FUJI MEDIA HOLDINGS,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥248.70B
• Operating Income: ¥-12.99B
• Net Income: ¥17.42B
• EPS: ¥82.48

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

Verdict: Core operations deteriorated with another operating loss, while bottom-line profitability turned positive on non-recurring/ below-the-line items, and cash generation was negative—overall mixed with low-quality earnings. Revenue fell 7.2% YoY to 2,486.99, and gross profit was 379.64, yielding a gross margin of 15.3%. Operating income remained in the red at -129.90 (a modest YoY improvement in loss size), translating to an operating margin of roughly -5.2%. Ordinary income was also negative at -108.92, but profit before tax jumped to 372.09 and net income reached 171.15 (+35.8% YoY), implying sizable special gains between ordinary income and pre-tax profit. Non-operating income was 40.64, including 25.30 of dividend income, but this alone does not explain the swing to positive PBT; extraordinary items likely drove the gap. EBITDA was -45.83 (margin -1.8%), and interest coverage was -8.46x, indicating weak operating ability to service debt from earnings. Cash flow quality was poor with operating CF at -99.21 versus net income of 171.15 (OCF/NI -0.58x). Total comprehensive income was -97.22, pointing to sizable OCI losses, likely from the mark-to-market impact on investment securities (3,782.63 on the balance sheet). Liquidity is ample (current ratio 235.5%, quick ratio 185.6%), and leverage is moderate (D/E 0.77x), but negative OCF and negative EBITDA temper comfort. ROE was a modest 2.1% (DuPont: NPM 6.9% × asset turnover 0.173 × leverage 1.77x), and ROIC was -0.6%, indicating capital inefficiency this period. Effective tax rate was elevated at 53.2%, which, together with extraordinary gains, suggests a non-normalized earnings mix. With capex of 413.15 and a proxy FCF (OCF - capex) of about -512, internal funding of dividends and investments is pressured absent asset sales or financing. Forward-looking, stabilizing core broadcasting/contents profitability and restoring positive OCF are critical; reliance on non-recurring gains is unsustainable.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 6.9% × asset turnover 0.173 × financial leverage 1.77x = ROE 2.1% (matches reported). The largest driver vs a normalized target is the very low asset turnover and negative operating margin—i.e., profitability from core operations is the primary drag. Business reason: revenue declined 7.2% YoY amid weaker advertising and media monetization, while SG&A (509.54) exceeds gross profit (379.64), keeping operating income negative. Non-operating and presumably extraordinary gains elevated net margin above what core economics would allow. Sustainability: the net margin uplift appears one-time/volatile; ordinary and operating income remain negative, and EBITDA is negative—core trends are not yet sustainable. Concerning trends: SG&A outstrips gross profit (gross profit 379.64 vs SG&A 509.54), indicating negative operating leverage; EBITDA negative despite substantial depreciation of 84.07 suggests insufficient gross profit to cover cash overhead. Margin dynamics: operating margin was approximately -5.22% this period; based on reported YoY for operating income and revenue, operating margin was roughly flat (compression of ~3–5 bps) despite cost headwinds, but still firmly negative.

Growth Assessment

Top-line contracted 7.2% YoY to 2,486.99, consistent with a soft ad market and pressure in legacy media. Operating income remained negative at -129.90, and EBITDA was -45.83, indicating weak underlying growth in profitability. Net income rose 35.8% YoY to 171.15, but this was driven by factors below operating/ordinary level (large gap between ordinary income -108.92 and PBT 372.09), not by recurring operations. Non-operating income (40.64) with dividend income (25.30) contributed, but does not fully explain the PBT jump—likely extraordinary gains. Revenue sustainability near term is challenged by the advertising cycle, audience fragmentation, and competitive streaming dynamics; cost discipline is required to restore operating break-even. Profit quality is low given negative OCF, negative EBITDA, and negative ordinary income. Outlook hinges on: 1) stabilization of TV ad demand and improved content monetization; 2) managing programming/production and SG&A costs to lift operating margin to positive; 3) limiting reliance on investment gains for earnings delivery.

