NISSIN FOODS HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥373.24B
• Operating Income: ¥31.82B
• Net Income: ¥31.23B
• EPS: ¥77.97

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

Nissin Foods Holdings (IFRS, consolidated) delivered FY2026 Q2 revenue of 3,732.40 (100M JPY), down 1.3% YoY, with operating income of 318.21 (100M JPY), declining 23.6% YoY, indicating margin compression despite only modest top-line softness. Gross profit was 1,356.76 (100M JPY), implying a gross margin of 36.4%, but SG&A rose to 997.53 (100M JPY), or 26.7% of sales, pressing operating margin to approximately 8.5%. EBITDA was 482.94 (100M JPY) with a 12.9% margin, and D&A was 164.73 (100M JPY), signaling a capital-intensive investment phase. Net income was 225.98 (100M JPY), down 22.2% YoY, with an effective tax rate of 32.8%, yielding a net margin of 6.0%. DuPont decomposition points to ROE of 4.4% (Net margin 6.0% × Asset turnover 0.409 × Financial leverage 1.76x), a subdued level for a branded food company. Asset turnover at 0.409 suggests relatively heavy asset intensity, consistent with ongoing capex and global manufacturing footprint. Operating cash flow of 139.85 (100M JPY) represented only 0.62x net income, signaling soft cash conversion in the half. Free cash flow was negative at -241.45 (100M JPY) due to large capital expenditures (-337.75) and broader investing CF of -381.30, indicating capacity expansion and/or strategic investments. Financing CF was positive at 77.47 (100M JPY) despite dividends (-121.63) and share repurchases (-204.51), implying incremental funding through borrowings or cash drawdowns. The balance sheet remains conservative: total equity of 5,184.65 (100M JPY) and equity ratio of 52.7%, with total liabilities of 3,365.59 (100M JPY) and reported short-term loans of 380.39 (100M JPY). Liquidity appears ample with cash and equivalents of 730.36 (100M JPY), although the full current liability structure and long-term debt are not disclosed in this dataset. Working capital dynamics look broadly balanced, with indicative days outstanding of approximately 56 (receivables), 53 (inventory), and 108 (payables), yielding a near-zero cash conversion cycle, though this is based on period-end balances. Dividend payout ratio is high at 92.2%, and FCF coverage was negative (-1.16x), suggesting near-term distributions are funded by balance sheet capacity rather than organic cash generation. Equity-method income of 59.09 (100M JPY) contributed meaningfully to pre-tax income (PBT 333.03), cushioning core profit decline. Overall, results reflect solid brand resilience but clear margin pressure and investment-heavy cash flows; balance sheet strength tempers risk, but improving cash conversion and restoring operating leverage will be key to earnings quality in the coming periods. Data limitations (notably non-operating line items, current liability detail, long-term debt, and dividend per share) constrain some ratio precision, but the available figures are sufficient to assess core trends.

Profitability Analysis

ROE_decomposition: Reported ROE is 4.4%, driven by net margin of 6.0%, asset turnover of 0.409, and financial leverage of 1.76x. The low asset turnover and moderate leverage cap ROE potential; the principal pressure this half came from margin compression. margin_quality: Gross margin was 36.4%, stable for a premium instant noodle portfolio but likely pressured by input costs and FX. SG&A intensity rose to 26.7% of sales, compressing operating margin to ~8.5% as revenue declined 1.3% YoY while opex did not flex proportionally. Net margin at 6.0% also reflects a 32.8% effective tax rate and the cushion from equity-method income (59.09). operating_leverage: Operating income fell 23.6% on a 1.3% revenue decline, indicating negative operating leverage given the fixed-cost base and higher brand investment. EBITDA margin of 12.9% versus operating margin of ~8.5% shows D&A drag consistent with elevated investment, further dampening incremental profitability.

Growth Assessment

revenue_sustainability: Top line declined 1.3% to 3,732.40 (100M JPY). Given the brand’s global footprint, price/mix likely mitigated volume headwinds, but the modest contraction suggests competitive intensity and/or normalization after prior price hikes. profit_quality: Operating income contracted 23.6% to 318.21, disproportionate to revenue, pointing to higher input costs, FX headwinds on imported raw materials, and/or increased brand and logistics spending. Equity-method gains (59.09) supported PBT (333.03), but underlying core profitability softened. outlook: If input cost inflation moderates and FX stabilizes, margins could recover as pricing and mix flow through. Conversely, sustained JPY weakness, elevated wheat/oil/palm costs, or incremental A&P could keep operating leverage negative. Execution on capex to unlock efficiency gains is a key swing factor.

Financial Health

liquidity: Cash and equivalents were 730.36 (100M JPY). Operating CF was 139.85, while current liabilities detail is unreported; thus current and quick ratios are not calculable from this dataset. Working capital reported at 2,883.43 equals current assets due to missing current liabilities, so formal liquidity ratios cannot be confirmed. solvency: Total liabilities were 3,365.59 vs equity of 5,184.65, yielding an equity ratio of 52.7% and debt-to-equity of 0.65x (using total liabilities). Short-term loans were 380.39; long-term loans and total interest-bearing debt are unreported, limiting precise leverage assessment. Nonetheless, assets of 9,135.85 against modest reported borrowings indicate a conservative balance sheet. capital_structure: Financial leverage (Assets/Equity) is 1.76x. Even with ongoing buybacks (-204.51) and dividends (-121.63), the company maintained positive financing CF (77.47), implying access to funding or cash redeployment. Without full IB debt disclosure, net debt cannot be determined.

Cash Flow Quality

earnings_quality: OCF/Net income was 0.62x (139.85 / 225.98), below 1.0x, indicating weaker cash conversion, likely due to working capital timing and higher tax or other non-cash/other operating items. EBITDA of 482.94 provides a solid cash earnings base, but conversion lagged this half. FCF_analysis: FCF was -241.45 (100M JPY), driven by capex of -337.75 and broader investing CF of -381.30, consistent with capacity and strategic investments. This negative FCF, alongside distributions, was bridged by financing inflows and existing cash. working_capital: Receivables 1,150.72 and inventories 705.36 versus payables 1,447.03 imply an indicative CCC near 1 day (DSO ~56, DIO ~53, DPO ~108 using half-year basis), suggesting structurally efficient cash conversion. The soft OCF likely reflects period-specific timing rather than structural deterioration.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 92.2%, elevated relative to current earnings and below-trend ROE (4.4%). With net margin at 6.0% and OCF/NI at 0.62x, dividend affordability from earnings is tight. FCF_coverage: FCF coverage was -1.16x, indicating dividends were not covered by free cash flow in the half. Distributions (dividends -121.63 and buybacks -204.51) were effectively funded by balance sheet capacity and/or incremental financing. policy_outlook: Given the company’s historically conservative balance sheet and brand strength, management may prioritize stable dividends; however, sustaining high payouts amid negative FCF will require improved operating cash conversion, moderation of capex, or continued access to funding. DPS data are unreported; conclusions rely on aggregate payout metrics provided.

Risk Assessment

Business Risks:

• Raw material and packaging cost volatility (wheat, palm oil, oils, seasonings).
• FX volatility (JPY weakness raises import costs).
• Competitive pricing pressure in instant noodles and broader packaged foods.
• Execution risk on capacity expansion and automation projects (capex-heavy phase).
• Demand normalization post-price hikes and potential volume elasticity.
• Geopolitical and logistics disruptions affecting global supply chains.
• Regulatory and food safety compliance across multiple jurisdictions.

Financial Risks:

• Weak near-term cash conversion (OCF/NI 0.62x) and negative FCF (-241.45).
• High payout relative to earnings (92.2%) combined with buybacks (-204.51).
• Partial visibility on total interest-bearing debt and current liabilities (liquidity ratios not calculable).
• Potential rise in financing costs if additional debt is used to fund investments/distributions.

Key Concerns:

• Operating leverage turned negative: operating income -23.6% on revenue -1.3%.
• Margin pressure from elevated SG&A (26.7% of sales) and possible input/FX headwinds.
• Dividend and buybacks outpacing organic cash generation in the half.

Investment Implications

Key Takeaways:

• Top line resilient but modestly down (-1.3%); margin compression drove profit decline.
• ROE at 4.4% is subdued given brand strength; recovery hinges on margin and asset efficiency.
• Cash conversion was weak (OCF/NI 0.62x); FCF negative due to heavy capex.
• Balance sheet remains conservative (equity ratio 52.7%); liquidity appears adequate despite data gaps.
• High payout (92.2%) and ongoing buybacks against negative FCF underscore reliance on balance sheet/funding in the near term.
• Equity-method income (59.09) meaningfully supported PBT.

Metrics to Watch:

• Operating margin trajectory and SG&A ratio (targeting recovery toward double-digit OPM).
• OCF/Net income and working capital turns (DSO, DIO, DPO).
• Capex intensity and project returns (EBITDA uplift, efficiency gains).
• Input cost basket and FX (JPY vs USD and key import currencies).
• ROE/ROIC progression and asset turnover improvement.
• Equity-method contribution stability.
• Dividend and buyback pace relative to FCF.

Relative Positioning: Within Japanese packaged foods, Nissin maintains premium brand equity and global scale with a conservative balance sheet, but current-period ROE and cash conversion lag best-in-class peers amid an investment-heavy phase and cost headwinds.

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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