FRUTA FRUTA INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.06B
• Operating Income: ¥254M
• Net Income: ¥204M
• EPS: ¥2.52

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

Fruta Fruta (25860) reported a sharp top-line rebound in FY2026 Q2, with revenue of ¥2,058m, up 83.0% YoY, indicating strong demand recovery or successful channel/product initiatives. Profitability improved markedly: operating income reached ¥254m (+174.6% YoY) and net income ¥204m (+177.3% YoY), reflecting substantial operating leverage. Gross profit was ¥397m, implying a gross margin of 19.3%, and operating margin improved to roughly 12.3%, a robust level for a branded food/beverage model. Ordinary income of ¥242m trails operating income slightly, suggesting modest non-operating costs, primarily interest expense of only ¥1.389m. Net margin stood at 9.91%, supported by a 0% effective tax rate, likely due to loss carryforwards under JGAAP. DuPont decomposition indicates a calculated ROE of 4.13%, driven by a 9.91% net margin, asset turnover of 0.377x, and low financial leverage of 1.11x. Asset-light characteristics are evident, with minimal D&A of ¥2.6m and high interest coverage of 182.9x. The balance sheet is strong: total assets are ¥5,456m against liabilities of ¥592m, implying an equity-to-asset ratio of about 90.5% despite the disclosed equity ratio item showing 0% (the latter appears unreported, not zero). Liquidity is ample with current assets of ¥3,405m and current liabilities of ¥588m, producing a current ratio of 5.8x and a quick ratio of 4.6x. Working capital is sizable at ¥2,816m, but this appears to be a major sink of cash in the period, as operating cash flow was negative at -¥359m despite positive earnings. Financing cash inflow of ¥794m funded the working capital build and operating outflow, indicating reliance on external capital this half. Investing cash flow and cash balances are shown as zero, which should be treated as undisclosed rather than actual zeros; therefore, capex and cash runway cannot be precisely assessed from this dataset. EPS is ¥2.52; back-solved shares outstanding approximate 81m, given net income of ¥204m, but share count disclosure is not provided here. Dividend per share is zero, with a payout ratio of 0%, consistent with a reinvestment and balance sheet repair stance. Overall, the company exhibits a strong earnings turnaround and balance sheet resilience, tempered by weak cash conversion in the period and reliance on financing, with some disclosures not available in the provided data.

Profitability Analysis

ROE_decomposition: ROE 4.13% = Net margin 9.91% × Asset turnover 0.377 × Financial leverage 1.11. ROA approximates 3.7% (NI ¥204m / Assets ¥5,456m). Leverage is low given equity of ¥4,937m vs assets of ¥5,456m, limiting ROE amplification. margin_quality: Gross margin 19.3%, operating margin ~12.3% (¥254m / ¥2,058m), ordinary margin ~11.8%, and net margin 9.91%. The tax rate is 0%, boosting net margin; normalization of taxes could compress net margin absent offsetting improvements. Low D&A (¥2.6m) suggests margins are driven by underlying unit economics rather than D&A relief. operating_leverage: Revenue grew 83.0% YoY, while operating income grew 174.6% YoY, indicating high operating leverage and improved fixed-cost absorption. Interest burden is negligible, so incremental operating profit flows through to net income efficiently.

Growth Assessment

revenue_sustainability: The 83.0% YoY revenue surge likely reflects product/channel expansion or post-weakness rebound. Sustainability will depend on repeat purchase behavior, channel breadth (CVS, e-commerce, drugstores), and pricing power amid input cost dynamics. profit_quality: Operating profit expansion outpaced sales growth, but OCF/NI of -1.76 signals weak cash conversion, likely due to working capital build (inventories ¥676m and receivables not disclosed). Ordinary income closely tracks operating income, suggesting limited non-operating distortions. outlook: If demand normalizes at higher run-rate and inventory/receivable cycles stabilize, margins could remain above prior periods. However, normalization of effective tax rate and potential input cost volatility (imported fruit pulps, FX exposure) are headwinds to net earnings growth.

Financial Health

liquidity: Current assets ¥3,404.5m vs current liabilities ¥588.3m; current ratio 5.79x and quick ratio 4.64x indicate strong short-term liquidity. Working capital stands at ¥2,816.3m. solvency: Total liabilities ¥592.0m vs equity ¥4,937.0m. Computed equity ratio ≈90.5% (equity/assets), implying very low leverage; the disclosed 0.0% equity ratio should be treated as undisclosed. capital_structure: Debt-to-equity 0.12x suggests limited interest-bearing debt. Interest expense is only ¥1.389m with 182.9x coverage, indicating minimal financial risk from leverage.

Cash Flow Quality

earnings_quality: OCF/Net income is -1.76, indicating earnings did not convert to cash this period, likely due to working capital investment. Net income benefits from a 0% effective tax rate, which may not persist. FCF_analysis: Investing CF is undisclosed, so capex/FCF cannot be fully assessed. Given negative OCF (-¥359.4m), FCF is likely negative unless offset by divestments (none disclosed). working_capital: High current assets and inventory of ¥675.8m suggest a growth/inventory build phase. Monitoring inventory turnover and receivables collection is critical to improve cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 with a 0% payout ratio. With negative OCF and ongoing growth investment, retaining earnings is prudent to preserve liquidity. FCF_coverage: FCF is not determinable from disclosed data; however, negative OCF implies dividends would not be covered by internal cash generation in the period. policy_outlook: Given small interest burden, strong equity base, and reinvestment needs, a conservative dividend stance likely persists until OCF turns sustainably positive and working capital normalizes.

Risk Assessment

Business Risks:

• Demand volatility for acai/functional beverage products in Japan and potential fad risk
• Input cost and supply chain risks tied to imported fruit pulps (Brazil), including logistics and quality consistency
• FX exposure (BRL/JPY and USD/JPY) affecting COGS and margins
• Customer concentration risk with key retailers or distributors
• Brand and pricing power risks amid competitive beverage aisles and private labels
• Inventory obsolescence risk for perishable/dated products

Financial Risks:

• Negative operating cash flow driven by working capital build
• Reliance on financing cash inflows (¥793.8m) to fund operations in the period
• Potential equity dilution if external funding continues
• Tax rate normalization from 0% could reduce net income
• Limited disclosure on cash balance and capex impedes cash runway assessment

Key Concerns:

• Sustainability of the 83% revenue growth rate
• Cash conversion (OCF/NI -1.76) and working capital intensity
• Gross margin durability amid FX and input cost fluctuations
• Visibility on cash position and investment needs given undisclosed investing CF and cash

Investment Implications

Key Takeaways:

• Strong revenue rebound and significant operating leverage drove profit inflection
• Balance sheet is equity-rich with low leverage, reducing solvency risk
• Cash conversion is weak this period; working capital management is a priority
• Interest burden is minimal, maximizing flow-through from operating gains
• Tax shield (0% effective rate) is temporarily supportive to net margin and ROE

Metrics to Watch:

• Operating cash flow and OCF/NI trajectory
• Inventory turnover days and receivables days
• Gross and operating margin trends
• Revenue growth run-rate and repeat purchase indicators
• Effective tax rate normalization path
• Any new equity/debt financing and share count changes
• Capex and investing cash flows once disclosed
• ROE and asset turnover as growth scales

Relative Positioning: Versus domestic small-cap beverage/functional food peers, Fruta Fruta currently exhibits higher near-term growth and operating leverage with very low financial leverage, but lags on cash flow conversion and has greater exposure to imported raw material and FX risks.

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