Financial Health

Liquidity is strong: current ratio 235.5% and quick ratio 185.6%, with cash and deposits of 1,132.86 against short-term loans of 461.85. No warning on current ratio (<1.0) or D/E (>2.0): D/E is 0.77x, within conservative range. Balance sheet scale is large (total assets 14,414.85) with investment securities of 3,782.63; equity is 8,156.25 (owners' equity 8,034.46). Maturity mismatch risk appears manageable near term: current assets 4,111.65 exceed current liabilities 1,745.63 by 2,366.02. Long-term loans of 3,018.47 are material; with EBITDA negative, refinancing and interest burden should be monitored, though cash and securities provide buffers. Off-balance sheet obligations are not disclosed in the provided data; none can be assessed from this dataset.

Cash Flow Quality

OCF/Net Income is -0.58x, a quality flag (<0.8), indicating earnings not supported by cash generation. Proxy free cash flow (OCF - capex) is approximately -512.36, suggesting dividends and investments are not covered by internal cash this period. Financing CF was +133.84, implying reliance on external funding (or asset-related financing) to bridge cash needs. Given negative EBITDA and ordinary income, working capital outflows and/or non-cash gains likely explain the NI–OCF gap; however, itemized working capital movements are not disclosed, so specific drivers (receivables, inventories, payables) cannot be isolated. There are no clear signs of manipulation from the limited data, but the combination of negative OCF and positive NI is a concern until reversed.

Dividend Sustainability

The calculated payout ratio is 68.4%, above the <60% comfort benchmark. With OCF negative (-99.21) and a proxy FCF of about -512.36 after capex, dividend coverage from free cash flow is not achieved this period. Balance sheet strength (cash and investment securities) could support payouts temporarily, but sustained distributions require restoration of positive OCF and operating profit. Reported DPS and total dividends paid are unreported; thus, forward policy assessment relies on historical practice and capital policy, which are not included here. Near-term sustainability hinges on reducing operating losses and capex intensity or monetizing assets; otherwise payout risk increases if weak cash generation persists.

Risk Assessment

Business Risks:

• Advertising market softness impacting broadcast revenue (-7.2% YoY revenue).
• Audience fragmentation and competitive pressure from streaming reducing pricing power.
• Content cost inflation and high SG&A (509.54) exceeding gross profit (379.64).
• Dependence on non-recurring gains to achieve positive net income (gap between ordinary income and PBT).
• Potential impairments on content/library or affiliates in a prolonged downturn.

Financial Risks:

• Negative EBITDA and operating loss driving negative interest coverage (-8.46x).
• Negative operating cash flow (OCF/NI -0.58x) and negative proxy FCF (~-512).
• Valuation volatility of large investment securities portfolio (3,782.63) evidenced by negative total comprehensive income (-97.22).
• Interest rate risk on substantial long-term loans (3,018.47).
• Elevated effective tax rate (53.2%) introduces earnings volatility.

Key Concerns:

• Core profitability remains negative at operating and ordinary levels.
• Quality of earnings is low; bottom line driven by below-the-line or extraordinary items.
• ROIC -0.6% indicates value dilution; ROE only 2.1% despite leverage of 1.77x.
• Dividend sustainability pressured by negative FCF and weak cash conversion.
• Limited disclosure granularity (e.g., SG&A breakdown, investing CF) obscures drivers.

Investment Implications

Key Takeaways:

• Core operations are loss-making; operating margin ~ -5.2% with EBITDA negative.
• Net profit positive due to non-recurring/ below-the-line gains; comprehensive income negative.
• Cash conversion is poor (OCF/NI -0.58x) and proxy FCF deeply negative (~-512).
• Balance sheet liquidity is strong (current ratio 235.5%) and leverage moderate (D/E 0.77x), providing buffer.
• Capital efficiency is weak (ROIC -0.6%, ROE 2.1%); improvement requires operating turnaround.

Metrics to Watch:

• Core operating margin and EBITDA trajectory (return to positive territory).
• Advertising revenue trend and pricing; audience ratings and digital/streaming monetization.
• SG&A vs gross profit and cost actions to restore operating leverage.
• OCF/NI ratio and working capital movements; capex discipline.
• Extraordinary gains/losses and OCI volatility from investment securities.
• Interest coverage and refinancing needs for long-term debt.

Relative Positioning: Within Japan’s terrestrial broadcasters, the company shows weaker core profitability this quarter versus peers with positive operating income, but maintains a comparatively strong liquidity position and sizable securities holdings that offer interim financial flexibility; strategic execution on content/digital monetization will be key to closing the performance gap.

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