EBARA Foods Industry,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.34B
• Operating Income: ¥1.08B
• Net Income: ¥848M
• EPS: ¥85.50

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

Ebara Foods Industry Co., Ltd. (28190) reported FY2026 Q2 (cumulative) consolidated results showing modest top-line growth but margin compression and weaker operating earnings. Revenue increased 2.1% year over year to ¥24.34bn, while operating income declined 12.6% to ¥1.08bn, indicating negative operating leverage. Gross profit of ¥8.51bn implies a gross margin of 35.0%, which is solid for a packaged foods company, but the operating margin fell to 4.4%, pointing to elevated SG&A and/or promotional intensity. Net income was ¥0.84bn (-1.5% YoY), yielding a 3.43% net margin, cushioned by minimal interest expense. ROE calculated via DuPont is 2.40% for the period, reflecting modest margins, low asset turnover (0.495x), and conservative leverage (assets/equity 1.41x). Liquidity is strong with a current ratio of 305% and quick ratio of 281%, and working capital of ¥18.96bn, indicating ample short-term solvency. Operating cash flow of ¥2.57bn is robust relative to net income (OCF/NI = 3.08x), suggesting healthy cash conversion and disciplined working capital management in the period. Interest coverage is extremely high at ~538x, underscoring de minimis financial risk from borrowing. The reported effective tax rate metric (0.0%) is clearly not reflective of the actual tax burden; using income tax of ¥0.42bn and ordinary income of ¥1.13bn implies an effective tax rate of roughly 37%, consistent with domestic statutory rates. Several line items show as zero (e.g., equity ratio, investing CF, cash and equivalents, DPS, shares outstanding), which we treat as undisclosed rather than true zeros per the data note; this constrains precision in capital structure, cash holdings, FCF, and dividend analysis. Despite the YoY profit decline, cash generation appears resilient, and leverage remains conservative. With only 2.1% revenue growth, the outlook likely depends on pricing hold, product mix, and input cost normalization to restore operating margin. We tentatively infer weighted average shares of roughly 9.8 million from net income and EPS, but the official share count is not disclosed in the dataset. Overall, the company demonstrates strong balance sheet health and cash flow quality, but subdued ROE and weaker operating margin highlight the need for execution on cost control and mix/pricing. Data limitations (notably zero-reported items) necessitate caution in interpreting dividend, cash, and FCF metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.43%
• asset_turnover: 0.495x
• financial_leverage: 1.41x (Assets/Equity ≈ 49,132/34,827)
• calculated_ROE: 2.40% (matches reported)
• commentary: ROE is constrained primarily by modest net margin and low asset turnover; leverage is conservative and not a material driver. margin_quality:
• gross_margin: 35.0% (Gross Profit ¥8.51bn / Revenue ¥24.34bn)
• operating_margin: 4.4% (Operating Income ¥1.08bn / Revenue)
• EBITDA_margin: 6.8% (EBITDA ¥1.66bn / Revenue)
• net_margin: 3.43%
• insight: YoY revenue growth (+2.1%) contrasted with operating income decline (-12.6%) suggests pressure in SG&A/promotions and/or incomplete price-cost recovery. operating_leverage: Negative in the period: small sales growth translated to a disproportionately larger decline in operating profit, indicating higher fixed cost absorption and/or increased commercial spend. Depreciation (¥0.58bn) is moderate, implying some fixed-cost base; further margin sensitivity to volume/mix remains.

Growth Assessment

revenue_sustainability: Top-line growth of 2.1% appears modest; absent disclosure by segment or geography, sustainability likely relies on pricing carryover, steady consumption in core categories, and distribution breadth. profit_quality: Net income decline was narrower than operating income decline, aided by negligible interest burden; however, the core profitability deterioration at the operating level warrants monitoring. outlook: A return to operating margin expansion will likely require cost normalization (inputs, logistics), continued mix improvement, and measured promotions. Given the conservative balance sheet, the company has flexibility to invest in brand and capacity, but near-term growth may track low single digits without a catalyst.

