NIHON NOHYAKU CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥47.71B
• Operating Income: ¥4.69B
• Net Income: ¥271M
• EPS: ¥43.09

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

Nihon Nohyaku (4997) delivered a strong FY2026 Q2 performance with clear operating leverage and improved profitability. Revenue rose 21.9% year over year to ¥47.7bn, while operating income surged 355.3% to ¥4.69bn, indicating significant fixed-cost dilution and/or mix improvement. Gross margin was 25.3%, and operating margin expanded to 9.8%, both pointing to better pricing, cost control, or product/geographic mix. Ordinary income of ¥4.66bn was close to operating income, suggesting limited non-operating drag beyond interest. Net income climbed 443.2% to ¥3.37bn, yielding a net margin of 7.07%. The DuPont bridge shows ROE of 4.10% built from a 7.07% net margin, 0.326x asset turnover, and 1.78x financial leverage; leverage is moderate given equity of ¥82.2bn versus assets of ¥146.3bn. Liquidity is robust with a current ratio of 224.9% and quick ratio of 180.9%; working capital stands at ¥64.8bn. OCF was strong at ¥12.9bn, translating to an OCF/net income multiple of 3.83x, indicating healthy cash conversion in the period. Interest expense of ¥1.29bn kept interest coverage at 3.6x (EBIT basis), adequate but an area to monitor if rates or leverage rise. Reported effective tax data appear limited, but the disclosed tax expense of ¥0.25bn indicates a low tax burden this period; extraordinary items could be affecting the pre-tax base. The balance sheet implies an equity ratio around 56.2% (equity/assets) despite the reported equity ratio field showing 0.0% due to non-disclosure format. Inventory of ¥22.8bn represents 19.6% of current assets, consistent with the seasonal working-capital intensity of agrochemicals. Financing cash flow was negative at ¥8.65bn, consistent with repayments or lower borrowings relative to the prior period; cash and investing cash flow items were not disclosed in XBRL, limiting free cash flow interpretation. Dividend data show 0 for DPS and payout due to non-disclosure; policy insight therefore remains constrained. Overall, results reflect strong execution with improved margins and cash generation, while financial flexibility remains solid. Data limitations around cash, investing flows, and equity ratio disclosure should be noted when interpreting sustainability and capital allocation.

Profitability Analysis

ROE is 4.10%, decomposed as: net margin 7.07% x asset turnover 0.326x x financial leverage 1.78x. Operating margin is 9.8% (¥4.687bn/¥47.710bn), up sharply alongside a 21.9% revenue increase, demonstrating pronounced operating leverage. Gross margin at 25.3% provides headroom; the spread between gross and operating margin (~15.5pp) implies a sizable SG&A burden that was leveraged effectively this period. Ordinary margin is 9.8% (¥4.661bn/¥47.710bn), very close to operating margin, indicating limited non-operating headwinds beyond interest. EBITDA was ¥5.679bn with an 11.9% margin, showing healthier cash earnings after a subdued prior year. Interest expense of ¥1.287bn consumed roughly 27.5% of operating income, tempering the flow-through to net. The low tax burden (tax expense ¥0.246bn) further supported net margin; however, extraordinary items and consolidations under JGAAP can cause divergence between ordinary income and taxable income. Overall margin quality improved on both gross and operating lines, with clear cost discipline and/or favorable mix. Continued monitoring of pricing, raw material costs, and FX is warranted given the sector’s exposure to commodity and currency swings.

Growth Assessment

Top-line growth of 21.9% YoY to ¥47.7bn indicates strong demand and/or pricing in crop protection and related segments. Operating income growth of 355.3% far outpaced revenue, evidencing substantial operating leverage and likely normalization from a weak comparison base. Net income rose 443.2% to ¥3.37bn, aided by improved operating performance and a low tax charge. The quality of growth appears solid given the concurrent expansion in gross, EBITDA, and operating margins. Cash generation was strong (OCF ¥12.9bn), supporting the durability of earnings; however, without disclosed investing cash flows, sustainability of growth capex and R&D intensity cannot be fully assessed. Inventory levels at ¥22.8bn are consistent with seasonal sales cycles; if growth persists, working-capital discipline will be key to maintaining cash conversion. Outlook-wise, continued revenue traction should translate to earnings if cost control and pricing hold; interest cost remains a swing factor for bottom-line momentum. The absence of disclosed capex and cash balance limits visibility on capacity expansion and balance-sheet-funded growth. Overall, momentum is favorable with a positive mix of volume/margin, though monitoring of FX, input costs, and channel inventory is essential.

