KOIKE-YA Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥29.96B
• Operating Income: ¥1.45B
• Net Income: ¥836M
• EPS: ¥67.88

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

Verdict: FY2026 Q2 was a mixed quarter with resilient topline growth but sharp margin compression leading to materially lower profits. Revenue rose 3.7% year over year to 299.62, indicating demand resilience and/or pricing support. Operating income fell 30.2% to 14.47, pulling operating margin down to 4.8%. Ordinary income decreased 30.7% to 14.26, while net income declined 34.6% to 7.24, driving net margin to 2.4%. Based on revenue growth and profit declines, we estimate operating margin compressed by roughly 236 bps year over year (from about 7.2% to 4.8%). Net margin likely compressed by about 142 bps (from ~3.8% to 2.4%). Gross margin stands at 30.3%, implying elevated cost of sales (208.97) relative to sales, consistent with input cost pressures. SG&A was 76.16, equating to a 25.4% SG&A-to-sales ratio; without a YoY breakdown, higher SG&A intensity cannot be confirmed but is a plausible contributor to the margin squeeze. Non-operating items were small (income 0.36, expenses 0.57), with a modest net drag mainly from interest expense (0.28). ROE calculated via DuPont is 3.7% (Net margin 2.4% × Asset turnover 0.693 × Leverage 2.22x), undershooting consumer staples peers. ROIC is 4.7%, below the 5% warning threshold, signaling weak capital efficiency. Liquidity is adequate but not ample (current ratio 125.5%, quick ratio 112.2%), and leverage is moderate (D/E 1.22x) with very strong interest coverage (51.7x). Earnings quality cannot be assessed due to unreported cash flow data; this is a key limitation. The calculated payout ratio of 81.1% appears elevated relative to profit pressure and absent FCF disclosure, raising caution on dividend flexibility if margin headwinds persist. Near term, focus remains on cost normalization, pricing/mix discipline, and SG&A control to stabilize margins and lift ROIC toward mid-single digits.

Profitability Analysis

DuPont decomposition: ROE 3.7% = Net Profit Margin (2.4%) × Asset Turnover (0.693) × Financial Leverage (2.22x). The most material change vs last year is the contraction in net profit margin, inferred from net income down 34.6% against revenue up 3.7%. Business drivers likely include higher raw material costs (e.g., potatoes, edible oils), energy and logistics inflation, and possibly elevated promotional spend, which depressed operating margin to 4.8%. Asset turnover at ~0.69 appears broadly stable, assuming average assets did not materially change; no evidence of deterioration here. Financial leverage at 2.22x is moderate and likely little changed; leverage did not drive ROE movement. We estimate operating margin compressed by ~236 bps YoY (from ~7.2% to 4.8%), pointing to negative operating leverage as costs grew faster than sales. Sustainability: margin pressure may ease if input costs normalize and price/mix holds; however, given competitive dynamics, a full reversal is uncertain in the near term. Watch for SG&A growth exceeding revenue growth; current SG&A-to-sales is 25.4%, but lack of YoY detail limits confirmation of a cost overrun trend.

Growth Assessment

Topline grew 3.7% YoY to 299.62, indicating stable demand and/or pricing actions in core snack categories. Profit growth was negative across all levels: operating income -30.2%, ordinary income -30.7%, net income -34.6%, highlighting margin headwinds. Operating margin is 4.8%, below historical levels implied by last year’s margin (~7.2%). Gross margin of 30.3% suggests cost of goods inflation not fully offset by price/mix. Non-operating contribution was minimal and slightly negative (net -0.21), so earnings were predominantly driven by core operations. Revenue sustainability appears reasonable for a branded snacks player, but profit quality hinges on cost normalization and disciplined SG&A. Outlook: to re-accelerate earnings, the company likely needs sustained price/mix, productivity gains, and cost relief in raw materials and logistics; otherwise, EPS may remain suppressed. Absent segment detail, we assume growth is broad-based with competitive pressure from larger peers and private label.

