HAGOROMO FOODS CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥38.92B
• Operating Income: ¥2.20B
• Net Income: ¥1.79B
• EPS: ¥193.52

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

Hagoromo Foods (TSE: 28310) reported FY2026 Q2 consolidated results under JGAAP showing stable, low-single-digit growth with resilient profitability and solid liquidity. Revenue rose 0.5% YoY to ¥38.916 billion, and operating income increased 0.5% YoY to ¥2.204 billion, indicating steady volume/price dynamics in a cost-normalizing environment. Net income grew 1.6% YoY to ¥1.821 billion, aided by healthy operating performance and limited financial expenses. Gross margin was 21.7%, reflecting improved input cost stability and/or pricing actions in core categories such as canned fish and pasta. Operating margin of 5.7% and EBITDA margin of 7.4% suggest disciplined cost control, with depreciation of ¥687 million indicating a moderate capital intensity for a mid-sized food manufacturer. DuPont analysis shows ROE of 4.05% (Net margin 4.68% × Asset turnover 0.521 × Leverage 1.66), marking adequate returns but still below typical mid-teens food peers, implying room for efficiency or mix improvement. Ordinary income of ¥2.567 billion implies an ordinary margin of 6.6%, with interest expense just ¥8.9 million and an exceptionally high interest coverage of 247.8x, underscoring limited financial risk from borrowing costs. Operating cash flow was ¥1.978 billion, roughly 1.09x net income, pointing to decent earnings quality and controlled working capital movements. Liquidity remains strong with a current ratio of 185.8% and quick ratio of 130.8%, supported by working capital of ¥17.345 billion and inventory of ¥11.110 billion. Capital structure is conservative-to-moderate with total liabilities of ¥27.348 billion against equity of ¥44.915 billion (Assets/Equity 1.66x), and a reported debt-to-equity of 0.61x; solvency risk appears contained. Effective tax rate, inferred from disclosures (¥757 million tax on approximately ¥2.58 billion pre-tax), is around 29–30%, consistent with Japan’s statutory range; the displayed 0.0% in the calculated metrics appears to reflect a disclosure or mapping limitation rather than economics. Dividend figures (DPS, payout ratio) and several balance sheet/cash items are shown as zero in the source but should be treated as not disclosed; thus, dividend sustainability cannot be directly assessed this quarter. The combination of modest growth, stable margins, and positive OCF indicates a durable earnings base, albeit with subdued ROE that may benefit from further mix upgrades, pricing discipline, and asset efficiency. Key near-term variables include raw fish (skipjack) input costs, FX (USD/JPY) for imports, and the pace of price pass-through versus consumer elasticity. Inventory management will be important to safeguard margins while avoiding working capital drag if demand softens. Overall, the business exhibits steady fundamentals, strong liquidity, and very low interest burden, with upside tied to margin mix and asset turnover improvements. Data limitations around cash/investing flows, dividends, and share data necessitate caution in drawing conclusions on capital allocation and FCF distribution capacity.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.68%
• asset_turnover: 0.521
• financial_leverage: 1.66
• calculated_ROE: 4.05%
• commentary: ROE is driven primarily by modest margins and moderate leverage; asset turnover at 0.521 suggests scope for efficiency gains (note: mid-year seasonality may depress turnover vs. full-year). margin_quality: Gross margin of 21.7% and operating margin of 5.7% indicate pricing power and cost discipline amid easing input inflation. Ordinary margin at 6.6% benefits from minimal financial costs. Net margin of 4.68% aligns with typical mid-cap packaged food companies in Japan, but below best-in-class peers with higher scale and premium mix. operating_leverage: Operating income growth (+0.5% YoY) roughly matched revenue growth (+0.5% YoY), implying neutral operating leverage this period. Incremental margins appear stable; further leverage could emerge from mix upgrades, procurement efficiencies, and SG&A productivity.

Growth Assessment

revenue_sustainability: Revenue grew 0.5% YoY to ¥38.916 billion, reflecting steady demand in core shelf-stable categories and likely sustained pricing. The growth rate is modest, consistent with a mature domestic market. profit_quality: Net income +1.6% outpaced sales and operating income, supported by a benign interest burden and disciplined costs. The inferred effective tax rate (~29–30%) is normal, supporting the quality of earnings. outlook: Near-term growth depends on raw fish input costs, FX pass-through, and consumer price sensitivity. Given strong brand equity in canned fish/pasta, stable low-single-digit growth is feasible, with upside from product mix and channel execution. Watch for inventory normalization and further price/mix improvements to protect margins if volumes are flat.

