Nisshinbo Holdings Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥364.57B
• Operating Income: ¥18.87B
• Net Income: ¥3.53B
• EPS: ¥88.44

Income Statement

Balance Sheet

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

For FY2025 Q3, Nisshinbo Holdings posted revenue of ¥364.6bn, up 4.2% YoY, signaling modest top-line growth amid what appears to be a recovery phase. Operating income surged to ¥18.9bn (+381.7% YoY), lifting the operating margin to approximately 5.2%, a sharp improvement that suggests effective pricing initiatives, cost control, or a normalization of prior-year headwinds. Ordinary income was ¥21.3bn, implying roughly ¥2.4bn of net non-operating gains that further supported profits. Net income reached ¥13.8bn (+368.2% YoY), translating to an EPS of ¥88.44 and a net margin of 3.79%. Gross profit was ¥72.7bn, with a gross margin of 19.9%, indicating reasonable value capture through the cost stack. The DuPont framework shows ROE of 4.60% (Net margin 3.79% × Asset turnover 0.576 × Financial leverage 2.11), evidencing a return profile driven primarily by margin recovery rather than asset intensity or leverage. Liquidity appears solid with a current ratio of 186.6% and a quick ratio of 159.8%, supported by working capital of ¥172.2bn. Interest coverage is strong at 11.3x (operating income over interest expense), implying low near-term refinancing risk. Inventory stands at ¥53.3bn, equating to roughly 70 days on cost of sales, a manageable level for a diversified industrial franchise. While the equity ratio field is shown as 0.0%, this is an unreported item; based on the provided totals and DuPont leverage, effective capitalization looks balanced with moderate leverage. Cash flow statements, depreciation and amortization, and cash balances are unreported (displayed as zeros), limiting assessment of earnings-to-cash conversion and capital intensity. The reported effective tax rate of 0.0% is also an unreported placeholder; a simple approximation using income tax of ¥5.2bn over ordinary income of ¥21.3bn implies a tax burden around the mid-20% range. Dividend data are unreported (DPS and payout show zero placeholders), so distribution policy cannot be assessed from this release alone. Overall, the quarter evidences a pronounced earnings recovery with healthier margins and adequate financial flexibility, but the absence of cash flow and depreciation disclosures constrains conclusions on sustainability and free cash flow generation.

Profitability Analysis

roe_decomposition: ROE 4.60% = Net margin 3.79% × Asset turnover 0.576 × Financial leverage 2.11. Implied ROA is about 2.18% (3.79% × 0.576), with leverage amplifying returns to shareholders. margin_quality: Gross margin 19.9% (¥72.7bn/¥364.6bn) reflects decent pricing and input cost management. Operating margin improved to ~5.2% (¥18.9bn/¥364.6bn), up markedly YoY, indicating successful cost rationalization and/or mix improvements. Ordinary margin is ~5.9% (¥21.3bn/¥364.6bn), aided by ~¥2.4bn in net non-operating income. Net margin at 3.79% is consistent with the operating recovery but still mid-single-digit, leaving room for further efficiency gains. operating_leverage: Operating income growth (+381.7% YoY) far outpaced revenue growth (+4.2% YoY), evidencing strong operating leverage and normalization from a weak base. This suggests fixed cost absorption improved and/or one-off headwinds have faded. Sustaining this leverage will depend on volume stability, pricing discipline, and input cost trends.

Growth Assessment

revenue_sustainability: Top-line grew 4.2% YoY to ¥364.6bn, a steady pace for a diversified industrial. Sustainability will hinge on demand in core end-markets and the company’s ability to defend pricing amid macro volatility. profit_quality: The step-up in operating margin to ~5.2% is material. Ordinary income exceeded operating income by ~¥2.4bn, implying supportive non-operating items (e.g., FX, investment income). Absent cash flow and D&A data, durability of margin gains cannot be fully validated. outlook: With gross margin near 20% and a stronger operating margin, earnings momentum appears favorable into FY-end, contingent on stable demand, input costs, and FX. Watch for continued cost discipline and mix improvement to defend mid-single-digit operating margins.

Financial Health

liquidity: Current ratio 186.6% and quick ratio 159.8% indicate ample near-term liquidity. Working capital totals ¥172.2bn, providing buffer against demand swings. solvency: Interest coverage at 11.3x (¥18.9bn/¥1.67bn) signals comfortable debt service capacity. The reported debt-to-equity ratio of 1.27x (total liabilities/equity) implies moderate leverage for a diversified industrial. capital_structure: Total assets ¥632.5bn and total liabilities ¥382.3bn. Total equity is reported at ¥300.5bn. There appears to be an internal inconsistency between assets and the sum of liabilities plus equity in the dataset; however, the DuPont leverage (2.11x) and the liabilities/equity ratio (1.27x) both indicate balanced capitalization with moderate leverage.

Cash Flow Quality

earnings_quality: Operating cash flow, investing cash flow, financing cash flow, and cash balances are unreported (displayed as zeros). As such, OCF/Net income and FCF metrics in the dataset are placeholders and cannot be interpreted. Without OCF and D&A, we cannot assess accrual intensity or cash conversion. fcf_analysis: Free cash flow is unreported. The absence of capex and OCF data prevents analysis of whether the margin recovery translated into cash. working_capital: Current assets ¥371.1bn and current liabilities ¥198.9bn yield strong liquidity. Inventories of ¥53.3bn equate to ~70 days on cost of sales (¥277.1bn), a reasonable level; monitoring inventory turns relative to demand will be key to preserving cash.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are unreported (shown as zeros). Based on EPS of ¥88.44, there is theoretical capacity for distributions, but actual policy and payout are not disclosed here. fcf_coverage: FCF is unreported, so coverage of dividends by free cash flow cannot be assessed from this dataset. policy_outlook: With ROE at 4.6% and moderate leverage, there appears to be room for a balanced approach between investment and shareholder returns, but clarity requires disclosed dividend guidance and cash flow data.

Risk Assessment

Business Risks:

• Demand cyclicality in key end-markets affecting volume and pricing
• Raw material and energy cost volatility impacting gross margin
• FX fluctuations influencing revenue and non-operating income
• Supply chain and logistics constraints affecting delivery and inventory levels
• Competitive pressure limiting pricing power and mix improvement

Financial Risks:

• Potential margin compression reducing interest coverage if volumes soften
• Working capital swings consuming operating cash in a downturn
• Exposure to non-operating items; if one-offs reverse, ordinary income could normalize lower
• Data limitations on cash and capex hinder assessment of refinancing and investment needs

Key Concerns:

• Sustainability of the sharp YoY margin recovery without corroborating cash flow data
• Unreported D&A and capex obscure capital intensity and underlying EBITDA
• Apparent internal inconsistency between assets and liabilities plus equity in the dataset, limiting precision on capital structure metrics

Investment Implications

Key Takeaways:

• Revenue up 4.2% YoY with significant operating profit recovery (+381.7% YoY)
• Operating margin ~5.2% and gross margin 19.9% indicate improved cost control and mix
• ROE 4.6% driven by better profitability and moderate leverage (2.11x)
• Strong liquidity (current ratio 186.6%, quick ratio 159.8%) and solid interest coverage (11.3x)
• Non-operating gains (~¥2.4bn) supported ordinary income; sustainability to be monitored
• Cash flow and D&A are unreported; earnings-to-cash conversion cannot be verified

Metrics to Watch:

• Operating cash flow and free cash flow disclosure in the full-year results
• Capex and depreciation to gauge EBITDA and capital intensity
• Inventory turnover and working capital days to assess cash discipline
• Operating margin trajectory and pricing vs. input costs
• FX impact and non-operating income components
• Order trends/backlog and segment mix supporting revenue sustainability

Relative Positioning: Within Japanese diversified industrials, Nisshinbo’s current profile shows mid-teens to ~20% gross margin and mid-single-digit operating margin with modest ROE, supported by moderate leverage and strong liquidity; upside hinges on sustaining margin gains and converting earnings to cash.

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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