Maruha Nichiro Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥536.70B
• Operating Income: ¥18.74B
• Net Income: ¥16.94B
• EPS: ¥247.23

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Maruha Nichiro Co., Ltd. (13330) reported FY2026 Q2 consolidated (JGAAP) revenue of ¥536.7bn, up 0.9% YoY, indicating broadly stable top-line momentum despite a mixed consumption and input-cost environment. Gross profit reached ¥73.3bn, implying a gross margin of 13.7%, and operating income rose 16.6% YoY to ¥18.7bn, lifting the operating margin to approximately 3.5%. The larger increase in operating income relative to sales suggests positive operating leverage, likely driven by pricing discipline, mix, and/or cost normalization in key inputs. Ordinary income was ¥18.3bn, close to operating income despite ¥2.0bn in interest expense, indicating limited net non-operating drag. Net income declined 9.8% YoY to ¥12.5bn, pointing to heavier tax and/or below-the-line effects; the reported income tax of ¥6.2bn implies an effective tax rate near 34% if we use ordinary income as a proxy for pre-tax income. EPS was ¥247.23, though share count data was not disclosed in this dataset. Liquidity appears comfortable with a current ratio of 175% and working capital of ¥177.7bn, while the quick ratio of 83% highlights a sizable inventory component typical for the seafood/processed foods supply chain. The balance sheet shows total assets of ¥714.2bn and total equity of ¥274.2bn; this implies an equity ratio around 38–39% (the 0.0% shown is undisclosed, not an actual zero). Financial leverage (assets/equity) stands at 2.60x and debt-to-equity at 1.48x, which is moderate for the sector. ROE is 4.54% via DuPont: net margin 2.32%, asset turnover 0.751x, and financial leverage 2.60x, indicating that current returns are mainly constrained by slim margins typical of the industry. Interest coverage of roughly 9.2x (operating income/interest expense) is adequate, supporting debt service capacity at current earnings levels. Cash flow figures (OCF, FCF, investing and financing CF) were not disclosed in this dataset, so we cannot triangulate earnings quality with cash conversion this quarter. Dividend and share data are also undisclosed here; as such, payout and coverage metrics shown as zero are placeholders, not actual payouts. Overall, the quarter reflects steady revenue, expanding operating margin, and adequate solvency, offset by a YoY decline in net profit driven by taxation and/or non-operating items, and limited visibility on cash flow and capital allocation from the provided data.

Profitability Analysis

ROE of 4.54% decomposes into a net profit margin of 2.32%, asset turnover of 0.751x, and financial leverage of 2.60x. The principal constraint on ROE is the thin net margin, in line with seafood/food processing industry norms. Gross margin is 13.7% and operating margin is about 3.5%; the spread from gross to operating margin indicates a meaningful SG&A/logistics burden, but the 16.6% YoY increase in operating income versus 0.9% revenue growth evidences positive operating leverage. Ordinary income at ¥18.3bn is only modestly below operating income despite ¥2.0bn in interest expense, suggesting non-operating gains partially offset financing costs. The interest burden (~11% of operating income) looks manageable given 9.2x coverage. The effective tax rate, approximated at ~34% using ordinary income as a proxy for pre-tax, weighs on net margin and explains part of the divergence between operating and net profit trends. Margin quality appears to have improved QoQ/YoY given operating margin expansion; sustaining this will hinge on continued pricing power, procurement discipline, and energy/logistics cost normalization. With asset turnover at 0.751x, efficiency is reasonable for an asset-intensive, inventory-heavy value chain; further gains would likely come from inventory optimization and footprint efficiency rather than rapid turnover improvements.

Growth Assessment

Top-line growth of 0.9% YoY suggests stable demand with likely price-led, mix-stable performance amid a cautious consumption backdrop. The sharp improvement in operating income (+16.6% YoY) vs. modest sales growth indicates quality of profit improvement driven by margin expansion rather than volume. Net income declined 9.8% YoY despite stronger operations, pointing to tax headwinds and/or below-the-line items; ordinary income (¥18.3bn) being close to operating income implies the primary drag is taxation rather than large non-operating losses. Revenue sustainability depends on maintaining pricing in processed foods and stable procurement in marine products; FX and raw material (frozen fish, feed, fuel) volatility remain swing factors. While the current data indicates improving operating efficiency, the absence of cash flow disclosures limits confirmation of underlying earnings quality and reinvestment capacity. Near-term outlook hinges on input cost trends (especially seafood raw materials and energy), logistics normalization, and elasticity to any price actions. If margin management persists, incremental operating leverage could continue even on low single-digit sales growth, but sustaining net profit growth will require managing tax/extraordinary items and financing costs.

