Home Japanese
Omega Investment Co., Ltd.

Itoki (Company note – 1Q update)

Coverage
Share price (5/26) ￥1,956 Dividend Yield (25/12 CE) 3.32 %
52weeks high/low ￥1,062/1,980 ROE(24/12 act) 13.79 %
Avg Vol (3 month)  214 thou shrs Operating margin (24/12 act) 7.3 %
Market Cap ￥104.4 bn Beta (5Y Monthly) 0.35
Enterprise Value ￥114.6 bn Shares Outstanding 53.38 mn shrs
PER (25/12 CE) 12.03 X Listed market TSE Prime
PBR (24/12 act) 1.87 X    
Click here for the PDF version of this page
PDF Version

1Q results were favorable. Business strategy was successful in the Workplace Business.

◇ FY12/2025 1Q Results highlights: Workplace Business as the growth driver

On May 2, 2025, Itoki announced its 1Q results for FY12/2025. The Workplace Business served as the key driver, leading to both revenue and profit growth. Net sales was 42.74 billion yen (+4% YoY), operating profit was 7.42 billion yen (+22% YoY), ordinary profit was 7.31 billion yen (+21% YoY), and net profit attributable to owner of parent was 4.91 billion yen (+19% YoY).

Before delving into the performance analysis, it is worth noting that, following an administrative warning from the Japan Fair Trade Commission (JFTC) in November 2024, Itoki initiated measures to improve its transaction practices with logistics subcontractors and submitted a report to the JFTC by March 17, 2025.

While these organizational improvements were being implemented, performance remained solid. The Workplace Business continued to lead the way, showing that the company’s business strategy is aligned with market trends. Sales in the segment was 34.6 billion yen (+2.8 billion yen YoY), operating profit was 7.0 billion yen (+1.7 billion yen YoY), and the operating profit margin reached 20.3% (+3.8pt YoY). With the rising demand for office space renewal as a pillar of customers’ investment in human capital (i.e., recruitment, retention, and productivity enhancement), the company is expanding its fully integrated sales approach, including design, specification, and construction, to beyond the Tokyo metropolitan area. As a result, in addition to price revisions, profitability has improved through a range of multifaceted initiatives.

Meanwhile, the Equipment & Public Works-Related Business posted lower revenue and operating profit. Sales was 7.7 billion yen (-1.0 billion yen YoY), operating profit was 0.3 billion yen (-0.3 billion yen YoY), and the segment margin was 4.8% (-3.7pt YoY). The decline was primarily due to delays in the construction start and completion of logistics facilities by customers, caused by rising material costs. However, profitability was maintained, and the segment’s overall contribution remains small. Overall, Q1 performance appears to have exceeded expectations.

On the balance sheet, short-term borrowings increased to cover working capital. However, there are currently no significant concerns.

◇ FY12/2025 Full-year earnings forecast: No change to the revenue and profit growth forecast; progress is steady

The company maintained its guidance for FY12/2025: Net sales of 145.0 billion yen (+4% YoY), operating profit of 11.5 billion yen (+14% YoY), ordinary profit of 11.5 billion yen (+14% YoY), and net profit attributable to owner of parent of 8.0 billion yen (+11% YoY), aiming to achieve record earnings again. The dividend per share remains unchanged at 65 yen (+10 yen YoY), with a projected payout ratio of 40%.

The outlook for achieving these targets remains solid.

First, 1Q progress rates were 29.5% for net sales and 64.5% for operating profit. Within this, the Workplace Business showed 30.9% progress on sales and 73.1% on operating profit, indicating that revenue is on track and profits are ahead of schedule.

Although profit growth stalled in 2Q of the previous fiscal year, which negatively impacted the stock market, similar concerns are limited this fiscal year. According to company interviews, demand for office renewals remains strong nationwide, supported by the human capital investment theme, and the deal pipeline is robust. Given the company’s value-added proposals and prior price revisions, stable earnings growth is expected.

Second, although the Equipment & Public Works-Related Business is currently sluggish, 1Q results were better than expected, and its contribution to overall profit is limited.

