MATSUMOTO INC.

Business Details

Composed of two divisions: school graduation memorial albums (approximately 81% of annual sales) and General Commercial Printing (posters, catalogs, pamphlets, etc.). The company has an integrated production system covering planning, plate-making, printing, and bookbinding. It also operates an Internet-Related Business including digital photo albums, photo print sales, self-publishing, and print mail-order services. Net sales were ¥2,126 million (down 2.0% year on year), with the School Albums division accounting for ¥1,722 million (81.0%) and the General Commercial Printing division accounting for ¥404 million (19.0%).

Recent Overview

Net income turned positive due to asset sales and recognition of extraordinary income, but operating loss continued for the third consecutive year, with a going concern note attached

In FY2026 (ending April 2026), the company recorded total extraordinary income of ¥246 million, including gain on sale of land and investment securities (gain on sale of fixed assets of ¥100 million, gain on sale of investment securities of ¥62 million), insurance cancellation refund of ¥87 million, reversal of provision for retirement benefits for directors of ¥30 million, and penalty income of ¥53 million, securing net income of ¥155 million. On the other hand, the operating loss was ¥159 million, continuing losses for the third consecutive year. Operating cash flow was negative for the fourth consecutive year (an outflow of ¥281 million), and a note was attached regarding material uncertainty about the going concern assumption. Cash on hand improved to ¥676 million due to new issuance of ¥200 million in corporate bonds and a net increase of ¥200 million in short-term borrowings. For FY2027 (ending April 2027), the company forecasts net sales of ¥2,186 million, operating income of ¥32 million, and net income of ¥48 million.

Key Products

Growth Drivers

• Improved profitability through optimization of School Albums selling prices (negotiating to pass on increased manufacturing costs to prices)
• Reduction of labor costs and personnel expenses through hiring restraint and a 40% reduction in representative director compensation, among other measures (planned reduction of approximately 4% year on year)
• Reduction of fixed costs and greater manufacturing process efficiency through consolidation and sale of business locations
• Improved operational efficiency and profit structure through standardization and digitalization of production processes and utilization of new technologies such as AI
• New service development in the education field and collaboration with partner companies under the "DAT (Digital Asset Treasury) concept"
• Leveling of production load through review of unprofitable transactions, appropriate price revisions, and early submission incentive measures

Risks

• Material uncertainty regarding the going concern assumption: operating losses have continued for three consecutive fiscal years and operating cash flow has been negative for four consecutive fiscal years; countermeasures are still in progress and final agreement with related parties has not yet been reached
• Structural contraction of the School Albums division: continued market contraction due to the declining birthrate and intensifying price competition amid the printing industry downturn
• Significant seasonal skew in sales: approximately 81% of annual sales are concentrated in the fourth quarter (February and March), creating cash flow risk as payables from December to January must be covered by cash on hand and bank borrowings
• Continued decline in demand for paper media due to accelerating digitalization of information media
• Cost pressure from rising raw material and electricity costs, and difficulty passing these on to selling prices
• Concerns over economic deterioration due to macroeconomic risks such as rising prices and tensions in Iran
• High uncertainty regarding the business environment and market trends, as the company did not disclose a forecast for the cumulative second quarter in its earnings forecast for FY2027 (ending April 2027)