Marutai Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.58B
• Operating Income: ¥203M
• Net Income: ¥169M
• EPS: ¥88.71

Income Statement

Balance Sheet

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

Marutai (29190) reported FY2026 Q2 standalone results under JGAAP with revenue of ¥4,576 million, down 2.3% YoY, reflecting soft topline conditions in its core noodle and related food products. Gross profit was ¥1,431 million, implying a solid gross margin of 31.3%, but operating income fell 35.9% YoY to ¥203 million as SG&A pressures outweighed gross profit resilience. Ordinary income was ¥237 million and net income came in at ¥169 million, a decline of 27.6% YoY, translating to an EPS of ¥88.71 for the half-year. Operating margin compressed to roughly 4.4% (¥203m/¥4,576m), indicating operating leverage working against the company amid modest revenue decline and cost inflation. DuPont analysis shows ROE of 1.69% (Net margin 3.69% × Asset turnover 0.349 × Financial leverage 1.31), with low asset turnover and moderate net margin being the main drags on equity efficiency. The balance sheet is strong: total assets are ¥13,095 million and total liabilities are ¥3,708 million, implying low leverage (D/E 0.37x) and an inferred equity ratio of about 76.6% despite the reported equity ratio field showing 0.0% (likely undisclosed in XBRL). Liquidity appears ample with a current ratio of 231% and quick ratio of 217%, supported by working capital of ¥3,523 million. Interest burden is negligible with interest expense of only ¥1.4 million and interest coverage at 143.6x, giving significant financial flexibility. Cash flow statements are unreported (OCF/ICF/FCF listed as 0), limiting assessment of cash conversion and free cash flow; these zeros reflect disclosure gaps rather than actual zeros. Depreciation and amortization are also unreported (listed as 0), so EBITDA and related metrics are not meaningful from the provided data. The tax line shows income tax expense of ¥111 million; however, the calculated effective tax rate in the summary metrics is shown as 0.0% due to data limitations, and should not be relied upon. Inventory is modest at ¥389 million versus current assets of ¥6,210 million, which supports the strong quick ratio and indicates low inventory carry relative to the balance sheet. Dividend metrics show DPS and payout ratio as 0.00, implying no disclosed interim dividend or policy detail at this stage; coverage analysis cannot be performed without cash flow data. Overall, profitability softened notably at the operating level, but the company maintains a very conservative capital structure and strong liquidity, which should cushion near-term volatility. The primary challenge is restoring operating leverage through volume/mix recovery and/or sustained pricing while managing cost inflation in raw materials and utilities. Data constraints—particularly around cash flows, depreciation, and share count—necessitate caution in interpreting cash-based and per-share metrics.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 3.69% × Asset turnover 0.349 × Financial leverage 1.31 = ROE 1.69%. Net margin of 3.69% reflects decent gross margin (31.3%) but elevated SG&A burden, leading to an operating margin of ~4.4% and a 35.9% YoY decline in operating income. Asset turnover of 0.349x (TTM-like proxy using period assets) is low for a packaged foods business, suggesting potential underutilized assets or scale constraints. Financial leverage is conservative at 1.31x (Assets/Equity), aligning with a low D/E of 0.37x; leverage is not a driver of ROE. Margin quality: the gross margin indicates pricing and product mix remain supportive, but the delta between gross and operating margin widened, pointing to cost creep in distribution, labor, or marketing. Operating leverage was negative in the half due to revenue contraction; fixed-cost absorption likely deteriorated, amplifying the EBIT decline relative to the modest revenue drop. Interest expense is minimal (¥1.4m), so below-the-line effects are not masking operating weakness. Effective tax rate cannot be reliably computed from the provided summary; reliance should be on reported net income.

Growth Assessment

Revenue declined 2.3% YoY to ¥4,576 million, indicating modest demand softness or normalization after prior price-led growth. Operating income fell more sharply (-35.9% YoY), showing revenue headwinds magnified by fixed costs and possibly higher SG&A. Net income decreased 27.6% YoY to ¥169 million, cushioned slightly by minimal interest expense. Sustainability: gross margin at 31.3% suggests underlying product economics remain intact; the key is controlling SG&A and improving capacity utilization. Profit quality is acceptable at the gross level, but operating profit quality is pressured by cost inflation and scale. Outlook hinges on: stabilization of raw material and energy costs, effectiveness of any pricing/mix actions, and volume recovery in core domestic channels. Given conservative leverage and strong liquidity, the company has room to invest in marketing, route-to-market efficiency, and plant optimization to support growth, but near-term earnings visibility is moderate given the topline softness and cost environment. Data gaps on capex and cash flows constrain visibility on growth investments.

