Nittetsu Mining Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥93.07B
• Operating Income: ¥8.59B
• Net Income: ¥6.30B
• EPS: ¥84.19

Income Statement

Balance Sheet

Cash Flow Statement

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

Nittetsu Mining (15150) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a slight top-line contraction. Revenue was ¥93.1bn, down 2.3% YoY, but operating income surged 60.9% YoY to ¥8.6bn, indicating meaningful margin expansion. Gross profit was ¥17.4bn, yielding an 18.7% gross margin, while operating margin improved to 9.2%, reflecting favorable mix, price-cost spread, and/or effective cost controls. Ordinary income reached ¥9.6bn, exceeding operating income by roughly ¥1.0bn, implying solid non-operating gains net of interest expense. Net income was ¥6.6bn (+15.6% YoY), with a net margin of 7.12% and EPS of ¥84.19. DuPont analysis indicates ROE of 4.21%, decomposed into 7.12% net margin, 0.364x asset turnover, and 1.62x financial leverage, suggesting ROE is mainly constrained by modest asset turnover rather than leverage. The balance sheet remains conservative with total assets of ¥255.8bn, liabilities of ¥88.2bn (D/E 0.56x), and ample working capital of ¥46.4bn; current and quick ratios of 183% and 167% underscore strong liquidity. Interest coverage is robust at 15.8x, buffering against rate and credit stress. Cash conversion, however, is weak: operating cash flow was ¥1.4bn versus ¥6.6bn net income (OCF/NI 0.22), pointing to working capital absorption and/or timing effects. Depreciation of ¥3.9bn and EBITDA of ¥12.5bn indicate healthy underlying cash earnings capacity, but reported OCF suggests near-term cash discipline is warranted. The reported effective tax rate in the calculated metrics appears as 0.0% due to data mapping limits, yet disclosed income tax of ¥2.86bn versus ordinary income implies a normalized ETR near 30%. Dividends are shown as zero (DPS and payout), which likely reflects unreported interim data rather than a policy shift; no conclusion can be drawn on shareholder returns without confirmed disclosures. Reported Free Cash Flow is shown as zero because investing cash flows are unreported; FCF cannot be determined from the provided data. Inventory is modest at ¥9.2bn relative to sales, which may mitigate obsolescence risk, but receivables and payables details are not provided to fully explain the OCF shortfall. Overall, the company delivered strong profit resilience and operating leverage amidst softer revenue, backed by a solid balance sheet, but near-term cash flow conversion and unreported items are key watch points. Data limitations (unreported equity ratio, investing CF, cash balance, and dividend figures) constrain precision in solvency and capital allocation assessments.

Profitability Analysis

ROE of 4.21% is driven by: net margin 7.12% × asset turnover 0.364 × financial leverage 1.62. Net margin improved YoY alongside a 60.9% YoY jump in operating income despite a 2.3% decline in revenue, evidencing operating leverage and/or better price-cost dynamics. Gross margin is 18.7% and operating margin 9.2%, with ordinary margin at 10.3% (¥9.6bn/¥93.1bn), indicating positive non-operating contributions (estimated ~¥1.5bn gains net of ¥0.5bn interest expense). EBITDA of ¥12.45bn (13.4% margin) versus operating income of ¥8.59bn highlights a sizable non-cash D&A burden (¥3.87bn), typical for capital-intensive mining and materials operations. Interest coverage of 15.8x (EBIT/interest) reflects strong capacity to service debt. The principal ROE constraint is low asset turnover (0.364x), consistent with heavy asset intensity; leverage is moderate at 1.62x assets/equity. Margin quality appears solid, but sustainability hinges on commodity pricing, energy costs, and product mix. Overall, profitability improved materially in the half, with clear operating leverage benefits.

Growth Assessment

Revenue declined 2.3% YoY to ¥93.07bn, indicating slight volume/price headwinds. Nevertheless, operating income rose 60.9% YoY to ¥8.59bn, implying substantial margin expansion from cost discipline, mix optimization, or price realization outpacing cost inflation. Ordinary income of ¥9.57bn outpaced operating income, suggesting incremental contributions from non-operating sources (e.g., equity-method gains, FX, or other income). Net income grew 15.6% YoY to ¥6.62bn, a more modest increase than operating income, likely reflecting higher taxes and/or non-controlling interests. Profit quality is mixed: EBITDA margin (13.4%) and interest coverage are healthy, but OCF/NI of 0.22 signals weak cash conversion in the period. Without investing cash flow disclosure, capex trajectory and FCF durability cannot be gauged; depreciation of ¥3.87bn suggests ongoing capital needs typical for mining. Outlook depends on domestic construction activity (cement/aggregate demand), commodity prices for resources segments, and energy/input cost trends; tight cost control and disciplined pricing will be critical to sustaining gains.

