TSUMURA & CO. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥89.90B
• Operating Income: ¥17.12B
• Net Income: ¥18.73B
• EPS: ¥166.65

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Tsumura (4540) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth but notable profit compression. Revenue increased 0.9% YoY to ¥89.9bn, indicating a relatively flat demand environment. Gross profit was ¥45.9bn with a high gross margin of 51.0%, underscoring continued pricing power and/or a favorable product mix. Despite resilient gross profitability, operating income fell 18.8% YoY to ¥17.1bn, compressing the operating margin to roughly 19.0%, implying higher SG&A or other operating cost headwinds. Ordinary income came in at ¥16.4bn, slightly below operating income due to net non-operating costs (including ¥0.25bn interest expense). Net income declined 28.7% YoY to ¥12.5bn, with EPS of ¥166.65, highlighting deleveraging from operating pressure and a normalized tax burden. Cash conversion was solid: operating cash flow (OCF) of ¥17.1bn exceeded net income (OCF/NI = 1.37x), supported by non-cash charges (D&A ¥5.33bn) and only a modest working capital absorption. The balance sheet remains conservative with total assets of ¥516.5bn and total equity of ¥326.5bn; the implied equity ratio is about 63.2% (despite the reported 0% line item being undisclosed), reflecting low solvency risk. Liquidity is very strong, with a current ratio of 4.78x and quick ratio of 4.53x, backed by ¥295.7bn of current assets versus ¥61.9bn of current liabilities. Leverage is modest, with total liabilities/equity of 0.41x and interest coverage of 68.5x, indicating ample debt-servicing capacity. DuPont decomposition yields a calculated ROE of 3.82%, driven by a high net margin (13.88%), low asset turnover (0.174x), and moderate financial leverage (1.58x), highlighting that low capital turnover is the main drag on equity efficiency. Effective tax rate is estimated at roughly 34% (¥6.43bn tax on about ¥18.9bn pre-tax), despite a displayed 0% metric which appears undisclosed rather than actual. Investing cash flow, cash and equivalents, and several shareholder return metrics are not reported (shown as zero), which constrains full free cash flow and dividend assessments. Financing cash outflows of ¥12.3bn suggest dividend payments and/or debt/service outflows, but the absence of disclosed DPS prevents confirmation. Overall, Tsumura’s financial health is robust, profitability remains solid though under pressure, and cash generation quality is good; however, growth is subdued and ROE is weighed down by a large asset base and softer operating leverage.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 13.88%
• asset_turnover: 0.174
• financial_leverage: 1.58
• calculated_ROE: 3.82%
• interpretation: ROE is held back primarily by low asset turnover, while margin remains healthy and leverage is moderate. margin_quality:
• gross_margin: 51.0%
• operating_margin: 19.0%
• EBITDA_margin: 25.0%
• net_margin: 13.88%
• commentary: High gross margin indicates product strength and pricing, but operating margin compression YoY suggests elevated SG&A or other operating costs. Net margin remains solid but fell more than operating margin, reflecting non-operating items and a normalized tax burden. operating_leverage: Operating income declined 18.8% YoY on only +0.9% revenue growth, implying negative operating leverage in the period. Cost discipline and SG&A efficiency will be key to stabilizing margins if top-line growth remains low.

Growth Assessment

revenue_sustainability: Revenue growth of +0.9% YoY indicates a largely flat demand environment, likely reflecting mature domestic markets and pricing constraints. profit_quality: Despite soft growth, gross margin stayed high at 51.0%, evidencing resilient core profitability; however, the translation to operating profit weakened due to higher operating costs. outlook: Near-term growth appears subdued barring a pickup in volume or pricing. Margin recovery hinges on cost normalization and efficiency improvements. With strong balance sheet capacity, Tsumura can sustain strategic investments, but disclosures on capex and pipeline initiatives are needed to refine the outlook.

Financial Health

liquidity:

• current_ratio: 477.6%
• quick_ratio: 453.5%
• working_capital: ¥233.8bn
• assessment: Very strong liquidity with ample current assets relative to obligations. solvency:
• debt_to_equity: 0.41x (Total liabilities/Equity)
• interest_coverage: 68.5x
• equity_ratio_inferred: ≈63.2% (Equity/Assets), despite undisclosed equity ratio in the dataset
• assessment: Low solvency risk given modest leverage and strong coverage. capital_structure: Assets ¥516.5bn funded predominantly by equity (¥326.5bn) with limited liabilities (¥134.3bn), providing financial flexibility.

Cash Flow Quality

earnings_quality: OCF/NI = 1.37x indicates healthy cash conversion. Adding D&A of ¥5.33bn to NI of ¥12.48bn largely explains OCF, implying only a small working capital absorption (~¥0.7bn). FCF_analysis: Investing cash flow is undisclosed (shown as zero), preventing a reliable FCF calculation. The reported FCF of zero should be treated as not available rather than an actual absence of free cash flow. working_capital: Inventories are ¥14.94bn; with limited detail on receivables/payables, we infer a modest net working capital build during the period (given OCF < NI + D&A).

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are undisclosed (shown as zero). EPS is ¥166.65; any payout assessment must be deferred until DPS is reported. FCF_coverage: Cannot be assessed due to undisclosed investing cash flows and FCF. Financing outflow of ¥12.32bn may include dividends and/or debt service, but attribution is unclear. policy_outlook: Given strong liquidity and low leverage, capacity to sustain ordinary dividends appears ample in principle; however, without DPS, capex, and explicit policy disclosure, visibility is limited.

Risk Assessment

Business Risks:

• Sluggish top-line growth (+0.9% YoY) may persist in a mature domestic market.
• Operating margin pressure from rising SG&A or input costs despite high gross margin.
• Pricing and reimbursement pressures common in Japan’s healthcare market could weigh on margins.
• Supply chain risks for key raw materials and potential cost volatility.
• Product mix shifts that could affect gross margin sustainability.

Financial Risks:

• Low asset turnover (0.174x) suppresses ROE and could worsen if growth slows.
• Potential working capital swings in receivables/inventories that could dampen OCF.
• Information risk from undisclosed items (cash balance, investing CF, DPS), limiting transparency.
• Tax rate variability (inferred ~34%) affecting net profitability.

Key Concerns:

• Negative operating leverage (OI -18.8% vs revenue +0.9%).
• Limited disclosure on investing activities and capital allocation (capex/FCF unknown).
• Undisclosed dividend metrics, constraining shareholder return analysis.

Investment Implications

Key Takeaways:

• Solid gross profitability (51% GM) but operating margin compressed to ~19%.
• ROE at 3.82% is constrained mainly by low asset turnover and softer operating leverage.
• Strong balance sheet with inferred equity ratio ~63% and interest coverage 68.5x.
• Healthy cash conversion (OCF/NI 1.37x) with modest working capital build.
• Growth remains subdued; margin recovery is a key swing factor.

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio.
• Revenue growth by segment/product and pricing/mix effects.
• Capex and investing cash flows to refine FCF and capital allocation views.
• Working capital metrics (DSO/DPO/DIH) and OCF/NI sustainability.
• Asset turnover improvements and their impact on ROE.
• Dividend disclosures (DPS, payout policy) and financing cash flow components.

Relative Positioning: Financially conservative with strong liquidity and solvency versus typical healthcare peers, but currently demonstrating weaker operating leverage and lower ROE due to low asset turnover and soft growth.

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