Maruhachi Holdings Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.78B
• Operating Income: ¥770M
• Net Income: ¥1.21B
• EPS: ¥68.99

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

Maruhachi Holdings (35040) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a modest top-line decline. Revenue fell 2.5% YoY to ¥5,784 million, yet operating income rose 7.3% YoY to ¥770 million, indicating effective cost control and favorable mix. Gross profit was ¥4,125 million, implying a very high gross margin of 71.3%, which underpins robust unit economics. EBITDA reached ¥1,041 million (18.0% margin), and operating margin expanded to approximately 13.3%, suggesting positive operating leverage. Ordinary income of ¥1,595 million significantly exceeded operating income, pointing to sizable non-operating gains and indicating that a material share of earnings is non-core. Net income declined 11.7% YoY to ¥1,069 million despite the stronger operating line, likely due to a heavier tax burden and/or a normalization of non-operating/extraordinary factors. Using the reported income tax expense of ¥885 million, implied pre-tax income is roughly ¥1,954 million, suggesting an effective tax rate near 45%, not the 0.0% indicated in the summary metric (which appears to be a data artifact). DuPont analysis shows ROE of 1.92%, driven by a high net margin (18.48%) but very low asset turnover (0.076) and modest leverage (1.36x). The balance sheet is conservative, with total equity of ¥55,737 million and total liabilities of ¥16,881 million; the implied equity ratio is about 73.6% despite a reported 0.0% metric (unreported). Liquidity is strong with a current ratio of 274.9% and a quick ratio of 259.6%, and interest coverage is ample at 44.0x. Operating cash flow was solid at ¥1,535 million, translating to an OCF/Net Income ratio of 1.44, indicating good cash conversion backed by non-cash charges (D&A of ¥271 million) and probable working capital tailwinds. Investing cash flow and cash balances are not disclosed in the XBRL feed presented (shown as zero), limiting assessment of free cash flow and liquidity buffers. Financing cash flow was an outflow of ¥465 million, consistent with debt repayment and/or shareholder returns, though DPS and payout metrics are shown as zero (unreported). Overall, the quarter demonstrates strong core profitability and cash conversion but highlights structural ROE constraints from low asset turnover and reliance on non-operating income. Data limitations around cash, investing flows, and dividends temper confidence in conclusions on capital allocation and dividend sustainability.

Profitability Analysis

ROE_decomposition: ROE 1.92% = Net Profit Margin 18.48% × Asset Turnover 0.076 × Financial Leverage 1.36. The very low asset turnover materially suppresses ROE despite healthy margins and modest leverage. margin_quality: Gross margin 71.3% and EBITDA margin 18.0% are strong, indicating high value-add and pricing discipline. Operating margin ~13.3% improved YoY (operating income +7.3% vs revenue -2.5%), reflecting cost control and mix. However, ordinary income (¥1,595m) far exceeds operating income (¥770m), showing notable reliance on non-operating items, which dilutes the quality of bottom-line earnings. operating_leverage: Positive operating leverage evidenced by higher operating income on lower sales. Fixed cost absorption likely improved; D&A of ¥271m (≈4.7% of sales) supports a manageable fixed-cost base.

Growth Assessment

revenue_sustainability: Revenue declined 2.5% YoY to ¥5,784m. Without segment detail, sustainability is uncertain; current trends suggest modest top-line softness likely offset by mix/pricing. profit_quality: Core profit quality is solid at the operating level, but overall profit quality is clouded by non-operating gains driving ordinary income above operating income. Net income decline (-11.7% YoY) despite stronger operating profit indicates higher tax burden and/or normalization of non-core items. outlook: Near-term earnings resilience depends on maintaining elevated margins and managing costs amid flat-to-soft sales. ROE improvement requires either asset base optimization (to lift turnover) or incremental leverage, absent which ROE may remain subdued.

