ASAHI PRINTING CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥22.51B
• Operating Income: ¥960M
• Net Income: ¥1.11B
• EPS: ¥35.27

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

Asahi Printing Co., Ltd. (TSE:3951) reported FY2026 Q2 (cumulative) consolidated results under JGAAP showing modest top-line growth but notable margin compression. Revenue rose 3.9% year over year to ¥22.51bn, while operating income fell 25.2% to ¥0.96bn and net income declined 30.4% to ¥0.75bn, indicating cost pressures and/or unfavorable mix. Gross profit was ¥5.17bn, yielding a 23.0% gross margin, but the operating margin compressed to 4.3%, implying elevated SG&A or limited pass-through of input cost inflation. Ordinary income of ¥1.20bn exceeded operating income, suggesting non-operating gains (e.g., financial income or subsidies) partly mitigated the operating shortfall. DuPont metrics show a net margin of 3.32%, asset turnover of 0.331x, and financial leverage of 1.92x, jointly producing a reported ROE of 2.12%, which is relatively subdued for the sector. Cash generation was strong relative to accounting profits: operating cash flow (OCF) was ¥2.26bn versus net income of ¥0.75bn, for an OCF/NI ratio of 3.03x, indicating healthy earnings quality and working capital discipline in the period. EBITDA totaled ¥2.37bn (10.5% margin), and interest coverage remained comfortable at 13.7x, reflecting low interest burden. The balance sheet appears solid with total assets of ¥67.93bn, total equity of ¥35.30bn, and liabilities of ¥34.89bn; this implies an equity ratio near 52%, despite the provided 0.0% equity ratio field (which we treat as unreported). Liquidity is robust with a current ratio of 205% and quick ratio of 197%, supported by working capital of ¥15.16bn. Financing cash outflows of ¥3.66bn suggest debt repayment and/or shareholder returns, though the DPS field is unreported and should not be taken as zero dividends. Investing cash flow is also unreported; given depreciation of ¥1.41bn, capex is likely non-negligible, and true free cash flow cannot be determined from the provided data. The effective tax rate field is shown as 0.0% but is inconsistent with the disclosed income tax expense of ¥0.51bn; using ordinary income as a proxy for pre-tax, the implied tax rate would be in the low-40% range, indicating the 0% metric is unreported. Overall, results point to a resilient demand environment for packaging but with margin headwinds, likely from raw material and energy costs and timing lags in price pass-through. Strong operating cash flow and liquidity mitigate near-term financial risk, while leverage is moderate. Near-term earnings recovery hinges on restoring operating margins via pricing, mix, and cost control. Data limitations (notably investing cash flows, dividends, and equity ratio) constrain precision in FCF and capital return assessments. We analyze only the available non-zero data and treat zeros in certain fields as non-disclosures rather than actual zeros.

Profitability Analysis

ROE_decomposition: Net margin 3.32% x asset turnover 0.331x x financial leverage 1.92x = ROE 2.12% (reported and calculated). Low ROE is driven primarily by compressed margins rather than excessive leverage or unusually low asset turnover. margin_quality: Gross margin at 23.0% remains reasonable for packaging, but the operating margin of 4.3% (¥0.96bn / ¥22.51bn) signals elevated SG&A and/or incomplete cost pass-through. Ordinary margin (~5.3%) exceeds operating margin, implying non-operating tailwinds. Net margin at 3.32% reflects both margin compression and a relatively normal tax burden when inferred from disclosed tax expense. operating_leverage: YoY revenue +3.9% contrasted with operating income -25.2% indicates negative operating leverage in the half, suggesting fixed cost absorption pressure and/or higher variable inputs not fully offset by pricing. With EBITDA margin at 10.5% vs operating margin 4.3%, D&A (¥1.41bn) is a significant drag, consistent with a capital-intensive asset base.

Growth Assessment

revenue_sustainability: Top-line growth of 3.9% suggests steady demand, likely supported by defensiveness in pharmaceutical and consumer packaging. Sustainability depends on customer order stability and pricing pass-through mechanisms. profit_quality: Ordinary income outpaced operating income, indicating reliance on non-operating items for earnings stability this period. The gap between gross and operating margins points to SG&A or other operating costs as a pressure point. outlook: Near-term growth hinges on restoring operating margin via pricing revisions, procurement optimization, and energy cost management. If input cost inflation moderates and price pass-through continues, margin recovery is plausible in H2. Conversely, renewed raw material inflation or a demand slowdown would cap earnings growth despite stable revenues.

