YAMAKI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.41B
• Operating Income: ¥98M
• Net Income: ¥131M
• EPS: ¥7.38

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

Yamaki Co., Ltd. (3598) reported FY2026 Q2 consolidated results under JGAAP showing modest profitability resilience amid top-line softness. Revenue declined 4.7% YoY to ¥5,406m, while operating income slipped only 0.5% YoY to ¥98m, indicating some operating cost flexibility. Gross profit of ¥1,667.6m translated to a gross margin of 30.8%, a solid level for an apparel/textile-oriented business model, suggesting product mix and pricing remain reasonably intact despite softer sales. Operating margin was 1.8%, reflecting a thin but positive contribution from core operations. Ordinary income of ¥116m exceeded operating income, implying positive non-operating balance (e.g., financial or other recurring income) offsetting interest costs of ¥35.6m. Net income declined 20.1% YoY to ¥104m (net margin 1.92%), pointing to headwinds below the operating line and/or prior-year one-time factors; the period’s income tax was negative (¥5.1m benefit), cushioning bottom-line pressure. DuPont analysis shows ROE at 2.42%, driven by low asset turnover (0.496x) and thin net margin, partially supported by moderate financial leverage (assets/equity ≈ 2.53x). Liquidity looks serviceable with a current ratio of 135% and positive working capital of ¥2,134m, though inventory and cash balances were not disclosed in the XBRL feed. Operating cash flow was strong relative to earnings at ¥251.0m (OCF/NI 2.41x), signaling good cash conversion from profit. Interest coverage of 2.8x is adequate but leaves limited buffer if earnings soften or rates rise. Balance sheet shows total assets of ¥10,897m and total liabilities of ¥7,049m, implying an estimated equity ratio around 39–40% despite the reported 0% (undisclosed) field. Dividend remains suspended (DPS ¥0) with a payout ratio of 0%, consistent with prioritizing balance sheet stability and reinvestment. Overall, the company maintained operating income nearly flat despite a mid-single-digit revenue decline, suggesting structural cost actions and/or mix management are working. However, subdued ROE, low asset turnover, and thin operating margins cap return potential in the near term. Cash flow quality appears favorable, but incomplete disclosures (cash, inventories, capex, investing flows) constrain full assessment of free cash flow. Outlook hinges on stabilizing demand, inventory discipline, and safeguarding margin structure amid potential cost inflation and interest headwinds.

Profitability Analysis

ROE_decomposition: ROE 2.42% = Net margin 1.92% × Asset turnover 0.496 × Financial leverage 2.53. The weak ROE is primarily constrained by low asset efficiency and thin net margins, while leverage provides only a modest lift. margin_quality: Gross margin at 30.8% is healthy, indicating pricing/mix resilience. Operating margin of 1.8% remains thin but relatively stable YoY given operating income declined only 0.5% against a 4.7% revenue decline. Ordinary margin (2.15%) exceeds operating margin due to positive non-operating balance, partially offset by interest expense of ¥35.6m. operating_leverage: Revenue -4.7% YoY vs operating income -0.5% YoY implies favorable cost elasticity and/or mix benefits, limiting deleverage. D&A of ¥56.6m (about 3.4% of gross profit) suggests a modest fixed-cost base; EBITDA margin is 2.9%, providing limited cushion against further revenue pressure.

Growth Assessment

revenue_sustainability: Top-line fell 4.7% YoY to ¥5,406m, indicating demand softness or deliberate pruning of low-margin sales. Sustained 30%+ gross margin suggests the decline may be more volume- than price-driven, but mix effects cannot be fully verified. profit_quality: Operating income resilience (-0.5% YoY) against revenue pressure reflects cost control. Net income fell 20.1% YoY, implying non-operating and/or tax effects weighed on the bottom line despite a small tax benefit this period. outlook: Short-term trajectory hinges on demand normalization in apparel channels and continued expense discipline. Maintaining gross margin near current levels and stabilizing volumes would be key to restoring earnings growth. With interest coverage at 2.8x and thin operating margin, growth investments must be selective and ROIC-focused.

