Dynapac Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥47.83B
• Operating Income: ¥2.26B
• Net Income: ¥2.31B
• EPS: ¥229.47

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

DYNAPACK Co., Ltd. (TSE:3947) reported FY2025 Q3 consolidated results under JGAAP showing solid top-line growth and a sharp rebound in operating profitability. Revenue rose 6.3% YoY to ¥47.83bn, while operating income surged 77.0% YoY to ¥2.26bn, indicating meaningful margin restoration and/or improved cost pass-through. Gross profit reached ¥8.33bn, translating to a gross margin of 17.4%, which, alongside the operating margin of 4.7%, suggests improved cost discipline in a still-competitive packaging environment. Ordinary income of ¥2.69bn exceeded operating income, implying positive non-operating contributions (e.g., financial income or equity-method gains) more than offsetting interest expense of ¥103m. Despite the operating and ordinary income strength, net income was essentially flat at ¥2.28bn (-0.3% YoY), implying non-recurring items and/or a higher tax burden offset the operating recovery. Based on net income (¥2.28bn) and reported income tax (¥1.17bn), implied pre-tax income is roughly ¥3.46bn and the effective tax rate approximates 33.9%, though JGAAP extraordinary items could affect this estimate. DuPont decomposition shows net margin of 4.78%, asset turnover of 0.583x, and financial leverage of 1.74x, yielding a calculated ROE of 4.85% (aligned with reported). The balance sheet is conservative: total assets are ¥82.05bn, total equity ¥47.11bn, and total liabilities ¥30.67bn, implying modest leverage (liabilities-to-equity ~0.65x) and an implied equity ratio near 57% (not officially disclosed this quarter). Liquidity appears adequate with a current ratio of 116% and a quick ratio of 111%, supported by low reported inventories of ¥1.11bn and presumably robust receivables/cash positions (cash detail not disclosed). Interest coverage is strong at 21.9x (operating income/interest expense), highlighting low financial risk. Cash flow statements (OCF/ICF/FCF) and D&A were not disclosed in the provided XBRL, limiting earnings quality and FCF assessment. Dividend data are also not provided, so payout trends cannot be inferred from this quarter’s dataset. Overall, the quarter evidences solid revenue growth and material operating leverage, but bottom-line stagnation versus the prior year points to non-operating and tax/extraordinary dynamics that warrant further reconciliation. The company’s moderate leverage and ample liquidity provide flexibility to navigate input cost volatility. However, limited cash flow disclosure and the gap between ordinary and implied pre-tax income temper confidence in the durability of earnings improvements. Monitoring cost pass-through, capacity utilization, and working capital discipline will be key to confirming margin sustainability into FY2025 year-end.

Profitability Analysis

ROE_decomposition: ROE 4.85% = Net Profit Margin 4.78% × Asset Turnover 0.583 × Financial Leverage 1.74. Net margin reflects improved operating efficiency but is still modest for the sector; asset turnover is typical for capital-intensive packaging; leverage is conservative, limiting ROE amplification. margin_quality: Gross margin 17.4% (¥8.33bn GP on ¥47.83bn revenue) and operating margin 4.7% (¥2.26bn OI) indicate significant YoY improvement given OI +77%. Ordinary income (¥2.69bn) exceeded OI, implying non-operating gains (e.g., FX, dividends, or equity-method) offset interest. Net margin of 4.78% was flat YoY, likely due to tax and/or extraordinary items. Effective tax estimated at ~33.9% using NI + tax, but classification differences under JGAAP may affect comparability. operating_leverage: Revenue +6.3% with OI +77.0% implies strong incremental margins and operating leverage, likely from cost pass-through to customers and improved mix/efficiency. The magnitude suggests raw material/energy cost normalization and/or SG&A containment. Sustainability depends on maintaining pricing discipline and stable paper/energy inputs.

Growth Assessment

revenue_sustainability: Top-line growth of 6.3% YoY appears broad-based for packaging demand; durability hinges on end-market trends in consumer goods, e-commerce, and industrial shipments, as well as the ability to preserve price increases implemented during prior cost inflation. profit_quality: With ordinary income > operating income and flat net income, profit quality is somewhat mixed: core operations improved, but bottom-line was held back by taxes/extraordinary items. Lack of D&A and CF data limits assessment of underlying cash earnings. Interest coverage (21.9x) corroborates healthier core earnings power. outlook: Assuming stable input costs and continued price discipline, margins should hold near recent levels. Key swing factors include containerboard price movements, energy costs, and demand from key customers. If management sustains operating leverage while normalizing extraordinary items, FY year-end net income could re-align with operating gains.

