SHINOBU FOODS PRODUCTS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥31.23B
• Operating Income: ¥1.40B
• Net Income: ¥939M
• EPS: ¥90.19

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

Shinobu Foods (TSE: 29030) delivered solid FY2026 Q2 results with clear signs of operational improvement and disciplined financial management. Revenue grew 9.3% year over year to ¥31.24bn, while operating income rose 14.4% to ¥1.40bn, indicating positive operating leverage. Net income increased 11.4% to ¥1.05bn, translating to EPS of ¥90.19. Profitability metrics improved across the P&L: operating margin reached 4.5%, ordinary margin 4.4%, and net margin 3.35%. Gross profit of ¥4.29bn implies a gross margin of 13.7%, which, together with better operating expense control, underpinned the outperformance of operating profits versus sales growth. DuPont decomposition shows ROE of 6.91% driven by a 3.35% net margin, asset turnover of 1.06x, and financial leverage of 1.95x. Implied ROA is approximately 3.6% (net margin × asset turnover), appropriate for a low-margin prepared foods business. Cash generation was healthy: operating cash flow of ¥1.26bn represented 1.21x net income, signaling reasonable earnings quality. The balance sheet is conservatively positioned with total assets of ¥29.47bn and total equity of ¥15.13bn, implying an equity ratio around 51% and leverage of 1.95x. Liquidity is adequate with a current ratio of 125% and quick ratio of 124%, supported by minimal reported inventory. Interest expense is negligible at ¥18m, and interest coverage is a robust 77.6x. Ordinary income was slightly below operating income, indicating small net non-operating costs. The company reported zero dividends for the period, with a payout ratio of 0%, and free cash flow was not disclosed (investing cash flow unreported). While several line items are unreported in XBRL (e.g., cash balance, investing cash flows, shares outstanding, book value per share), the non-zero data points provide a coherent picture of improving profitability and solid cash conversion. Overall, Shinobu Foods is demonstrating margin discipline, positive operating leverage, and sound liquidity, albeit with ongoing exposure to input costs and channel dynamics typical of the ready-to-eat foods segment.

Profitability Analysis

ROE_decomposition: Reported ROE is 6.91%, decomposed as Net Margin 3.35% × Asset Turnover 1.06× × Financial Leverage 1.95×. This implies ROA near 3.6% and indicates that moderate leverage and improving margins are key contributors to equity returns. margin_quality: Gross margin is 13.7% (¥4.29bn GP on ¥31.24bn sales), operating margin 4.5% (¥1.40bn), ordinary margin 4.4% (¥1.39bn), and net margin 3.35% (¥1.05bn). The uplift of operating income (+14.4% YoY) versus revenue (+9.3% YoY) suggests cost discipline and better mix or price pass-through. Ordinary income slightly trails operating income, reflecting minor net non-operating costs. operating_leverage: With revenue up 9.3% and operating profit up 14.4%, operating leverage is approximately 1.55×, evidencing scale benefits and fixed-cost absorption. EBITDA of ¥2.13bn yields a 6.8% EBITDA margin, supported by depreciation of ¥733m that reflects ongoing capital intensity but manageable non-cash burden.

Growth Assessment

revenue_sustainability: Top-line growth of 9.3% appears broad-based, likely driven by steady demand for prepared foods and possible price adjustments to offset costs. Asset turnover at 1.06× points to efficient use of the asset base to support growth. profit_quality: Net income growth of 11.4% outpaced sales, underscoring improving operating efficiency. The net-to-OCF conversion ratio (1.21×) supports the quality of earnings, indicating limited reliance on accruals in the period. outlook: Assuming continued demand in convenience and retail channels and effective cost pass-through, margin improvement can be sustained near current levels. However, input cost volatility (rice, seafood, packaging), energy, and labor inflation remain key watchpoints that could compress margins if price actions lag.