Financial Health

Liquidity is strong: current ratio 183.4% and quick ratio 166.8%, supported by ¥46.36bn of working capital. Solvency is conservative with total liabilities of ¥88.21bn versus equity of ¥157.48bn (D/E 0.56x; liabilities/assets ~34%). Interest expense of ¥0.55bn is well covered by EBIT (15.8x). The reported equity ratio of 0.0% is an unreported item; based on provided balance sheet, equity/assets imply an equity ratio near 61.6%. Asset intensity is high (asset turnover 0.364x), consistent with the industry. Cash and cash equivalents are shown as zero due to non-disclosure; actual cash balance is unknown. Overall, the balance sheet affords resilience, but visibility on cash, capex commitments, and off-balance obligations (if any) is limited by data gaps.

Cash Flow Quality

Earnings quality is mixed: net income of ¥6.62bn contrasts with operating cash flow of ¥1.43bn, yielding an OCF/NI ratio of 0.22, which is weak and points to working capital absorption and/or timing effects (specific drivers not disclosed). EBITDA of ¥12.45bn and D&A of ¥3.87bn underscore solid cash earnings potential, but conversion to cash was soft in the period. Free Cash Flow cannot be determined because investing cash flow is unreported (shown as zero by placeholder). Similarly, period-end cash is unreported, preventing assessment of liquidity runway beyond working capital. Inventory is modest at ¥9.21bn versus sales, but lack of receivables/payables data limits diagnosis of the OCF shortfall. Monitoring whether OCF normalizes relative to earnings in subsequent quarters is key for assessing cash flow quality.

Dividend Sustainability

Dividend metrics (DPS 0, payout 0%, FCF coverage 0.00x) reflect non-disclosure rather than actual zeros; no inference can be made about current dividends or policy from this dataset. Historically for capital-intensive sectors, sustainable dividends hinge on OCF stability and maintenance capex coverage; with OCF/NI at 0.22 this half and investing CF undisclosed, coverage cannot be assessed. Balance sheet strength (D/E 0.56x, strong liquidity) would support capacity in principle, but cash conversion must improve and capex visibility is required. Until investing cash flows and official dividend guidance are available, dividend sustainability cannot be conclusively evaluated.

Risk Assessment

Business Risks:

• Commodity price volatility affecting resources segment margins and earnings
• Domestic construction demand swings impacting limestone/cement-related volumes
• Energy and fuel cost inflation impacting mining and processing costs
• FX fluctuations influencing import costs and translation of overseas interests
• Operational risks in mining (reserve quality, geotechnical events, accidents, weather disruptions)
• Environmental and permitting risks, including tightening regulations and remediation obligations
• Customer concentration risk within cement, steel, and construction end-markets
• Supply chain constraints for equipment, explosives, and spare parts

Financial Risks:

• Weak cash conversion in the period (OCF/NI 0.22), increasing reliance on working capital
• Potentially elevated maintenance and development capex inherent to mining (investing CF not disclosed)
• Interest rate and refinancing risk limited but present (¥0.55bn interest expense; D/E 0.56x)
• Tax rate variability; implied normalized ETR near 30% vs reported calculated metric showing 0% due to data gaps
• Limited visibility on cash balance and liquidity buffers due to non-disclosure

Key Concerns:

• Sustainability of margin gains amid softer revenue
• Conversion of accounting earnings to operating cash flow
• Capex intensity and free cash flow trajectory (investing CF unreported)
• Data limitations on dividends and equity ratio inhibiting capital allocation assessment

Investment Implications

Key Takeaways:

• Strong operating leverage: operating income +60.9% YoY on revenue -2.3% YoY
• Healthy margins (OPM 9.2%, EBITDA margin 13.4%) and robust interest coverage (15.8x)
• Conservative balance sheet (D/E 0.56x) and ample working capital (¥46.4bn)
• ROE 4.21% constrained mainly by low asset turnover (0.364x)
• Cash conversion weak (OCF/NI 0.22) and FCF indeterminable due to missing investing CF
• Non-operating items positive (ordinary income > operating income by ~¥1.0bn)
• Dividend status and policy not inferable from provided data

Metrics to Watch:

• Operating cash flow normalization vs net income (OCF/NI toward >0.8 over subsequent quarters)
• Investing cash flow and capex vs depreciation (capex/D&A) to gauge FCF
• Price-cost spread (realized prices vs energy and input costs) and gross margin trend
• Asset turnover and working capital efficiency (DSO/DPO/DIO if disclosed)
• Ordinary-to-operating income gap (stability of non-operating gains)
• Leverage and interest coverage movements amid rate environment
• Formal dividend guidance and payout policy updates

Relative Positioning: Within Japan’s mining/materials value chain, the company exhibits stronger-than-typical liquidity and coverage and recently improved operating margins, but it remains asset-intensive with modest ROE and currently weak cash conversion; durability of the margin uplift and FCF generation will determine how it stacks up against peers focused on aggregates and industrial minerals.

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
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