Financial Health

liquidity: Current ratio 185.8% and quick ratio 130.8% indicate ample liquidity. Working capital totals ¥17.345 billion, with inventories of ¥11.110 billion forming a significant component appropriate for shelf-stable categories. solvency: Assets of ¥74.675 billion vs. equity of ¥44.915 billion imply leverage (A/E) of 1.66x. Debt-to-equity is reported at 0.61x, and interest expense is only ¥8.9 million with coverage at 247.8x, suggesting very manageable financial risk. capital_structure: Total liabilities of ¥27.348 billion are moderate relative to equity. Equity ratio is undisclosed in the source (shown as 0%), but inferred equity base is strong. No indications of covenant pressure given minimal interest burden.

Cash Flow Quality

earnings_quality: OCF of ¥1.978 billion is 1.09x net income (¥1.821 billion), indicating that earnings are cash-backed and working capital is under control this period. FCF_analysis: Investing cash flow is not disclosed (displayed as 0). As such, free cash flow cannot be reliably determined despite the calculated metric showing 0. D&A of ¥687 million implies ongoing capital needs; maintenance capex likely tracks D&A over time. working_capital: Inventory of ¥11.110 billion within current assets of ¥37.570 billion suggests typical stocking for shelf-stable foods. Continued focus on inventory turnover will be important to sustain OCF amid modest sales growth.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are not disclosed this quarter (values shown as 0 should be treated as unreported). EPS is ¥193.52 for the period, but without DPS or full-year guidance, payout cannot be assessed. FCF_coverage: Free cash flow is not determinable due to undisclosed investing cash flows; therefore, FCF coverage of dividends cannot be evaluated from the provided data. policy_outlook: Given stable earnings and strong liquidity, the company appears positioned to sustain ordinary dividends under a typical mid-cap food policy framework; however, concrete assessment awaits disclosed DPS/FCF and capital allocation details.

Risk Assessment

Business Risks:

• Raw material price volatility (skipjack tuna and other seafood inputs).
• Foreign exchange risk (USD/JPY) impacting import costs.
• Consumer price sensitivity amid ongoing food inflation and real income pressures.
• Competition from private brands and domestic peers in shelf-stable categories.
• Supply chain disruptions (fishing quotas, catch volumes, logistics).
• Channel mix shifts and potential retailer bargaining power.

Financial Risks:

• Potential working capital swings tied to inventory procurement cycles.
• Capex requirements to maintain processing capacity and quality; timing unknown due to undisclosed investing CF.
• Exposure to interest rate normalization is limited currently, but debt profile details are not fully disclosed.
• Tax rate variations due to changes in incentives or geographic profit mix.

Key Concerns:

• Sustaining margin gains if input costs re-accelerate or FX weakens.
• Asset turnover improvement needed to lift ROE above mid-single digits.
• Visibility on free cash flow and dividends constrained by undisclosed investing cash flows and DPS.

Investment Implications

Key Takeaways:

• Stable top-line with modest (+0.5% YoY) growth and steady operating profit performance.
• Healthy margin profile (GM 21.7%, OP 5.7%, EBITDA 7.4%) with strong cost control.
• Robust liquidity (current ratio 185.8%, quick ratio 130.8%) and minimal interest burden (coverage 247.8x).
• ROE at 4.05% is modest; upside tied to asset efficiency and mix improvements.
• Earnings quality is solid (OCF/NI 1.09x); FCF and dividends not assessable due to limited disclosures.

Metrics to Watch:

• Gross and operating margin trajectory versus input cost/FX trends.
• OCF/Net income ratio and inventory turnover.
• Capex and investing cash flows (maintenance vs. growth).
• Price/mix contribution to sales and volume trends.
• Leverage (debt-to-equity) and interest expense evolution.
• DPS and payout disclosures for dividend policy visibility.

Relative Positioning: Within Japan’s mid-cap packaged food peers, Hagoromo exhibits stable margins, strong liquidity, and very low interest risk, but delivers lower ROE than premium-branded or higher-scale peers; execution on mix, efficiency, and capital discipline will be key to narrowing the 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
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