MARUWA CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥33.12B
• Operating Income: ¥10.84B
• Net Income: ¥8.44B
• EPS: ¥600.78

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

MARUWA (53440) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a soft top line. Revenue declined 4.9% YoY to ¥33,115 million, while operating income fell 15.2% to ¥10,843 million, indicating negative operating leverage in the half. Gross profit of ¥18,720 million implies a robust gross margin of 56.5%, highlighting strong product economics and/or favorable mix. Operating margin remained high at 32.7%, though compressed versus the prior year given the larger drop in operating income relative to revenue. Ordinary income of ¥11,123 million exceeded operating income by ¥280 million, suggesting net non-operating gains (likely interest income or forex gains) supported earnings. Net income came in at ¥7,413 million (-12.2% YoY), translating to a healthy net margin of 22.4%. DuPont analysis shows ROE of 5.48% driven by a 22.4% net margin, asset turnover of 0.224x, and low financial leverage of 1.09x; returns are primarily margin-led rather than leverage- or turnover-driven. Cash generation was strong with operating cash flow (OCF) of ¥11,109 million, yielding an OCF/Net income ratio of 1.50, indicative of solid earnings quality and cash conversion. The balance sheet is conservative: total assets were ¥147,915 million against total liabilities of ¥14,431 million, implying low gearing (liabilities/equity ~0.11x). Liquidity is abundant with current assets of ¥100,290 million versus current liabilities of ¥13,933 million, producing a current ratio of ~720% and quick ratio of ~701%; inventories are modest at ¥2,645 million, limiting obsolescence risk. EBITDA was ¥13,001 million (39.3% margin), with D&A of ¥2,158 million, indicating a capital-intensive base but manageable non-cash expense burden. Interest expense was not reported (0 in the dataset), consistent with a near debt-free position and rendering interest coverage metrics not meaningful. Reported effective tax rate in the calculated section shows 0.0% due to data limitations; however, using disclosed income tax expense (¥3,687 million) and net income implies a tax burden broadly consistent with ~33% on pre-tax earnings. Dividend data were not disclosed for the period (DPS shown as 0.00), and share count metrics are also unreported, limiting per-share capital policy analysis. Data gaps exist (e.g., cash & equivalents, investing cash flows, equity ratio, share count), but available figures point to strong margins, excellent liquidity, high cash conversion, and low financial risk.

Profitability Analysis

ROE at 5.48% is explained by a 22.39% net profit margin, asset turnover of 0.224x, and financial leverage of 1.09x, indicating returns are predominantly margin-driven. Gross margin stands at 56.5%, reflecting strong pricing power, product mix, and/or cost efficiencies in advanced ceramics/components. Operating margin is 32.7% (¥10,843m / ¥33,115m), down YoY as operating income fell faster than revenue (-15.2% vs -4.9%), evidencing negative operating leverage in the half. Ordinary margin is 33.6% (¥11,123m / ¥33,115m), aided by non-operating income. Net margin of 22.4% remains high for the sector, but compressed YoY alongside the decline in operating profit. EBITDA margin of 39.3% (EBITDA ¥13,001m) underscores strong underlying profitability before non-cash charges. D&A of ¥2,158m implies an EBITDA-to-EBIT drop-off consistent with capital intensity yet manageable. The spread between gross and operating margins suggests disciplined SG&A but some deleveraging on lower sales. With minimal leverage (assets/equity ~1.09x) and negligible interest expense, financial gearing is not a driver of ROE, leaving margins and asset efficiency as the key levers. The decline in operating income relative to revenue indicates fixed-cost absorption sensitivity; monitoring volume/mix recovery will be crucial for margin restoration.

Growth Assessment

Revenue fell 4.9% YoY to ¥33,115m, pointing to demand softness or timing effects in end markets. Operating income declined 15.2% YoY to ¥10,843m, indicating negative operating leverage and/or unfavorable mix. Net income decreased 12.2% YoY to ¥7,413m, cushioned by non-operating gains and strong gross margin. EBITDA of ¥13,001m shows core earnings resilience despite the revenue contraction. Asset turnover at 0.224x is modest, typical for capital-intensive manufacturers; growth will likely be driven by utilization and mix rather than asset expansion in the near term. Ordinary income surpassing operating income suggests some tailwind from financial/non-operating items that may not be recurring, making underlying operating trends more informative for outlook. Sustainability of revenue depends on end-market normalization in electronics/industrial applications; the high gross margin base provides cushion if volumes recover. Absent segment or regional breakdowns, we infer that product mix quality remains high but volume headwinds pressured operating leverage. Near-term growth outlook hinges on order intake visibility, inventory digestion at customers, and capex cycles in downstream industries. With strong liquidity and low leverage, the company is well positioned to invest in growth when demand improves.