Financial Health

Liquidity appears strong: current assets ¥6,210 million vs current liabilities ¥2,687 million yield a current ratio of 231% and quick ratio of 217%. Working capital is sizable at ¥3,523 million, and inventories are modest at ¥389 million, limiting obsolescence risk. Solvency is robust: total liabilities ¥3,708 million vs equity ¥10,020 million give D/E of 0.37x; financial leverage at 1.31x is conservative. The reported equity ratio of 0.0% is not reflective of reality; based on assets and equity, the implied equity ratio is ~76.6%. Interest coverage is very high at 143.6x (operating income/interest expense), indicating low refinancing risk and ample buffer against rate moves. No cash balance is disclosed in the provided data (listed as 0), so absolute liquidity cannot be quantified from this dataset, but balance sheet structure suggests resilience.

Cash Flow Quality

Operating, investing, and financing cash flows are all shown as 0 due to non-disclosure, preventing a direct assessment of earnings-to-cash conversion. The OCF/Net income ratio is listed as 0.00, which should not be interpreted as poor conversion but as data unavailability. Depreciation and amortization are unreported (0), so EBITDA and accrual-based quality checks cannot be performed. Free cash flow is shown as 0 (undisclosed), so FCF coverage of dividends cannot be evaluated. Working capital structure appears healthy (high quick ratio and modest inventories), which typically supports decent cash conversion, but actual changes in receivables/payables/inventories are unknown for the period. Overall, earnings quality cannot be validated without OCF and capex detail; conclusions here are tentative.

Dividend Sustainability

DPS and payout ratio are reported as 0.00, indicating no disclosed dividend for the period. With net income of ¥169 million in H1, there is theoretical capacity to fund dividends, supported by a strong balance sheet (implied equity ratio ~76.6% and low D/E). However, absent OCF and capex data, FCF coverage cannot be assessed and the FCF coverage metric listed (0.00x) is not meaningful. Policy outlook is unclear from the provided data; as a standalone filer, the company may prioritize reinvestment and balance sheet strength amid margin pressure. Dividend sustainability assessment is therefore inconclusive and contingent on actual cash generation and full-year profitability.

Risk Assessment

Business Risks:

• Raw material price volatility (e.g., wheat flour, palm oil) and FX exposure on imports
• Energy and utility cost inflation impacting manufacturing costs
• Competitive pressure from larger domestic food players and private labels
• Demand softness or downtrading in instant noodles and related categories
• Logistics and distribution cost increases affecting SG&A
• Food safety and quality control risks
• Regional concentration risks if sales are skewed to specific domestic areas
• Customer concentration or bargaining power of major retailers

Financial Risks:

• Limited disclosure on cash flows and capex, constraining visibility on cash generation
• Potential future capex needs for plant maintenance/automation could pressure FCF
• Small-cap liquidity and market access risks
• Tax expense variability and limited clarity on effective tax rate
• Earnings sensitivity to small changes in volume given operating leverage

Key Concerns:

• Operating income down 35.9% YoY on modest revenue decline, indicating adverse operating leverage
• ROE at 1.69% driven by low asset turnover and modest margins
• Cash flow data (OCF/FCF) and depreciation are undisclosed, limiting earnings quality assessment
• Dividend policy visibility is low (DPS reported as 0.00 for the period)
• Reported equity ratio field (0.0%) is not reflective of strong balance sheet implied by assets/equity

Investment Implications

Key Takeaways:

• Topline contracted 2.3% YoY; cost pressures led to a 35.9% YoY decline in operating income
• Gross margin remains solid at 31.3%, but SG&A intensity compressed operating margin to ~4.4%
• Balance sheet is conservative (D/E 0.37x; implied equity ratio ~76.6%); interest burden is negligible
• ROE is low at 1.69%, constrained by low asset turnover and modest net margin
• Cash flow and depreciation are undisclosed; caution in interpreting EBITDA/FCF metrics
• Dividend visibility is limited; current DPS disclosure is 0.00

Metrics to Watch:

• SG&A-to-sales ratio and operating margin trajectory
• Raw material and utility cost indices (wheat, palm oil, electricity/gas)
• Pricing and mix actions vs. volume trends in core categories
• Inventory days and receivables/payables turnover (working capital efficiency)
• Capex and maintenance spending, and any disclosure of depreciation
• Operating cash flow and free cash flow once disclosed
• Any updates to dividend policy and full-year guidance

Relative Positioning: Versus domestic small/mid-cap packaged food peers, Marutai exhibits stronger balance sheet conservatism (low leverage, high liquidity) but weaker profitability in the period (operating margin ~4–5% and ROE ~2% vs peers typically mid-single-digit to high-single-digit ROE). Earnings volatility appears higher due to operating leverage and scale, while interest burden risk is lower than peers.

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
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis