Marusan-Ai Co., Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥32.87B
• Operating Income: ¥857M
• Net Income: ¥828M
• EPS: ¥315.71

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.

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AI Financial Analysis

Executive Summary

Marusanai Co., Ltd. (25510) reported FY2025 Q4 (full-year) consolidated results under JGAAP showing a modest top-line decline and significant margin compression at the operating level. Revenue was ¥32.872bn, down 0.9% YoY, indicating a broadly stable demand environment with limited growth. Gross profit was ¥8.675bn, implying a gross margin of 26.4%, which is reasonable for a branded food/soy-based products company but suggests cost pressures persisted. Operating income fell 25.3% YoY to ¥0.857bn, compressing operating margin to roughly 2.6%, underscoring negative operating leverage on a slightly lower sales base. Ordinary income was ¥0.858bn, close to operating income, indicating minimal contribution from non-operating items and low financial drag. Net income declined 14.0% YoY to ¥0.712bn, with EPS of ¥315.71. Using reported net income and EPS, the implied average shares outstanding are approximately 2.26 million. DuPont analysis points to a calculated and reported ROE of 10.15%, driven by modest net margin (2.17%), healthy asset turnover (1.216x), and relatively high financial leverage (3.85x). ROA is approximately 2.6% (¥712m/¥27.022bn), reflecting a business with thin net margins but decent asset utilization. Liquidity appears adequate with a current ratio of 116% and a quick ratio of 90%, backed by positive operating cash flow of ¥0.977bn. However, free cash flow was negative ¥1.427bn due to sizable investing outflows (¥2.404bn), suggesting a capex-heavy year, likely for capacity, automation, or product line investments. Interest coverage is strong at 31.8x (EBIT/interest), indicating low near-term refinancing risk. Balance sheet leverage is notable with liabilities/equity at 2.91x, but the equity-to-asset ratio is about 26% (based on reported totals), despite the equity ratio field showing 0.0% (undisclosed). Reported effective tax rate of 0.0% is inconsistent with disclosed income tax; based on net income and taxes, the implied effective tax rate is roughly 30%, highlighting a data field limitation rather than an anomaly. Dividend fields (DPS, payout, FCF coverage) show as zero/unreported; therefore, dividend conclusions rely on inference rather than disclosed figures. Overall, the year reflects resilient demand but margin headwinds and an investment phase depressing free cash flow, with earnings quality supported by OCF exceeding net income.

Profitability Analysis

ROE of 10.15% decomposes into a 2.17% net profit margin, 1.216x asset turnover, and 3.85x financial leverage. The operating margin of 2.61% (¥857m/¥32,872m) and EBITDA margin of 6.0% indicate thin profitability typical of mid-sized food manufacturers with rising input costs. Gross margin at 26.4% suggests some pricing power but likely pressured by raw materials (e.g., soybeans), packaging, and energy/freight. The 25.3% YoY decline in operating income on a 0.9% sales decline highlights negative operating leverage; fixed costs absorbed more profit on slightly lower volumes. Ordinary income closely tracking operating income implies limited contribution from financial or other income and minimal FX/other non-core volatility. Interest expense is modest (¥27.0m), and coverage is strong at 31.8x, so debt cost is not currently a profit headwind. ROA near 2.6% reflects thin net margins; ROE uplift stems mainly from leverage rather than high margin or exceptionally high turnover. Depreciation of ¥1.122bn (≈3.4% of sales) indicates a relatively asset-intensive manufacturing base that will require continued reinvestment. Overall, margin quality is acceptable but vulnerable to input inflation; operating leverage could work positively if pricing/volume recover.

Growth Assessment

Top-line decreased 0.9% YoY to ¥32.872bn, indicating flat demand with possible product mix shifts. Profitability deteriorated more sharply, with operating income down 25.3% YoY, pointing to cost inflation outpacing pricing actions or volume efficiency. Net income declined 14.0% YoY to ¥712m, with a smaller drop than operating income, possibly helped by lower non-operating headwinds or tax effects. Given the investing cash outflows of ¥2.404bn, management appears to be prioritizing capacity/efficiency investments, which could support medium-term growth and margin recovery. Revenue sustainability looks reasonable given the stable base, but near-term growth likely depends on successful price/mix management and category momentum in soy/plant-based products. Profit quality is supported by OCF/NI of 1.37x, implying limited earnings inflation from working capital or accruals. Outlook hinges on raw material cost trends (soybeans, packaging), energy costs, and the ability to pass through increases. If capex is for efficiency or new SKUs, operating leverage could turn positive with even modest sales growth; conversely, if volumes stay flat, margin recovery may be gradual. No guidance is provided here; thus, the near-term growth outlook is cautious but with potential catalysts from newly deployed assets.

