J-OIL MILLS, INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥112.25B
• Operating Income: ¥2.52B
• Net Income: ¥3.58B
• EPS: ¥52.98

Income Statement

Balance Sheet

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

J-Oil Mills reported FY2026 Q2 (cumulative) consolidated results under JGAAP with revenue of ¥112.246 billion, down 3.5% YoY, indicating top-line softness after prior input-cost-driven price hikes in the edible oils market. Gross profit was ¥19.961 billion, translating to a gross margin of 17.8%, which is respectable but suggests sustained input cost pressures and/or pricing normalization versus last year. Operating income declined sharply by 53.8% YoY to ¥2.516 billion, compressing the operating margin to approximately 2.2%, implying negative operating leverage. Ordinary income of ¥2.782 billion exceeded operating income, indicating contribution from non-operating items; interest expense remained modest at ¥58 million, and interest coverage was strong at 43.4x. Net income fell 50.9% YoY to ¥1.753 billion, equating to a net margin of 1.56% and EPS of ¥52.98, highlighting substantial bottom-line pressure. DuPont analysis shows ROE of 1.63% driven by a 1.56% net margin, 0.658x asset turnover, and 1.58x financial leverage—profitability, not leverage or turnover, is the primary drag. The balance sheet is conservative: total assets were ¥170.545 billion and total equity ¥107.660 billion, implying an equity ratio of roughly 63.2% (calculated), despite the reported equity ratio field showing 0.0% (unreported). Liquidity is strong with a current ratio of 270% and a quick ratio of 218%, and working capital of ¥63.875 billion provides cushion against commodity and demand volatility. Inventories of ¥19.613 billion appear reasonable relative to cost of sales, implying an estimated inventory days of roughly 37 on a simple end-balance basis. Cash flow data (operating, investing, financing) and depreciation/amortization were not disclosed in this dataset (not zeros), limiting EBITDA and free cash flow assessment. The effective tax rate metric shown as 0.0% is not reliable given the provided tax expense, and likely reflects data unavailability in the calculation inputs. Dividend information (DPS, payout, FCF coverage) and share count/book value per share were also not disclosed, preventing distribution analysis from the provided dataset. Overall, the quarter shows resilient top-line scale but significant margin compression and weakened earnings quality, set against a robust balance sheet and low financial risk. The investment debate centers on the pace of gross-to-operating margin recovery as raw material and logistics costs stabilize, and on the company’s ability to maintain pricing and mix in a normalizing market. Near-term earnings sensitivity to commodity spreads and FX remains high, while structural balance sheet strength provides downside protection. We note material data limitations around cash flows and depreciation, and base conclusions on the available non-zero items.

Profitability Analysis

ROE_decomposition: ROE 1.63% = Net margin 1.56% x Asset turnover 0.658x x Leverage 1.58x. ROA is approximately 1.03% (1.56% x 0.658). The low ROE is predominantly driven by weak net margins rather than inefficient asset use or high leverage. margin_quality: Gross margin at 17.8% on revenue of ¥112.246b indicates some preservation of spread, but operating margin fell to ~2.2% (operating income ¥2.516b), signaling higher SG&A pressure and/or reduced pricing power. Net margin of 1.56% reflects additional non-operating/tax burdens. The magnitude of YoY operating profit decline (-53.8%) versus revenue (-3.5%) suggests significant margin compression. operating_leverage: Negative operating leverage is evident: a modest revenue decline translated into a disproportionately large drop in operating income. This implies limited short-term cost flexibility and high sensitivity to gross spread movements. Interest burden is minimal, so leverage does not drive earnings volatility.

Growth Assessment

revenue_sustainability: Revenue decreased 3.5% YoY to ¥112.246b, consistent with normalization in edible oil prices and possible volume/mix headwinds. Sustainability hinges on maintaining pricing amid commodity deflation and competitive dynamics. profit_quality: Operating income down 53.8% YoY to ¥2.516b indicates weakened profit quality due to squeezed spreads and higher operating costs. Ordinary income exceeding operating income points to non-operating support; recurring operating profitability needs recovery for quality to improve. outlook: Near-term growth is constrained by commodity volatility (soy, rapeseed, palm), FX swings (yen), and demand elasticity. If input costs stabilize and pricing discipline holds, gross-to-operating margin recovery is possible in subsequent quarters. However, the current run-rate implies subdued earnings growth absent a material spread improvement.

