Shimadaya Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥22.83B
• Operating Income: ¥2.76B
• Net Income: ¥1.82B
• EPS: ¥119.74

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

Verdict: Solid top-line and operating performance with slight margin expansion at the operating level, but bottom-line declined on non-recurring items, leading to a mild quality overhang. Revenue rose 4.4% YoY to 228.32, supported by steady demand and likely price/mix benefits. Gross profit reached 72.58 with a margin of 31.8%, consistent with an improving cost environment and pricing discipline. Operating income increased 4.8% YoY to 27.56, outpacing sales growth. Ordinary income was 28.27 (+3.2% YoY), implying small positive non-operating contributions (net +0.71). Profit before tax declined to 25.99, indicating extraordinary losses or adjustments between ordinary income and PBT. Net income fell 5.1% YoY to 18.20 despite stronger operating profits, primarily due to below-the-line factors and a ~30% effective tax rate. Operating margin edged up to 12.1% from ~12.0% last year (+5 bps), signaling modest operating leverage. Net margin compressed to ~8.0% from ~8.8% (-80 bps), reflecting the ordinary-to-PBT delta and taxes. Earnings quality was acceptable: operating cash flow of 17.99 was essentially in line with net income (OCF/NI 0.99x), reducing concerns about aggressive accruals. Free cash flow for the period was approximately 0.12 after 17.87 in capex, indicating capex intensity this half absorbed most cash generation. The balance sheet remains conservative with a current ratio of 238% and substantial cash (50.67) against limited liabilities (total 70.72). ROE stands at 9.3% (DuPont: 8.0% margin × 0.86x asset turnover × 1.36x leverage), and ROIC at 13.4%, both comfortably above typical food sector cost of capital. Forward-looking, modest operating margin gains appear sustainable if cost normalization and pricing discipline persist, but bottom-line recovery hinges on the absence of recurring extraordinary losses. Key sensitivities include wheat and energy costs, FX for imported inputs, and the ability to maintain price pass-through without demand erosion. Overall, near-term momentum is steady, with strong financial health providing flexibility for investment and shareholder returns, though net profit optics may remain volatile if one-time items recur.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (NPM) 8.0% × Asset Turnover (AT) 0.860 × Financial Leverage (FL) 1.36x = ROE 9.3%. The component that changed the most YoY appears to be NPM, which compressed ~80 bps (from ~8.8% to ~8.0%) despite operating income growth, due to ordinary-to-PBT slippage (extraordinary losses) and a ~29.9% effective tax rate. Asset turnover at 0.860 is consistent with a relatively asset-light, efficient manufacturing/distribution footprint and likely little YoY movement given sales growth and a stable asset base. Financial leverage at 1.36x remains conservative, implying limited contribution to ROE from leverage. Business drivers: operating margin improved slightly (+5 bps) as price/mix and cost control offset input cost pressures; however, one-off below-the-line items pressured net margin. Sustainability: the operating margin gain looks sustainable given cost normalization and SG&A discipline; the net margin compression seems one-time if extraordinary losses do not recur. Watchpoints: if SG&A growth were to run ahead of revenue, operating leverage would reverse; in this period, operating income grew slightly faster than revenue, suggesting SG&A was kept in check relative to gross profit.

Growth Assessment

Revenue grew 4.4% YoY to 228.32, indicating steady demand and pricing resilience in core products. Operating income grew 4.8% YoY to 27.56, marginally outpacing revenue and signaling stable operating leverage. Ordinary income rose 3.2% YoY to 28.27; the smaller growth vs operating income reflects limited non-operating tailwinds. Net income declined 5.1% YoY to 18.20 due to below-the-line items between ordinary income and PBT and tax effects. Current operating margin is 12.1% (+~5 bps YoY), while net margin compressed ~80 bps to ~8.0%. With ROIC at 13.4%, the company is creating value above its likely cost of capital; sustaining ROIC above 8% hinges on maintaining gross margin near 32% and disciplined capex. Outlook: mid-single-digit revenue growth appears sustainable given product positioning and potential for continued price/mix; margin trajectory depends on input cost trends (wheat, energy) and logistics costs. Risks to growth include consumer trading down and competitive pricing in retail/private label. Absent repeated extraordinary losses, net profit growth should re-align with operating profit growth.

