NICHIREI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥347.71B
• Operating Income: ¥18.31B
• Net Income: ¥14.24B
• EPS: ¥56.47

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

Nichirei (TSE:2871) reported FY2026 Q2 (cumulative) consolidated results under JGAAP with revenue of ¥347.7bn, up a modest 0.1% YoY, signaling broadly flat topline conditions across its core food and temperature-controlled logistics franchises. Gross profit was ¥63.3bn, implying a gross margin of 18.2%, which, while stable, suggests limited pricing power or ongoing input cost friction relative to the prior year. Operating income declined 7.0% YoY to ¥18.3bn, compressing the operating margin to about 5.3% and indicating negative operating leverage as costs outpaced the minimal revenue growth. Ordinary income of ¥18.8bn exceeded operating income despite ¥0.5bn of interest expense, pointing to positive non-operating contributions that partially offset weaker operations. Net income rose 9.9% YoY to ¥14.1bn, implying support from non-operating items and/or tax effects; the provided effective tax rate of 0.0% is not meaningful due to missing pretax-profit disclosure, but reported income tax expense of ¥6.2bn suggests a normal tax burden. DuPont metrics show ROE of 4.99%, driven by a 4.07% net margin, 0.674x asset turnover, and 1.82x financial leverage—an overall modest return profile for a branded food/logistics group. Cash generation was solid: operating cash flow (OCF) of ¥19.5bn was 1.38x net income, aided by non-cash charges (D&A ¥11.8bn) and likely benign working-capital movements. Liquidity remains healthy with a current ratio of 158.8% and a quick ratio of 128.0%, while solvency appears sound with liabilities/equity of 0.79x and interest coverage of 34.9x. Total assets stood at ¥515.8bn and equity at ¥283.6bn, yielding a leverage (assets/equity) of 1.82x consistent with DuPont. Working capital of ¥75.8bn and inventories of ¥39.6bn provide operating flexibility, though inventory discipline remains a key variable for margin stability in food operations. EBITDA of ¥30.1bn (8.7% margin) underscores adequate cash profitability relative to interest obligations. Investing cash flow and cash/equivalents were reported as zero in the dataset, indicating non-disclosure rather than true zero; this limits free cash flow (FCF) assessment and any precise dividend coverage analysis. Dividend per share was shown as ¥0.00 with a 0.0% payout, which should be treated as undisclosed rather than an actual suspension; Nichirei historically maintains a dividend, so policy insight cannot be inferred from this dataset. Overall, results depict resilient cash generation and balance sheet strength but soft operating momentum and modest ROE, with non-operating tailwinds and tax dynamics cushioning bottom-line growth. Data gaps (notably equity ratio, investing CF, cash balance, DPS) constrain depth of analysis; conclusions focus on disclosed non-zero items.

Profitability Analysis

roe_decomposition: ROE is 4.99%, explained by Net Profit Margin 4.07% x Asset Turnover 0.674x x Financial Leverage 1.82x. The return profile is modest, reflecting mid-to-low margins and moderate capital intensity with conservative leverage. margin_quality: Gross margin is 18.2% (¥63.3bn/¥347.7bn), indicating stable value-add but limited cost pass-through leeway. Operating margin compressed to ~5.3% (¥18.3bn/¥347.7bn), down YoY alongside a 7% fall in operating income despite flat sales, implying cost pressures (raw materials, energy, labor) or adverse mix. Net margin improved to 4.07% on non-operating support and tax effects, cushioning the operating shortfall. operating_leverage: With revenue +0.1% and operating income -7.0%, Nichirei experienced negative operating leverage in H1. High fixed-cost elements (cold storage logistics, manufacturing) likely magnified even slight topline softness or cost inflation. EBITDA margin of 8.7% shows some buffer, but incremental margins appear weaker YoY.

Growth Assessment

revenue_sustainability: Topline growth was nearly flat at +0.1% YoY, suggesting mature market conditions, pricing normalization after prior inflationary pass-throughs, or mixed demand across segments. Sustainability hinges on volumes in processed foods, pricing discipline, and cold-chain demand. profit_quality: Net income +9.9% YoY despite OP -7.0% points to reliance on non-operating items and/or tax cadence rather than core operational improvement. Interest expense is modest (¥0.5bn), and ordinary income exceeded OP by ~¥0.5bn, indicating non-operating gains helped. The OCF/NI ratio of 1.38 supports earnings quality from a cash standpoint. outlook: Absent segment disclosure, the base case is cautious: flattish revenue run-rate, margins under pressure from costs and wage inflation, partially offset by operational efficiencies and logistics utilization. Near-term catalysts would include easing input costs, improved pricing/mix, and logistics throughput; risks include consumer downtrading and energy costs.