Financial Health

Assets total ¥146.3bn against equity of ¥82.2bn and liabilities of ¥72.8bn, implying an equity ratio near 56.2% (calculated), despite the equity ratio field being undisclosed. Current assets of ¥116.6bn vs current liabilities of ¥51.9bn yield a current ratio of 224.9% and quick ratio of 180.9%, indicating strong near-term liquidity. Working capital is ¥64.8bn, providing a sizable buffer for seasonal needs. Debt-to-equity is 0.89x (using total liabilities as a proxy), indicating moderate leverage; the true interest-bearing debt level is not disclosed here. Interest coverage is 3.6x on EBIT, which is acceptable but below highly conservative thresholds, and should improve if operating gains persist. Cash & equivalents were not disclosed; therefore, net debt cannot be assessed. The negative financing cash flow (−¥8.65bn) suggests repayments or reduced borrowing, supportive of deleveraging, but detail is lacking. Overall solvency appears sound given the sizable equity base and liquidity ratios.

Cash Flow Quality

Operating cash flow of ¥12.9bn versus net income of ¥3.37bn (OCF/NI = 3.83x) indicates strong cash realization of earnings, likely aided by working-capital inflows. EBITDA of ¥5.68bn provides additional comfort on cash earnings, though D&A of ¥0.99bn highlights ongoing asset intensity. Investing cash flow is not disclosed (reported as 0 due to data limitations), preventing a clear view of capex and resulting free cash flow. Reported free cash flow as 0 reflects non-disclosure, not actual performance; qualitatively, FCF is likely positive given robust OCF unless capex was unusually high. Working capital stands at ¥64.8bn, and inventory is ¥22.8bn (19.6% of current assets), consistent with sector seasonality; sustained OCF will depend on disciplined inventory and receivables management. Interest expense of ¥1.29bn remains a cash outflow consideration; improved EBIT should gradually enhance coverage. Overall, earnings quality appears strong this period, but a full assessment awaits disclosure of investing cash flows and cash balances.

Dividend Sustainability

Dividend per share and payout ratio fields show 0 due to non-disclosure; thus, no conclusion can be drawn on actual dividends from this dataset. On capacity, net income of ¥3.37bn and strong OCF of ¥12.9bn suggest room for shareholder returns, subject to capex and working-capital needs. FCF coverage metrics cannot be determined because investing cash flows were not disclosed; the reported 0.00x FCF coverage reflects missing data, not a lack of cash generation. The balance sheet’s implied equity ratio (~56%) and liquidity strength support flexibility in principle. Absent explicit policy or guidance, we assume a continuation of prudent, earnings-linked distributions typical in the sector, but confirmation requires management disclosures.

Risk Assessment

Business Risks:

• Agricultural demand cyclicality and weather-related volatility affecting pesticide application
• Raw material and input cost fluctuations impacting gross margin
• Foreign exchange movements affecting exports, imported inputs, and translation
• Regulatory changes and product registrations in key markets
• Channel inventory normalization risk after strong sales periods
• Competitive pricing pressure from global agrochemical peers and generics

Financial Risks:

• Interest burden (¥1.29bn) with only 3.6x EBIT coverage
• Working-capital intensity and seasonal cash swings
• Limited visibility on capex due to non-disclosure of investing cash flows
• Potential currency mismatch between revenues and funding
• Concentration of assets in inventory/receivables increasing liquidity sensitivity

Key Concerns:

• Sustainability of margin expansion amid input cost and FX volatility
• Dependence on working-capital release to drive OCF
• Incomplete disclosure on cash, investing CF, and dividends limits assessment of capital allocation

Investment Implications

Key Takeaways:

• Strong operating leverage: revenue +21.9% YoY with operating income +355.3%
• Margins expanded: gross 25.3%, operating 9.8%, EBITDA margin 11.9%
• Healthy cash conversion: OCF ¥12.9bn (3.83x net income)
• Moderate leverage with implied equity ratio ~56% and current ratio 225%
• Interest coverage at 3.6x is adequate but a watchpoint
• Data gaps on cash, capex, and DPS/payout restrict full capital allocation analysis

Metrics to Watch:

• Pricing and gross margin trajectory versus raw material costs
• Operating margin and SG&A efficiency as sales scale
• Interest coverage and total interest-bearing debt levels
• Working-capital metrics (inventory and receivable turns)
• Investing cash flow/capex and resulting free cash flow
• FX impact on revenue and costs, and any hedging policies
• Dividend announcements and payout guidance

Relative Positioning: Within Japanese agrochemicals, the company currently exhibits above-trend profit rebound and strong liquidity, with margin recovery and cash conversion comparing favorably to a year ago; however, interest burden and incomplete disclosure on capex/dividends temper relative clarity versus peers with fuller capital allocation visibility.

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