Taisei Lamick Group Head Quarter & Innovation Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥15.95B
• Operating Income: ¥1.08B
• Net Income: ¥596M
• EPS: ¥95.21

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: Solid top-line growth but profit compression; FY2026 Q2 shows resilient demand with clear margin pressure and elevated tax drag. Revenue rose 4.2% YoY to 159.48, but operating income fell 20.3% YoY to 10.79 and net income dropped 33.9% YoY to 5.96. Gross profit was 42.01, implying a gross margin of 26.3%, while operating margin settled at 6.8% and net margin at 3.7%. Using the disclosed growth rates, operating margin contracted by roughly 207 bps YoY (from ~8.8% to ~6.8%), and net margin contracted by about 215 bps (from ~5.9% to ~3.7%). Ordinary income was 11.14 (-17.3% YoY) and non-operating income remained minor at 0.46 (interest income 0.19; dividend income 0.09), so the earnings deterioration is primarily operating in nature. The effective tax rate jumped to 47.1%, exacerbating the net income decline and indicating either non-deductible items or timing effects. EBITDA was 18.98 with an EBITDA margin of 11.9%, indicating still-healthy cash earnings before depreciation, but depreciation of 8.19 remains heavy relative to operating profit. Cash flow quality is decent: OCF of 8.07 exceeds net income (OCF/NI 1.35x), suggesting earnings are cash-backed this half. However, capital expenditures of -15.69 imply negative implied FCF of about -7.62 (OCF minus capex), highlighting investment-heavy spending. The balance sheet is conservative: current ratio 214%, quick ratio 173%, and low leverage (reported D/E 0.33x), with cash of 42.25 and receivables of 65.17 comfortably exceeding current liabilities of 80.17. ROE is subdued at 2.4% per DuPont (NPM 3.7% × asset turnover 0.475 × leverage 1.33x), and ROIC at 2.7% flags weak capital efficiency. Financing cash flow was -6.21, including share repurchases of -3.08, signaling continued shareholder returns despite negative implied FCF. The payout ratio (calculated) is high at 94.6%, which, coupled with negative implied FCF, raises sustainability questions absent a 2H earnings and cash flow rebound. Forward-looking, watch margin recovery (price pass-through, mix) and normalization of the tax rate; without these, returns (ROE/ROIC) will remain below cost of capital and constrain distributions.

Profitability Analysis

ROE decomposition: ROE 2.4% = Net Profit Margin (3.7%) × Asset Turnover (0.475x) × Financial Leverage (1.33x). The component with the most adverse change is Net Profit Margin, inferred from -20.3% YoY operating income vs +4.2% revenue and a higher effective tax rate (47.1%), driving net margin down ~215 bps YoY. Operating margin compressed to 6.8% (from ~8.8%), reflecting cost pressures (COGS and/or SG&A) and possibly unfavorable mix; depreciation burden (8.19) also limits operating leverage. Asset turnover at 0.475x is modest and likely little changed YoY given only +4.2% sales growth and a stable asset base. Financial leverage is low at 1.33x and stable, providing limited ROE lift. Business drivers: probable input cost inflation (packaging resin/films), lag in price pass-through, and higher labor/utility costs pressured margins; the spike in the effective tax rate further suppressed net margin. Sustainability: part of the margin pressure could normalize if selling price adjustments catch up and the tax rate reverts to a mid-20s–30s range; however, structural headwinds (wage inflation, energy) suggest only gradual recovery. Flags: SG&A is not disclosed in detail, but operating income fell despite revenue growth, implying SG&A/COGS growth outpaced sales; monitor if SG&A growth continues to exceed revenue growth.

Growth Assessment

Revenue growth of 4.2% YoY indicates steady end-market demand (likely food and beverage pouching/packaging), but profit growth is negative due to margin compression. Current margins: gross 26.3%, operating 6.8%, ordinary 7.0%, net 3.7%. Operating margin contracted ~207 bps YoY and net margin ~215 bps YoY (derived from provided growth rates), evidencing weaker operating leverage. Non-operating contributions are small (0.46), so growth depends primarily on improving core operations. EBITDA margin at 11.9% suggests underlying cash earnings capacity remains, but depreciation intensity limits reported operating profit growth. Outlook hinges on pricing/mix and cost normalization; absent this, top-line growth is unlikely to translate to bottom-line recovery in H2. Watch for 2H seasonality and any announced price revisions.

