PIETRO Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.01B
• Operating Income: ¥67M
• Net Income: ¥47M
• EPS: ¥-6.51

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.

AI Financial Analysis

Executive Summary

Pietro (2818) posted FY2026 Q2 consolidated revenue of ¥6.01bn, up 9.6% YoY, indicating solid top-line momentum despite a challenging cost environment. Gross profit was ¥2.842bn, delivering a robust gross margin of 47.3%, which suggests successful pricing/mix and/or easing of key input costs relative to sales. However, operating income fell 30.8% YoY to ¥67m, compressing the operating margin to roughly 1.1%, implying heavier SG&A burden and limited operating leverage in the half. Ordinary income slipped into a ¥30m loss, pointing to non-operating headwinds that offset the small operating profit. Net income was a ¥44m loss (margin -0.73%), and EPS stood at -¥6.51. Depreciation and amortization totaled ¥229m, with EBITDA of ¥296m and an EBITDA margin of 4.9%, highlighting that cash earnings capacity remains materially above accounting profit at this stage. Operating cash flow was positive at ¥160m despite the net loss, yielding an OCF/Net Income ratio of -3.64, which reflects favorable cash conversion (and/or timing in working capital and taxes) in the period. Liquidity appears tight but positive: current ratio 104.4%, quick ratio 96.4%, and working capital of ¥139m, suggesting limited buffer against shocks. Reported debt-to-equity is 0.63x, and interest coverage (EBIT/interest) is 15.7x, indicating manageable financial costs relative to operating earnings. The DuPont framework indicates an ROE of -0.71%, driven by a slightly negative net margin (-0.73%), modest asset turnover (0.432x), and leverage of 2.25x. On the balance sheet, total assets are ¥13.916bn and total equity ¥6.176bn; the reported equity ratio is 0.0%, which appears unreported rather than reflective of economic reality. Total liabilities disclosed (¥3.914bn) do not mathematically bridge to total assets alongside equity, indicating incompleteness in the liability or equity detail; given the instruction that zeros represent non-disclosure, we treat these as data limitations rather than inconsistencies. Investing cash flow and cash/equivalents were shown as zero, indicating non-disclosure; therefore, free cash flow and liquidity runway cannot be fully assessed from the provided data alone. No dividend is reported for the period (DPS ¥0), with payout ratio 0.0%, which may reflect a conservative stance amid near-term earnings pressure or non-disclosure timing. Overall, Pietro shows healthy gross profitability and positive OCF but thin operating margins, a swing to ordinary loss from non-operating items, and tight but positive liquidity. The near-term outlook hinges on improved operating leverage in H2, stabilization of non-operating items, and clearer disclosure of cash, capex, and full liability structure.

Profitability Analysis

ROE decomposition: ROE is -0.71% = Net profit margin (-0.73%) × Asset turnover (0.432x) × Financial leverage (2.25x). The negative net margin is the primary drag, while asset turnover is moderate for a branded food/restaurant mix, and leverage is not excessive. Gross margin at 47.3% is strong for the category, indicating price/mix resilience and/or cost relief in inputs (e.g., edible oils, packaging). Operating margin at ~1.1% shows that SG&A intensity remains high; implied SG&A and other operating costs approximate ¥2.775bn (gross profit ¥2.842bn minus operating income ¥67m), or about 46.2% of sales, leaving little room for shocks. EBITDA margin at 4.9% vs operating margin at 1.1% highlights sizable non-cash charges (D&A ¥229m) and limited operating leverage in the half. The drop in operating income (-30.8% YoY) despite 9.6% revenue growth suggests cost inflation, promotional investments, or higher personnel/logistics expenses outpacing scale benefits. Ordinary income turned negative (¥-30m), pointing to non-operating losses (e.g., financial, equity-method, FX, or other) overshadowing small operating profit. Interest expense was modest at ¥4.3m and is well covered by EBIT (15.7x), indicating financing costs are not the core issue. Effective taxation appears atypical for a loss period (tax expense disclosed at ¥64.7m while metrics list an effective tax rate of 0.0%); this may reflect non-deductible items and local taxes rather than a normalized tax burden. Overall, profitability quality is mixed: product-level margins seem healthy, but overhead structure and non-operating items are compressing bottom-line returns.

Growth Assessment

Revenue grew 9.6% YoY to ¥6.01bn, a solid pace given the broader food sector context and likely aided by pricing and mix. Sustainability depends on price elasticity in dressings/sauces, channel momentum (retail vs foodservice), and the restaurant business recovery trajectory. With operating income down 30.8% YoY, current growth is not translating to profit growth due to elevated SG&A/logistics and the lack of operating leverage in H1. The negative ordinary income underscores sensitivity to non-operating movements; normalization here would be a lever for profit recovery even without large operating gains. EBITDA growth is not disclosed YoY, but the current EBITDA margin (4.9%) leaves scope for improvement if cost-to-serve moderates. Near-term outlook hinges on H2 seasonality, further price optimization, cost pass-through, and disciplined promotion. Inventory levels (¥253m) are small relative to current assets, which may limit overhang risk but also suggests tight supply chain management; conversely, it offers less buffer for demand surges. Given positive OCF and revenue momentum, profit quality can improve if SG&A efficiency is achieved and non-operating losses abate. Absence of disclosed investing cash flows limits visibility into capacity expansion or productivity initiatives, which are important for medium-term growth. Overall, top-line trends are encouraging, but profit sustainability requires tighter cost control and stabilization of non-operating results.

