Mitsubishi Gas Chemical Company,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥361.68B
• Operating Income: ¥25.14B
• Net Income: ¥28.32B
• EPS: ¥-143.48

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

Mitsubishi Gas Chemical (4182) reported FY2026 Q2 consolidated results under JGAAP showing revenue of ¥361.7bn, down 6.8% YoY, evidencing a softer demand backdrop and/or weaker pricing across key product lines. Gross profit is disclosed at ¥89.4bn, implying a gross margin of 24.7%, which suggests reasonable spread management despite top-line pressure. Operating income declined 25.5% YoY to ¥25.1bn, indicating negative operating leverage as fixed costs and/or less favorable mix weighed more than the drop in revenue. Ordinary income was ¥31.5bn, above operating income, pointing to positive non-operating contributions (e.g., FX gains, equity-method income, or financial income). Despite positive ordinary income, the company posted a net loss of ¥27.9bn (EPS -¥143.48), indicating substantial extraordinary losses or other below-the-line items overshadowing operating and ordinary profits. The DuPont decomposition yields an ROE of -4.20% driven by a -7.72% net margin, modest asset turnover of 0.336x, and financial leverage of 1.62x. Liquidity appears sound with a current ratio of 167% and quick ratio of 124%, supported by working capital of ¥185.3bn and inventories of ¥119.8bn. Balance sheet strength is solid: total equity of ¥665.5bn against total assets of ¥1.075tn implies a computed equity ratio near 62% (the disclosed 0.0% is an unreported placeholder). Operating cash flow was positive at ¥35.6bn, comfortably exceeding interest expense of ¥1.43bn and aligning with an interest coverage ratio of 17.6x, underscoring manageable financial risk. EBITDA of ¥42.0bn and an EBITDA margin of 11.6% show the core earnings power remains intact even amid cyclical headwinds. The negative bottom line alongside positive OCF suggests non-cash or non-operating charges are the principal drivers of the loss rather than a collapse in cash-generating capability. Investing cash flow and cash balance were not disclosed (shown as zero), limiting full cash flow assessment and free cash flow calculation. Dividend data (DPS and payout) were also not disclosed (zeros), so distribution policy assessment this quarter is constrained; historically, capital discipline and a strong equity base underpin distribution capacity over the cycle. Overall, the quarter reflects cyclical pressure (revenue decline, operating income compression) and likely one-off or exceptional items driving the net loss, but liquidity, solvency, and cash interest coverage remain comfortable. Outlook hinges on recovery in core chemicals and advanced materials end-markets (including electronics) and stabilization of feedstock and energy costs. Data limitations around investing cash flows, cash position, and dividends should be noted when interpreting coverage and payout metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.0772
• asset_turnover: 0.336
• financial_leverage: 1.62
• calculated_ROE: -0.042 margin_quality:
• gross_margin: 0.247
• operating_margin: 0.0695
• ordinary_margin: 0.087
• EBITDA_margin: 0.116
• commentary: Gross margin at 24.7% suggests spreads are holding up better than revenue; however, operating margin of 7.0% declined more than sales (-25.5% OI vs. -6.8% revenue), indicating negative operating leverage and/or mix deterioration. Ordinary margin exceeded operating margin due to non-operating gains. The negative net margin indicates substantial below-the-line losses, likely non-recurring or non-cash. operating_leverage: Revenue declined 6.8% YoY while operating income fell 25.5% YoY, implying unfavorable operating leverage. Fixed cost absorption and product mix likely contributed. EBITDA margin of 11.6% vs. operating margin of 7.0% indicates depreciation burden (¥16.9bn) is meaningful but manageable.

Growth Assessment

revenue_sustainability: Top line decreased 6.8% YoY to ¥361.7bn, suggesting softer volumes/prices in basic chemicals (e.g., methanol chain) and potential moderation in electronics-related materials. Inventory at ¥119.8bn (≈33% of H1 sales) appears manageable but should be monitored for any accumulation signaling demand softness. profit_quality: Ordinary income (¥31.5bn) exceeded operating income (¥25.1bn), implying support from non-operating items; however, the shift to a net loss (¥-27.9bn) points to extraordinary impacts. Positive OCF (¥35.6bn) despite the accounting loss suggests underlying cash earnings are more resilient than reported net income. outlook: Earnings trajectory will depend on recovery in downstream demand (especially electronics/semiconductor materials), stabilization of methanol/aromatics spreads, and energy/feedstock costs. Any reversal of extraordinary charges could normalize bottom-line results, while currency (JPY) and regional demand trends remain key swing factors.