Financial Health

liquidity:

• current_ratio: 305.2%
• quick_ratio: 280.5%
• working_capital: ¥18.96bn
• commentary: Excellent short-term liquidity provides resilience against demand or supply shocks. solvency:
• interest_coverage: ≈538x (Operating Income/Interest Expense)
• debt_to_equity: 0.38x (note: appears to be total liabilities to equity; interest expense suggests limited financial debt)
• equity_ratio: Not disclosed (reported 0.0% is an undisclosed item).
• commentary: Low financial risk profile with substantial equity base (¥34.83bn) relative to liabilities (¥13.16bn). capital_structure: Assets ¥49.13bn funded primarily by equity (A/E ≈ 1.41x). Minimal reliance on interest-bearing debt, as evidenced by near-zero interest expense.

Cash Flow Quality

earnings_quality: OCF/Net Income = 3.08x indicates strong cash conversion, suggesting earnings are backed by cash and/or favorable working capital timing in the half. free_cash_flow_analysis: Investing cash flow is undisclosed (reported 0). Without capex data, we cannot compute FCF reliably. EBITDA of ¥1.66bn provides capacity for maintenance investment while remaining cash generative. working_capital: High current and quick ratios and positive OCF imply effective working capital management; inventory of ¥2.28bn appears modest relative to revenue scale, though inventory turnover cannot be assessed without COGS balance sheet details.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are undisclosed (reported 0.00). EPS for the period is ¥85.50; absent DPS, payout cannot be assessed from provided data. FCF_coverage: Not assessable due to undisclosed investing cash flow (FCF shown as 0 reflects lack of disclosure, not true zero). policy_outlook: Financing cash outflow of ¥0.40bn may reflect dividends and/or debt service; if assumed to be mainly dividends, implied payout would be modest versus H1 net income, supported by strong liquidity. However, this is speculative given data limitations.

Risk Assessment

Business Risks:

• Input cost volatility (agricultural commodities, oils, packaging) potentially pressuring gross margin.
• Competitive intensity and private-label pressure in sauces/condiments affecting pricing and promotions.
• Demand elasticity amid consumer trading-down could cap pricing power.
• Product mix and channel shifts impacting margin (e.g., promotion-heavy retail periods).
• Operational execution risk in marketing and SG&A control given negative operating leverage.

Financial Risks:

• Limited, given minimal interest expense and strong liquidity; refinancing risk appears low.
• FX exposure on imported inputs could affect costs if not fully hedged (not disclosed).
• Working capital swings could temporarily impact OCF despite healthy structural position.

Key Concerns:

• Operating margin compression despite revenue growth (-12.6% YoY in operating income).
• Low ROE (2.40%) driven by modest margins and low asset turnover.
• Data gaps (investing CF, cash balance, dividend details) constrain assessment of FCF and capital allocation.

Investment Implications

Key Takeaways:

• Top line grew 2.1% YoY, but operating income fell 12.6%, signaling negative operating leverage.
• Gross margin is healthy at 35%, but operating margin is thin at 4.4%.
• ROE at 2.40% is subdued due to low margin and asset turnover; leverage is conservative.
• Liquidity is very strong (current ratio 305%, quick 281%), with ample working capital.
• OCF is robust at ¥2.57bn (3.08x net income), indicating solid cash conversion.
• Interest burden is negligible (coverage ~538x), implying low financial risk.
• Dividend and FCF assessments are constrained by undisclosed items.

Metrics to Watch:

• Operating margin trajectory (pricing vs. SG&A/promotion trends).
• Gross margin vs. input cost inflation and FX on imported materials.
• OCF sustainability and any disclosures on capex to derive FCF.
• Inventory levels and turnover relative to sales growth.
• ROE improvement via margin expansion or asset efficiency.
• Any updates on dividend policy and capital allocation.

Relative Positioning: Versus domestic packaged food peers, Ebara exhibits stronger liquidity and lower financial leverage, but operates with mid-single-digit operating margins and lower ROE; improving operating efficiency and mix will be key to narrowing 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