MARUDAI FOOD CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥120.29B
• Operating Income: ¥4.21B
• Net Income: ¥4.31B
• EPS: ¥130.48

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

Marudai Food Co., Ltd. (2288) delivered modest topline growth with meaningful operating profit improvement in FY2026 Q2 (cumulative), while net profit declined year on year due to non-operating and/or below-the-line effects. Revenue rose 1.4% YoY to ¥120.29bn, indicating stable demand with limited volume/pricing expansion. Gross profit reached ¥18.709bn, translating to a gross margin of 15.6%, which supports the view that price pass-through and cost normalization are gaining traction versus recent inflationary headwinds. Operating income increased 46.1% YoY to ¥4.21bn, lifting the operating margin to approximately 3.5% and demonstrating positive operating leverage despite only modest sales growth. Ordinary income was ¥4.442bn, helped by net non-operating income versus interest expense of ¥116m, suggesting contributions from subsidies, financial income, or other non-operating gains. Net income declined 25.2% YoY to ¥3.194bn (net margin 2.66%), implying adverse below-the-line items or a tougher comparison to prior-year extraordinary gains; tax expense of ¥965m implies an effective rate around 23% on our approximation, despite an “effective tax rate” field showing 0.0% (unreported). The DuPont decomposition yields an ROE of 4.49%, driven by a 2.66% net margin, asset turnover of 0.951x, and financial leverage of 1.78x, reflecting moderate capital efficiency. The balance sheet is conservative with total assets of ¥126.508bn and total equity of ¥71.123bn; this implies an equity ratio of roughly 56% (the provided 0.0% is unreported), and a debt-to-equity ratio of 0.76x, indicating moderate leverage headroom. Liquidity appears sound with a current ratio of 137% and quick ratio of 106%, supported by working capital of ¥15.116bn and inventories of ¥12.628bn. Operating cash flow of ¥2.756bn represents 0.86x of net income, an acceptable but improvable level given the industry’s working capital intensity. Financing cash outflow of ¥3.621bn suggests debt repayments and/or shareholder returns, though dividends and share data are unreported this period. Free cash flow and investing cash flows are unreported, limiting visibility into capex intensity and cash conversion beyond OCF. Overall, profitability trends are improving at the operating line, cash generation is decent, and the capital structure remains conservative, but the YoY decline in net income underscores residual volatility in non-operating items and/or one-offs. Strategic focus on pricing discipline, product mix improvement, and cost control seems to be working, and sustained OCF improvement will be key to reinforcing balance sheet strength. Near-term priorities include monitoring gross margin durability, SG&A discipline, and working capital efficiency in the context of raw material and energy cost movements. Data gaps (equity ratio, DPS, FCF, investing CF, share data) constrain full comparability; analysis below relies only on available non-zero disclosures and standard derivations.

Profitability Analysis

ROE of 4.49% is explained by net margin 2.66% × asset turnover 0.951x × financial leverage 1.78x. Net margin at 2.66% is modest but improving at the operating level, reflecting a healthier operating margin of ~3.5% on ¥4.21bn operating income. Gross margin of 15.6% indicates improved cost pass-through versus prior inflation shocks; continued stability in raw materials will be crucial. EBITDA of ¥6.524bn (5.4% margin) shows some operating leverage; EBITDA-to-Operating Income spread reflects depreciation of ¥2.314bn, consistent with a capital-intensive manufacturing base. Ordinary income exceeded operating income by ~¥232m, indicating net non-operating gains despite ¥116m interest expense. Interest coverage is robust at 36.3x (EBIT/interest), highlighting low financial burden. The YoY divergence—operating income +46% vs. net income -25%—suggests one-offs, tax normalization, or minority interest effects outside the operating line; underlying core margin trends appear positive. Overall margin quality is improving but remains sensitive to input price volatility and product mix (processed meats, hams/sausages, prepared foods).

Growth Assessment

Revenue grew 1.4% YoY to ¥120.29bn, suggesting limited volume growth and/or price increases in a mature domestic market. The strong +46.1% YoY increase in operating income indicates effective cost control and price discipline, delivering operating leverage despite modest sales growth. Net income decline of 25.2% YoY points to non-operating and/or extraordinary factors impacting bottom line comparability. Sustainability of growth hinges on maintaining gross margin near the current 15–16% range and further optimizing SG&A. Ordinary income at ¥4.442bn implies supportive non-operating items this period; reliance on such items should be minimized for quality of earnings. Forward outlook depends on raw material (pork, beef, poultry), energy, and logistics cost trajectories, as well as the company’s price pass-through cadence. Demand for processed and ready-to-eat categories should remain resilient, but competition and private label pose pricing pressure. Absent volume acceleration, further profit growth will rely on mix improvement and efficiency gains.