Financial Health

liquidity: Current assets ¥101.415b vs current liabilities ¥37.540b yields a current ratio of 270% and a quick ratio of 218% (ex-inventories). Working capital stands at ¥63.875b, indicating strong short-term liquidity. solvency: Total liabilities ¥63.876b vs equity ¥107.660b implies low leverage (liabilities/equity 0.59x). Calculated equity ratio is ~63.2% (equity/assets), pointing to a conservative capital structure. capital_structure: Interest expense of ¥58m and interest coverage of 43.4x reflect minimal debt service risk. The company relies primarily on equity funding; capacity for additional borrowing exists if needed.

Cash Flow Quality

earnings_quality: Cash flow data (operating, investing, financing) and depreciation/amortization were not disclosed in this dataset; therefore, OCF/Net Income and EBITDA-based assessments are not available. Earnings quality conclusions rely on accrual statements and margin behavior. FCF_analysis: Free cash flow cannot be computed without OCF and capex. Given strong working capital and low interest burden, the medium-term ability to generate FCF will depend on margin recovery and capex intensity, which are not provided here. working_capital: Inventories ¥19.613b versus cost of sales ¥96.345b suggests roughly 37 days of inventory on a simple end-balance basis for the half-year; receivables/payables details are not available. No abnormal build is apparent from the limited data.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in this dataset (zeros indicate not reported). With EPS at ¥52.98 for H1, capacity for dividends exists in principle, but sustainability cannot be evaluated without policy, historical payout, and cash flow data. FCF_coverage: Not assessable as OCF and capex are not disclosed. Cash coverage and leverage are favorable, but distribution affordability depends on actual cash generation. policy_outlook: Absent disclosed DPS/policy, we assume a conservative stance consistent with a low-leverage balance sheet. Near-term dividend decisions will likely track profit recovery and cash flow visibility rather than balance sheet constraints.

Risk Assessment

Business Risks:

• Commodity price volatility in soy, rapeseed, and palm affecting crush and refining margins
• FX volatility (yen) impacting imported raw materials and pricing
• Competitive pricing pressure in edible oils and food products
• Demand elasticity and downtrading amid consumer inflation fatigue
• Potential supply chain disruptions and logistics costs
• Regulatory and food safety compliance risks

Financial Risks:

• Margin compression leading to weak cash generation in downcycles
• Potential inventory valuation impacts during commodity deflation
• Tax expense volatility and possible one-off items affecting net income
• Limited disclosure of cash flows and depreciation complicates assessment of coverage metrics

Key Concerns:

• Sharp YoY decline in operating income (-53.8%) on modest revenue decline (-3.5%)
• Low net margin (1.56%) driving ROE down to 1.63%
• Dependence on non-operating items to bridge ordinary income above operating income
• Unavailable cash flow data preventing validation of earnings-to-cash conversion

Investment Implications

Key Takeaways:

• Top-line modestly lower; bottom-line materially weaker due to margin compression
• ROE of 1.63% reflects profitability headwinds rather than excessive leverage
• Balance sheet strength (equity ratio ~63%) mitigates solvency risk
• Interest burden is minimal; financing risk low
• Recovery hinges on gross spread normalization and cost control

Metrics to Watch:

• Gross and operating margin progression by quarter
• Commodity spread indicators (input costs vs. selling prices) and FX
• Inventory levels and turnover relative to cost of sales
• Operating cash flow and capex once disclosed
• Tax rate normalization and any one-off items

Relative Positioning: Within Japan’s edible oils and fats space, J-Oil Mills exhibits conservative leverage and strong liquidity relative to peers, but profitability currently trails due to compressed operating margins; near-term performance is more sensitive to commodity spreads and FX than to balance sheet constraints.

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