Financial Health

liquidity: Current ratio 124.9% and quick ratio 124.4% indicate adequate short-term coverage. Working capital stands at ¥2.64bn, suggesting headroom to manage seasonal swings and procurement needs. solvency: Financial leverage is modest at 1.95× (Assets/Equity). While the disclosed equity ratio is 0% in the dataset, the implied equity ratio from non-zero items is approximately 51% (¥15.13bn/¥29.47bn), indicating a solid capital base. capital_structure: Debt-to-equity of 0.96× points to moderate leverage. Interest burden is de minimis (¥18m), and coverage is strong at 77.6×, leaving ample buffer against rate or earnings shocks.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥1.26bn is 1.21× net income, a healthy conversion that supports the accrual quality of earnings. EBITDA of ¥2.13bn provides additional cushion for working capital and investment needs. FCF_analysis: Investing cash flow is unreported; therefore, free cash flow cannot be accurately determined from available data (dataset shows FCF = 0 as undisclosed). Nevertheless, OCF margin of ~4.0% (¥1.26bn/¥31.24bn) suggests internally generated funds are available for maintenance capex and selective growth spend. working_capital: Quick ratio ~ current ratio, combined with minimal reported inventories (¥59m), implies a fast-moving product cycle and tight inventory control. Changes in receivables/payables are not disclosed, but the OCF/NI ratio indicates manageable working capital movements.

Dividend Sustainability

payout_ratio_assessment: Reported DPS is ¥0.00 with a payout ratio of 0%, implying retention of earnings for reinvestment or balance sheet strength. Given net income of ¥1.05bn, capacity exists for distributions, but policy is not evidenced in the disclosed period. FCF_coverage: With investing cash flows unreported, FCF coverage of dividends cannot be assessed (dataset shows 0.00× because FCF is undisclosed). On an OCF basis, coverage would be ample if capex requirements are not elevated. policy_outlook: Absent explicit guidance, dividend policy appears conservative. If margin improvements and cash generation persist, there is scope for future payouts; however, visibility depends on capex plans and working capital needs.

Risk Assessment

Business Risks:

• Input cost volatility (rice, seafood, meats, packaging materials) impacting gross margin
• Energy and utility cost inflation affecting manufacturing costs
• Labor cost pressures and staffing constraints in manufacturing and logistics
• High customer and channel concentration risk in convenience store and retail segments
• Food safety and quality control risks, including potential recalls
• Demand variability due to seasonality, weather, and consumer spending trends
• Logistics disruptions and cold-chain reliability
• Product mix shifts toward lower-margin items

Financial Risks:

• Thin operating margins increase sensitivity to small revenue or cost changes
• Potential capex needs for plant upgrades and automation could pressure FCF
• Moderate leverage (D/E 0.96×) could rise with new borrowing for expansion
• Working capital swings given purchasing cycles and receivable collection timing
• Interest rate increase risk is low but non-zero despite strong coverage

Key Concerns:

• Sustaining price/mix actions to offset input and labor cost inflation
• Maintaining operating leverage as growth normalizes
• Visibility on capex and investing cash flows (currently undisclosed)

Investment Implications

Key Takeaways:

• Sales grew 9.3% YoY to ¥31.24bn with operating income up 14.4% to ¥1.40bn, evidencing positive operating leverage.
• Margins improved: operating margin 4.5%, EBITDA margin 6.8%, net margin 3.35%.
• ROE of 6.91% is driven by modest leverage (1.95×) and improving margins with efficient asset use (1.06× turnover).
• Earnings quality is solid with OCF/Net income at 1.21× and interest coverage at 77.6×.
• Liquidity is adequate (current ratio 125%) and implied equity ratio ~51% supports solvency.
• Dividend payout is currently nil; cash generation provides optionality subject to capex needs.
• Key uncertainties remain around input costs, labor, and undisclosed investing cash flows.

Metrics to Watch:

• Gross margin and operating margin trends versus input cost indices (rice, energy)
• Price pass-through cadence and product mix in core channels
• Factory utilization and depreciation-to-sales ratio as a proxy for capital intensity
• OCF/Net income and OCF margin to monitor earnings quality
• Capex levels and investing cash flows once disclosed (FCF trajectory)
• Leverage (D/E) and interest coverage as rates evolve

Relative Positioning: Within the Japanese prepared foods and chilled RTE segment, Shinobu Foods exhibits typical low double-digit gross margins and mid-single-digit EBITDA margins, with comparatively strong balance sheet resilience and healthy cash conversion; sustaining margin gains amid cost pressures will be key to maintaining its competitive standing.

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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