YUKIGUNI FACTORY CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.77B
• Operating Income: ¥431M
• Net Income: ¥75M
• EPS: ¥2.05

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

For FY2026 Q2, ユキグニファクトリー株式会社 reported revenue of 197.73億円, declining 8.3% YoY, with a disproportionately sharp contraction in profitability: operating income fell 67.2% to 4.31億円 and net income dropped 89.0% to 0.81億円. The operating margin compressed to roughly 2.2% (4.31/197.73), despite a reported gross margin of 28.0%, indicating significant deleveraging from fixed costs and/or elevated SG&A intensity. EBITDA was 16.04億円 (8.1% margin), implying 11.73億円 of D&A and highlighting an asset-heavy cost base. DuPont analysis shows a very low ROE of 0.7% driven by a thin net margin (0.4%), low asset turnover (0.551x), and high financial leverage (2.97x). An effective tax rate of 116.4% (tax expense exceeding pre-tax income) further depressed net profit, suggesting one-off tax effects or deferred tax valuation allowance impacts. Cash flow quality weakened materially: operating cash flow was -16.32億円 versus net income of 0.81億円 (OCF/NI = -20.15x), with free cash flow at -26.10億円 after -9.40億円 of capex. The balance sheet shows total assets of 358.55億円 and total equity of 120.85億円 (equity ratio 33.5%), with substantial long-term loans of 154.35億円 and short-term loans of 17.00億円, yielding a high debt-to-equity ratio of 2.10x. Liquidity assessment is constrained because current liabilities are unreported, and reported working capital equals current assets (115.01億円), which likely overstates true liquidity. Dividend outflows of -3.99億円 and buybacks of -0.32億円 were maintained despite weak earnings and negative FCF, resulting in a calculated payout ratio of 739.1% and FCF coverage of -4.36x. EPS (basic) was 2.05円 against a calculated BVPS of 303.01円, underscoring subdued returns on a sizable equity base. The capital structure includes negative capital surplus (-60.67億円) and retained earnings of 183.34億円, suggesting historical equity transactions or OCI movements weighing on reported equity. Cash and equivalents were 39.03億円 at period end, providing some buffer but not offsetting the negative OCF and ongoing capex needs. Overall, the quarter indicates cyclical or execution-related headwinds, operating deleverage, and tax burdens converging to compress earnings, while leverage remains elevated. Near-term priorities appear to be restoring operating margin, normalizing working capital to repair OCF, and aligning shareholder returns with cash generation. Data limitations (notably non-operating items, interest expense, current liabilities, and DPS details) constrain certain ratio analyses, and zeros reflect unreported items rather than actual zeros.

Profitability Analysis

ROE_decomposition: ROE 0.7% = Net margin 0.4% x Asset turnover 0.551x x Leverage 2.97x. The primary drag is the net margin, exacerbated by a 116.4% effective tax rate, while asset turnover is modest and leverage is high. margin_quality: Gross margin is 28.0% (55.31/197.73). Operating margin is about 2.2% (4.31/197.73), indicating SG&A absorption of roughly 75% of gross profit (41.39/55.31). EBITDA margin at 8.1% shows D&A is a significant cost layer (D&A 11.73億円). Net margin collapsed to 0.4%, driven by tax expense outpacing pre-tax profit. operating_leverage: Revenue declined 8.3% YoY, but operating income fell 67.2%, reflecting high operating leverage. This suggests a sizable fixed cost base (manufacturing assets, depreciation, and fixed SG&A) causing profit volatility with modest top-line variability.

Growth Assessment

revenue_sustainability: Top-line contracted 8.3% YoY to 197.73億円. Without segment detail or order backlog data, sustainability is uncertain. The magnitude of profit fall relative to revenue suggests mix deterioration or pricing pressure alongside volume declines. profit_quality: EBITDA of 16.04億円 vs EBIT of 4.31億円 highlights heavy depreciation. The 116.4% effective tax rate is non-sustainable and likely includes one-offs; underlying run-rate profitability may be higher than reported net income suggests. outlook: Recovery hinges on margin normalization (pricing, mix, and cost control), reversal of adverse tax effects, and stabilization of demand. Near-term growth visibility is limited due to data gaps (non-operating items, backlog, and guidance not provided).

