NIHON PARKERIZING CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥64.73B
• Operating Income: ¥6.83B
• Net Income: ¥6.82B
• EPS: ¥50.50

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

Nihon Parkerizing (4095) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth but slightly weaker profitability. Revenue rose 3.2% YoY to ¥64.7bn, while operating income declined 4.3% YoY to ¥6.83bn, indicating some margin compression. Gross profit of ¥21.03bn equates to a 32.5% gross margin, which remains healthy for a surface treatment/chemicals and processing business but suggests input cost or mix pressures versus the prior year. Ordinary income of ¥8.84bn exceeded operating income, implying supportive non-operating contributions (e.g., financial income, FX gains, or equity-method income). Net income was ¥5.66bn, down 4.0% YoY, broadly in line with the operating profit decline, suggesting non-operating items softened but did not fully offset margin pressure. The DuPont bridge indicates a net margin of 8.75%, asset turnover of 0.248x, and financial leverage of 1.20x, yielding ROE of 2.61%. The low ROE is primarily a function of subdued asset turnover and conservative leverage, rather than inadequate net margin alone. Liquidity appears very strong with a current ratio of 4.23x and quick ratio of 4.10x, supported by substantial current assets relative to current liabilities. The balance sheet is conservative: total liabilities of ¥44.0bn against equity of ¥217.3bn results in a low debt-to-equity ratio of 0.20x, and an implied equity ratio around the low-80% range based on reported assets and equity (the disclosed “Equity Ratio 0.0%” appears undisclosed rather than literal). Interest expense is minimal at ¥14mn, with an interest coverage ratio of 487.8x, reflecting negligible financial risk from debt. Cash flow data (OCF/FCF) were not disclosed in this quarter’s dataset, so cash conversion and free cash flow coverage cannot be evaluated from the provided figures. Depreciation and EBITDA metrics were also not disclosed; hence, operating leverage and maintenance vs. growth investment needs cannot be quantified from this snapshot. Based on net income and income tax figures, the implied effective tax rate is approximately 27–28%, though this is an estimate given the absence of a disclosed pre-tax income line. Inventory reported at ¥4.01bn is modest relative to current assets, implying a working capital structure more weighted to cash and receivables (cash was not disclosed this period). Dividend data were not provided for the period (DPS and payout show as zero in the feed), so shareholder return trends cannot be inferred from this release alone. Overall, the company demonstrates solid balance sheet strength and resilient ordinary income, but faces modest operating margin pressure and a low ROE profile, with key uncertainties tied to cash flow generation and capital allocation absent cash flow disclosures.

Profitability Analysis

ROE_decomposition: ROE 2.61% = Net Margin 8.75% × Asset Turnover 0.248× × Financial Leverage 1.20×. The primary drags are low asset turnover and modest leverage; net margin remains acceptable for the business model. margin_quality: Gross margin at 32.5% is solid, but operating income declined 4.3% YoY despite 3.2% revenue growth, implying SG&A and/or input cost headwinds and mix effects. Ordinary income outpacing operating income indicates beneficial non-operating items supporting earnings quality at the pre-tax level. operating_leverage: Revenue growth of +3.2% alongside a -4.3% decline in operating income suggests negative operating leverage this period. Without D&A disclosure, EBITDA trends are unclear, but the data imply SG&A inflation or cost absorption challenges outweighed modest volume/pricing gains.

Growth Assessment

revenue_sustainability: Top-line growth of 3.2% YoY appears steady, consistent with stable demand in core end markets (automotive and industrial). The absence of backlog/order data limits visibility; growth likely reflects a mix of pricing and stable volumes. profit_quality: Ordinary income exceeded operating income (¥8.84bn vs. ¥6.83bn), indicating non-operating gains contributed meaningfully. While supportive, sustainable profit growth should be grounded in operating earnings; the current mix reduces quality of earnings slightly versus pure operating momentum. outlook: Assuming stable global auto/industrial activity and easing input costs, operating margins could stabilize in 2H. However, if cost inflation persists or mix shifts adversely, operating income may remain under pressure. FX volatility could continue to affect ordinary income positively or negatively.

