NAKAMURAYA CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.50B
• Operating Income: ¥-1.93B
• Net Income: ¥-1.33B
• EPS: ¥-229.81

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

For FY2026 Q2 (single-entity, JGAAP), Nakamuraya reported revenue of ¥12.496bn, declining 1.7% YoY, indicating modest topline softness. Gross profit was ¥3.653bn, implying a gross margin of 29.2%, which is reasonable for the company’s food-related profile but insufficient to cover fixed costs in the current half. Operating income deteriorated to a loss of ¥1.93bn (operating margin roughly -15.4%), and ordinary income was a loss of ¥1.802bn, suggesting minor non-operating support versus operating performance. Net income was a loss of ¥1.327bn, with a reported net margin of -10.62% and EPS of -¥229.81. The magnitude of loss relative to a small revenue decline highlights meaningful operating leverage and fixed cost pressure. EBITDA was -¥1.190bn, with D&A of ¥740m, indicating that after non-cash charges the core earnings power remains negative. Despite the loss, operating cash flow (OCF) was positive at ¥587m, pointing to supportive working capital movements and non-cash expense add-backs. The OCF/Net Income ratio is shown as -0.44, which reflects positive OCF against a negative net result and signals that cash earnings quality is better than headline losses imply. Liquidity appears strong: the current ratio is 250.3% and quick ratio 217.9%, underpinned by current assets of ¥11.202bn versus current liabilities of ¥4.475bn and working capital of ¥6.727bn. Solvency looks sound with total liabilities of ¥16.471bn against total equity of ¥26.174bn; this implies an estimated equity ratio of about 56.5% (equity/assets), although the reported equity ratio field is unfilled. Interest expense is low at ¥12m and interest coverage based on EBITDA is negative due to the loss, but the absolute interest burden is modest. DuPont shows ROE at -5.07% driven by a negative net margin (-10.62%) and low asset turnover (0.270), with moderate leverage (1.77x). The tax line shows a benefit of ¥557m, consistent with loss carryforwards or deferred tax effects; the displayed effective tax rate metric of 0.0% appears non-representative given unreported fields. Dividend distribution is suspended (DPS ¥0.00), consistent with negative earnings and the need to preserve liquidity. Several datapoints are unreported (e.g., cash and equivalents, investing cash flow, shares outstanding), limiting precision on per-share and free cash flow coverage analyses. Overall, the quarter reflects a revenue dip translating into a disproportionately larger operating loss due to fixed costs, but with robust liquidity and a conservative balance sheet providing cushion. Near-term focus should be on restoring operating margin via cost control, mix improvement, and potential price actions while sustaining cash discipline.

Profitability Analysis

ROE_decomposition: Reported DuPont: Net profit margin -10.62%, asset turnover 0.270x, financial leverage 1.77x, yielding ROE of -5.07%. The negative ROE is predominantly margin-driven; low turnover and moderate leverage play secondary roles. margin_quality: Gross margin of 29.2% (¥3.653bn GP on ¥12.496bn sales) is reasonable but insufficient to cover fixed SG&A, resulting in an operating margin of roughly -15.4%. Ordinary margin improved slightly versus operating due to non-operating gains net of interest (ordinary loss -¥1.802bn vs operating loss -¥1.930bn). The tax benefit (¥557m) partially offsets the loss, but underlying operating profitability remains weak. operating_leverage: Revenue declined only 1.7% YoY, yet operating loss deepened (-38.3% YoY reported for operating income), evidencing high operating leverage and fixed cost inflexibility in the half. EBITDA of -¥1.190bn versus D&A of ¥740m indicates that even before depreciation, earnings are negative, underscoring the need for cost actions and/or pricing. efficiency: Asset turnover at 0.270x (based on period-end assets) is low; annualized turnover would be higher but still modest for the category, suggesting underutilized assets or seasonality. Working capital appears ample, but inventory efficiency cannot be robustly assessed with a single point.

Growth Assessment

revenue_sustainability: Topline decline of 1.7% YoY indicates mild demand softness or mix pressure. Without segment details, the sustainability of revenues is uncertain; however, stability near ¥12.5bn suggests the core franchise remains intact. profit_quality: Net loss of ¥1.327bn contrasts with positive OCF of ¥587m, implying supportive non-cash items (D&A ¥740m) and likely favorable working capital. Ordinary loss being smaller than operating loss indicates some recurring non-operating income support, but reliance on this is not ideal. outlook: To return to profitability, management likely needs to improve price/mix, reduce fixed costs, and maintain procurement discipline. Given low interest burden, financial flexibility exists to execute restructuring or marketing investments. Near-term growth visibility is limited by the lack of disclosed segment trends and macro price elasticity but stabilization of revenue with margin repair is the key path forward.