Financial Health

liquidity: Current assets ¥27.50bn vs current liabilities ¥23.73bn → current ratio 116%; quick ratio 111% (low inventories of ¥1.11bn). Working capital is ¥3.78bn, indicating adequate short-term coverage. solvency: Total liabilities ¥30.67bn vs equity ¥47.11bn → liabilities-to-equity 0.65x; interest expense ¥103m with OI ¥2.26bn → interest coverage 21.9x. Balance sheet resilience is strong. capital_structure: Implied equity ratio (equity/assets) ~57.4% (¥47.11bn/¥82.05bn), though the reported equity ratio field is undisclosed this quarter. Leverage is modest, providing flexibility for capex cycles typical of packaging equipment.

Cash Flow Quality

earnings_quality: Cash flow statements were not disclosed in the provided dataset (zeros indicate unreported). As such, OCF/NI and FCF conversion cannot be evaluated this quarter. Earnings quality is inferred from strong interest coverage and margin trends, but definitive cash validation is unavailable. FCF_analysis: Free cash flow is not computable due to missing OCF and capex/D&A data. Given the capital intensity of corrugated packaging, monitoring capex versus depreciation will be important once disclosed. working_capital: Positive working capital of ¥3.78bn and low reported inventories suggest disciplined inventory management, though detailed AR/AP days and seasonal effects are not available for validation.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed in this dataset. EPS is ¥229.47, but without DPS we cannot compute payout. FCF_coverage: Unavailable due to unreported cash flow statements; FCF coverage cannot be assessed. policy_outlook: Given modest ROE (4.85%) and a conservative balance sheet, the company likely maintains a prudent payout framework; however, without DPS history and FCF data, we cannot infer near-term changes. Clarification from company guidance is needed.

Risk Assessment

Business Risks:

• Raw material (containerboard) and energy price volatility affecting margins and pass-through timing
• Demand fluctuations in consumer goods, e-commerce, and industrial end-markets
• Competitive pricing pressure in corrugated and folding carton markets
• Customer concentration and contract re-pricing risk
• Operational execution in capacity utilization and logistics costs
• Regulatory/environmental requirements for recycling and emissions compliance
• Potential FX impacts on imported inputs or overseas operations

Financial Risks:

• Working capital swings due to receivables and seasonality
• Capex cycles for machinery upgrades and potential cash outflows
• Exposure to interest rate increases, albeit mitigated by low leverage
• Impairment risk on fixed assets if demand softens
• Tax rate variability and extraordinary item volatility under JGAAP

Key Concerns:

• Net income flat YoY despite strong operating income growth
• Lack of cash flow and D&A disclosure limits earnings quality assessment
• Discrepancy between ordinary income and implied pre-tax income suggests non-recurring items
• ROE at 4.85% remains modest versus typical shareholder return hurdles

Investment Implications

Key Takeaways:

• Revenue growth of 6.3% YoY with operating income up 77% indicates strong operating leverage
• Net income essentially flat suggests tax and/or extraordinary impacts masking operational gains
• Healthy balance sheet with liabilities-to-equity ~0.65x and implied equity ratio ~57%
• Interest coverage of 21.9x points to low financial risk
• Cash flow visibility is limited this quarter due to unreported OCF/FCF
• Margin sustainability hinges on raw material and energy cost trends and price pass-through

Metrics to Watch:

• Operating margin and gross margin trajectory
• Pass-through of paper and energy cost changes to selling prices
• OCF, capex, and FCF once disclosed; OCF/NI conversion
• Working capital days (AR, AP, Inventory) and inventory normalization
• ROE progression (via margin and asset turnover improvements)
• Ordinary vs pre-tax income reconciliation and extraordinary items
• Capex vs depreciation to gauge maintenance vs growth investment
• Dividend policy updates and payout ratio once DPS is disclosed

Relative Positioning: Within Japan’s paper and packaging sector, the company appears operationally improving with conservative leverage and recovering margins, but profitability (ROE and net margin) remains below top-tier peers; enhanced cash flow disclosure and sustained pass-through would strengthen comparative standing.

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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