Financial Health

liquidity: Current ratio 274.9% and quick ratio 259.6% indicate ample short-term liquidity. Working capital is ¥18,773.96m (current assets ¥29,507.26m minus current liabilities ¥10,733.30m). Cash balance is not disclosed in this dataset. solvency: Debt-to-equity is low at 0.30x; interest expense is modest at ¥17.50m with coverage of 44.0x, indicating low refinancing risk. capital_structure: Total assets ¥75,699m, total equity ¥55,737m, total liabilities ¥16,881m. Implied equity ratio ~73.6% (vs reported 0.0% metric, which appears unreported), reflecting a conservative balance sheet with ample equity cushion.

Cash Flow Quality

earnings_quality: OCF/Net Income is 1.44 (¥1,535m / ¥1,069m), suggesting solid cash realization of earnings. D&A (¥271m) contributes to cash conversion; working capital movements likely favorable given the strong OCF. FCF_analysis: Investing cash flow is not disclosed (shown as 0), so free cash flow cannot be reliably calculated. Based on OCF alone, the company likely generated positive pre-investment cash flow. working_capital: Inventories are ¥1,648m; without prior-period levels, turnover trends are unclear. High current and quick ratios suggest an asset-light working capital structure outside of cash/receivables, but specific cash and AR data are not disclosed.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥68.99. Reported DPS and payout ratio are 0.00, which likely reflects non-disclosure rather than an actual zero dividend. Therefore, payout cannot be assessed from this dataset. FCF_coverage: FCF coverage cannot be evaluated due to missing investing cash flow and capex data. OCF is sufficient to cover modest interest (¥17.5m) and potential dividends under many scenarios, but conclusions are tentative. policy_outlook: Given the strong balance sheet and cash generation, the capacity for shareholder returns appears ample, but absent disclosed DPS/policy, sustainability and trajectory of distributions remain unclear.

Risk Assessment

Business Risks:

• Top-line softness (-2.5% YoY) could persist if end-demand weakens.
• Margin reliance on mix and pricing may face competitive or cost pressures.
• High gross margin business could be vulnerable to input cost spikes or channel shifts.
• Dependence on non-operating gains to lift ordinary income above operating income may not be repeatable.

Financial Risks:

• Very low asset turnover (0.076) depresses ROE and may signal an underutilized asset base.
• Potential earnings volatility from non-operating/extraordinary items affecting ordinary and net income.
• Tax burden variability (implied effective tax rate ≈45%) could weigh on net profit.
• Data gaps on cash and investing flows limit visibility into liquidity buffers and capex needs.

Key Concerns:

• Structural ROE constraint due to low asset turnover.
• Quality of earnings given the gap between operating and ordinary income.
• Uncertainty around dividend policy and cash deployment due to undisclosed DPS/FCF.

Investment Implications

Key Takeaways:

• Operating performance improved despite lower sales, with operating income up 7.3% YoY and operating margin ~13.3%.
• Net income declined 11.7% YoY, likely reflecting higher taxes and normalization of non-operating items.
• ROE is low at 1.92%, constrained by an extremely low asset turnover of 0.076.
• Balance sheet strength is notable: implied equity ratio ~73.6%, debt-to-equity 0.30x, and interest coverage 44x.
• Cash conversion is strong (OCF/NI 1.44), but FCF cannot be confirmed due to missing investing cash flow data.

Metrics to Watch:

• Operating vs ordinary income mix (sustainability of non-operating gains).
• Asset turnover trajectory and any asset optimization initiatives.
• Effective tax rate normalization and its impact on net income.
• OCF sustainability and disclosure of capex/investing cash flows.
• Working capital movements (inventories, receivables) and their impact on OCF.

Relative Positioning: Relative to domestic textiles/home-related peers, Maruhachi exhibits superior margins and a conservative balance sheet but lags on capital efficiency (ROE) due to a large, low-turnover asset base and reliance on non-operating income to bridge earnings.

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