◇ Share price trends and future points of interest

The company’s stock has been trading between 1,500 and 1,800 yen since the beginning of the year. While it briefly fell below 1,400 yen in early April due to a market-wide downturn triggered by U.S. tariff hikes, it quickly rebounded and continued to rise steadily after the announcement of 1Q results. Currently, it has exceeded 1,800 yen, approaching the previous high of 2,200 yen, which was recorded in February 2024.

This performance likely reflects market appreciation for the company’s effective strategy and revenue growth in the Workplace Business, along with significant improvements in profitability.

However, valuation metrics such as PER and PBR do not suggest overheating. If the following factors become more evident, the stock may exceed the 2,200 yen level, driven by increased growth expectations and a reduced risk of future performance volatility:

– Continued earnings expansion beyond 2Q, further raising confidence in the FY12/2025 forecast.

– Contribution to FY12/2026 (final year of the medium-term plan) earnings growth from both core businesses.

– Emergence of new growth drivers beyond the current plan: Office 3.0, specialized facilities, and overseas expansion.

– Enhanced earnings stability through recurring revenue and diversified income sources.

– Clarification of long-term financial targets and the company’s stance on M&A.

If updates are provided during the upcoming IR Day or 2Q results announcement, the stock may gain further upward momentum. Investors should closely monitor both earnings progress and management’s responses.

Company profile

Itoki Corporation (Itoki) is an office furniture manufacturer that designs tomorrow’s “workstyles”. It was founded in 1890. In addition to office furniture manufacturing, the company is also involved in construction and interior decoration. In 2022, Koji Minato was appointed president, and the company’s corporate structure has been transformed under his leadership. The company has advocated Office DX and Office 3.0 and is working to add high value. Under its three-year medium-term management plan, RISE TO GROWTH 2026, which ends in FY2026, the company is promoting the priority strategy ‘7 Flags’ and ESG strategies under the theme of ‘enhancing sustainable growth’. The plan aims to achieve sales of 150 billion yen, operating profit of 14 billion yen and ROE of 15% in FY2026.

Key financial data

Unit: million yen 2020/12 2021/12 2022/12 2023/12 2024/12 2025/12
CE
Sales 116,210 115,905 123,324 132,985 138,460 145,000
EBIT (Operating Income) 1,585 2,561 4,582 8,524 10,078 11,500
Pretax Income 1,277 1,523 8,372 8,378 10,071  
Net Profit Attributable to Owner of Parent -235 1,166 5,294 5,905 7,183 8,000
Cash & Short-Term Investments 18,246 17,451 26,976 24,795 22,482  
Total assets 105,096 103,898 115,288 117,437 120,521  
Total Debt 17,308 17,308 17,308 17,308 37,533  
Net Debt -7,487 -7,487 -7,487 -7,487 15,051  
Total liabilities 60,901 58,818 65,374 62,434 71,174  
Total Shareholders’ Equity 54,960 54,960 54,960 54,960 49,260  
Net Operating Cash Flow 4,561 2,774 5,804 6,321 -1,000  
Capital Expenditure 3,316 3,316 3,316 3,316 6,036  
Net Investing Cash Flow -1,152 -1,170 4,923 -4,012 -7,107  
Net Financing Cash Flow -2,267 -2,658 -1,426 -4,148 5,905  
Free Cash Flow 3,005 3,005 3,005 3,005 -4,146  
ROA (%) -0.22 1.12 4.83 5.08 6.04  
ROE (%) -0.53 2.63 11.17 11.27 13.79  
EPS (Yen) -5.2 25.8 117.0 130.3 147.0 162.6
BPS (Yen) 970.4 993.9 1,101.3 1,212.0 1,001.1  
Dividend per Share (Yen) 13.00 15.00 37.00 42.00 55.00 65.00
Shares Outstanding (Million shares) 45.66 45.66 45.66 45.66 53.38  

Source: Omega Investment from company data, rounded to the nearest whole number.