Financial Health

Total assets ¥126.508bn and total equity ¥71.123bn imply an equity ratio of ~56% (the disclosed 0.0% is unreported) and leverage (liabilities/equity) of 0.76x, indicating a solid balance sheet. Current assets ¥55.746bn vs. current liabilities ¥40.630bn yield a current ratio of 137% and a quick ratio of 106%, providing comfortable short-term liquidity. Working capital totals ¥15.116bn, with inventories at ¥12.628bn; inventory management remains a key lever for cash conversion. Interest expense is modest at ¥116m, and interest coverage is strong at 36.3x, suggesting low refinancing risk under current conditions. Financing cash outflow of ¥3.621bn points to deleveraging and/or shareholder returns, though specifics are not disclosed. Overall solvency is solid, with capacity to absorb shocks, but vigilance on input cost swings and inventory levels is warranted.

Cash Flow Quality

Operating cash flow of ¥2.756bn equates to 0.86x of net income, which is acceptable but indicates some working capital drag or timing effects; a ratio sustainably above 1.0x would signal stronger conversion. Depreciation of ¥2.314bn versus operating income of ¥4.21bn is consistent with the EBITDA bridge and supports non-cash earnings quality. Free cash flow cannot be assessed because investing cash flows are unreported this period (shown as 0). Similarly, cash and equivalents are unreported, limiting visibility on liquidity buffers beyond working capital ratios. Financing cash outflow of ¥3.621bn suggests repayments or dividends/buybacks; given dividends are unreported, we infer repayments dominate. Working capital management—particularly inventory and receivables—remains central to improving OCF in a low-growth environment. Overall, earnings quality appears reasonable at the operating level, but confirmation via sustained OCF > net income and disclosed capex/FCF data is needed.

Dividend Sustainability

Dividend per share and payout ratios are unreported this period (shown as 0.00), preventing a direct assessment of cash return policy. EPS is ¥130.48, and operating cash flow is ¥2.756bn; without investing cash flow and actual DPS, free cash flow coverage of dividends cannot be determined. Balance sheet strength (equity ratio estimated ~56% and low interest burden) would generally support steady dividends if policy prioritizes stability. However, the YoY decline in net income and unreported investing cash flows introduce uncertainty about near-term payout capacity. We therefore focus on prospective FCF generation—capex intensity, working capital discipline, and operating margin trajectory—to gauge dividend sustainability once disclosures are available.

Risk Assessment

Business Risks:

• Raw material price volatility (pork, beef, poultry) affecting gross margins
• Energy and logistics cost fluctuations impacting cost base
• Price pass-through limitations due to competition and retailer bargaining power
• Demand elasticity and downtrading toward private label
• Food safety and recall risks inherent to meat processing
• Supply chain disruptions (animal disease outbreaks, import constraints)
• Labor shortages and wage inflation in manufacturing and logistics
• Product mix risk if premium/value-added categories underperform

Financial Risks:

• Working capital swings reducing OCF-to-net income conversion
• Potential increase in borrowing costs from rate normalization
• Exposure to FX on imported raw materials if hedging is insufficient
• Capex requirements (unreported) potentially pressuring FCF
• Non-operating income volatility affecting ordinary and net income

Key Concerns:

• Net income decline (-25.2% YoY) despite stronger operating income
• OCF/Net income at 0.86x, indicating only moderate cash conversion
• Limited disclosure on investing cash flows and dividends this period

Investment Implications

Key Takeaways:

• Operating recovery is evident: operating income +46.1% on +1.4% revenue, operating margin ~3.5%
• Gross margin at 15.6% suggests improving price-cost balance
• ROE of 4.49% reflects modest profitability with solid asset efficiency and moderate leverage
• Liquidity and solvency are healthy (current ratio 137%, quick ratio 106%, D/E 0.76x)
• Cash conversion acceptable but not robust (OCF/NI 0.86x); sustained improvement needed
• Net income decline highlights sensitivity to non-operating/extraordinary items
• Data gaps (FCF, investing CF, DPS, share data) limit full payout and valuation analysis

Metrics to Watch:

• Gross and operating margins (price pass-through vs. input costs)
• OCF-to-net income ratio (target sustainably >1.0x)
• Inventory days and receivables turnover (working capital efficiency)
• Capex and free cash flow once investing CF is disclosed
• Ordinary vs. operating income gap (non-operating dependence)
• Equity ratio and leverage trends
• Interest coverage resilience under varying rates

Relative Positioning: Within Japan’s processed meats and prepared foods peer set, Marudai exhibits improving operating efficiency and a conservative balance sheet, though scale is smaller than leading peers; profitability is recovering but remains mid-pack, with further upside contingent on sustained margin gains and stronger cash conversion.

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