MITSUI MATSUSHIMA HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥31.90B
• Operating Income: ¥5.40B
• Net Income: ¥2.94B
• EPS: ¥101.86

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

Mitsui Matsushima Holdings (1518) reported solid FY2026 Q2 consolidated results under JGAAP, with clear signs of margin expansion and operating leverage. Revenue increased 9.1% year over year to ¥31.9 billion, while operating income rose 40.2% to ¥5.40 billion, indicating strong cost discipline and mix improvements. Net income surged 80.7% to ¥5.20 billion, lifting the net margin to a high 16.31%, supported by modest non-operating tailwinds and minimal interest burden. The DuPont-based ROE is 9.76%, decomposed into a 16.31% net margin, 0.268x asset turnover, and 2.24x financial leverage. Gross margin stands at 34.1% and operating margin at approximately 16.9%, both robust for the group’s profile and suggestive of improved pricing and scale benefits. EBITDA was ¥6.07 billion (19.0% margin), and interest coverage was very strong at 88.6x given low interest expense of ¥61 million. Liquidity remains sound with a current ratio of 162% and quick ratio of 147%, and working capital of ¥27.3 billion provides operational flexibility. Capital structure looks balanced: total liabilities are ¥52.1 billion against equity of ¥53.3 billion (implying an equity/asset ratio of roughly 44.7%), and debt-to-equity is reported at 0.98x. Cash flow conversion, however, is a weak spot this half: operating cash flow of ¥1.24 billion equates to an OCF/Net Income ratio of 0.24, indicating significant working capital absorption or timing effects. Financing cash outflows totaled ¥5.92 billion, pointing to debt reduction and/or shareholder returns, though detailed breakdowns are not disclosed here. The reported effective tax rate metric shows 0.0%, but tax expense of ¥1.44 billion against ordinary income of ¥5.62 billion implies a more normal mid-20s rate (~25–26%). Dividend data are not disclosed in this feed (DPS shows as zero by convention for unreported), so payout assessment relies on capacity rather than policy signals. Overall, profitability momentum and balance sheet strength are evident, but near-term free cash flow quality appears soft due to working capital movements and absent investing cash flow disclosures. Outlook hinges on sustaining margin gains while improving cash conversion in the second half. Data limitations include unreported equity ratio, cash and equivalents, investing cash flows, DPS, and share counts; conclusions focus on available non-zero data.

Profitability Analysis

ROE of 9.76% is driven by a high net margin (16.31%), moderate asset turnover (0.268x on a half-year basis), and leverage of 2.24x. Operating margin of 16.9% (¥5.40b/¥31.90b) indicates substantial operating leverage, as operating income growth (+40.2% YoY) far outpaced revenue growth (+9.1% YoY). Gross margin at 34.1% and EBITDA margin at 19.0% suggest healthy unit economics and cost control, with limited drag from depreciation (¥672m). The spread between operating and ordinary income (¥220m) implies modest non-operating gains or financial income; interest expense is minimal at ¥61m. Interest coverage is exceptionally strong at 88.6x, underscoring low financial burden. Margin quality appears robust, but the disconnect with OCF (OCF/NI 0.24) tempers the quality signal, suggesting working capital-intensive growth or timing effects. Overall, profitability is strong relative to typical diversified industrial/resource peers, with evidence of scale efficiencies and improved mix.

Growth Assessment

Top-line growth of 9.1% YoY to ¥31.9b reflects steady demand, while operating income expanded 40.2% YoY to ¥5.40b, evidencing margin-led growth. Net income expanded 80.7% YoY to ¥5.20b, partly aided by low interest costs and stable taxes, driving a significant uplift in bottom-line efficiency. Asset turnover of 0.268x (based on average assets implied by period-end figures) is moderate for H1; sustaining revenue momentum into H2 is key to improving annualized efficiency. The quality of growth this half is primarily margin-driven rather than volume-driven, and sustainability depends on maintaining pricing, cost discipline, and stable non-operating items. Given the OCF/NI ratio of 0.24, current growth has not translated fully into cash, likely due to working capital build; monitoring inventory (¥6.52b) and receivables movements will be important. Outlook: if margin structures hold and working capital normalizes, full-year earnings quality can improve; conversely, any normalization of prices/spreads or increased input costs could compress margins and slow profit growth.

