Nippon Carbide Industries Company,Incorporated FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.26B
• Operating Income: ¥2.09B
• Net Income: ¥1.00B
• EPS: ¥164.33

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

日本カーバイド工業株式会社 (4064) reported solid FY2026 Q2 results under JGAAP on a consolidated basis, with clear signs of margin expansion and operating leverage. Revenue rose 3.8% YoY to ¥24.262bn, while operating income surged 65.7% YoY to ¥2.093bn, lifting the operating margin to approximately 8.6%. Ordinary income reached ¥2.363bn, indicating supportive non-operating results alongside strong core operations. Net income increased 80.6% YoY to ¥1.531bn, translating to an EPS of ¥164.33. Gross profit was ¥7.124bn, driving a gross margin of 29.4%, which underpins the improved operating performance. EBITDA was ¥3.033bn, implying an EBITDA margin of 12.5%, and reflecting a meaningful recovery in profitability relative to top-line growth. The DuPont decomposition shows a net margin of 6.31%, asset turnover of 0.393x, and financial leverage of 1.62x, producing an ROE of 4.02%, consistent with the reported value. The OCF/Net Income ratio of 1.12 suggests earnings are backed by cash generation, with operating cash flow of ¥1.722bn exceeding net income. The interest coverage ratio is strong at 49.8x, supported by low interest expense of ¥42m and higher operating earnings. The balance sheet remains conservative, with total assets of ¥61.794bn, liabilities of ¥25.454bn, and equity of ¥38.055bn; this implies an equity ratio around 61.6% despite the equity ratio being shown as 0.0% in the dataset. Liquidity is robust, with a current ratio of 256% and quick ratio of 224%, supported by working capital of ¥23.423bn. Inventories are ¥4.779bn, indicating a modest inventory load versus current assets. Income tax expense was ¥376m; while the calculated metric shows an effective tax rate of 0.0%, a simple inference from net income and tax points to an effective tax rate around 19–20%, suggesting normalizing tax burden. Free cash flow is shown as 0 in the dataset due to unreported investing cash flows; therefore, true FCF is not ascertainable this quarter. Dividend data (DPS and payout) were not disclosed; hence dividend policy signals this period are limited. Overall, the quarter demonstrates strong operating leverage and improved cash conversion, with a solid capital structure, although data gaps (equity ratio, cash balance, investing CF, dividend) constrain full-depth assessment.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.31% (Net income ¥1,531m / Revenue ¥24,262m)
• asset_turnover: 0.393x (Revenue ¥24,262m / Total assets ¥61,794m)
• financial_leverage: 1.62x (Total assets ¥61,794m / Equity ¥38,055m)
• calculated_ROE: 4.02% (matches reported 4.02%) margin_quality:
• gross_margin: 29.4% (¥7,124m / ¥24,262m)
• EBITDA_margin: 12.5% (¥3,033m / ¥24,262m)
• operating_margin: 8.6% (¥2,093m / ¥24,262m)
• commentary: YoY revenue +3.8% versus operating income +65.7% indicates significant margin expansion, likely from mix/pricing discipline and cost control. Ordinary income above operating income suggests helpful non-operating items (e.g., FX, dividend/interest income), augmenting bottom line. operating_leverage: High this period: modest top-line growth coupled with outsized operating profit increase implies positive fixed-cost absorption and cost efficiencies.

Growth Assessment

revenue_sustainability: Revenue grew 3.8% YoY to ¥24.262bn. Sustainability hinges on end-market demand in chemicals/materials and potential pricing/mix improvements; no segment disclosure provided to parse volume vs. price. profit_quality: Net income +80.6% YoY to ¥1.531bn is supported by cash (OCF/NI 1.12). EBITDA growth and low interest burden reinforce quality; however, some uplift comes from non-operating items as ordinary income exceeds operating income. outlook: With improved margins (operating margin ~8.6%, EBITDA margin 12.5%) and strong liquidity, the company is positioned to weather demand variability. Continuation depends on raw material/energy costs, FX, and mix; absent segment details, near-term visibility is moderate.

