Shimadaya Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥22.83B
• Operating Income: ¥2.76B
• Net Income: ¥1.92B
• 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

Shimadaya (250A0) delivered a solid FY2026 Q2 (cumulative) performance with defensive profitability and a very strong balance sheet, while cash conversion lagged. Revenue rose 4.4% YoY to ¥22.83bn, with operating income up 4.8% YoY to ¥2.76bn as operating margin held at a healthy 12.1%. Gross margin of 30.1% and EBITDA margin of 15.1% indicate improved mix and/or pricing power offsetting input cost pressures. Ordinary income exceeded operating income (¥2.83bn vs. ¥2.76bn), suggesting modest non-operating gains; however, net income declined 5.1% YoY to ¥1.82bn, likely driven by a higher tax burden and/or below-the-line items. Based on ordinary income and recorded income tax, the implied effective tax rate is approximately 29–30%, consistent with standard domestic rates (the reported 0.0% metric is not reflective of the disclosed tax charge). DuPont analysis shows ROE of 9.35% driven by a solid 7.97% net margin, asset turnover of 0.86x, and low financial leverage of 1.36x, which collectively point to quality-driven returns rather than leverage. The balance sheet is conservative: equity is ¥19.47bn versus total assets of ¥26.54bn, implying an equity ratio of roughly 73–74% (the 0.0% figure is an undisclosed placeholder). Liquidity is strong with a current ratio of 232% and quick ratio of 209%, and working capital of ¥6.97bn provides ample operating flexibility. Interest expense is de minimis (¥21k) and interest coverage is effectively unconstrained, underscoring low credit risk. Operating cash flow was ¥1.11bn (OCF/NI ~0.61), indicating weaker cash conversion, likely due to working capital absorption amid growth and seasonality typical for food manufacturers. Free cash flow cannot be reliably assessed because investing cash flows (capex) were not disclosed in XBRL; the calculated FCF=0 reflects missing data rather than actual zero capex. Inventory of ¥1.22bn against cost of sales suggests lean inventory practices (indicative DIO ~15 days using period-end balances), but full turnover diagnostics require average balances. The company reported no dividend (DPS=0), and payout data are therefore not indicative of policy; given the strong balance sheet, a dividend would likely be serviceable at modest levels, but visibility is limited without capex and explicit policy guidance. Share data were not disclosed; using EPS and net income, the implied share count is roughly 15.2 million, which should be treated as an estimate. Overall, Shimadaya exhibits resilient operating performance, prudent financial structure, and manageable risks, with the main watchpoint being the gap between earnings and operating cash flow and the absence of capex disclosure.

Profitability Analysis

ROE (DuPont) = Net profit margin (7.97%) × Asset turnover (0.86x) × Financial leverage (1.36x) = 9.35%. Operating margin stands at 12.1% (¥2,756m / ¥22,832m), supported by a 30.1% gross margin, indicating reasonable pass-through of input cost inflation and favorable product mix. EBITDA margin of 15.1% (¥3,449m) provides cushion for reinvestment and marketing while maintaining profitability. The slight positive operating leverage is evident: revenue grew 4.4% YoY while operating income rose 4.8% YoY, implying modest fixed-cost dilution. Ordinary income (¥2,827m) above operating income suggests small net non-operating gains (e.g., financial income or subsidies), but this did not translate into net income growth due to a heavier tax burden and/or below-the-line items. Interest expense is immaterial (¥21k), so profitability is not reliant on financial leverage; returns are driven by operating efficiency and margin quality. The implied effective tax rate is about 29.7% (¥841m tax / ~¥2,827m pre-tax proxy), consistent with domestic statutory norms; the reported 0.0% tax rate metric reflects non-disclosure, not economic reality. Overall profitability quality appears sound given robust gross-to-operating drop-through and minimal reliance on non-operating gains or leverage.

Growth Assessment

Top-line growth of 4.4% YoY to ¥22.83bn suggests steady demand, likely supported by pricing and stable volume within core noodle and chilled/frozen categories. Operating income growth of 4.8% YoY outpaced sales slightly, indicating modest positive operating leverage and disciplined cost control. Net income declined 5.1% YoY despite stronger operating profit, likely due to tax normalization or non-recurring items below ordinary income; this creates a temporary divergence between operating and bottom-line growth. Gross margin at 30.1% and EBITDA margin at 15.1% point to sustained pricing power and product mix resilience, which is constructive for margin sustainability if input costs remain stable. Looking forward, growth sustainability will depend on raw material cost trends (wheat/flour), energy and logistics costs, and the company’s ability to maintain pricing while defending volumes. The conservative balance sheet provides capacity to invest in capacity, efficiency, and product development to support medium-term growth. Absent disclosed segment data and volume/price mix details, we infer steady, incremental growth with manageable margin risk rather than step-change expansion.

Financial Health

Total assets are ¥26.54bn and total equity is ¥19.47bn, implying an equity ratio of ~73–74% (calculated), signifying a very strong capital base. Total liabilities are ¥6.77bn, and current liabilities are ¥5.27bn versus current assets of ¥12.24bn, yielding a current ratio of 232% and quick ratio of 209%—ample near-term liquidity. Debt-to-equity is reported at 0.35x (likely total liabilities-to-equity proxy), with negligible interest expense (¥21k) and an exceptionally high implied interest coverage, indicating minimal solvency risk. Working capital totals ¥6.97bn, providing operational flexibility to manage seasonal swings and inventory needs. Cash and equivalents were not disclosed (reported as 0), but liquidity appears strong based on current asset composition; absence of cash detail is a data limitation, not a concern signal. Overall, the company’s low leverage and thick equity buffer position it well against macro or input cost shocks.

Cash Flow Quality

Operating cash flow was ¥1.11bn versus net income of ¥1.82bn, for OCF/NI of ~0.61, indicating weaker cash conversion in the period. The shortfall likely reflects working capital absorption (e.g., higher receivables and/or inventory build) associated with growth and seasonal patterns common in food manufacturing. Depreciation and amortization of ¥693m (≈25% of operating income) supports non-cash earnings quality at the operating level. Free cash flow cannot be assessed because investing cash flow (including capex) was undisclosed (reported as 0 due to non-reporting), so the FCF figure of 0 should not be interpreted as zero capex. With limited disclosure on receivables/payables, we cannot decompose working capital changes; however, inventory at ¥1.22bn against COGS implies lean stocking (indicative DIO ~15 days using period-end), supportive of cash generation once working capital normalizes. Net non-operating cash uses are minimal given tiny interest expense and small financing outflows (¥1.9m). We will look for a rebound in OCF in subsequent quarters to validate earnings quality.

Dividend Sustainability

Reported DPS is 0 and payout ratio is 0% due to non-disclosure of dividends in the period; this does not establish a policy stance. With net income of ¥1.82bn and low leverage, the company would have capacity to fund a modest dividend if desired, but capex and investing cash flows are undisclosed, preventing a proper free cash flow coverage test. Historically, food companies prioritize stable dividends; however, without explicit guidance or capex data, sustainability cannot be assessed this quarter. If capex is in line with maintenance plus selective growth, FCF coverage of a modest payout would likely be comfortable given margins and liquidity; conversely, a step-up in strategic capex could temporarily compress coverage. Until dividend policy and capex are clarified, we treat dividend outlook as uncertain.

Risk Assessment

Business Risks:

• Raw material price volatility (wheat, flour, oils) affecting gross margin
• Energy and logistics cost inflation impacting COGS and SG&A
• Competitive pressure from domestic peers and private labels leading to pricing pressure
• Food safety and quality control risks with potential brand and legal ramifications
• Demand softness from demographic trends and changing consumption patterns
• Retail channel bargaining power and promotional intensity
• Product mix shifts between chilled, frozen, and ambient lines affecting utilization and margins

Financial Risks:

• Working capital absorption leading to weaker cash conversion (OCF/NI 0.61)
• Potential capex upcycles (undisclosed) temporarily pressuring free cash flow
• Tax rate normalization or fluctuations impacting net profit
• Limited disclosure of cash and investing flows reduces visibility for liquidity and FCF

Key Concerns:

• Gap between operating profit growth (+4.8% YoY) and net income (-5.1% YoY)
• Undisclosed investing cash flows cap FCF visibility
• Reliance on continued pricing power to offset input cost volatility

Investment Implications

Key Takeaways:

• Resilient operating performance: revenue +4.4% YoY, OP +4.8% YoY, operating margin ~12.1%
• High-quality balance sheet with calculated equity ratio ~73–74% and minimal interest burden
• Cash conversion soft (OCF/NI 0.61) likely due to working capital; watch for normalization
• Net income decline (-5.1% YoY) driven by taxes/below-the-line items despite solid operations
• FCF and dividend capacity uncertain this quarter due to undisclosed investing flows

Metrics to Watch:

• OCF to net income ratio and working capital changes (receivables, inventory, payables)
• Gross and operating margins versus input cost trends (wheat, energy, logistics)
• Capex levels and investing cash flow disclosure to assess FCF
• Volume versus price mix to gauge demand elasticity
• Effective tax rate and any extraordinary gains/losses affecting bottom line

Relative Positioning: Within Japan’s processed food/noodle peers, Shimadaya appears conservatively financed with above-average balance sheet strength, mid-teens EBITDA margins, and disciplined costs; cash conversion is currently below ideal but likely cyclical/seasonal, leaving the company well positioned to navigate input cost volatility.

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