Financial Health

liquidity: Current assets ¥204.9bn vs current liabilities ¥129.1bn yield a current ratio of 158.8% and quick ratio of 128.0%, indicating solid short-term coverage. Working capital of ¥75.8bn provides operational resilience. solvency: Total liabilities of ¥223.3bn against equity of ¥283.6bn imply liabilities/equity of 0.79x and assets/equity (leverage) of 1.82x. Interest coverage is strong at 34.9x, suggesting ample headroom under higher-rate scenarios. capital_structure: Balance sheet is equity-heavy with moderate leverage, appropriate for a capital-intensive logistics footprint. The reported equity ratio of 0.0% is an undisclosed item, not an actual metric; based on totals, equity/asset ratio would be approximately 55%.

Cash Flow Quality

earnings_quality: OCF of ¥19.5bn equals 1.38x net income of ¥14.1bn, indicating healthy cash conversion supported by D&A of ¥11.8bn and manageable working-capital needs. fcf_analysis: Free cash flow cannot be robustly assessed because investing cash flow is reported as zero (undisclosed). Given the business model, maintenance and expansion capex are typically material; thus true FCF is likely below OCF. working_capital: Inventories of ¥39.6bn and working capital of ¥75.8bn look reasonable relative to scale, but inventory turns and receivables/payables cadence are not disclosed. Cash balance is undisclosed (reported as zero), limiting liquidity granularity.

Dividend Sustainability

payout_ratio_assessment: DPS is shown as ¥0.00 with a 0.0% payout ratio, which should be treated as not disclosed. With EPS at ¥56.47 and OCF/NI at 1.38x, coverage would likely be adequate for a modest payout, but actual dividends cannot be evaluated from provided data. fcf_coverage: FCF coverage cannot be computed because investing cash flow is undisclosed; any conclusion on dividend affordability from FCF would be speculative. policy_outlook: Nichirei historically maintains shareholder returns linked to stable cash generation, but absent DPS and buyback data here, policy trend and near-term changes cannot be inferred. Monitoring full-year guidance and capex plans will be key.

Risk Assessment

Business Risks:

• Raw material and energy cost volatility impacting gross margin
• Consumer demand softness or downtrading in processed foods
• Operational leverage in cold-chain logistics leading to margin swings with volume changes
• Foreign exchange exposure on imported inputs
• Competitive pricing pressure in food and logistics segments
• Supply chain disruptions affecting inventory and service levels

Financial Risks:

• Potential capex intensity in logistics and manufacturing reducing FCF in investment cycles
• Working-capital swings affecting cash conversion
• Interest rate increases (albeit mitigated by strong coverage)
• Asset impairments risk in case of underutilized facilities

Key Concerns:

• Negative operating leverage with flat revenue and OP down 7.0% YoY
• Dependence on non-operating items/tax for net income growth
• Data gaps (investing CF, cash balance, dividend data) obscuring true FCF and payout capacity

Investment Implications

Key Takeaways:

• Topline essentially flat (+0.1% YoY) with margin compression at the operating level
• ROE modest at 4.99% driven by conservative leverage and mid-single-digit operating margin
• Strong liquidity and interest coverage provide balance-sheet resilience
• Cash conversion solid (OCF/NI 1.38x), but true FCF unknown due to undisclosed investing CF
• Non-operating items and tax likely supported bottom-line growth despite weaker operations

Metrics to Watch:

• Operating margin trajectory and cost pass-through in H2
• Investing cash flow/capex and resulting FCF
• Segment-level volume, pricing, and utilization (foods vs logistics)
• Inventory levels and working-capital turnover
• Energy and raw material cost trends
• Full-year guidance revisions and dividend policy disclosures

Relative Positioning: Within Japan’s food and cold-chain logistics peer set, Nichirei shows solid balance sheet strength and cash conversion but a modest ROE and pressured operating margin this half; profitability sits mid-pack while capital discipline and leverage are conservative.

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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