Yamami Company (2820) FY2026 Q2 Earnings Report

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Executive Summary

This was an earnings period characterized by higher revenue and profit, as a significant improvement in the gross profit margin, in addition to revenue growth, drove Operating Income higher. Revenue was ¥11.50B (+10.6% YoY), Operating Income was ¥1.28B (+59.2%), Ordinary Income was ¥1.28B (+58.9%), and Net Income was ¥0.89B (+58.8%). The improvement in the gross profit margin to 23.6% (19.9% in the same period last year) was the primary driver of profit growth, with the decline in the cost-of-sales ratio directly contributing to margin expansion.

Factors Affecting Earnings Fluctuations

【Revenue】Revenue was ¥11.50B, representing a +10.6% increase YoY. Although segment-level disclosure is unavailable, performance is progressing at a pace above the full-year company plan’s 9.1% revenue growth target. Accounts receivable increased +51.4% YoY, outpacing revenue growth, confirming an increase in working capital requirements associated with expanded sales.

【Profit and Loss】The gross profit margin improved to 23.6% (19.9% in the same period last year) due to the decline in the cost-of-sales ratio, and Operating Income reached ¥1.28B (+59.2%). SG&A expenses were ¥1.43B, up +13.6% YoY and exceeding the revenue growth rate; however, the benefit of gross profit improvement more than offset this increase, and the Operating Income margin expanded to 11.2% (7.8% in the same period last year). Ordinary Income and Net Income also increased at nearly the same levels, indicating that the impact of non-operating and extraordinary gains and losses was limited. The results were characterized by higher revenue and profit, led by improved profitability.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 11.2% (7.8% in the same period last year), while the Net Income margin improved to 7.7% (5.4% in the same period last year), primarily due to the increase in the gross profit margin to 23.6% (19.9% in the same period last year). 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥1.44B, 1.63 times Net Income of ¥0.89B, indicating solid cash backing for earnings; however, the OCF-to-EBITDA ratio was 0.66 times against EBITDA of ¥2.20B, which is somewhat low, and the increase in accounts receivable is constraining cash conversion. 【Investment Efficiency】Annualized ROE was 16.1%, with the improvement in the Net Income margin serving as the primary driver. 【Financial Soundness】The Equity Ratio was 63.4%, Debt/EBITDA was low at 0.61 times against interest-bearing debt of ¥1.34B, and the current ratio was 106.2%.

Cash Flow Analysis

Operating Cash Flow was ¥1.44B, a significant increase from ¥0.78B in the same period last year, demonstrating cash generation exceeding Net Income of ¥0.89B. Within this figure, the ¥1.19B increase in accounts receivable was a cash outflow factor, while the ¥0.43B increase in accounts payable was a cash inflow factor, indicating that changes in working capital affected the scale of OCF. Investing Cash Flow was -¥0.59B, of which capital expenditures accounted for ¥0.58B, remaining below depreciation and amortization expense of ¥0.92B. Financing Cash Flow was -¥0.47B, primarily reflecting debt repayments and dividend payments. As a result, free cash flow was positive at ¥0.85B, indicating that capital expenditures were sufficiently funded by OCF while surplus funds were secured.

Earnings Quality

The current profit growth was primarily attributable to an ongoing improvement in the gross profit margin and was not dependent on extraordinary gains and losses or temporary non-operating income. Non-operating income was ¥0.02B, while non-operating expenses were also ¥0.02B, both small in scale, and the difference between Ordinary Income and Net Income was almost entirely attributable to the ¥0.40B burden from corporate income taxes and other taxes. The fact that OCF was 1.63 times Net Income and generated more cash than accounting profit indicates solid earnings quality; however, accounts receivable increased +51.4% YoY, outpacing revenue growth, requiring continued monitoring of future collections from an accrual perspective.

Earnings Forecast and Guidance

Progress against the full-year plan was 51.4% for Operating Income, 51.6% for Ordinary Income, and 54.9% for Net Income, exceeding the standard first-half progress rate of 50%. Revenue progress was 50.0%, in line with the plan. However, the forecast YoY growth rate for full-year Net Income is limited to +7.7%, representing a plan for a significant slowdown from the +58.8% growth achieved in the first half. The company may be incorporating cost increases and the impact of comparisons with the same period last year into its second-half outlook, making the extent to which the first-half improvement in margins can be sustained in the second half a key point of focus.

Shareholder Returns

The Q2 dividend was ¥36.00 per share, and the Payout Ratio against first-half Net Income was 28.2% (the Payout Ratio based solely on dividends). The full-year dividend forecast is ¥82.00 per share, resulting in an estimated Payout Ratio of approximately 35.3% against the full-year Net Income forecast of ¥1.62B. First-half dividends were sufficiently covered by free cash flow of ¥0.85B, and assuming the current level of earnings and cash generation continues, there are no significant concerns regarding dividend sustainability.

Risk Factors

1. Raw Material and Energy Costs and Pricing Power: Although the gross profit margin improved to 23.6%, it remains below the general level for the food industry (25～40%). Raw material costs increased from ¥0.36B in the previous year to ¥0.42B, making the ability to pass through cost increases to prices critical to maintaining margins.

2. Increase in Trade Receivables and Cash Conversion Efficiency: Accounts receivable increased +51.4% YoY to ¥3.52B, expanding at a pace above revenue growth. The OCF/EBITDA ratio remained at 0.66 times, raising the possibility that longer collection periods may weigh on cash conversion efficiency.

3. Capital Expenditures Below Depreciation and Amortization: Capital expenditures of ¥0.58B were below depreciation and amortization expense of ¥0.92B, resulting in a capex-to-depreciation ratio of 0.64 times. Given the capital-intensive structure in which tangible fixed assets account for approximately 69% of total assets, continuation of this situation could affect future production capacity and quality maintenance.

Industry Benchmarks (For Reference; Compiled by the Company)

Industry Benchmark (food_beverage)

Profitability and Returns

Because comparable data for the Company’s Operating Income margin and Net Income margin within the industry is limited, the assessment is restricted to their absolute levels.

Growth and Capital Efficiency

Similarly, due to limited industry median data, only the Company’s actual revenue growth rate is presented.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. A key characteristic of these results was the substantial improvement in profitability: against a +10.6% increase in Revenue, Operating Income rose +59.2%, driven by an approximately 374bp improvement in the gross profit margin.

2. OCF was 1.63 times Net Income, and free cash flow was positive at ¥0.85B, providing cash support for first-half earnings and dividends; however, the OCF-to-EBITDA ratio was somewhat low at 0.66 times.

3. The full-year plan assumes Net Income growth of only +7.7% YoY, indicating a slowdown from the first-half growth pace. The sustainability of margins in the second half, as well as structural changes involving the increase in accounts receivable and insufficient capital expenditures, will be key points to monitor.

Theoretical Share Price (For Reference)

Sensitivity: ¥1,751〜¥1,853 at Cost of Equity ±1%, and ¥1,796〜¥1,808 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a time-period discrepancy relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat high.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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