Financial Health

liquidity:

• current_ratio: 255.8% (¥38,453m / ¥15,030m)
• quick_ratio: 224.0% ((Current assets ¥38,453m − Inventories ¥4,779m) / ¥15,030m)
• working_capital: ¥23,423m
• cash_position: Cash and equivalents not disclosed in dataset (shown as 0 ⇒ unreported). solvency:
• debt_to_equity: 0.67x (using total liabilities / equity as a proxy)
• interest_coverage: 49.8x (Operating income ¥2,093m / Interest expense ¥42m)
• equity_ratio: Implied ~61.6% (Equity ¥38,055m / Assets ¥61,794m); reported 0.0% is a data gap. capital_structure: Balance sheet is equity-heavy with modest leverage and low interest burden, providing resilience and capacity for investment.

Cash Flow Quality

earnings_quality: OCF of ¥1,722m vs net income of ¥1,531m yields OCF/NI of 1.12, indicating earnings are cash-backed this period. FCF_analysis: Free cash flow is not ascertainable; investing cash flows are unreported (shown as 0). Depreciation & amortization of ¥940m suggests maintenance capex requirements, but actual capex is unknown. working_capital: Inventories of ¥4,779m are moderate relative to current assets; absence of receivables/payables detail limits analysis of cash conversion cycle. OCF/EBITDA of ~56.8% indicates some working capital drag or timing effects but remains healthy.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% and DPS as 0.00 appear to be unreported rather than true zeros. With EPS at ¥164.33, coverage capacity cannot be measured without an announced DPS. FCF_coverage: Not assessable due to unreported investing cash flows and therefore unknown FCF. policy_outlook: No dividend disclosures provided in the dataset. Given strong balance sheet and improving profitability, the company has flexibility, but actual policy remains undisclosed.

Risk Assessment

Business Risks:

• End-market cyclicality in chemicals/materials affecting volume and pricing.
• Raw material and energy cost volatility compressing margins.
• FX fluctuations impacting both non-operating income and operating competitiveness.
• Product mix shifts that may alter margin profile and utilization.
• Customer concentration or electronics-related demand sensitivity (industry-typical).

Financial Risks:

• Potential working capital swings affecting cash conversion (OCF/EBITDA ~57%).
• Limited visibility on capex and investing cash flows could mask future FCF needs.
• Tax rate variability; estimated effective tax ~19–20% vs calculated metric showing 0% due to data gaps.
• Exposure to interest rate changes is low currently but could rise with future debt.

Key Concerns:

• Data gaps: equity ratio, cash balance, investing cash flows, dividend metrics unreported.
• Sustainability of margin gains if input costs or pricing tailwinds reverse.
• Dependence on non-operating contributions to maintain ordinary income above operating income.

Investment Implications

Key Takeaways:

• Strong operating leverage: revenue +3.8% YoY vs operating income +65.7% YoY, operating margin ~8.6%.
• Cash-backed earnings: OCF/NI 1.12 and interest coverage 49.8x indicate quality and resilience.
• Conservative balance sheet: implied equity ratio ~61.6% and D/E 0.67x.
• Profitability improving: gross margin 29.4%, EBITDA margin 12.5%, ROE 4.02% with room to improve via asset turnover or margin.
• Non-operating tailwinds contributed to ordinary income; sustainability should be monitored.

Metrics to Watch:

• Operating margin and EBITDA margin trajectory versus raw material/energy cost trends.
• OCF/NI and OCF/EBITDA to gauge cash conversion and working capital dynamics.
• Capex and investing cash flows to assess FCF and reinvestment needs.
• Inventory levels and days, plus receivables/payables if disclosed, for cycle management.
• Ordinary income composition (FX gains/losses, investment income) and interest expense.
• Equity ratio and leverage metrics as reported in subsequent filings.
• Dividend announcements (DPS, payout) to clarify capital return policy.

Relative Positioning: Within TSE-listed specialty chemicals/materials peers, the company exhibits above-average liquidity, low financial risk, and mid-tier profitability (EBITDA margin ~12.5%, operating margin ~8.6%); asset turnover is modest at 0.39x, keeping ROE moderate at ~4%.

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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