Nippon Crucible Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.04B
• Operating Income: ¥188M
• Net Income: ¥137M
• EPS: ¥22.07

Income Statement

Balance Sheet

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

Nippon Rutsu Bo Co., Ltd. (5355) reported FY2026 Q2 consolidated results under JGAAP showing steady topline growth but softer operating profitability. Revenue was ¥5,045 million, up 3.9% YoY, indicating modest demand resilience in its refractory/crucible and related materials markets. Gross profit of ¥1,408 million translates to a gross margin of 27.9%, a respectable level for materials manufacturing, suggesting product mix and pricing discipline remain supportive. Operating income was ¥188 million, down 13.3% YoY, implying negative operating leverage as fixed costs and/or cost inflation outpaced revenue growth. Ordinary income exceeded operating income at ¥226 million, indicating supportive non-operating items (e.g., financial income, FX gains) partially offsetting operating softness. Net income rose 6.5% YoY to ¥146 million, suggesting below-the-line gains and/or tax effects drove the improvement despite weaker operating profit. The DuPont breakdown shows a net margin of 2.89%, asset turnover of 0.441x, and financial leverage of 1.92x, yielding an ROE of 2.46%, which is subdued for the sector and reflects margin pressure. Liquidity is solid with a current ratio of 171.6% and quick ratio of 154.2%, underpinned by working capital of ¥2,776 million. The capital structure appears conservative: total liabilities of ¥5,635 million versus equity of ¥5,940 million imply an equity ratio around 52% (computed), despite the reported equity ratio showing 0% due to disclosure limitations. Interest coverage is comfortable at 17.5x, indicating low near-term refinancing risk. Inventory stood at ¥673 million, consistent with a production footprint that must buffer lead times and raw material variability; inventory management will be a key driver of cash conversion. Reported OCF, FCF, and cash balances are not disclosed (shown as zeros), limiting cash flow quality assessment. DPS and payout metrics are also not disclosed, preventing dividend policy analysis from actual distributions. Overall, the company demonstrates stable demand and balance sheet resilience but faces cost pressure and limited operating leverage, with non-operating items lifting the bottom line. Data limitations—especially on cash flow and dividend disclosures—constrain the depth of cash flow and payout analysis, so conclusions rely on income statement and balance sheet signals.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.89%
• asset_turnover: 0.441x
• financial_leverage: 1.92x
• calculated_ROE: 2.46%
• commentary: ROE is primarily constrained by the thin net margin; asset turnover is moderate for a specialty materials manufacturer, and leverage is restrained, yielding a modest aggregate ROE. margin_quality:
• gross_margin: 27.9%
• operating_margin: 3.7%
• ordinary_income_margin: 4.5%
• net_margin: 2.9%
• drivers: ['Operating margin compression despite revenue growth points to cost inflation (raw materials, energy) and/or higher fixed overheads.', 'Ordinary income outpacing operating income implies supportive non-operating gains partially masking weaker core profitability.'] operating_leverage:
• revenue_YoY: +3.9%
• operating_income_YoY: -13.3%
• assessment: Negative operating leverage in the period; incremental sales did not scale through to EBIT due to cost headwinds or mix.

Growth Assessment

revenue_sustainability: Low single-digit growth suggests stable end-market demand; sustainability will hinge on order intake from metals/foundry and industrial customers and the company’s ability to pass through costs. profit_quality: Core profit quality is mixed: operating earnings declined while net profit rose on non-operating support, which is less repeatable. Gross margin remains adequate but leaves limited buffer for further cost inflation. outlook: Absent visibility into backlog and pricing, a cautious trajectory of modest growth with a focus on margin defense is reasonable. Monitoring energy costs, raw material pricing, and FX effects will be critical to gauge whether operating margins can recover.

