ASAHI KASEI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.49T
• Operating Income: ¥107.45B
• Net Income: ¥62.41B
• EPS: ¥48.79

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

Asahi Kasei (3407) reported FY2026 Q2 consolidated results under JGAAP showing broadly resilient profitability amid a flattish top line. Revenue was ¥1,486.4bn, down 0.3% YoY, indicating stable demand conditions with modest volume/price headwinds. Gross profit reached ¥470.0bn, yielding a gross margin of 31.6%, which is robust for a diversified chemicals–homes–healthcare portfolio and suggests decent input cost pass-through and mix. Operating income was ¥107.5bn, down 1.3% YoY, implying slight operating pressure and limited operating leverage at current volumes. Operating margin stood at 7.2%, supported by disciplined costs and stable depreciation. EBITDA was ¥180.3bn with a 12.1% margin, indicating healthy cash earnings power relative to revenue. Ordinary income of ¥106.1bn was slightly below operating income, reflecting modest net non-operating costs including ¥3.8bn of interest expense; interest coverage is strong at 28.5x. Net income increased 10.0% YoY to ¥66.3bn, implying a favorable non-operating/tax/minority interest mix versus last year despite slightly weaker operating profit. DuPont ROE was 3.36%, decomposed into a 4.46% net margin, 0.372x asset turnover, and 2.02x financial leverage; this points to a capital-intensive profile with moderate profitability. ROA was approximately 1.7%, consistent with diversified industrial peers in a mid-cycle phase. Liquidity remains solid with a current ratio of 183% and a quick ratio of 148%, underpinned by ¥804.8bn of working capital. The balance sheet shows moderate leverage (total liabilities/equity of 1.06x), and the company maintains ample headroom relative to earnings. Operating cash flow was ¥151.1bn, equating to 2.28x net income, which signals strong earnings quality and favorable working capital dynamics. Free cash flow cannot be assessed due to unreported investing cash flows; therefore, FCF and dividend coverage metrics are not determinable from the provided data. Several items are unreported in XBRL (equity ratio, investing CF, cash balance, shares/DPS), limiting precision on capital allocation and shareholder return analysis. Overall, the quarter demonstrates steady margins, strong cash conversion, and conservative solvency, but muted growth and low ROE highlight the need for mix improvement and asset efficiency gains.

Profitability Analysis

ROE_decomposition: ROE 3.36% = Net margin 4.46% × Asset turnover 0.372 × Financial leverage 2.02. This reflects moderate profitability on a sizable asset base and modest leverage. margin_quality: Gross margin 31.6% and operating margin 7.2% (¥107.5bn OI on ¥1,486.4bn sales) indicate stable cost pass-through and disciplined SG&A. EBITDA margin at 12.1% corroborates underlying cash profitability. Net margin at 4.46% benefits from manageable interest costs (¥3.8bn) and a favorable below-the-line/tax outcome YoY. operating_leverage: With revenue down 0.3% and operating income down 1.3%, implied operating leverage was slightly negative in the period, suggesting modest fixed-cost under-absorption or mix effects. D&A of ¥72.9bn (≈4.9% of sales) indicates meaningful fixed-cost base typical of chemicals and manufacturing.

Growth Assessment

revenue_sustainability: Sales were essentially flat (-0.3% YoY) at ¥1,486.4bn, implying stable end-market demand across chemicals, homes, and healthcare. Pricing/mix likely offset some volume softness. profit_quality: Operating income declined modestly (-1.3% YoY) to ¥107.5bn, but net income rose 10.0% YoY to ¥66.3bn, indicating improvements in non-operating items and/or taxes. EBITDA of ¥180.3bn supports the durability of earnings despite top-line stagnation. outlook: Given steady margins and strong cash conversion, near-term earnings should remain resilient if raw material costs and FX remain benign. Sustained growth likely depends on product mix upgrades in specialty chemicals/healthcare, housing demand trends, and normalization of input costs. Data limitations (no segment details here) constrain visibility.

Financial Health

liquidity: Current assets ¥1,769.4bn vs current liabilities ¥964.6bn yield a current ratio of 183% and a quick ratio of 148%, supported by ¥804.8bn in working capital and inventories of ¥341.5bn. solvency: Total liabilities ¥2,101.3bn vs equity ¥1,974.8bn give a liabilities-to-equity ratio of 1.06x. Interest expense is low at ¥3.8bn with interest coverage of 28.5x, indicating strong debt service capacity. capital_structure: Financial leverage of 2.02x (assets/equity) is moderate for the sector. The reported equity ratio was unreported (0% placeholder), so the precise equity-to-asset ratio cannot be confirmed from XBRL despite equity of ¥1,974.8bn and assets of ¥3,997.1bn.

Cash Flow Quality

earnings_quality: OCF of ¥151.1bn equals 2.28x net income, indicating strong conversion and likely working capital release or disciplined receivables/inventory management. FCF_analysis: Free cash flow cannot be calculated because investing cash flows were unreported (0 placeholder). As a capital-intensive company, true FCF depends on maintenance and growth capex levels not disclosed here. working_capital: Inventories are ¥341.5bn, and quick ratio of 148% suggests healthy liquidity beyond stock. The strong OCF implies favorable changes in payables/receivables or inventory relative to earnings.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported (0 placeholders); thus, we cannot assess payout against earnings. FCF_coverage: FCF coverage is indeterminable due to unreported investing CF; OCF alone appears ample versus typical dividend needs, but capex requirements are unknown. policy_outlook: Without disclosed DPS or share count, we cannot infer current policy execution. Historically, stability would hinge on cash generation and leverage, both of which look supportive, but confirmation requires full cash flow and policy disclosures.

Risk Assessment

Business Risks:

• Raw material and energy price volatility affecting chemical margins
• FX fluctuations (notably USD/JPY and EUR/JPY) impacting translation and input costs
• Housing demand cyclicality affecting the Homes business
• Regulatory and reimbursement risks in healthcare/medical devices
• Competitive pressure and commoditization in base chemicals
• Supply chain constraints and logistics costs impacting deliveries and inventory
• Environmental regulations and decarbonization investment needs

Financial Risks:

• Capital intensity and potential capex upcycles could compress FCF
• Working capital swings affecting OCF seasonally
• Interest rate normalization raising financing costs from a low base
• Impairment risk on long-lived assets in cyclical segments

Key Concerns:

• Low ROE at 3.36% relative to cost of equity benchmarks
• Muted top-line growth (-0.3% YoY) and slightly negative operating leverage
• Data gaps (investing CF, equity ratio, DPS) limiting visibility on FCF and shareholder returns

Investment Implications

Key Takeaways:

• Stable revenue and margins with slight YoY operating profit decline
• Net income up 10% YoY supported by below-the-line/tax factors
• Strong liquidity (CR 183%, QR 148%) and interest coverage (28.5x)
• OCF robust at ¥151.1bn (2.28x net income), implying high earnings quality
• ROE modest at 3.36% driven by low asset turnover and moderate margins
• FCF and dividend assessment not possible due to unreported investing CF and DPS

Metrics to Watch:

• Segment margins and mix (specialty vs commodity chemicals, homes, healthcare)
• Capex and investing cash flows to gauge FCF trajectory
• Working capital trends (inventory and receivables days)
• Raw material/energy input prices and pricing pass-through
• FX rates and hedging impact on margins
• ROIC vs WACC and progress on asset efficiency

Relative Positioning: Operationally resilient with strong cash conversion and balance sheet headroom, but earnings growth and ROE trail more asset-light or specialty-focused peers; visibility on FCF and shareholder returns is constrained by missing investing and dividend disclosures.

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