Hiramatsu Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.47B
• Operating Income: ¥-66M
• Net Income: ¥1.68B
• EPS: ¥-0.40

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

Hiramatsu (2764) reported FY2026 Q2 consolidated results under JGAAP showing a top-line decline and a small operating loss, with mixed signals on profitability quality and cash flow pressure. Revenue was ¥4.466bn, down 19.6% YoY, indicating a weaker demand environment in core restaurants/banquets or deliberate pruning of low-margin volume. Despite the revenue contraction, reported gross profit margin was high at 69.7%, suggesting strong pricing, mix improvement, or accounting classification differences that keep a large share of costs below cost of sales. Operating income was a loss of ¥66m (YoY loss narrowed by 27.1%), and ordinary income was a loss of ¥67m, pointing to limited drag from non-operating items. Net loss narrowed to ¥28m (EPS -¥0.40), implying some improvement in cost discipline, although seasonality may also play a role. EBITDA was positive at ¥168m, underpinned by depreciation and amortization of ¥234m, which indicates the core business generates some cash operating capacity before fixed charges. Interest expense was ¥33m with an interest coverage ratio of -2.0x on an EBIT basis, underscoring that earnings are not yet covering financing costs. DuPont decomposition shows a slight negative ROE of -0.48% driven by a slim negative net margin (-0.63%), modest asset turnover (0.389x), and leverage of 1.96x, implying that leverage is not currently magnifying returns. Liquidity appears ample with a current ratio of 227% and working capital of ¥5.28bn, providing near-term cushion for operations and seasonality. The balance sheet shows total assets of ¥11.48bn versus total liabilities of ¥6.25bn and equity of ¥5.86bn, for a debt-to-equity ratio of 1.07x, a moderate leverage profile for the sector. Operating cash flow was an outflow of ¥572m despite a small net loss, signaling material working capital usage or timing effects in receivables/payables or advance payments/refunds. Financing cash flow shows a large outflow of ¥10.67bn, most likely debt repayment or lease liability reductions; however, investing cash flow and cash balance are unreported in XBRL and should not be interpreted as zero. Dividend distribution remains suspended (DPS ¥0), appropriate given negative earnings and cash outflows. Overall, H1 shows resilient gross margin and improving operating loss, but weaker revenue and negative OCF raise questions about the sustainability of margin gains and the need for further cost/portfolio actions. Key monitoring points include revenue trajectory into seasonally stronger quarters, normalization of working capital, interest coverage improvement, and clarity on the large financing cash outflow. Data limitations exist in several line items reported as zero (unreported), so conclusions are based on available non-zero disclosures and calculated metrics provided.

Profitability Analysis

ROE_decomposition: ROE -0.48% = Net margin (-0.63%) × Asset turnover (0.389x) × Financial leverage (1.96x). The small negative ROE is primarily due to a slightly negative net margin, while asset turnover remains subdued and leverage is moderate. margin_quality: Reported gross margin is high at 69.7%, implying strong pricing and/or cost-of-sales discipline, but operating margin remains negative given sizable SG&A and fixed costs typical of restaurants/banquets. EBITDA margin of 3.8% indicates some operating cash profitability before depreciation and interest, yet insufficient to cover fixed charges. Effective tax rate appears near zero due to losses. operating_leverage: Revenue fell 19.6% YoY, but operating loss was contained at ¥66m, implying management offset volume deleverage with cost controls and mix management. Nonetheless, negative EBIT and -2.0x interest coverage show that current scale is still below breakeven for full fixed-cost absorption. Incremental revenue recovery would likely translate into outsized EBIT improvement given the cost structure.

Growth Assessment

revenue_sustainability: Top-line declined to ¥4.466bn (-19.6% YoY). This suggests soft banquet/wedding traffic, fewer high-ticket events, or strategic downsizing. Sustainability hinges on demand recovery in weddings, inbound-driven fine dining, and pricing power. profit_quality: Positive EBITDA (¥168m) alongside negative EBIT reflects heavy depreciation and fixed costs; margin improvements appear driven more by cost control and mix than by scale efficiency. Net margin (-0.63%) is close to breakeven, providing operating leverage optionality if sales stabilize. outlook: If event demand and high-end dining recover into the second half, earnings could inflect given the operating leverage. Key will be maintaining high gross margin while improving seat utilization and banquet bookings. Any further price optimization and labor/productivity initiatives would support margin recovery.