Financial Health

liquidity: Current assets are 115.01億円; current liabilities are unreported, so current and quick ratios cannot be computed. Reported working capital equals current assets (115.01億円), which likely overstates liquidity because current liabilities are not disclosed here. Cash and equivalents are 39.03億円. solvency: Total liabilities are 253.43億円 versus equity of 120.85億円, giving an equity ratio of 33.5%. Debt-to-equity is 2.10x, with long-term loans of 154.35億円 and short-term loans of 17.00億円. Leverage is elevated for the current earnings profile. capital_structure: Retained earnings are 183.34億円 while capital surplus is -60.67億円, implying historical equity adjustments (e.g., share-related transactions/OCI). With thin profitability and negative OCF, deleveraging capacity is currently constrained without margin and cash flow recovery.

Cash Flow Quality

earnings_quality: OCF of -16.32億円 versus net income of 0.81億円 (OCF/NI = -20.15x) signals weak earnings-to-cash conversion, likely due to working capital outflows and possibly non-cash tax effects. FCF_analysis: FCF was -26.10億円 after -9.40億円 of capex. Investing CF of -9.78億円 aligns with capex magnitude, indicating limited asset disposals. Financing CF was +7.79億円 despite dividends and buybacks, implying net borrowing supported cash needs. working_capital: Receivables (24.90億円) and inventories (18.39億円) are meaningful against half-year revenue; payables are 28.86億円. Without period-to-period deltas or current liabilities totals, the precise WC driver is unclear, but the negative OCF suggests a build in receivables/inventories or reduced payables.

Dividend Sustainability

payout_ratio_assessment: The calculated payout ratio is 739.1%, far above sustainable levels given net income of 0.81億円. EPS of 2.05円 and BVPS of 303.01円 imply returns on equity are currently insufficient to fund distributions. FCF_coverage: FCF coverage is -4.36x, reflecting dividends paid (-3.99億円) despite negative FCF (-26.10億円). This indicates reliance on balance sheet or incremental debt to fund dividends. policy_outlook: Unless OCF rebounds and margins normalize, maintaining the current cash distribution pace could pressure leverage. Absent DPS disclosure, we infer a continued dividend based on cash flow statements, but policy recalibration may be considered if cash generation does not recover.

Risk Assessment

Business Risks:

• Operating leverage amplifying earnings volatility on modest revenue changes
• Potential pricing pressure or adverse product mix contributing to margin compression
• Demand softness relative to prior year without visibility on order backlog
• Supply chain or input cost inflation impacting gross margin
• Execution risk in cost control and capex prioritization

Financial Risks:

• Elevated leverage (D/E 2.10x; equity ratio 33.5%) amid weak earnings
• Negative operating cash flow and negative FCF requiring external financing
• Tax volatility (116.4% effective tax rate) depressing net income
• Refinancing and interest rate risk given sizable long-term loans (154.35億円)
• Dividend outflows despite negative FCF increasing balance sheet strain

Key Concerns:

• Sustainability of dividends with payout ratio at 739.1% and FCF coverage at -4.36x
• Restoration of operating margin from ~2.2% to support deleveraging
• Normalization of working capital to reverse OCF weakness
• Clarity on non-operating items and interest burden (unreported) to assess true earnings power

Investment Implications

Key Takeaways:

• Revenue down 8.3% YoY but operating income down 67.2% highlights high operating leverage
• Net margin 0.4% and ROE 0.7% indicate very weak returns in the period
• OCF -16.32億円 and FCF -26.10億円 flag poor cash conversion and investment funding needs
• Leverage remains high (D/E 2.10x; long-term loans 154.35億円) amid compressed margins
• Effective tax rate at 116.4% likely non-recurring but materially impacted net income
• Dividend and buybacks proceeded despite negative FCF, pressuring financial flexibility

Metrics to Watch:

• Operating margin recovery and SG&A efficiency (EBIT margin vs gross margin spread)
• OCF and FCF trajectory; working capital days (DSO/DIO/DPO) when available
• Leverage and interest coverage once interest expense is disclosed
• Equity ratio and net debt trends; refinancing schedule for long-term loans
• Tax rate normalization and any disclosures on one-off tax items
• Order intake/backlog or book-to-bill (if disclosed) to gauge top-line outlook
• Dividend policy announcements and DPS guidance

Relative Positioning: Given the reported figures, the company currently exhibits weaker profitability and cash generation versus a typical asset-heavy, leveraged industrial profile, with returns suppressed by tax effects and operating deleverage; positioning could improve if margins and cash conversion normalize, but near-term resilience appears constrained by leverage and negative FCF.

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