Financial Health

Total assets were ¥27.022bn and total equity ¥7.017bn, implying an equity ratio around 26% despite the equity ratio field showing 0.0% (undisclosed in XBRL). Total liabilities of ¥20.430bn equate to a debt-to-equity of 2.91x (liabilities/equity), indicating meaningful leverage but manageable given strong interest coverage. Current assets of ¥14.485bn versus current liabilities of ¥12.444bn yield a current ratio of 116% and a quick ratio of 90%, suggesting adequate short-term liquidity. Working capital stands at ¥2.041bn, providing a modest liquidity buffer. Inventories are ¥3.331bn; relative to COGS, this implies roughly 50 days of inventory, a reasonable level for a food manufacturer with perishable inputs and finished goods. Cash and equivalents are shown as 0 (undisclosed), which limits precision in assessing immediate liquidity; however, positive OCF and solid coverage mitigate near-term concerns. Ordinary income closely aligned with operating income indicates limited financial volatility from derivatives/FX or equity method results.

Cash Flow Quality

Operating cash flow of ¥0.977bn exceeded net income of ¥0.712bn (OCF/NI 1.37x), indicating good earnings quality with supportive working capital management and non-cash charges. Depreciation of ¥1.122bn underpins cash earnings (EBITDA ¥1.979bn). Free cash flow was negative ¥1.427bn due to sizable investing outflows of ¥2.404bn, likely reflecting capacity expansion, productivity enhancements, or strategic investments. Financing cash flow was a small net outflow of ¥109m, suggesting limited reliance on new debt/equity in the period. Working capital appears stable given the modest change implied by OCF outpacing NI; inventories at ~50 days do not signal stress. The negative FCF is investment-driven, not indicative of weak earnings quality; sustainability improves if capex normalizes toward maintenance levels.

Dividend Sustainability

Dividend data (DPS, payout ratio, FCF coverage) are shown as 0.00, indicating undisclosed rather than actual zero. With EPS at ¥315.71 and OCF at ¥0.977bn, earnings and cash generation could support a modest dividend under normal capex, but FY2025’s negative FCF (-¥1.427bn) reflects an investment-heavy year. Without disclosed DPS, we cannot compute a true payout. If the company maintains or initiates dividends, coverage should be evaluated against normalized FCF rather than this year’s elevated investing outflows. Balance sheet leverage (liabilities/equity 2.91x) argues for prudence in distributions until FCF turns positive post-investment. Policy outlook likely favors stability and reinvestment, with potential for dividends contingent on post-capex cash generation.

Risk Assessment

Business Risks:

• Input cost volatility (soybeans, packaging materials, energy) pressuring gross margins
• Pricing power constraints in competitive retail channels limiting pass-through
• Demand volatility for soy/plant-based products and private label mix shifts
• Operational ramp risks from recent capex (startup inefficiencies, delays)
• Supply chain and logistics costs affecting service levels and costs
• Brand and quality risks in food safety and compliance

Financial Risks:

• Leverage at 2.91x liabilities/equity increases sensitivity to earnings swings
• Negative FCF in the period due to high capex, requiring future cash generation to normalize
• Limited disclosed cash balance obscures immediate liquidity analysis
• Potential interest rate increases could lift funding costs (though current interest burden is low)
• Working capital swings (inventory and receivables) could affect OCF

Key Concerns:

• Operating margin compression despite nearly flat sales (negative operating leverage)
• Sustainability of price/mix actions to offset input inflation
• Execution on newly deployed capital to lift productivity and margins
• Lack of disclosed dividends may signal conservative stance or data gap; clarity needed

Investment Implications

Key Takeaways:

• Stable revenue base (-0.9% YoY) but significant operating margin compression (operating margin ~2.6%)
• ROE at 10.15% supported by leverage; ROA modest (~2.6%)
• Earnings quality solid (OCF/NI 1.37x) despite profit decline
• Negative FCF (-¥1.427bn) driven by elevated investing outflows; medium-term payoff is key
• Liquidity adequate (current ratio 116%, quick ratio 90%); interest coverage strong (31.8x)
• Balance sheet equity ratio approximately 26% by calculation despite undisclosed field

Metrics to Watch:

• Gross and operating margins (price pass-through versus input cost trends)
• Capacity ramp and utilization from recent capex; capex guidance/normalization
• Free cash flow trajectory and working capital turns (inventory days, receivable days)
• Leverage metrics (liabilities/equity, net debt/EBITDA when cash is disclosed)
• OCF/NI ratio as a proxy for earnings quality
• Volume growth in core soy milk/miso and contribution from new products

Relative Positioning: Within Japan’s packaged foods/soy-based category, the company operates at smaller scale with lower margins than large-cap peers, relying on operational efficiency and selective pricing to defend profitability; leverage-supported ROE contrasts with peers that typically exhibit higher margins and stronger balance sheets.

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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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