Financial Health

Liquidity: Current ratio 125.5% (>1.0 but <1.5), quick ratio 112.2%—adequate near-term liquidity with room for improvement. No warning on current ratio (above 1.0). Working capital stands at 39.13. Maturity profile: Current liabilities 153.64 vs current assets 192.77; short-term loans are modest at 5.00, with cash 45.68 and receivables 95.83 providing coverage—limited maturity mismatch risk. Solvency: Debt-to-equity 1.22x (within the <1.5x conservative benchmark); long-term loans 57.82 indicate reliance on term funding but interest coverage is very strong at 51.68x, implying low near-term refinancing stress. Off-balance items: Not disclosed; no identified off-balance sheet obligations from the provided data. Equity base is 194.88, supporting leverage capacity, but capital efficiency is weak (ROIC 4.7%).

Cash Flow Quality

Operating cash flow is unreported, so OCF/Net Income cannot be assessed; earnings quality flags cannot be confirmed. Free cash flow and capex are also unreported, limiting visibility on reinvestment pace and cash returns. Working capital indicators from the balance sheet appear reasonable: receivables 95.83 and inventories 20.36 relative to half-year sales do not suggest obvious stock build or channel-stuffing, but without OCF we cannot rule out timing effects. With interest coverage at 51.7x and modest short-term debt, financing strain seems limited, but the absence of OCF data remains a key gap.

Dividend Sustainability

The calculated payout ratio is 81.1%, which is high versus the <60% benchmark, especially in a year with profit compression. FCF coverage is not calculable due to missing OCF/capex data; consequently, we cannot confirm cash coverage of dividends. Balance sheet leverage is moderate and liquidity is adequate, which can support dividends temporarily; however, with ROE at 3.7% and ROIC at 4.7%, prolonged high payout could constrain reinvestment and deleveraging if earnings remain weak. Policy outlook: unless profitability recovers, management may need to balance shareholder returns with margin restoration and capex for productivity/brand support.

Risk Assessment

Business Risks:

• Input cost inflation (potatoes, edible oils, packaging, energy) pressuring gross margin
• Logistics and distribution cost increases impacting SG&A and COGS
• Competitive pricing pressure from larger peers and private brands reducing pricing power
• Demand elasticity to further price hikes potentially limiting pass-through
• Product mix risk if premium SKUs underperform in a weak consumer environment

Financial Risks:

• High payout ratio (81.1%) despite profit compression may reduce financial flexibility
• ROIC at 4.7% (<5%) indicates weak capital efficiency and potential value dilution
• Liquidity only moderate (current ratio 1.26), leaving less buffer for shocks
• Potential working capital swings affecting cash conversion (OCF unreported)

Key Concerns:

• Sustained operating margin compression (~236 bps YoY) with uncertain cost normalization
• Net margin down ~142 bps YoY; ROE subdued at 3.7%
• Limited visibility due to unreported OCF, capex, and dividend cash outlays
• Reliance on price/mix in a competitive category to offset cost pressures

Investment Implications

Key Takeaways:

• Revenue growth of 3.7% but significant margin squeeze drove net income down 34.6%
• Operating margin fell to 4.8%, an estimated 236 bps YoY compression
• ROE at 3.7% and ROIC at 4.7% reflect low capital efficiency
• Leverage moderate (D/E 1.22x) and interest coverage strong (51.7x)
• Payout ratio is elevated at 81.1% despite weaker earnings

Metrics to Watch:

• Gross margin trajectory and cost pass-through effectiveness
• SG&A-to-sales ratio versus revenue growth (discipline on promotions and logistics)
• OCF/Net income and free cash flow once reported
• Inventory and receivable days as indicators of demand and channel health
• Pricing/mix sustainability and market share versus major peers

Relative Positioning: Within Japan’s snack foods category, the company demonstrates stable demand but weaker profitability metrics versus leading peers, with lower ROE/ROIC and heightened sensitivity to cost inflation; balance sheet strength and brand equity help, but improved cost discipline and margin recovery are needed to close the performance gap.

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