Financial Health

Liquidity is solid: current ratio 162.3% and quick ratio 147.5% indicate ample near-term coverage. Working capital of ¥27.33b provides a cushion for operations and inventory cycles. Total assets are ¥119.21b with equity of ¥53.33b, implying an estimated equity ratio of ~44.7% (the reported equity ratio of 0.0% is unreported in this dataset). Debt-to-equity at 0.98x suggests moderate leverage consistent with diversified holdings, with low interest costs indicating manageable debt service. Interest coverage at 88.6x reflects strong capacity to meet obligations. Financing cash outflow of ¥5.92b implies deleveraging and/or shareholder returns, but the exact composition is undisclosed here. Overall solvency appears healthy, though confirmation of cash balances and debt maturity profiles would strengthen the assessment.

Cash Flow Quality

Earnings quality is mixed this half: while profitability metrics are strong, OCF of ¥1.24b versus net income of ¥5.20b yields an OCF/NI ratio of 0.24, indicating weak cash conversion driven by working capital timing or growth-related investment in inventories/receivables. Free cash flow cannot be reliably assessed because investing cash flows are unreported in this feed (shown as zero by convention). Depreciation of ¥672m versus EBITDA of ¥6.07b indicates a light non-cash component relative to operating profit, so the cash shortfall likely stems from working capital movements rather than non-cash earnings. Monitoring OCF recovery in H2, inventory turnover, and receivables collections will be essential to validate earnings quality.

Dividend Sustainability

Dividend data (DPS and payout) are not disclosed here; zeros denote unreported values. Capacity-wise, H1 net income of ¥5.20b and low interest burden suggest room for distributions if policy allows, but weak OCF this half (¥1.24b) and unknown investing cash needs constrain visibility on FCF coverage. Financing cash outflows of ¥5.92b could reflect buybacks or debt repayments, but without detail, payout sustainability cannot be inferred. Assessment: potential capacity exists given profitability and balance sheet strength, yet sustainability depends on improved cash conversion and clarity on capital allocation. Policy outlook cannot be determined from the provided data.

Risk Assessment

Business Risks:

• Commodity and energy price volatility impacting margins and volumes
• Demand cyclicality in industrial and energy end-markets
• Input cost inflation and supply chain constraints
• FX fluctuations affecting import costs and overseas earnings
• Regulatory and environmental policy changes affecting energy-related businesses
• Customer concentration or contract repricing risks
• M&A integration and goodwill/asset impairment risks if portfolio is active

Financial Risks:

• Weak H1 cash conversion (OCF/NI 0.24) increasing reliance on working capital normalization
• Potential refinancing/maturity concentration not disclosed in this dataset
• Exposure to interest rate shifts, albeit mitigated by currently low interest expense
• Unreported cash and investing CF reduce visibility on liquidity runway and capex needs

Key Concerns:

• Sustainability of elevated margins into H2
• Normalization of working capital to restore OCF
• Limited disclosure here on cash balances, investing cash flows, and dividend policy

Investment Implications

Key Takeaways:

• Strong H1 profitability with operating margin ~16.9% and net margin 16.31%
• ROE of 9.76% driven by high margins and moderate leverage
• Excellent interest coverage (88.6x) and solid liquidity (current ratio 162%)
• Cash conversion is a near-term weak point (OCF/NI 0.24)
• Balance sheet appears resilient with an estimated equity ratio ~44.7%
• Financing cash outflows suggest active capital allocation, but details are not provided

Metrics to Watch:

• Operating cash flow and OCF/NI ratio in H2
• Operating margin sustainment and SG&A ratio
• Inventory and receivables turnover (working capital intensity)
• Net debt and debt-to-equity trajectory
• Investing cash flows and capex plans
• Any disclosed DPS/buyback guidance and payout framework

Relative Positioning: Versus Tokyo-listed diversified industrial/resource peers, the company exhibits above-average margins and healthy ROE with moderate leverage, but currently lags on cash conversion; overall financial resilience is solid, contingent on H2 normalization of working capital.

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
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