Financial Health

Liquidity: Current assets ¥3.275bn vs current liabilities ¥3.136bn yield a current ratio of 104.4% and quick ratio of 96.4%, indicating tight but manageable short-term liquidity. Working capital stands at ¥139m, leaving limited cushion for adverse swings in receivables, payables, or seasonal builds. Solvency: Reported debt-to-equity is 0.63x and interest burden is light (¥4.3m), suggesting moderate leverage and low financial cost risk. The disclosed equity base is ¥6.176bn against total assets of ¥13.916bn, implying a leverage factor of ~2.25x consistent with the DuPont inputs. Balance-sheet disclosure appears incomplete (equity ratio shown as 0.0% and liabilities that do not reconcile to assets plus equity), so precise solvency assessment is constrained. Capital structure appears predominantly equity-supported with modest financial debt service costs, but a full view requires complete liability and cash disclosures. Overall, financial health is acceptable but with a narrow liquidity buffer and data limitations that reduce precision.

Cash Flow Quality

Earnings quality is mixed: net loss (¥-44m) contrasts with positive OCF (¥160m), yielding an OCF/Net Income ratio of -3.64, which in this context indicates strong cash conversion due to add-backs (D&A ¥229m) and likely favorable working capital and tax timing. EBITDA of ¥296m underpins cash generation capacity, but conversion from EBITDA to OCF suggests some working-capital or tax outflows are still present. Free cash flow is shown as 0 due to non-disclosed investing cash flows (Investing CF reported as 0, which is an unreported item rather than actual zero); hence true FCF cannot be determined. Financing cash flow was an outflow of ¥260m, likely reflecting debt repayment and/or dividends/share-related cash flows; DPS is reported as ¥0, so the outflow is more likely debt paydown or lease-related payments. Cash and equivalents are shown as 0 (undisclosed), preventing analysis of cash runway and net debt. Working capital appears modestly positive; inventory is low relative to current assets (about 7.7%), reducing obsolescence risk but placing more emphasis on receivables/payables management for OCF. Overall, cash flow quality in the half is better than headline earnings, but the absence of investing and cash balance disclosures limits FCF and liquidity conclusions.

Dividend Sustainability

No dividend per share is reported for the period (DPS ¥0; payout ratio 0.0%). With net loss and thin operating margin, a conservative distribution stance is understandable. OCF was positive at ¥160m, but with investing cash flows undisclosed and financing outflows of ¥260m, coverage metrics cannot be robustly computed; the listed FCF coverage of 0.00x reflects non-disclosure rather than true capacity. Sustainability therefore cannot be fully assessed without capex and cash balance details. If profitability normalizes (removal of non-operating losses and SG&A discipline), dividend capacity would improve; conversely, persistent thin margins would constrain distributions. Policy outlook cannot be inferred from the provided data and should be checked against company guidance and historical practice.

Risk Assessment

Business Risks:

• Raw material cost volatility (edible oils, spices, packaging) impacting gross margin despite recent resiliency
• Price elasticity and competitive promotions in dressings/sauces potentially pressuring volume and mix
• Operational leverage risk from the restaurant segment (traffic sensitivity, labor and utility costs)
• Logistics and labor inflation limiting SG&A efficiency gains
• Channel mix shifts (retail vs foodservice) affecting margin structure
• Brand investment needs versus near-term margin preservation trade-offs
• Execution risk in passing through costs without losing shelf space or consumer loyalty

Financial Risks:

• Tight liquidity buffer (current ratio 104.4%, quick ratio 96.4%) leaving limited room for working capital shocks
• Non-operating loss drivers (ordinary income -¥30m) introducing earnings volatility
• Incomplete disclosure of cash, capex, and full liabilities, reducing visibility on solvency and FCF
• Potential tax cash outflows even in loss periods (local/irrecoverable taxes) affecting OCF
• Refinancing or covenant risk cannot be assessed without full debt schedule disclosure

Key Concerns:

• Operating margin compression to ~1.1% despite 9.6% revenue growth
• Ordinary loss indicating headwinds outside core operations
• Data limitations: equity ratio shown as 0.0%, cash and investing CF undisclosed, liabilities not fully reconciled
• Limited working capital cushion (¥139m) in a cost-volatile environment

Investment Implications

Key Takeaways:

• Solid top-line growth (+9.6% YoY) but weak operating leverage; operating income down 30.8% YoY
• Gross margin strong at 47.3%, signaling resilient pricing/mix
• Ordinary income turned negative (¥-30m), a key swing factor for bottom line
• Positive OCF (¥160m) despite net loss, aided by D&A and working capital/tax timing
• Liquidity is tight but positive (current ratio 104.4%, quick ratio 96.4%)
• Leverage moderate (D/E 0.63x) with comfortable interest coverage (15.7x)
• Dividend not reported (DPS ¥0); FCF and policy visibility limited due to non-disclosures

Metrics to Watch:

• SG&A-to-sales ratio and operating margin trajectory in H2
• Non-operating income/expenses driving ordinary income
• Gross margin sustainability versus input cost trends
• Working capital turns (receivables and payables days) and OCF conversion
• Capex and investing cash flows to assess true FCF
• Cash and equivalents / net debt and any changes in financing CF
• Equity ratio and full liability disclosure for solvency clarity

Relative Positioning: Within Japan’s condiments and packaged foods space, Pietro remains smaller-scale relative to large peers, which limits operating leverage and heightens ordinary-income volatility; while its gross margin is competitive, operating margins are thinner and liquidity is tighter, making disciplined SG&A management and stable non-operating items particularly important for closing the profitability gap.

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