Yushiro Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥25.69B
• Operating Income: ¥2.33B
• Net Income: ¥2.61B
• EPS: ¥219.41

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

For FY2026 Q2, 株式会社ユシロ reported revenue of ¥25.69bn, down 7.6% YoY, indicating a soft demand environment or pricing pressure in its core businesses. Despite the top-line decline, gross profit reached ¥8.643bn, implying a gross margin of 33.6%, which remains solid for a specialty chemicals/industrial fluids profile. Operating income fell 10.8% YoY to ¥2.33bn, with an operating margin of roughly 9.1%, pointing to some operating deleverage as revenue contracted. Ordinary income of ¥2.904bn exceeded operating income, suggesting a positive contribution from non-operating items (e.g., financial income or equity-method gains), while interest expense remained minor at ¥31m. Net income rose 18.0% YoY to ¥2.934bn, outpacing operating trends and implying tailwinds from non-operating or extraordinary items and a moderate tax burden. Back-solving from reported income tax of ¥654m indicates an effective tax rate of about 18.2%, even though the provided calculated metric lists 0.0% (the latter appears to be an unreported/placeholder figure). DuPont analysis shows a net margin of 11.42%, asset turnover of 0.420x, and financial leverage of 1.38x, resulting in an ROE of 6.61%. The ROE profile reflects conservative balance sheet leverage and decent margins but modest asset efficiency. Liquidity is strong, with a current ratio of 235% and quick ratio of 213%, underpinned by current assets of ¥31.69bn and working capital of ¥18.22bn. The capital structure is conservative: total liabilities are ¥18.43bn against equity of ¥44.39bn, for a debt-to-equity ratio of 0.42x. Interest coverage is very strong at 75x, reinforcing limited financial risk from borrowing costs. Operating cash flow of ¥2.027bn trails net income (OCF/NI = 0.69), suggesting less-than-full cash conversion influenced by working capital movements or timing effects. Free cash flow and investing cash flows were not disclosed (zeros indicate unreported), limiting our visibility on capex intensity and cash returns. Dividend data show DPS and payout as zero in this dataset; these appear unreported rather than true zeros, so dividend conclusions require caution. Overall, the period reflects resilient margins and a healthy balance sheet offset by revenue contraction and softer operating profits, with EPS supported by non-operating/extraordinary factors and moderate taxes.

Profitability Analysis

ROE of 6.61% is driven by an 11.42% net margin, 0.420x asset turnover, and 1.38x financial leverage (DuPont). Operating margin is approximately 9.1% (¥2.33bn/¥25.69bn), indicating reasonable operating efficiency despite top-line pressure. Gross margin at 33.6% suggests pricing and cost management are holding up; however, the 10.8% YoY decline in operating income versus a 7.6% revenue decline points to operating deleverage. Ordinary income (¥2.904bn) exceeding operating income implies non-operating gains (e.g., FX, financial income, or equity-method), which also supported net income. EBITDA of ¥2.887bn yields an 11.2% margin, cushioning versus operating income via non-cash D&A of ¥557m. Interest expense is minimal (¥31m), with coverage ~75x, indicating profitability is not constrained by financing costs. The net margin expanded relative to operating trends due to non-operating/extraordinary items and a moderate tax burden, lifting bottom-line performance. Overall profitability quality is mixed: core operations softened, but total profitability was supported by below-the-line contributions.

Growth Assessment

Revenue decreased 7.6% YoY to ¥25.69bn, signaling weaker end-market demand or pricing pressure. Operating income fell 10.8% YoY, evidencing operating deleverage as fixed costs were spread over a smaller sales base. Net income grew 18.0% YoY to ¥2.934bn, implying reliance on non-operating or extraordinary gains and a favorable effective tax rate in the period. Without segment/regional disclosure, the sustainability of revenue is uncertain; cyclical exposure to industrial production and automotive end-markets likely influenced the top line. Margin resilience (gross 33.6%, EBITDA 11.2%) suggests some pricing power and cost control, but sustaining these margins amid softer sales will be key. Outlook hinges on pass-through of raw material costs, FX movements, and demand normalization in autos and general machinery. Given the OCF/NI ratio of 0.69, the quality of profit growth is tempered by weaker cash conversion this half, likely due to working capital timing. Near-term growth visibility is limited by missing capex and segment data; we assume modest growth potential contingent on macro demand recovery and stable input costs.