Financial Health

Liquidity is strong: current ratio 237.8% and quick ratio 216.6% comfortably exceed benchmarks; no warning on Current Ratio < 1.0. Cash and deposits (50.67) plus receivables (63.49) together exceed current liabilities (55.12), indicating low near-term refinancing risk. Leverage is conservative: reported D/E 0.36x is well below 1.5x; no flags for D/E > 2.0. Total liabilities are 70.72 against equity of 194.66, implying ample solvency buffer. Maturity mismatch risk is low given high liquid assets versus short-term obligations; short-term loans are unreported, but available liquidity appears sufficient. Off-balance sheet obligations were not disclosed in the dataset; none identified.

Cash Flow Quality

OCF/Net Income is 0.99x, just below 1.0 but broadly healthy, suggesting earnings are largely cash-backed with limited accrual stretch. Operating cash flow of 17.99 nearly equals net income of 18.20, indicating working capital movements are not materially distorting earnings. Capex was 17.87, resulting in approximately breakeven free cash flow (~0.12) for the period; this suggests capex timing was front-loaded or elevated in H1. With Financing CF at -5.01, the company likely funded shareholder returns and/or minor debt service from internal cash; dividends and debt details were not disclosed. Sustainability: if capex normalizes in H2, FCF should improve; current period FCF coverage of dividends cannot be assessed precisely due to unreported dividend cash outflow. No clear signs of working capital manipulation: receivables and inventories appear reasonable relative to sales and OCF.

Dividend Sustainability

The calculated payout ratio is 43.4%, which is comfortably below the 60% benchmark and generally sustainable if earnings are maintained. Period FCF was approximately 0.12 due to elevated capex, implying weak intra-period cash coverage; however, with strong liquidity and likely seasonality in capex, full-year FCF coverage could be adequate. Dividend per share and total cash dividends paid were unreported, limiting precision. Balance sheet strength (cash 50.67; low leverage) provides flexibility to sustain dividends through cycles. Key dependencies: stability of operating cash flow, normalization of capex cadence in H2, and avoidance of recurring extraordinary losses that pressured net income this quarter.

Risk Assessment

Business Risks:

• Raw material cost volatility (wheat, flour) impacting gross margin
• Energy and logistics cost fluctuations affecting manufacturing and distribution expenses
• Price pass-through risk amid competitive retail and private label pressure
• Demand elasticity and potential consumer trading down
• Seasonality/weather effects on chilled and fresh noodle consumption

Financial Risks:

• FX sensitivity for imported inputs (USD/JPY) affecting COGS
• Potential recurrence of extraordinary losses pressuring bottom line
• Capex timing risk leading to temporary FCF compression
• Receivables collection timing given sizable AR relative to monthly sales

Key Concerns:

• Net margin compression (~80 bps YoY) despite stronger operating profit
• Ordinary-to-PBT gap (2.28) suggesting one-time losses or adjustments
• Thin period FCF (~0.12) due to capex intensity

Investment Implications

Key Takeaways:

• Steady topline growth (+4.4% YoY) with slight operating margin expansion (+~5 bps)
• Bottom-line decline (-5.1% YoY) driven by below-the-line factors, not core operations
• Healthy ROE (9.3%) and robust ROIC (13.4%) indicate value creation
• Strong liquidity (current ratio 238%) and low leverage (D/E 0.36x) underpin resilience
• Earnings quality solid (OCF/NI 0.99x), but H1 FCF constrained by capex

Metrics to Watch:

• Gross and operating margin progression versus input cost trends
• Ordinary income to PBT bridge (extraordinary gains/losses) and effective tax rate
• OCF/NI ratio (>1.0 target) and working capital turns (AR and inventory days)
• Capex cadence and full-year FCF generation versus dividend outlays
• FX (USD/JPY) and wheat/energy price movements informing COGS outlook

Relative Positioning: Within domestic packaged foods, the company demonstrates above-average balance sheet strength and ROIC discipline, with operational execution intact; the main relative weakness is bottom-line volatility from non-recurring items in the period.

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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