Financial Health

liquidity: Current assets ¥137.9bn vs. current liabilities ¥32.6bn yield a current ratio of 4.23x and quick ratio of 4.10x, indicating very strong near-term liquidity. Working capital stands at ¥105.3bn. solvency: Total liabilities ¥44.0bn vs. equity ¥217.3bn imply a debt-to-equity ratio of 0.20x and an implied equity ratio of ~83% based on assets/equity (the reported 0.0% equity ratio appears undisclosed). Interest coverage at 487.8x evidences minimal financial risk. capital_structure: Low leverage and substantial equity base provide flexibility for capex, M&A, and shareholder returns, contingent on cash flow generation. The conservative structure also dampens ROE.

Cash Flow Quality

earnings_quality: Cash flow statements (OCF/FCF) were not disclosed in this dataset; therefore OCF-to-net income and free cash flow conversion cannot be assessed here. The reported OCF/NI of 0.00 should be treated as undisclosed rather than literal. FCF_analysis: Free cash flow not available. Without D&A and capex details, we cannot separate maintenance from growth investment or assess reinvestment intensity. working_capital: Inventories are ¥4.01bn versus current assets of ¥137.9bn, implying limited inventory risk and a current asset base skewed to cash/receivables (cash not disclosed). Receivables collection efficiency and payables discipline cannot be evaluated without turnover metrics.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed (zeros indicate non-reporting). As such, payout sustainability cannot be evaluated from this release. FCF_coverage: FCF and OCF are undisclosed; coverage of dividends by FCF cannot be assessed. policy_outlook: With a strong balance sheet and low leverage, the company has capacity for dividends over time, but actual policy depends on cash generation, investment needs, and management’s capital allocation priorities, none of which are quantifiable from the provided cash flow data.

Risk Assessment

Business Risks:

• Demand cyclicality in automotive and industrial end-markets
• Raw material and energy cost inflation impacting margins
• FX volatility affecting non-operating income and competitiveness
• Product mix shifts toward lower-margin services or geographies
• Environmental and regulatory compliance costs in surface treatment/chemicals

Financial Risks:

• Low ROE due to low asset turnover and conservative leverage
• Potential cash conversion risk (OCF undisclosed this period)
• Working capital swings tied to receivables and contract terms
• Earnings sensitivity to non-operating items (ordinary income > operating income)

Key Concerns:

• Operating income decline despite revenue growth indicates margin pressure
• Dependence on non-operating gains to bridge operating softness
• Limited visibility on cash flow and capex, constraining assessment of FCF durability

Investment Implications

Key Takeaways:

• Revenue grew 3.2% YoY to ¥64.7bn; operating income fell 4.3% YoY to ¥6.83bn
• Gross margin remains solid at 32.5%, but negative operating leverage emerged in H1
• Ordinary income (¥8.84bn) exceeded operating income, highlighting non-operating support
• ROE is low at 2.61%, driven by low asset turnover (0.248x) and low leverage (1.20x)
• Balance sheet is very strong: D/E 0.20x, current ratio 4.23x, interest coverage 487.8x
• Cash flow metrics (OCF/FCF) are undisclosed; dividend details also undisclosed

Metrics to Watch:

• Operating margin trajectory and SG&A efficiency in 2H
• OCF, FCF, and capex once disclosed; OCF/NI > 1.0x as a quality marker
• Input cost trends (materials, energy) and pricing pass-through
• FX impacts on ordinary income and translation effects
• Asset turnover improvement via utilization and portfolio mix
• Working capital turns (DSO/DIO/DPO) when disclosed

Relative Positioning: Versus Japanese chemical/surface-treatment peers, the company exhibits strong balance sheet resilience and solid gross margins but lower ROE due to conservative leverage and low asset turnover; earnings reliance on non-operating items this period modestly reduces perceived earnings quality.

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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