Financial Health

liquidity: Current assets ¥9.424bn vs current liabilities ¥4.144bn yields a current ratio of 227% and substantial working capital of ¥5.28bn, suggesting solid near-term liquidity. Quick ratio matches current ratio due to inventories being unreported. solvency: Total liabilities ¥6.247bn vs equity ¥5.856bn implies a debt-to-equity ratio of 1.07x, a moderate leverage level. Interest expense of ¥33.3m vs negative EBIT leaves interest coverage at -2.0x, indicating reliance on liquidity rather than earnings for debt service in the near term. capital_structure: Leverage is not excessive in balance sheet terms, but earnings lag financing costs. The large financing cash outflow (¥10.67bn) suggests significant repayments or liability reductions, pending confirmation due to limited disclosure on cash balances.

Cash Flow Quality

earnings_quality: OCF of -¥572m versus net loss of -¥28m yields an OCF/NI ratio of 20.44 (both negative), indicating operating cash burn far exceeds accounting loss, likely due to working capital swings (receivables, advances, or payables timing). FCF_analysis: Free cash flow is unreported; investing cash flow is shown as zero (unreported), so FCF cannot be reliably derived. EBITDA generation is insufficient to cover working capital outflows in H1. working_capital: Negative OCF points to material cash tied up in operations. With current assets significantly exceeding current liabilities, there may be sizable receivables or other current assets requiring conversion; monitoring collection cycles and event-related deposits/refunds is critical.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0) and payout ratio 0%. Given negative net income and cash outflow, withholding dividends aligns with preservation of liquidity. FCF_coverage: FCF coverage is unreported; with OCF negative and investing CF unreported, there is no evidence of distributable free cash flow in H1. policy_outlook: A resumption of dividends would require sustained positive EBIT, improved interest coverage, and normalization of operating cash flows. Near-term priority likely remains balance sheet stability and earnings recovery.

Risk Assessment

Business Risks:

• Demand volatility in weddings/banquets and high-end dining impacting utilization and revenue
• Sensitivity to macro conditions and consumer discretionary spending
• Cost inflation in food, labor, and utilities compressing margins
• Operational leverage from fixed rents and staff costs leading to profit volatility
• Brand concentration in premium segments limiting volume flexibility
• Seasonality of event-driven revenues

Financial Risks:

• Negative EBIT and -2.0x interest coverage imply earnings do not cover financing costs
• Significant operating cash outflow in H1 stresses liquidity if sustained
• Large financing cash outflow (¥10.67bn) suggests refinancing/repayment risk pending disclosure clarity
• Moderate leverage (D/E 1.07x) could become burdensome without earnings recovery
• Working capital swings affecting cash conversion

Key Concerns:

• Top-line contraction of 19.6% YoY
• Operating cash burn of ¥572m despite a small net loss
• Interest coverage below 1x and ongoing fixed-cost burden
• Visibility on financing activities given large outflows and unreported cash balance
• Execution on revenue recovery and cost control to reach sustained breakeven

Investment Implications

Key Takeaways:

• Revenue decline (-19.6% YoY) contrasts with resilient reported gross margin (69.7%), indicating mix/pricing strengths but insufficient scale.
• EBITDA positive (¥168m) but EBIT negative (¥66m loss); operating leverage remains the swing factor.
• Liquidity appears adequate (current ratio 227%), yet OCF is materially negative (¥572m).
• Interest coverage is weak (-2.0x), highlighting the need for earnings improvement or further financial de-risking.
• Large financing cash outflow (¥10.67bn) requires clarification on debt/lease reductions and remaining liquidity headroom.

Metrics to Watch:

• Quarterly revenue run-rate and banquet booking pipeline
• EBIT margin progression and SG&A efficiency
• Interest coverage and net financial expenses
• Operating cash flow and working capital turns (DSO/DPO where disclosed)
• Leverage metrics (D/E, net debt where disclosed) and refinancing schedule
• Average check and seat utilization as indicators of pricing and volume

Relative Positioning: Within Japanese premium dining and wedding operators, Hiramatsu shows comparatively high reported gross margin but weaker scale and interest coverage; balance sheet leverage is moderate, and turnaround hinges on restoring revenue density while maintaining disciplined cost control.

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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