Financial Health

Liquidity is very strong: current assets of ¥100,290m versus current liabilities of ¥13,933m yield a current ratio of ~720% and a quick ratio of ~701%, indicating ample short-term coverage even excluding inventories (¥2,645m). Working capital is ¥86,357m, providing significant buffer. Solvency is robust with total liabilities of ¥14,431m and total equity of ¥135,360m, implying liabilities/equity of ~0.11x and financial leverage (assets/equity) of ~1.09x. Interest expense is reported as 0 in this dataset, consistent with minimal debt; hence interest coverage ratios are not meaningful but debt service risk appears negligible. Equity ratio was not disclosed (reported 0.0% indicates not reported), but inferred equity/asset ratio is approximately 91.5% (¥135,360m / ¥147,915m), highlighting a strong capital structure. The balance sheet can comfortably withstand cyclical volatility and supports continued investment and R&D.

Cash Flow Quality

Operating cash flow was ¥11,109m versus net income of ¥7,413m, producing an OCF/Net income ratio of 1.50, which indicates robust earnings quality and favorable working capital dynamics. EBITDA of ¥13,001m and D&A of ¥2,158m reconcile well to operating income, supporting the integrity of reported cash generation. Investing cash flow is shown as 0 in the dataset, which likely reflects non-disclosure rather than absence of investment; therefore, Free Cash Flow reported as 0 should be treated as not determinable rather than truly zero. Without capex disclosure, true FCF cannot be reliably computed; however, strong OCF suggests capacity to fund typical capex and still generate surplus in a steady state. Working capital appears well managed given high liquidity and low inventories relative to current assets; changes are not provided, but cash conversion looks solid. Absence of cash & equivalents data (shown as 0) limits assessment of net cash, but the low-liability profile suggests net cash or minimal net debt.

Dividend Sustainability

Annual DPS is shown as 0.00 and payout ratio as 0.0%, indicating dividends were not disclosed for the period; this may reflect timing or policy choice rather than a permanent stance. Given net income of ¥7,413m and strong OCF of ¥11,109m, coverage capacity for potential dividends appears ample, subject to unknown capex and strategic investment needs. Reported FCF coverage of 0.00x is not meaningful due to missing investing cash flows; true FCF coverage cannot be determined from the provided data. With a conservative balance sheet and high liquidity, the company has flexibility to sustain or resume distributions if aligned with policy and growth plans. Lack of share count and book value per share data limits per-share dividend and capital return analysis. Policy outlook cannot be inferred from this dataset; monitoring management guidance and historical payout trends is necessary.

Risk Assessment

Business Risks:

• Demand cyclicality in electronics/industrial end markets affecting volumes and utilization
• Negative operating leverage when revenue declines, pressuring operating margins
• Product mix shifts potentially impacting gross margin sustainability
• Customer inventory adjustments and order visibility uncertainty
• Exposure to FX fluctuations affecting non-operating gains and competitiveness

Financial Risks:

• Limited transparency on capex and investing cash flows constrains FCF visibility
• Potential working capital swings despite current strength could affect cash conversion
• Concentration risks (customers/products) not disclosed could elevate earnings volatility
• Tax rate variability; calculated metric shows 0.0% due to disclosure gaps while actual burden appears ~33%

Key Concerns:

• Revenue decline (-4.9% YoY) alongside a larger drop in operating income (-15.2% YoY)
• Reliance on margin strength rather than asset turnover or leverage to drive ROE
• Insufficient disclosure on investing cash flows and cash balances limits capital allocation analysis

Investment Implications

Key Takeaways:

• High-quality margin profile (gross 56.5%, operating 32.7%, EBITDA 39.3%) despite softer sales
• Strong cash conversion (OCF/NI 1.50) supports earnings quality
• Very conservative balance sheet (liabilities/equity ~0.11x) and abundant liquidity (current ratio ~720%)
• ROE of 5.48% is margin-led; improvement depends on volume recovery and asset efficiency
• Non-operating income modestly supports earnings; sustainability uncertain
• Dividend and FCF metrics not assessable due to missing investing and share data

Metrics to Watch:

• Order trends and book-to-bill to gauge demand recovery
• Operating margin trajectory vs revenue to assess operating leverage sensitivity
• Capex levels and investing cash flows to derive true FCF
• Inventory levels and working capital turns for cash conversion durability
• FX impacts and non-operating items within ordinary income
• Tax rate normalization relative to pre-tax income

Relative Positioning: Within Japan’s advanced ceramics/components space, MARUWA’s margins and balance sheet appear stronger than typical peers, but current ROE is moderated by low asset turnover and limited leverage; near-term performance hinges on volume recovery and mix stability.

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