MANDOM CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥41.25B
• Operating Income: ¥2.37B
• Net Income: ¥1.46B
• EPS: ¥36.19

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

Mandom (4917) reported FY2026 Q2 consolidated results under JGAAP showing solid top-line growth with pronounced operating leverage. Revenue rose 5.3% year over year to ¥41.25bn, while operating income surged 65.4% to ¥2.37bn, indicating strong cost discipline and/or mix improvements. Gross profit reached ¥16.54bn with a gross margin of 40.1%, suggesting healthy pricing and cost of goods management despite input cost pressures common in personal care. Operating margin improved to 5.7% (operating income/revenue), a notable step-up given the modest sales growth. Ordinary income was ¥2.87bn, and net income increased 4.5% to ¥1.63bn, with net margin at 3.96%. Depreciation and amortization totaled ¥1.97bn, supporting an EBITDA of ¥4.34bn (10.5% margin). Cash generation was robust: operating cash flow was ¥5.37bn, equating to 3.29x net income, which is a strong earnings quality indicator. The balance sheet is conservative, with total assets of ¥96.06bn and equity of ¥76.03bn; this implies an equity ratio of ~79% based on provided balances (the reported equity ratio metric is unreported). Liquidity appears ample, with a current ratio of 404% and a quick ratio of 315%, and working capital of ¥45.60bn. Leverage is modest with liabilities/equity at 0.27x and interest expense just ¥19m, yielding interest coverage of ~125x. DuPont decomposition indicates ROE of 2.15% driven by a 3.96% net margin, asset turnover of 0.429x, and financial leverage of 1.26x. While ROE is improving, it remains modest relative to typical return hurdles, constrained primarily by still-low margins and conservative leverage. The effective tax rate metric is shown as 0.0% in the dataset, but the presence of ¥631m income tax against ¥1,633m net income suggests a more normal tax burden; this discrepancy reflects reporting limitations rather than economics. Dividend metrics (DPS, payout, FCF coverage) are unreported in this dataset; therefore, dividend conclusions are constrained. Overall, results demonstrate improving profitability and strong cash conversion on a very solid balance sheet, though sustaining sales momentum and margin gains will be key to lifting ROE.

Profitability Analysis

ROE_decomposition: ROE 2.15% = Net margin 3.96% × Asset turnover 0.429 × Financial leverage 1.26. Net margin (1,633/41,251) benefited from operating margin expansion (operating margin ~5.75%), while conservative leverage limits ROE amplification. margin_quality: Gross margin of 40.1% indicates resilient pricing and product mix. Operating margin at ~5.7% reflects SG&A efficiency gains relative to sales growth. Net margin at 3.96% remains modest, likely reflecting SG&A intensity and non-operating items. operating_leverage: Revenue grew 5.3% YoY while operating income rose 65.4% YoY, demonstrating strong operating leverage from fixed-cost absorption and cost control. EBITDA margin at 10.5% vs. operating margin 5.7% suggests meaningful but manageable D&A burden (~4.8% of sales). Interest expense is negligible (¥19m), so operating improvements flow through to the bottom line.

Growth Assessment

revenue_sustainability: Sales growth of 5.3% suggests steady demand recovery and/or successful product initiatives; sustainability will hinge on channel sell-through and regional mix, particularly in Asia ex-Japan. profit_quality: Net income grew 4.5% YoY despite a much larger increase in operating income, implying some offset from non-operating or tax items. The OCF/NI ratio of 3.29x supports high earnings quality. outlook: Near-term outlook depends on maintaining gross margin discipline amid input cost and FX volatility, and on continued SG&A efficiency. If mid-single-digit revenue growth persists and operating margin holds or expands, ROE should trend upward from the current 2.15%.

Financial Health

liquidity: Current ratio 403.7% and quick ratio 314.5% reflect strong short-term solvency. Working capital is ¥45.60bn, providing a substantial buffer. solvency: Total liabilities/total equity is 0.27x, and interest coverage is ~125x, indicating low financial risk. Based on balances, equity ratio is approximately 79% (though the reported equity ratio metric is unreported in the dataset). capital_structure: Capitalization is equity-heavy with minimal reliance on interest-bearing debt, affording flexibility but limiting ROE uplift from leverage.

Cash Flow Quality

earnings_quality: OCF of ¥5.37bn relative to net income of ¥1.63bn (3.29x) indicates strong cash conversion, suggesting limited accruals or favorable working capital dynamics. FCF_analysis: Free cash flow is not disclosed in the dataset (Investing CF reported as 0 indicates unreported). Without capex detail, FCF cannot be reliably calculated; however, the sizeable OCF implies capacity to fund typical maintenance capex and dividends. working_capital: Inventories are ¥13.40bn; without prior-period comparatives, the directionality of inventory and receivables is unclear. High liquidity ratios imply no immediate working capital stress.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to unreported DPS and share counts; this should not be interpreted as an actual zero payout. Based on earnings capacity, a moderate payout would appear serviceable, but precise coverage cannot be assessed from the provided data. FCF_coverage: FCF coverage metric is unreported; absent capex information, we cannot compute dividend coverage by FCF. policy_outlook: Given the low leverage and strong OCF, the balance sheet could support a consistent dividend policy. However, with DPS not disclosed for this period, we refrain from inferring changes in policy.

Risk Assessment

Business Risks:

• Demand volatility in men’s grooming and personal care across Japan and ASEAN markets
• Competitive pricing pressure from global and domestic brands affecting gross margin
• Raw material and packaging cost inflation impacting COGS
• Channel mix shifts (e-commerce vs. traditional retail) influencing SG&A efficiency
• Product cycle and innovation risk, including potential inventory obsolescence

Financial Risks:

• Foreign exchange volatility affecting imported inputs and overseas subsidiaries
• Working capital swings (inventory and receivables) impacting cash conversion
• Potential impairment risk on long-lived assets if growth or margins underperform
• Limited ROE due to conservative leverage and modest margins

Key Concerns:

• ROE at 2.15% remains below typical equity cost benchmarks
• Sustainability of margin gains after a leverage-driven quarter
• Lack of disclosed capex/FCF and dividend details constrains visibility

Investment Implications

Key Takeaways:

• Top-line growth of 5.3% YoY with significant operating leverage (operating income +65.4%)
• Gross margin at 40.1% and operating margin ~5.7% show improved profitability
• Strong cash conversion with OCF/NI at 3.29x
• Very solid balance sheet with liabilities/equity at 0.27x and interest coverage ~125x
• ROE at 2.15% remains modest; further margin expansion is needed to lift returns
• Dividend and FCF data are not disclosed, limiting payout analysis

Metrics to Watch:

• Revenue growth by region and channel
• Gross margin and SG&A-to-sales ratio
• Operating margin sustainability
• OCF/NI ratio and inventory turnover
• Capex and FCF once disclosed
• FX impacts on COGS and overseas earnings
• ROE trajectory and asset turnover

Relative Positioning: Within Japanese personal care peers, Mandom exhibits a conservative balance sheet and strong cash conversion but currently lower ROE, with improving margins offering upside if sustained.

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