Financial Health

Liquidity is strong: current ratio 213.9% and quick ratio 172.7%, with working capital of 91.32. Cash and deposits (42.25) plus receivables (65.17) comfortably cover current liabilities (80.17), indicating low maturity mismatch risk. Solvency is conservative: reported D/E 0.33x and interest coverage 2262x imply minimal reliance on interest-bearing debt (though specific debt balances are unreported). Total assets are 335.94 and equity 251.74, giving low financial leverage (1.33x assets/equity). No off-balance sheet obligations were disclosed in the data provided. Explicit warnings: none on liquidity or leverage (Current Ratio well > 1.0; D/E well < 2.0).

Cash Flow Quality

OCF of 8.07 exceeds net income of 5.96 (OCF/NI 1.35x), indicating acceptable earnings quality with supportive working capital dynamics. Implied FCF is negative at approximately -7.62 (OCF 8.07 minus capex 15.69), given investing CF detail is unreported but capex disclosed; this suggests internal cash generation did not cover investment outlays in the half. Financing CF of -6.21 includes share repurchases (-3.08), with the remainder likely dividends and/or lease/diverse outflows. Potential working capital signs: receivables (65.17) and payables (53.53) are sizable; no apparent aggressive manipulation from the limited snapshot, but continued monitoring of receivable days and inventory levels is warranted.

Dividend Sustainability

The calculated payout ratio is high at 94.6%, which would be above the typical sustainability threshold (<60%). However, dividend amounts are unreported; financing CF includes -6.21 with buybacks of -3.08, implying other distributions (likely dividends) around -3.1 if no other financing items—this would equate to ~52% of NI for the half. Given negative implied FCF (-7.62), distributions are currently not covered by internally generated free cash in H1. Sustainability will depend on H2 cash generation, capex phasing, and potential tax rate normalization. Policy outlook unknown due to lack of guidance data; if management targets stable/increasing DPS, coverage may rely on cash on hand (42.25) near term, but medium-term sustainability requires margin/FCF recovery.

Risk Assessment

Business Risks:

• Input cost inflation (resins/films, energy) pressuring gross margin and price pass-through timing risk
• Customer pricing pressure and potential delays in contract repricing
• Execution risk on elevated capex (15.69) with uncertain near-term return, risking continued negative FCF
• High effective tax rate (47.1%) depressing net income, with uncertainty on normalization timing
• Potential demand softness or mix shift in food/beverage packaging end-markets

Financial Risks:

• Low ROIC at 2.7% indicating poor capital efficiency versus typical 7–8% targets
• Negative implied FCF despite positive OCF, constraining self-funded growth and distributions
• Earnings sensitivity to depreciation and amortization given heavy asset base
• Data gaps on interest-bearing debt could obscure refinancing or lease obligations (though leverage appears low)

Key Concerns:

• Sustained margin compression (operating margin ~6.8%) versus prior ~8.8%
• Payout policy potentially aggressive relative to current cash generation (payout ratio flagged at 94.6%)
• Limited contribution from non-operating income to offset core margin pressure
• Asset turnover of 0.475x and low leverage limiting ROE recovery absent margin rebound

Investment Implications

Key Takeaways:

• Top-line growth (+4.2% YoY) but marked operating and net margin compression (~200+ bps YoY)
• OCF quality acceptable (1.35x NI), yet capex-driven negative implied FCF in H1
• Balance sheet strength (current ratio 214%, low leverage) affords resilience
• ROE 2.4% and ROIC 2.7% underscore sub-par capital efficiency
• High effective tax rate amplified earnings decline; normalization is a key earnings lever

Metrics to Watch:

• Operating margin and gross margin recovery trajectory
• Price pass-through progress and product mix
• Capex cadence versus cash generation (FCF)
• Effective tax rate normalization
• ROIC and ROE trend into H2
• Working capital turns (receivable and inventory days)

Relative Positioning: Within Japanese packaging/converting peers, Daisei Lamic shows a strong balance sheet and high liquidity but below-peer profitability (ROE/ROIC) and recent margin compression; improving price-cost dynamics and capex returns are needed to close the 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
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