Financial Health

liquidity: Current assets ¥11.202bn vs current liabilities ¥4.475bn yield a current ratio of 250.3% and quick ratio of 217.9%, indicating strong short-term liquidity. Working capital stands at ¥6.727bn. solvency: Total liabilities ¥16.471bn against total equity ¥26.174bn imply an estimated equity ratio of ~56.5% (equity/assets) and a leverage (assets/equity) of 1.77x. Interest expense is low at ¥12m, supporting solvency despite negative EBITDA. capital_structure: Debt-to-equity is reported at 0.63x (measure likely using total liabilities), indicating moderate leverage. The modest interest burden suggests limited financial debt or low average cost of debt. Equity base remains sizable for loss absorption.

Cash Flow Quality

earnings_quality: OCF of ¥587m versus net loss of ¥1.327bn indicates that earnings include significant non-cash charges (D&A ¥740m) and tax effects (¥557m benefit). The OCF/Net Income ratio of -0.44 reflects positive cash generation relative to negative earnings, a favorable indicator for near-term liquidity. FCF_analysis: Investing cash flow is unreported (displayed as 0), so free cash flow cannot be reliably computed. On a proxy basis, if maintenance capex approximates D&A (¥740m), indicative FCF would likely be negative, but this is an assumption in absence of disclosed capex/ICF. working_capital: Positive OCF in a loss-making period suggests working capital release (and/or tax refunds). Without detailed AR/AP/inventory movements, the sustainability of this cash benefit is uncertain.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 with a payout ratio of 0.0%, consistent with negative earnings (-¥1.327bn) and prudent capital preservation. FCF_coverage: FCF coverage is shown as 0.00x; given investing cash flows are unreported, true FCF coverage of dividends cannot be determined. With DPS at zero, near-term coverage is not a constraint. policy_outlook: Given current losses and the need to restore profitability, continuation of a conservative dividend stance appears likely until operating cash generation improves sustainably.

Risk Assessment

Business Risks:

• High operating leverage causing outsized earnings swings on small revenue changes
• Input cost volatility (raw materials, energy) impacting gross margin
• Demand softness or weak mix/pricing in key product categories
• Competitive pressure in the packaged foods/confectionery/retail channels
• Potential execution risk in cost restructuring and pricing actions
• Brand and channel concentration risks if reliance on specific retailers or formats is high

Financial Risks:

• Negative EBITDA and operating losses despite low interest burden
• Potential erosion of equity if losses persist
• Uncertain capex requirements due to unreported investing cash flows
• Working capital-driven OCF may be non-recurring or timing-related
• Limited visibility on cash and equivalents due to unreported balance

Key Concerns:

• Operating margin at approximately -15.4% with only a 1.7% revenue decline
• Sustained negative EBITDA (-¥1.190bn) indicating core earnings pressure
• Dependence on non-operating items and tax benefits to mitigate net losses
• Data gaps on cash, investing flows, and share metrics limiting precision in FCF and per-share analysis

Investment Implications

Key Takeaways:

• Revenue down 1.7% YoY to ¥12.496bn, but operating loss widened to -¥1.93bn, highlighting fixed cost pressure
• Gross margin 29.2% is not covering SG&A at current scale; EBITDA at -¥1.190bn
• Balance sheet resilience with estimated equity ratio ~56.5% and low interest expense (¥12m)
• Positive OCF (¥587m) despite losses suggests cash conservation via non-cash charges and WC
• Dividend suspended (DPS ¥0), prioritizing cash preservation

Metrics to Watch:

• Sequential operating margin and EBITDA trajectory
• Price/mix versus input cost inflation in gross margin
• Working capital trends (inventory, receivables, payables) and OCF sustainability
• Capex and investing cash flows to assess true FCF
• Sales momentum and promotional intensity affecting topline and margins

Relative Positioning: Compared to typical domestic food peers, Nakamuraya currently exhibits weaker profitability and efficiency (negative EBITDA, low asset turnover) but maintains stronger-than-average liquidity and a conservative leverage profile, affording time to execute margin repair.

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