Financial Health

liquidity:

• current_ratio: 1.674
• quick_ratio: 1.238
• working_capital_yen: 185339000000
• commentary: Strong short-term liquidity, supported by sizeable current assets and moderate current liabilities. Inventories are significant but not excessive relative to sales. solvency:
• debt_to_equity: 0.63
• interest_expense_yen: 1427000000
• interest_coverage: 17.6
• equity_base_yen: 665535000000
• commentary: Leverage is moderate and interest coverage is robust, indicating low refinancing risk under current conditions. Computed equity ratio approximates 62%, evidencing a strong capital buffer. capital_structure: Assets ¥1.075tn funded by ¥422.3bn liabilities and ¥665.5bn equity. Financial leverage (assets/equity) at 1.62x is conservative for the sector.

Cash Flow Quality

earnings_quality: OCF of ¥35.6bn versus net income of ¥-27.9bn (OCF/NI -1.27 due to negative denominator) indicates cash conversion is healthy and the loss is driven by non-cash or non-operating items. FCF_analysis: Investing cash flow is unreported (shown as 0), so FCF cannot be reliably computed this period. EBITDA of ¥42.0bn and positive OCF imply capacity to fund routine capex under normal conditions. working_capital: Working capital stands at ¥185.3bn with inventories at ¥119.8bn. Positive OCF suggests either stable working capital or a release; close monitoring of receivables and inventory turns is warranted given the revenue decline.

Dividend Sustainability

payout_ratio_assessment: Dividend data (DPS, payout) are shown as zero, indicating items were not disclosed rather than actual zero. Given negative EPS, a mechanical payout ratio would not be meaningful. FCF_coverage: FCF coverage cannot be assessed due to unreported investing cash flows. OCF is positive, which is supportive for future distributions, subject to capex and one-off cash needs. policy_outlook: With a strong equity base and moderate leverage, medium-term capacity for dividends remains, contingent on earnings normalization and cash flow after capex. Confirmation of full-year guidance and capital allocation priorities will be key.

Risk Assessment

Business Risks:

• Cyclical demand and pricing for basic chemicals (e.g., methanol chain, aromatics).
• Exposure to semiconductor and electronics materials cycles affecting advanced materials volumes and pricing.
• Feedstock and energy cost volatility impacting spreads.
• Foreign exchange fluctuations (USD/JPY) affecting input costs and translation.
• Potential for plant outages, maintenance turnarounds, and supply chain disruptions.

Financial Risks:

• Extraordinary losses driving net losses despite positive ordinary income.
• Potential impairments or equity-method losses in volatile markets.
• Working capital swings if demand softens further, affecting OCF.
• Refinancing and interest rate risk, albeit mitigated by strong coverage.

Key Concerns:

• Magnitude and recurrence risk of below-the-line losses that turned net income negative.
• Sustainability of margins if feedstock costs rise or selling prices weaken further.
• Visibility on capex plans and investing cash flows (currently unreported), which affect FCF and dividends.

Investment Implications

Key Takeaways:

• Revenue down 6.8% YoY with operating income down 25.5% indicates negative operating leverage.
• Ordinary profit exceeds operating profit, but extraordinary items drove a ¥27.9bn net loss.
• Liquidity and solvency remain solid: current ratio 167%, interest coverage 17.6x, leverage moderate.
• Positive OCF (¥35.6bn) suggests core cash generation remains intact despite accounting loss.
• Data gaps in investing CF, cash balance, and dividends constrain full valuation of FCF and payout.

Metrics to Watch:

• Methanol and key chemical spread trends and utilization rates.
• Electronics/semiconductor materials order trends and inventory levels.
• Capex and investing cash flows to determine true FCF.
• Extraordinary items and impairment charges impacting bottom line.
• Working capital turns (inventory and receivables) amid softer revenue.
• FX (USD/JPY) sensitivity to margins and translation.

Relative Positioning: Within the Japanese chemicals cohort, Mitsubishi Gas Chemical exhibits stronger balance sheet resilience and interest coverage than more leveraged peers, but its current-period loss reflects higher exposure to cyclical and extraordinary factors; recovery potential is tied to end-market normalization and spread stability.

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