FUMAKILLA LIMITED FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥40.14B
• Operating Income: ¥2.12B
• Net Income: ¥934M
• EPS: ¥80.47

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

Fumakilla (TSE:4998) reported FY2026 Q2 (cumulative) consolidated results showing resilient profitability despite modest top-line softness. Revenue declined 1.0% YoY to ¥40.1bn, but operating income rose 30.5% YoY to ¥2.12bn as cost discipline lifted margins. Gross profit was ¥11.80bn with a gross margin of 29.4%, indicating stable product mix and/or improved sourcing and manufacturing efficiency. Operating margin expanded to 5.3%, up meaningfully YoY, reflecting operating leverage from cost containment in SG&A versus slightly lower sales. Ordinary income was ¥2.13bn, broadly in line with operating income, suggesting limited non-operating gains/losses and manageable interest burden. Net income surged 78.7% YoY to ¥1.33bn, aided by stronger operations; reported income tax expense was ¥0.63bn, implying a normalized effective tax rate of roughly low-30% (based on income before taxes), even though an “effective tax rate” metric of 0.0% was shown, which appears to be an unreported placeholder rather than actual zero. DuPont analysis shows a net margin of 3.30%, asset turnover of 0.642x, and financial leverage of 2.24x, delivering an ROE of 4.74%. Liquidity is sound with a current ratio of 133.9% and a quick ratio of 107.3%; working capital stands at ¥11.26bn. Solvency is moderate with total liabilities of ¥37.25bn versus equity of ¥27.95bn (debt-to-equity 1.33x); our computed equity ratio (equity/assets) is approximately 44.7%, even though the reported equity ratio field shows 0.0% due to non-disclosure formatting. Operating cash flow was strong at ¥6.86bn, exceeding net income by 5.17x, indicating robust earnings quality and likely favorable working capital movements. Financing cash flow was a net outflow of ¥7.27bn, consistent with debt reduction and/or lease/interest outflows; annual DPS is shown as ¥0.00, implying no interim distribution in the period. EBITDA was ¥3.01bn (margin 7.5%), and interest coverage is ample at 25.5x, underscoring comfortable debt service capacity. Inventory at ¥8.84bn appears manageable relative to current assets (¥44.50bn), supporting the quick ratio above 1x. While revenue contracted modestly, the magnitude of profit improvement suggests sustained cost optimization and pricing discipline in the core household insecticide and daily-use products portfolio. Seasonality in the insecticide category can be pronounced; thus, Q2 cumulative dynamics may not fully represent full-year trends. Several items (e.g., investing cash flow, cash balance, share counts) are shown as zero due to non-disclosure in the XBRL mapping and should not be interpreted as actual zeros.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.30%
• asset_turnover: 0.642
• financial_leverage: 2.24
• calculated_ROE: 4.74% margin_quality:
• gross_margin: 29.4%
• operating_margin: 5.3%
• EBITDA_margin: 7.5%
• commentary: Gross margin stability alongside improved operating margin indicates effective SG&A control and possibly better pricing/mix. Ordinary income aligns with operating income, implying minimal non-operating distortion. operating_leverage: Revenue declined 1.0% YoY while operating income increased 30.5% YoY, evidencing positive operating leverage from cost efficiency. Depreciation of ¥0.89bn within EBITDA of ¥3.01bn suggests a capital-light to moderate profile supporting margin resilience.

Growth Assessment

revenue_sustainability: Top-line contracted slightly to ¥40.1bn (-1.0% YoY), consistent with potential seasonality and demand normalization after strong prior periods in insecticide categories. International and domestic channel composition is not disclosed; sustainability hinges on maintaining shelf space, brand strength, and pricing amid competition. profit_quality: Net income rose 78.7% YoY to ¥1.33bn with ordinary income closely tracking operating income, indicating that earnings growth is primarily operational rather than financial. Interest expense of ¥0.083bn is small relative to EBIT, reducing profit volatility risk. outlook: Assuming stable demand into peak seasonal quarters, margins could remain supported by cost controls and procurement discipline. Key sensitivities are raw material costs (petrochemical derivatives), FX for imported inputs, and weather-driven demand swings for insect control products.

