Nippon Soda Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥67.07B
• Operating Income: ¥7.05B
• Net Income: ¥6.34B
• EPS: ¥124.10

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

Nippon Soda (4041) reported consolidated FY2026 Q2 (first-half cumulative) results under JGAAP with revenue of ¥67.1bn, essentially flat YoY (+0.0%). Operating income was ¥7.05bn, down a modest 0.3% YoY, indicating stable but slightly pressured operating profitability amid an unchanged top line. Ordinary income rose to ¥9.74bn, outpacing operating income and suggesting solid non-operating contributions (e.g., financial or equity-method gains). Net income increased 7.0% YoY to ¥6.79bn, implying net-level tailwinds despite flattish sales and marginal operating softness. Gross profit was ¥19.46bn, translating to a 29.0% gross margin, which is robust for diversified chemicals and suggests reasonable pricing and product mix resilience. EBITDA was ¥10.94bn (16.3% margin), supporting the view of sound underlying cash earnings capacity. The DuPont decomposition shows a net margin of 10.13%, asset turnover of 0.232x, and financial leverage of 1.49x, culminating in a calculated ROE of 3.51% for the period. Liquidity is strong: current ratio 209%, quick ratio 123%, and working capital of ¥67.7bn underpin a conservative balance sheet posture. Leverage appears moderate to low, with debt-to-equity at 0.52x and interest coverage a high 34.9x, indicating ample buffer against rate increases or cyclical downturns. Operating cash flow was ¥13.83bn, equal to 2.04x net income, evidencing high cash conversion supported by non-cash charges and likely working capital release. While the reported equity ratio is shown as 0.0% in the dataset, the balance sheet figures imply a high equity ratio of roughly 67% (¥193.5bn equity on ¥288.6bn assets). The effective tax rate metric is reported as 0.0% but does not align with the provided income tax expense; based on net income and taxes, the implied tax burden is around the high-20% range for this period. Dividends are not disclosed (DPS 0.00 shown), limiting assessment of actual payout practices for the half; EPS is ¥124.10. Investing cash flow and cash balance are undisclosed (shown as 0), constraining free cash flow analysis and cash-on-hand visibility. Overall, results reflect defensive profitability, strong liquidity, and prudent leverage, but muted growth with slight negative operating leverage. Data limitations around investing cash flows, cash, shares, and dividends constrain deeper capital allocation and per-share analysis; conclusions focus on the disclosed non-zero items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 10.13%
• asset_turnover: 0.232
• financial_leverage: 1.49
• calculated_ROE: 3.51% (period basis; not annualized) margin_quality:
• gross_margin: 29.0% (¥19.46bn/¥67.07bn)
• operating_margin: 10.5% (¥7.05bn/¥67.07bn)
• EBITDA_margin: 16.3%
• ordinary_margin: 14.5% (¥9.74bn/¥67.07bn)
• net_margin: 10.13%
• commentary: Gross and EBITDA margins indicate healthy value-add and cost pass-through; ordinary income outpacing operating income suggests supportive non-operating items. operating_leverage: Revenue was flat YoY while operating income fell 0.3% YoY, indicating slight negative operating leverage. Cost discipline largely offset top-line stagnation, keeping operating margin roughly stable.

Growth Assessment

revenue_sustainability: Revenue ¥67.1bn (+0.0% YoY) signals a pause in topline expansion. With no segment detail provided, stability likely reflects mixed volumes and pricing in core chemicals and agrochemicals. profit_quality: Net income growth of +7.0% YoY versus flat sales and slightly lower operating profit points to non-operating tailwinds and/or improved financial items. Core profitability is steady but not accelerating. outlook: Absent guidance in the dataset, a cautious base case is for stable revenues with margin resilience supported by product mix and cost control. Upside depends on demand normalization, pricing power versus raw materials, and foreign exchange. Monitoring H2 seasonality is crucial as Q2 figures are cumulative for H1.

Financial Health

liquidity:

• current_ratio: 209.4%
• quick_ratio: 123.1%
• working_capital: ¥67.73bn
• commentary: Ample short-term liquidity with conservative buffer; inventories are sizeable within current assets. solvency:
• debt_to_equity: 0.52x
• interest_coverage: 34.9x (operating income/interest expense)
• equity_ratio_implied: ≈67% (¥193.55bn equity / ¥288.56bn assets) despite the reported 0.0% placeholder
• commentary: Low leverage and strong coverage indicate limited solvency risk under current conditions. capital_structure: Balance sheet is equity-heavy with modest debt. Ordinary income exceeding operating income suggests a benign financial result this period.

Cash Flow Quality

earnings_quality: OCF/Net Income at 2.04x implies strong cash conversion, supported by ¥3.89bn D&A and likely favorable working capital movements. FCF_analysis: Investing cash flow is undisclosed (shown as 0). Using the dataset’s FCF definition (OCF + Investing CF), FCF appears as 0, but this reflects missing data rather than true free cash generation. working_capital: Inventories of ¥53.42bn versus H1 COGS of ¥47.62bn imply elevated inventory intensity; a simple point-in-time proxy suggests high inventory days, though average balances are unavailable. Receivables and payables are not disclosed, limiting deeper diagnosis.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% (DPS undisclosed). With EPS at ¥124.10, actual payout cannot be assessed from provided data. FCF_coverage: Not assessable given investing cash flow is undisclosed; the reported 0.00x is a placeholder. policy_outlook: No dividend information in this dataset. Balance sheet strength and OCF capacity suggest room for distributions, but policy and track record are not provided here.

Risk Assessment

Business Risks:

• Cyclical demand in chemicals and agrochemicals impacting volumes and pricing
• Raw material and energy cost volatility affecting spreads
• Foreign exchange fluctuations given likely overseas sales and procurement
• Product mix shifts between specialty and commodity lines affecting margins
• Regulatory and environmental compliance costs, including emissions and safety
• Inventory valuation risks amid price swings and demand changes

Financial Risks:

• Working capital swings driving OCF volatility
• Potential increases in interest rates (though coverage is currently strong)
• Undisclosed capital expenditure needs that could pressure FCF
• Asset impairment risk in downturns
• Pension/retirement benefit obligations not disclosed in this dataset

Key Concerns:

• Flat revenue and slight negative operating leverage in H1
• High inventory intensity at period-end
• Limited visibility on investing cash flows, cash balances, and dividend policy due to unreported items

Investment Implications

Key Takeaways:

• Stable topline with resilient margins; operating income nearly flat YoY
• Net income growth supported by non-operating items (ordinary income > operating income)
• Strong liquidity (current ratio 209%) and conservative leverage (D/E 0.52x, interest coverage 34.9x)
• High cash conversion (OCF/NI 2.04x) indicates solid earnings quality
• Data gaps around investing CF, cash, and dividends limit capital allocation insight

Metrics to Watch:

• Price–cost spread versus raw materials and energy
• Inventory days and overall working capital turnover
• H2 revenue trajectory and operating margin trend
• Capex and investing cash flows (project pipeline, maintenance vs. growth)
• ROE progression (margin, asset turnover) and asset efficiency
• Dividend disclosures and payout policy updates

Relative Positioning: Within Japanese diversified chemicals, Nippon Soda appears conservatively financed with mid-teens EBITDA margins and strong liquidity; ROE is moderate on a period basis due to low asset turnover, leaving room for efficiency-driven improvement.

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