Financial Health

liquidity: Current assets ¥8,225m and current liabilities ¥6,091m yield a current ratio of 135% and working capital of ¥2,134m. Quick ratio also shows 135% as inventories were not disclosed; actual quick liquidity may be lower if inventories are material. solvency: Total liabilities ¥7,049m vs equity ¥4,304m imply a liabilities-to-equity ratio of 1.64x. Estimated equity ratio is roughly 39.5% (4,304/10,897), as the reported 0% reflects non-disclosure. Interest coverage at 2.8x is adequate but not robust. capital_structure: Financial leverage (assets/equity) is 2.53x per DuPont. The provided debt-to-equity likely uses total liabilities; interest-bearing debt split is not disclosed, limiting precision on net debt metrics.

Cash Flow Quality

earnings_quality: OCF of ¥251.0m vs net income ¥104.0m (OCF/NI 2.41x) indicates strong cash conversion, suggesting limited accrual build and/or effective working capital management this period. FCF_analysis: Investing cash flows and capex were not disclosed (reported as 0), so true FCF cannot be determined. On a proxy basis, pre-investing FCF (≈ OCF) is positive at ¥251.0m, but sustainability requires visibility on maintenance capex. working_capital: Positive OCF implies favorable shifts in receivables/payables/inventories, but inventory and detailed WC components are undisclosed. Working capital is sizable at ¥2,134m, offering some operational buffer.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio 0%, aligning with the modest earnings base (EPS ¥7.38) and the need to preserve cash given thin operating margins and moderate leverage. FCF_coverage: FCF coverage not assessable due to undisclosed investing cash flows; reported FCF 0 reflects data limitation rather than actual cash generation. policy_outlook: With ROE at 2.42% and interest coverage at 2.8x, management is likely to prioritize balance sheet strength and reinvestment over distributions until earnings and cash flow visibility improve.

Risk Assessment

Business Risks:

• Demand volatility in apparel and retail channels impacting volumes and pricing
• Input cost inflation (materials, logistics) pressuring gross margin
• Channel mix shifts (e-commerce vs wholesale) affecting margin structure
• Product and inventory obsolescence risk typical of apparel cycles
• Competition-driven discounting eroding margins

Financial Risks:

• Thin operating margin (1.8%) limits shock absorption
• Interest coverage of 2.8x exposes earnings to rate increases or profit dips
• Asset turnover at 0.496x indicates low capital efficiency, weighing on ROE
• Limited disclosure on cash, inventories, and capex complicates liquidity and FCF assessment

Key Concerns:

• Sustaining gross margin while stabilizing revenue
• Maintaining positive OCF if sales softness persists
• Managing leverage and interest burden amid modest profitability

Investment Implications

Key Takeaways:

• Revenue -4.7% YoY but operating income -0.5% YoY demonstrates cost discipline and mix management
• Gross margin resilient at 30.8%; operating margin thin at 1.8%
• ROE low at 2.42% due to low asset turnover and margins despite moderate leverage
• OCF strong relative to earnings (2.41x), indicating good cash conversion
• Liquidity adequate (current ratio 135%) with positive working capital
• Interest coverage 2.8x requires cautious balance sheet management
• Dividend suspended (DPS 0), consistent with preservation of financial flexibility

Metrics to Watch:

• Revenue trajectory and order backlog in key channels
• Gross margin progression and markdown rates
• Operating margin and SG&A ratio trends
• OCF and working capital days (DSO/DIO/DPO) once disclosed
• Capex and investing cash flows to gauge sustainable FCF
• Interest expense and coverage amid rate environment
• Asset turnover improvement initiatives

Relative Positioning: Within domestic apparel/textile peers, the company shows average-to-good gross margin resilience but below-average ROE and asset efficiency; balance sheet appears reasonably capitalized, but earnings quality surpasses optical profitability given strong OCF conversion.

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