Financial Health

liquidity:

• current_ratio: 133.9%
• quick_ratio: 107.3%
• working_capital: ¥11,264,000,000
• commentary: Liquidity headroom appears adequate; quick ratio above 1x indicates coverage of short-term obligations without relying on inventory liquidation. solvency:
• debt_to_equity: 1.33x (total liabilities/equity)
• interest_coverage: 25.5x
• equity_ratio_computed: 44.7% (equity/assets)
• commentary: Balance sheet leverage is moderate with strong interest coverage. The reported equity ratio field at 0.0% is an unreported placeholder; computed equity ratio suggests a solid capital base. capital_structure: Total assets ¥62.58bn funded by ¥37.25bn liabilities and ¥27.95bn equity. Negative financing cash flow implies deleveraging and/or servicing obligations; no evidence of equity issuance in the period.

Cash Flow Quality

earnings_quality: OCF/net income of 5.17x indicates strong conversion and likely favorable working capital inflows. Limited non-operating items and strong coverage of interest expense corroborate quality. FCF_analysis: Free cash flow is shown as 0 due to undisclosed investing cash flows; with OCF at ¥6.86bn and depreciation at ¥0.89bn, underlying FCF is likely positive absent unusually high capex. Precise FCF cannot be determined from disclosed data. working_capital: Inventories at ¥8.84bn within current assets of ¥44.50bn suggest balanced stock levels. The strong OCF implies receivables collection and/or inventory normalization contributed positively, although period-to-period movements are not disclosed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.00, indicating no dividend disclosure for the period. With EPS at ¥80.47 and strong OCF, capacity exists for distributions, but policy details are not provided here. FCF_coverage: FCF coverage is shown as 0.00x due to missing investing cash flow and FCF. Based on OCF strength, coverage would likely be comfortable if capex remains within historical norms. policy_outlook: Absent explicit guidance, dividends likely align with earnings stability and balance sheet conservatism. Management appears to prioritize balance sheet strength given net financing outflows.

Risk Assessment

Business Risks:

• Seasonality and weather sensitivity affecting insecticide demand
• Intense competition in household products impacting pricing and shelf space
• Raw material cost volatility (petrochemical inputs, packaging)
• FX exposure on imported materials and overseas operations
• Retailer inventory adjustments and channel mix shifts
• Regulatory changes in chemical formulations and product safety standards

Financial Risks:

• Moderate leverage with potential refinancing risk if rates rise
• Working capital swings affecting cash generation in off-peak seasons
• Potential FX translation and transaction impacts on margins
• Concentration of cash flows in peak quarters increasing intra-year liquidity needs

Key Concerns:

• Sustainability of margin improvements amid flat to declining sales
• Visibility on capex and investing cash flows (currently undisclosed)
• Dividend policy clarity given zero payout disclosure in the period

Investment Implications

Key Takeaways:

• Profitability improved materially despite a slight revenue decline, highlighting effective cost control.
• ROE of 4.74% reflects moderate profitability; scope for improvement lies in margin and turnover gains.
• Strong OCF (¥6.86bn) points to high earnings quality and working capital discipline.
• Balance sheet remains sound with computed equity ratio around 45% and interest coverage of 25.5x.
• Financing outflows suggest deleveraging or servicing of obligations; dividend not disclosed.
• Full-year performance will hinge on seasonality, input cost trends, and FX.

Metrics to Watch:

• Revenue growth by region/channel and price/mix versus volume
• Gross margin progression versus raw material and FX trends
• SG&A ratio and operating margin sustainability
• Working capital turnover (inventory days, receivable days)
• Capex and investing cash flows to assess true FCF
• Net debt and interest coverage trajectory

Relative Positioning: Within Japan’s household insecticide and daily-use products space, Fumakilla appears to be improving margins from a stable revenue base, with balanced leverage and solid liquidity; continuation of cost discipline and working capital control will be key to narrowing the profitability gap with leading peers.

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