Financial Health

liquidity:

• current_assets: ¥6,656,782,000
• current_liabilities: ¥3,880,307,000
• current_ratio: 171.6%
• quick_ratio: 154.2%
• working_capital: ¥2,776,475,000
• assessment: Strong short-term liquidity with ample buffer to meet obligations and fund operations. solvency_capital_structure:
• total_assets: ¥11,432,000,000
• total_liabilities: ¥5,635,406,000
• total_equity: ¥5,940,000,000
• debt_to_equity: 0.95x (using total liabilities/equity)
• equity_ratio_computed: ≈52.0%
• interest_coverage: 17.5x
• assessment: Balance sheet is solid with moderate leverage and strong coverage. The reported equity ratio of 0% is a disclosure gap; computed equity ratio indicates a conservative structure.

Cash Flow Quality

earnings_quality: Net income benefited from non-operating items (ordinary income > operating income). Without OCF disclosure, accruals and conversion cannot be assessed. FCF_analysis: OCF and investing CF are undisclosed (shown as zero), preventing calculation of FCF. Capex and depreciation are not reported, limiting insight into maintenance vs. growth spending. working_capital: Inventories at ¥672,575,000 and strong quick ratio suggest adequate liquidity; however, absent receivables/payables detail and OCF, cash conversion and cycle efficiency cannot be evaluated.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥22.07, but DPS is not disclosed (zero placeholder). The reported payout ratio of 0% should not be interpreted as an actual payout policy. FCF_coverage: Not assessable due to lack of OCF and capex disclosure. policy_outlook: Given the solid balance sheet and modest profitability, a sustainable payout would depend on underlying cash generation and capex needs; absent cash flow data, no conclusion on sustainability can be drawn.

Risk Assessment

Business Risks:

• Exposure to cyclical demand in metals/foundry and industrial end-markets affecting volume and pricing.
• Raw material cost volatility (e.g., carbon/graphite and refractory inputs) impacting gross margins.
• Energy price fluctuations affecting kiln/furnace operating costs and competitiveness.
• Customer concentration risk typical for specialty materials suppliers.
• International competition from lower-cost producers, especially in Asia.
• Technological substitution or shifts in materials specifications by key customers.

Financial Risks:

• Margin compression leading to reduced interest coverage if costs rise further.
• Working capital swings (inventory and receivables) potentially straining cash conversion.
• FX exposure on imports of raw materials and exports, affecting ordinary income.
• Limited disclosure on cash and cash flows reduces visibility on liquidity buffers.
• Potential capex requirements for environmental compliance and efficiency upgrades.

Key Concerns:

• Negative operating leverage despite revenue growth indicates cost pass-through challenges.
• Dependence on non-operating contributions to support net income.
• Lack of cash flow and dividend disclosures constrains assessment of earnings quality and payout capacity.

Investment Implications

Key Takeaways:

• Topline grew 3.9% YoY to ¥5.0 billion, but operating income fell 13.3% YoY, signaling cost pressure.
• Gross margin at 27.9% is solid for the segment, yet operating margin compressed to 3.7%.
• Ordinary income (¥226 million) above operating income (¥188 million) points to non-operating support.
• ROE calculated at 2.46% reflects thin net margins and conservative leverage.
• Liquidity is strong (current ratio 171.6%, quick ratio 154.2%) with working capital of ¥2.78 billion.
• Balance sheet is conservative; computed equity ratio around 52% despite reported 0% due to disclosure limits.
• Cash flow and dividend data are not disclosed, limiting visibility on cash generation and payout policy.

Metrics to Watch:

• Operating margin trajectory and cost pass-through effectiveness.
• Order intake/backlog and book-to-bill in core end-markets.
• Inventory turns and receivables days as indicators of cash conversion.
• Energy and raw material cost trends and any surcharge mechanisms.
• FX impacts on ordinary income and hedging effectiveness.
• Capex levels and depreciation once disclosed to gauge maintenance vs. growth investment.

Relative Positioning: Within Japanese specialty refractory/materials peers, the company exhibits solid liquidity and conservative leverage but only modest profitability and ROE; sustained margin recovery and improved cash conversion are needed to close the gap with higher-return 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