Financial Health

Liquidity is solid with a current ratio of 175% and working capital of ¥177.7bn, providing a buffer for seasonal inventory swings. The quick ratio of 83% reflects a high inventory share (inventories ¥218.0bn within current assets of ¥414.6bn), typical for the sector but a watchpoint for cash conversion. Total assets are ¥714.2bn and total equity ¥274.2bn; this implies an equity ratio around 38.4% (the 0.0% label is an undisclosed placeholder). Debt-to-equity is 1.48x, indicating moderate leverage; financial leverage (assets/equity) at 2.60x is consistent with the calculated DuPont inputs. Interest expense of ¥2.0bn is covered ~9.2x by operating income, suggesting manageable solvency risk at current earnings. The liability structure detail is undisclosed, but current liabilities of ¥236.9bn vs. current assets indicate sufficient short-term coverage. Overall, the balance sheet appears balanced for the industry with adequate solvency and liquidity headroom, albeit with reliance on inventory carrying.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed in this dataset (zeros indicate undisclosed, not actual zeros), so we cannot directly evaluate cash conversion, capex intensity, or FCF coverage this quarter. Depreciation and amortization are also undisclosed here, limiting EBITDA assessment. Given the inventory-heavy model (inventories ¥218.0bn), working capital movements can materially influence OCF; without period-on-period working capital detail, earnings-to-cash conversion cannot be validated. Interest coverage of ~9.2x from earnings suggests capacity to service debt from operations, but cash evidence is lacking in the provided figures. In the absence of OCF/FCF data, we infer that sustaining margin improvements and inventory discipline will be critical to maintain healthy cash generation.

Dividend Sustainability

Dividend per share and payout ratio are shown as zero due to non-disclosure in this dataset and should not be interpreted as actual zero distributions. Without OCF and capex data, free cash flow coverage of dividends cannot be assessed. On an earnings basis, net income of ¥12.5bn and EPS of ¥247.23 would, in principle, provide capacity for distributions depending on actual policy, cash flows, and leverage tolerance; however, the lack of disclosed DPS and cash flow data precludes a robust payout sustainability analysis. Historically, food sector payouts are often balanced against inventory and capex needs; for this period, we cannot confirm the company’s policy stance or coverage.

Risk Assessment

Business Risks:

• Raw material price volatility in seafood and feed impacting gross margins
• Foreign exchange fluctuations (procurement in USD/EUR vs. JPY revenues) affecting costs
• Energy and logistics cost swings influencing SG&A and COGS
• Supply chain and fishery catch variability, including climate and regulatory constraints
• Aquaculture disease/outbreak risks affecting yields and supply
• Intense competition and private label pricing pressure in processed foods
• Demand elasticity to price increases in a cautious consumer environment

Financial Risks:

• Inventory-heavy working capital exposing cash flow to demand and procurement timing
• Moderate leverage (D/E 1.48x) and interest expense sensitivity to rate/credit conditions
• Tax rate volatility (~34% this period proxy) affecting net income
• Potential exposure to non-operating/extraordinary items not detailed in the dataset
• FX translation and transaction risks impacting earnings and balance sheet

Key Concerns:

• Net income down 9.8% YoY despite stronger operating profit, implying below-the-line pressure
• Lack of disclosed operating, investing, and free cash flows limits earnings quality assessment
• High inventory balance (¥218.0bn) requires tight control to avoid cash drag and write-down risk

Investment Implications

Key Takeaways:

• Top line stable (+0.9% YoY) with clear operating margin expansion (operating income +16.6% YoY)
• Net income decline (-9.8% YoY) mainly reflects tax/other below-the-line effects
• ROE at 4.54% is constrained by low net margin; efficiency and leverage are reasonable
• Liquidity is comfortable (current ratio 175%) but quick ratio (83%) highlights inventory intensity
• Interest coverage ~9.2x signals manageable debt service at current earnings
• Cash flow and dividend data not disclosed; capital return and FCF quality cannot be verified from this dataset

Metrics to Watch:

• Operating cash flow, capex, and free cash flow once disclosed
• Inventory days and turnover, especially post-peak procurement seasons
• Gross and operating margin trajectory versus raw material and energy cost trends
• FX (USD/JPY) impacts on procurement and hedging effectiveness
• Effective tax rate and any extraordinary/non-operating items
• Interest expense and refinancing terms affecting coverage
• Asset turnover and working capital efficiency

Relative Positioning: Within Japanese food/seafood peers, Maruha Nichiro exhibits typical low single-digit operating margins, moderate leverage, and reasonable asset turnover; profitability gains this quarter are encouraging, but sustained ROE improvement will depend on maintaining margin discipline and converting earnings to cash, areas not verifiable from the undisclosed cash flow data.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis