O'will Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.61B
• Operating Income: ¥1.06B
• Net Income: ¥543M
• EPS: ¥70.09

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

O'will Co., Ltd. (31430) delivered solid profit growth in FY2026 Q2 with revenue of ¥21,606,000,000 (+5.1% YoY) translating into operating income of ¥1,058,000,000 (+33.2% YoY) and net income of ¥630,000,000 (+14.7% YoY). Profit expansion outpaced top-line growth, indicating favorable operating leverage and effective SG&A control. Gross profit reached ¥2,222,812,000, yielding a gross margin of 10.3%, while operating margin improved to roughly 4.9%. Ordinary income (¥985,000,000) was below operating income, implying net non-operating expenses, including interest expense of ¥20,604,000 and likely other non-operating items. The net profit margin stood at 2.92%, consistent with low-margin trading business economics but showing efficiency gains. DuPont analysis shows ROE of 10.78%, decomposed into a 2.92% net margin, 1.140x asset turnover, and 3.25x financial leverage, a respectable return for a trading-oriented model. Liquidity appears sound with a current ratio of 185.8% and a quick ratio of 141.0%, supported by working capital of ¥6,881,931,000. The balance sheet shows total assets of ¥18,960,000,000, liabilities of ¥10,965,386,000, and equity of ¥5,842,000,000, implying an equity ratio of about 30.8% (derived from provided balances; the reported 0.0% equity ratio is a non-disclosure placeholder). Cash flow quality is mixed: operating cash flow (OCF) was negative at -¥347,093,000, resulting in an OCF/net income ratio of -0.55, indicating significant working capital investment to support growth. Financing cash inflow of ¥981,867,000 suggests reliance on external funding—likely short-term borrowings—to bridge cash needs. Interest coverage is strong at 51.3x, reflecting modest interest burden relative to EBITDA of ¥1,105,307,000. The effective tax rate displayed as 0.0% is not meaningful; using income tax of ¥267,377,000 and net income of ¥630,000,000 suggests a normalized tax burden of roughly 29–30% after extraordinary adjustments. Inventory stood at ¥3,589,364,000; combined with revenue growth and negative OCF, this points to a deliberate build or slower turnover, which bears monitoring. Dividend data are not disclosed (DPS and payout shown as 0.00 are placeholders), so distribution policy and sustainability cannot be assessed from this dataset. Overall, fundamentals show improved profitability and healthy liquidity, counterbalanced by weaker cash conversion and increased reliance on financing to fund working capital. Data gaps (cash, equity ratio, DPS, share counts) limit precision, but the available figures indicate stable core earnings with cash flow execution as the key area to watch.

Profitability Analysis

ROE_decomposition: ROE 10.78% = Net Margin 2.92% × Asset Turnover 1.140× × Financial Leverage 3.25×. Drivers are modest margin improvement and efficient asset use, amplified by moderate leverage. margin_quality: Gross margin 10.3% and operating margin ~4.9% reflect improved cost discipline and likely favorable mix or procurement. Ordinary margin (~4.6%) trails operating due to net non-operating costs (interest and other). Net margin at 2.92% is typical for a trading model but trending positively given operating income growth outpacing sales. operating_leverage: Revenue +5.1% YoY vs operating income +33.2% YoY indicates strong operating leverage, likely from fixed-cost containment and improved gross spread. Low D&A (¥47,307,000) means leverage is mostly from SG&A efficiency rather than depreciation-related effects.

Growth Assessment

revenue_sustainability: Top-line growth of 5.1% suggests steady demand. Given trading exposure, growth likely reflects a combination of volume and pricing (including FX), but sustainability will depend on customer demand and commodity price trajectories. profit_quality: Operating income growth outpaced revenue, implying better spreads and cost control. Ordinary income below operating highlights some non-operating drag, but interest burden is small and coverage is strong. outlook: If gross spread improvements and SG&A efficiency persist, profit growth can continue even on modest revenue gains. However, negative OCF and inventory build imply execution risk if turnover slows or demand normalizes. Monitoring inventory and receivable cycles is key to sustaining profit conversion.

Financial Health

liquidity: Current ratio 185.8% and quick ratio 141.0% indicate comfortable short-term liquidity. Working capital totals ¥6,881,931,000, offering a buffer against trading cycle volatility. solvency: Total liabilities of ¥10,965,386,000 versus equity of ¥5,842,000,000 imply an equity ratio of approximately 30.8% (derived) and financial leverage of 3.25× (assets/equity). Debt-to-equity at 1.88× is moderate for a trading firm. capital_structure: Interest expense of ¥20,604,000 is small relative to EBITDA (coverage 51.3×), suggesting manageable funding costs. Positive financing cash flow (¥981,867,000) indicates incremental borrowing or similar funding to support working capital.

Cash Flow Quality

earnings_quality: Net income of ¥630,000,000 contrasts with OCF of -¥347,093,000 (OCF/NI = -0.55), pointing to weak cash conversion this period due to working capital usage. FCF_analysis: Investing CF is undisclosed (reported as 0). Given negative OCF, free cash flow is likely negative, but precise FCF cannot be determined without capex data. working_capital: Inventory at ¥3,589,364,000 and revenue growth suggest inventory accumulation or slower turns. The reliance on financing inflows to fund operations underscores the importance of normalizing receivable and inventory cycles in H2.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are undisclosed (0.00 placeholders). With EPS of ¥70.09, any payout assessment requires the company’s stated policy, which is not provided here. FCF_coverage: Given negative OCF and unknown capex, FCF coverage of dividends cannot be evaluated; if dividends were paid, coverage would likely be tight this period absent working capital normalization. policy_outlook: Without disclosed DPS or policy, we cannot infer dividend stability. Future distributions will depend on cash generation in H2 and working capital release.

Risk Assessment

Business Risks:

• Commodity and input price volatility affecting gross spreads
• Foreign exchange fluctuations impacting import costs and pricing
• Customer concentration and volume sensitivity typical of trading models
• Supply chain disruptions and lead-time variability influencing inventory levels
• Food safety and quality control risks (industry-specific)
• Margin compression risk if competitive pricing intensifies

Financial Risks:

• Negative operating cash flow and increased reliance on external financing
• Inventory build and potential turnover risk
• Interest rate risk on short-term borrowings despite currently strong coverage
• Working capital volatility impacting liquidity
• Potential FX-related non-operating losses affecting ordinary income

Key Concerns:

• OCF of -¥347,093,000 versus net income of ¥630,000,000 (weak cash conversion)
• Positive financing CF of ¥981,867,000 signals funding dependence for working capital
• Ordinary income below operating income suggests non-operating drag
• Undisclosed DPS and equity ratio metrics limit assessment of capital allocation and solvency trends

Investment Implications

Key Takeaways:

• Profitability improved materially, with operating income up 33.2% on 5.1% sales growth
• ROE of 10.78% supported by modest margins, decent asset turnover, and moderate leverage
• Liquidity is comfortable, but cash conversion is weak due to working capital investment
• Financing inflows likely funded inventory/receivable growth, raising execution risk if turnover slows
• Interest burden is low; coverage at 51.3× provides cushion against rate increases

Metrics to Watch:

• OCF/Net income ratio and trajectory through H2
• Inventory days and receivable days (turnover and aging)
• Gross margin sustainability and SG&A ratio
• Ordinary income bridge (FX and other non-operating items)
• Net debt to EBITDA and short-term borrowing levels
• Equity ratio (derived) trend and working capital intensity

Relative Positioning: Within Japanese food and ingredients trading peers, the company shows typical thin margins but competitive ROE near 11%, aided by asset turnover and leverage; current cash flow weakness is a relative soft spot compared to peers with steadier working capital cycles.

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