Share price

Quarterly topics

【Financial highlights】

Source: Company materials

【Analysis of changes in operating profits】

Source: Company materials

【Performance in each segment】

Source: Company materials

【Earnings forecast for FY ending December 2025】

Source: Company materials

【Earnings forecast for FY2025 in the Medium-term Management Plan 】

Source: Company material

【Status of held business negotiations in FY2025】

Source: Company material

Financial data (quarterly basis)

Unit: million yen 2023/12 2024/12 2025/12
  1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
(Income Statement)                  
Sales 36,965 31,225 28,667 36,128 40,918 31,592 29,613 36,337 42,744
Year-on-year 4.6% 9.9% 9.4% 8.3% 10.7% 1.2% 3.3% 0.6% 4.5%
Cost of Goods Sold (COGS) 22,216 18,955 17,483 22,090 24,545 19,888 17,644 21,182 23,993
Gross Income 14,749 12,270 11,184 14,038 16,373 11,704 11,969 15,155 18,751
Gross Income Margin 39.9% 39.3% 39.0% 38.9% 40.0% 37.0% 40.4% 41.7% 43.9%
SG&A Expense 9,970 10,047 11,006 12,694 10,333 10,878 11,029 12,883 11,328
EBIT (Operating Income) 4,779 2,223 178 1,344 6,040 826 940 2,272 7,423
Year-on-year 20.5% 444.9% -162.2% 171.5% 26.4% -62.8% 428.1% 69.0% 22.9%
Operating Income Margin 12.9% 7.1% 0.6% 3.7% 14.8% 2.6% 3.2% 6.3% 17.4%
EBITDA 5,522 2,906 910 2,079 6,753 1,582 1,684 3,166 8,189
Pretax Income 4,804 2,275 363 936 6,006 1,328 1,035 1,702 7,257
Consolidated Net Income 3,297 1,411 202 997 4,104 985 725 1,409 4,910
Minority Interest 1 0 0 0 2 1 11 25 -6
Net Income ATOP 3,296 1,411 202 996 4,101 985 714 1,383 4,916
Year-on-year -2.7% 389.9% -227.0% -44.0% 24.4% -30.2% 253.5% 38.9% 19.9%
Net Income Margin 8.9% 4.5% 0.7% 2.8% 10.0% 3.1% 2.4% 3.8% 11.5%
                   
(Balance Sheet)                  
Cash & Short-Term Investments 20,908 24,788 23,292 24,795 24,751 28,513 30,536 22,482 24,296
Total assets 115,841 111,693 111,573 117,437 127,459 120,701 120,935 120,521 132,329
Total Debt 18,387 17,361 17,342 17,308 38,662 41,566 42,881 37,924 44,114
Net Debt -2,521 -7,427 -5,950 -7,487 13,911 13,053 12,345 15,442 19,818
Total liabilities 64,090 58,270 57,730 62,434 81,595 73,584 73,305 71,174 80,689
Total Shareholders’ Equity 51,709 53,379 53,800 54,960 45,818 47,068 47,571 49,260 51,562
                   
(Profitability %)                  
ROA 4.49 5.67 6.09 5.08 5.52 5.41 5.85 6.04 6.16
ROE 10.45 12.45 13.12 11.27 13.76 12.51 13.41 13.79 16.43
(Per-share) Unit: JPY                  
EPS 72.8 31.1 4.5 22.0 85.7 20.0 14.5 28.1 99.9
BPS 1,141.9 1,177.1 1,186.4 1,212.0 933.1 956.6 966.8 1,001.1 1,047.9
Dividend per Share 0.00 0.00 0.00 42.00 0.00 0.00 0.00 55.00 0.00
Shares Outstanding(million shares) 45.66 45.66 45.66 45.66 53.38 53.38 53.38 53.38 53.38

Source: Omega Investment from company materials

Financial data (full-year basis)

Unit: million yen 2014/12 2015/12 2016/12 2017/12 2018/12 2019/12 2020/12 2021/12 2022/12 2023/12 2024/12
(Income Statement)                      
Sales 102,993 106,516 101,684 108,684 118,700 122,174 116,210 115,905 123,324 132,985 138,460
Year-on-year -0.5% 3.4% -4.5% 6.9% 9.2% 2.9% -4.9% -0.3% 6.4% 7.8% 4.1%
Cost of Goods Sold 66,858 68,424 65,071 70,012 77,479 80,712 74,536 74,186 77,575 80,744 83,259
Gross Income 36,135 38,092 36,613 38,672 41,221 41,462 41,674 41,719 45,749 52,241 55,201
Gross Income Margin 35.1% 35.8% 36.0% 35.6% 34.7% 33.9% 35.9% 36.0% 37.1% 39.3% 39.9%
SG&A Expense 33,711 33,949 33,862 35,761 39,336 40,776 40,089 39,158 41,167 43,717 45,123
EBIT (Operating Income) 2,424 4,143 2,751 2,911 1,885 686 1,585 2,561 4,582 8,524 10,078
Year-on-year -40.5% 70.9% -33.6% 5.8% -35.2% -63.6% 131.0% 61.6% 78.9% 86.0% 18.2%
Operating Income Margin 2.4% 3.9% 2.7% 2.7% 1.6% 0.6% 1.4% 2.2% 3.7% 6.4% 7.3%
EBITDA 5,055 6,551 5,316 5,551 4,615 4,436 5,603 6,148 7,821 11,417 13,185
Pretax Income 3,171 4,246 2,918 3,401 3,083 938 1,277 1,523 8,372 8,378 10,071
Consolidated Net Income 2,355 4,631 1,850 2,442 1,744 -579 -355 933 5,181 5,907 7,223
Minority Interest 195 101 -56 40 19 -28 -119 -233 -113 1 39
Net Income ATOP 2,160 4,530 1,907 2,402 1,725 -550 -235 1,166 5,294 5,905 7,183
Year-on-year -44.8% 109.7% -57.9% 26.0% -28.2% -131.9% -57.3% -596.2% 354.0% 11.5% 21.6%
Net Income Margin 2.1% 4.3% 1.9% 2.2% 1.5% -0.5% -0.2% 1.0% 4.3% 4.4% 5.2%
                       
(Balance Sheet)                      
Cash & Short-Term Investments 22,132 21,533 19,839 19,977 16,529 17,030 18,246 17,451 26,976 24,795 22,482
Total assets 96,721 98,175 95,681 102,451 108,710 108,778 105,096 103,898 115,288 117,437 120,521
Total Debt 18,916 18,927 19,931 17,892 16,834 22,166 21,742 20,091 19,487 17,308 37,533
Net Debt -3,216 -2,606 92 -2,085 305 5,136 3,496 2,640 -7,489 -7,487 15,051
Total liabilities 53,532 50,864 50,275 54,997 61,200 62,940 60,901 58,818 65,374 62,434 71,174
Total Shareholders’ Equity 41,632 45,677 44,949 46,863 46,857 45,370 43,812 44,931 49,871 54,960 49,260
                       
(Cash Flow)                      
Net Operating Cash Flow 5,715 4,522 5,073 3,565 1,384 3,586 4,561 2,774 5,804 6,321 -1,000
Capital Expenditure 1,400 1,114 1,641 1,333 3,477 3,226 1,729 2,110 4,145 3,316 6,036
Net Investing Cash Flow -1,742 -803 -4,044 -2,971 -3,094 -3,221 -1,152 -1,170 4,923 -4,012 -7,107
Net Financing Cash Flow -2,179 -3,807 -2,571 -706 -2,463 0 -2,267 -2,658 -1,426 -4,148 5,905
Free Cash Flow 4,315 3,408 3,664 2,342 -1,924 635 2,832 664 1,659 3,005 -4,146
                       
(Profitability %)                      
ROA 2.25 4.65 1.97 2.42 1.63 -0.51 -0.22 1.12 4.83 5.08 6.04
ROE 5.22 10.38 4.21 5.23 3.68 -1.19 -0.53 2.63 11.17 11.27 13.79
(Per-share) Unit: JPY                      
EPS 42.8 91.6 40.1 52.7 37.8 -12.1 -5.2 25.8 117.0 130.3 147.0
BPS 825.8 953.5 986.8 1,028.9 1,027.4 995.8 970.4 993.9 1,101.3 1,212.0 1,001.1
Dividend per Share 13.00 13.00 13.00 13.00 13.00 13.00 13.00 15.00 37.00 42.00 55.00
Shares Outstanding (million shares) 52.14 52.14 52.14 52.14 45.61 45.66 45.66 45.66 45.66 45.66 53.38

Source: Omega Investment from company materials

Recommend
Search