Financial Health

liquidity: Current ratio 205.1% and quick ratio 197.0% indicate strong short-term coverage. Working capital of ¥15.16bn provides ample buffer for operations. solvency: Debt-to-equity of 0.99x (using total liabilities/equity) implies moderate leverage. Reconstructed equity ratio is approximately 52.0% (¥35.30bn / ¥67.93bn), despite the reported 0.0% field being unreported. capital_structure: Interest expense of ¥0.07bn is modest relative to EBITDA (¥2.37bn), supporting an interest coverage of 13.7x. Financing cash outflow of ¥3.66bn suggests deleveraging and/or shareholder returns; precise mix is not disclosed here.

Cash Flow Quality

earnings_quality: OCF of ¥2.26bn vs net income of ¥0.75bn (OCF/NI 3.03x) indicates strong cash conversion, likely aided by favorable working capital movements and non-cash D&A (¥1.41bn). FCF_analysis: Investing cash flow is unreported; given D&A of ¥1.41bn, maintenance capex is likely material. Therefore, true free cash flow (OCF minus capex) cannot be reliably computed; the provided FCF of 0 should be treated as undisclosed rather than zero. working_capital: High cash conversion suggests inventory and receivables management contributed positively. Reported inventories of ¥1.17bn are low relative to current assets, consistent with the high quick ratio; however, broader WC details (AR/AP days) are not provided.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥35.27. The provided payout ratio and DPS fields are shown as 0.00, which we interpret as undisclosed. Without an actual DPS, we cannot compute a payout ratio. Historically, sustainability would be assessed against normalized earnings and cash generation. FCF_coverage: With investing cash flows undisclosed, FCF cannot be determined; thus, dividend coverage by FCF cannot be assessed from this dataset. policy_outlook: Given strong liquidity and solid interest coverage, the balance sheet could support ordinary shareholder returns. However, margin pressure and potential capex needs (implied by D&A) suggest a balanced approach until operating margins recover.

Risk Assessment

Business Risks:

• Raw material and energy cost volatility (paper, board, films, inks, electricity).
• Pricing pass-through lag with major customers, compressing margins during inflationary spikes.
• Customer concentration in pharmaceutical/consumer sectors, with potential for volume or pricing pressure upon contract renewals.
• Operational disruptions or quality/compliance requirements (e.g., GMP standards) raising fixed costs.
• Product mix shifts toward lower-margin SKUs impacting gross margin.

Financial Risks:

• Capital intensity requiring steady capex to maintain quality and compliance, potentially pressuring FCF.
• Interest rate risk on floating-rate debt, though current interest burden is modest.
• Working capital swings affecting cash conversion in weaker demand quarters.
• FX exposure on imported inputs (if applicable), influencing cost base.

Key Concerns:

• Operating margin compression despite revenue growth (OPM 4.3%).
• Dependence on non-operating gains to support ordinary income in the period.
• Incomplete disclosure on investing cash flows and dividends, limiting FCF and payout analysis.

Investment Implications

Key Takeaways:

• Top-line growth is intact (+3.9% YoY), but operating profitability has weakened (-25.2% YoY).
• Cash conversion is strong (OCF/NI 3.03x), supporting liquidity.
• Leverage is moderate with an implied equity ratio around 52% and interest coverage of 13.7x.
• Margin recovery is the pivotal driver for ROE improvement beyond the current 2.12%.
• Capex needs are likely material (D&A ¥1.41bn), but undisclosed investing cash flows obscure FCF.

Metrics to Watch:

• Gross and operating margins (cost pass-through progress).
• Ordinary income vs operating income gap (non-operating reliance).
• Capex and investing cash flows (maintenance vs growth).
• OCF/NI and working capital trends (inventory and receivable days).
• Leverage metrics (net debt, interest coverage) and any changes in financing cash flows.
• Contract repricing cadence with key clients.

Relative Positioning: Within Japanese packaging and printing peers, Asahi Printing shows defensive revenue characteristics but currently lags on operating margin momentum and ROE, while maintaining above-average liquidity and prudent leverage.

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