Financial Health

Liquidity is strong: current ratio 235.2%, quick ratio 212.5%, working capital ¥18.216bn, supporting operational flexibility. Solvency risk appears low: total liabilities ¥18.433bn vs equity ¥44.391bn yields a debt-to-equity ratio of 0.42x and financial leverage of 1.38x. Interest burden is small (¥31m), and coverage of ~75x confirms ample headroom. Total assets stand at ¥61.224bn; asset efficiency (turnover 0.420x) is modest, consistent with inventory and receivables intensity in industrial consumables. The reported equity ratio of 0.0% is an unreported metric in this dataset; based on the balance sheet, equity/total assets is approximately 72.6%. Overall, balance sheet strength is a support for resilience amid cyclical softness.

Cash Flow Quality

Operating CF of ¥2.027bn versus net income of ¥2.934bn yields OCF/NI of 0.69, indicating weaker cash conversion this period, likely tied to working capital outflows or timing effects. D&A of ¥557m provides a non-cash buffer, aligning EBITDA (¥2.887bn) with operating income. Free cash flow cannot be assessed due to unreported investing cash flows and capex; thus, true cash generation after reinvestment is unclear. Financing CF was an outflow of ¥1.211bn, likely reflecting dividends, share repurchases, or debt reduction; however, dividends are unreported in this dataset. Cash and equivalents were not disclosed (zero indicates unreported), which limits analysis of cash liquidity buffers and net debt. Working capital appears sizable (¥18.216bn) with inventories of ¥3.049bn; without receivables/payables detail, the specific drivers of OCF shortfall cannot be isolated. Earnings quality is mixed: accounting earnings are solid, but cash realization lagged in the half.

Dividend Sustainability

Dividend data (DPS 0, payout 0%, FCF coverage 0x) are unreported rather than true zeros, so we cannot draw conclusions on actual distributions. From a capacity standpoint, operating cash flow of ¥2.027bn and low leverage suggest room for shareholder returns, but absence of capex/FCF data prevents a coverage assessment. Financing cash outflow of ¥1.211bn could include dividends or buybacks, but the split is unknown. Policy outlook cannot be inferred from this dataset; historical policy and guidance would be needed. Given cyclical earnings and working capital swings, a conservative payout linked to stable OCF would be prudent, but we lack disclosed policy specifics.

Risk Assessment

Business Risks:

• Demand cyclicality in automotive and general machinery end-markets impacting metalworking fluids and related products
• Raw material price volatility (base oils, additives) affecting gross margin and pricing pass-through
• Foreign exchange fluctuations influencing both revenue and non-operating income
• Competitive pricing pressure in industrial consumables
• Regulatory/ESG shifts around chemicals and environmental compliance
• Geopolitical and supply chain disruptions affecting customers’ production schedules

Financial Risks:

• Weaker cash conversion (OCF/NI 0.69) indicating working capital volatility
• Limited visibility on capex and investing cash flows, creating uncertainty around FCF
• Potential reliance on non-operating/extraordinary items to support net income
• Exposure to raw material cost spikes before pricing adjustments can be implemented

Key Concerns:

• Top-line decline of 7.6% YoY and operating income down 10.8% YoY
• Net income growth driven by non-operating/extraordinary factors rather than core operations
• Unreported cash and investing data constraining FCF and liquidity analysis
• Asset turnover of 0.420x indicating moderate asset efficiency

Investment Implications

Key Takeaways:

• Revenue contracted 7.6% YoY while operating income fell 10.8%, reflecting operating deleverage
• Net income rose 18.0% YoY aided by non-operating/extraordinary items and a moderate tax rate (~18%)
• Margins remain sound (gross 33.6%, operating ~9.1%, EBITDA 11.2%) despite softer sales
• Balance sheet is conservative with D/E ~0.42x and strong liquidity (current ratio 235%)
• Cash conversion lagged (OCF/NI 0.69), pointing to working capital pressure
• FCF and dividend details are unreported, limiting visibility on cash returns

Metrics to Watch:

• Revenue growth by region/segment and recovery in key end-markets (auto, machinery)
• Gross and operating margin trends versus raw material cost movements
• OCF/NI ratio and working capital days (receivables, inventory, payables)
• Capex and disclosed FCF to assess reinvestment needs and return capacity
• Non-operating/extraordinary income components and sustainability
• ROE decomposition: asset turnover improvements and margin stability
• FX sensitivity and pricing pass-through effectiveness

Relative Positioning: Within Japanese specialty chemicals/industrial fluids peers, the company presents strong balance sheet resilience and high interest coverage, with mid-single-digit ROE constrained by modest asset turnover and near-term top-line softness; visibility on FCF and dividends is currently limited due to unreported items.

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