.7% to ¥5,804 million from ¥5,061 million at January 31, 2026. Machinery and vehicles rose ¥427 million to ¥1,171 million, intangible assets ¥174 million to ¥210 million and land ¥103 million, while other property, plant and equipment fell ¥208 million; in current assets, notes and accounts receivable rose ¥138 million and raw materials and supplies ¥103 million. Liabilities rose ¥738 million to ¥4,472 million, led by ¥300 million of new short-term borrowings and a ¥183 million increase in long-term borrowings to ¥2,457 million. Including the current portion of long-term debt, borrowings reached about ¥3,480 million against ¥2,935 million. Net assets barely moved, up ¥4.7 million to ¥1,332 million, as ¥32.8 million of net profit was largely offset by ¥29.4 million of dividends, and the equity ratio fell from 26.2% to 23.0%.

Operating cash flow turned negative, at −¥12.0 million against +¥308.5 million. Before interest and taxes it was ¥44.4 million against ¥357.6 million: besides the lower pre-tax profit, receivables absorbed ¥129.6 million and inventories ¥111.9 million, against a ¥30.6 million release a year earlier, and other current liabilities fell ¥61.4 million after rising ¥132.4 million, while higher payables added ¥120.1 million back. Investing used ¥534.1 million, including ¥439.4 million for property, plant and equipment and ¥173.3 million for intangible assets, partly offset by ¥88.3 million from sales of property, plant and equipment. Financing brought in ¥515.0 million — ¥600 million of new long-term loans and ¥300 million of net short-term borrowing, less ¥355.1 million of repayments and ¥29.1 million of dividends. Cash and cash equivalents fell ¥30.9 million over the half, to ¥471.8 million.

Guidance kept, with most of the profit still to come

itamiarts left unchanged the full-year FY1/2027 guidance it published on March 13, 2026: revenue of ¥6,000 million (+26.0%), operating profit of ¥246 million (+13.7%), ordinary profit of ¥246 million (+9.7%) and net profit of ¥167 million (+10.4%), or ¥113.72 per share. The first half delivered 48.6% of guided revenue but only 29.0% of guided operating profit, 27.5% of ordinary profit and 19.6% of net profit. That leaves an implied second half of about ¥3,087 million of revenue, ¥175 million of operating profit against the ¥71 million just reported, and about ¥134 million of net profit. The filing's only comment on that shape is that, by the nature of the business, profit tends to be weighted towards the second and third quarters — one of which falls in the half just reported and the other in the half to come.

The dividend forecast was also left unchanged. itamiarts paid no interim dividend and plans a year-end dividend of ¥20.00 per share, the same as for FY1/2026, which would be about 17.6% of guided earnings per share. Shares outstanding were unchanged at 1,470,000, with no treasury stock.

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.