Maruichi Steel Tube Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥120.54B
• Operating Income: ¥15.42B
• Net Income: ¥8.24B
• EPS: ¥46.72

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

Maruichi Steel Tube Co., Ltd. (TSE:5463) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥120.5bn, down 9.7% YoY, but achieved strong margin-led profit growth. Operating income rose 18.6% YoY to ¥15.4bn, indicating solid pricing power, improved input cost environment, and/or disciplined SG&A control. Ordinary income reached ¥16.7bn, and net income rose 45.1% YoY to ¥10.7bn, translating to a net margin of 8.87%. The gross margin stands at 19.1%, and the implied operating margin is approximately 12.8%, both robust for a steel pipe producer in a normalizing steel price environment. Interest expense was minimal at ¥35m, yielding an interest coverage of roughly 441x, underscoring the company’s conservative capital structure. The balance sheet is very strong with total assets of ¥419.7bn and total equity of ¥353.4bn; this implies an equity ratio in the mid-80% range despite the reported “0.0%” (likely unreported), and a low debt-to-equity ratio of 0.19x. Liquidity is ample with current assets of ¥226.6bn against current liabilities of ¥51.1bn, resulting in a current ratio of 444% and working capital of ¥175.5bn. DuPont metrics indicate ROE of 3.02%, comprised of an 8.87% net margin, 0.287x asset turnover, and 1.19x financial leverage, reflecting a low leverage profile and modest asset productivity. Revenue declined YoY, suggesting normalization after prior price cycles and/or softer volumes, but profitability resilience suggests effective product mix and cost pass-through. Reported depreciation and cash flow metrics are shown as zero, which likely indicates non-disclosure rather than actual zeros; therefore, EBITDA and OCF-based diagnostics cannot be validated this quarter. The effective tax rate is listed as 0.0%, but using income tax of ¥3.1bn versus ordinary income suggests an indicative tax rate around the high teens; thus, the 0.0% should be treated as a data limitation. Dividend data are shown as zero, which likely reflects non-disclosure in this dataset for the period rather than a true suspension; dividend sustainability assessment thus relies on earnings and balance sheet strength rather than reported payouts. Overall, the company exhibits margin strength, very low financial risk, and strong liquidity despite a top-line decline. Operating leverage appears positive but controlled, with profits expanding on lower sales. Key uncertainties include volume trends, raw material spread sustainability, and the extent to which non-operating items supported ordinary income. Given data gaps (notably cash flow and depreciation), cash conversion and reinvestment intensity cannot be conclusively assessed this quarter. The outlook hinges on steel demand in core end-markets and the stability of input costs, but the balance sheet provides substantial flexibility.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.87%
• asset_turnover: 0.287x
• financial_leverage: 1.19x
• calculated_ROE: 3.02%
• interpretation: ROE is modest due to conservative leverage and moderate asset turnover; margin is currently the main driver. margin_quality: Gross margin at 19.1% and operating margin around 12.8% (¥15.4bn / ¥120.5bn) indicate healthy spreads. Net margin of 8.87% is strong for the sector, supported by low interest burden and manageable tax. The YoY increase in operating income despite lower revenue points to improved mix/pricing and cost discipline. operating_leverage: Positive operating leverage is evident (Op. income +18.6% YoY vs. revenue -9.7% YoY). This implies fixed-cost absorption and/or structural efficiency gains. Sustainability will depend on volume stability and raw material spreads.

Growth Assessment

revenue_sustainability: Revenue declined 9.7% YoY to ¥120.5bn, suggesting normalization from prior price peaks and/or softer volumes. Without segment or regional disclosure, sustainability of the top line remains uncertain. profit_quality: Profit growth is margin-led; low interest expense and reasonable implied tax rate support quality. Ordinary income exceeded operating income, implying supportive non-operating factors (e.g., equity income/FX), but details are not disclosed. outlook: Short-term outlook hinges on steel demand in construction, infrastructure, and export markets, and on raw material price stability. Given strong balance sheet and cost control, the company appears positioned to defend margins even if demand remains mixed.

Financial Health

liquidity: Current assets ¥226.6bn vs. current liabilities ¥51.1bn yield a current ratio of 443.7% and working capital of ¥175.5bn, indicating very strong short-term liquidity. Quick ratio matches due to unreported inventories, so actual quick ratio may be lower but likely still strong. solvency: Total liabilities ¥65.9bn vs. equity ¥353.4bn give a debt-to-equity of 0.19x, signifying low leverage and high solvency. capital_structure: Implied equity ratio is approximately 84% (equity/assets) despite the reported 0.0% (non-disclosure). Interest coverage of 440.6x reflects minimal financial risk.

Cash Flow Quality

earnings_quality: OCF is unreported (shown as 0), preventing a direct OCF-to-net income assessment. However, strong margins and low interest suggest underlying earnings quality is reasonable, pending cash flow confirmation. FCF_analysis: Free cash flow cannot be calculated due to unreported OCF and capex (D&A also unreported). As such, FCF coverage metrics are not assessable this quarter. working_capital: Working capital is ample at ¥175.5bn. Without inventory and receivables/payables detail, we cannot assess cash conversion cycle dynamics.

Dividend Sustainability

payout_ratio_assessment: Reported DPS and payout ratio are 0, which likely reflects non-disclosure for the period. Based on net income of ¥10.7bn and low leverage, the capacity to pay dividends appears supported, but actual policy cannot be validated from the provided data. FCF_coverage: Not assessable due to unreported OCF and capex; FCF coverage shown as 0.00x is not indicative. policy_outlook: With strong balance sheet and profitability, dividend sustainability would generally be supported; however, without disclosed DPS/FCF, we refrain from conclusions on trajectory or payout level.

Risk Assessment

Business Risks:

• Steel price volatility impacting spreads and inventory valuation.
• Demand cyclicality in construction, infrastructure, and industrial end-markets.
• Competition from domestic and imported steel tubes affecting pricing power.
• Raw material cost fluctuations and availability.
• Foreign exchange volatility influencing imports/exports and non-operating income.

Financial Risks:

• Potential working capital swings amid price cycles affecting cash conversion.
• Capex requirements for capacity/quality upgrades (capex not disclosed this period).
• Counterparty credit risk in a cyclical environment.

Key Concerns:

• Top-line decline of 9.7% YoY raises questions on volume/pricing trends.
• Cash flow data (OCF, capex) and depreciation are unreported, limiting earnings quality assessment.
• Ordinary income above operating income suggests non-operating contributions whose durability is uncertain.

Investment Implications

Key Takeaways:

• Margin resilience drove profit growth despite revenue decline.
• Very strong balance sheet with low leverage and high liquidity reduces financial risk.
• ROE is modest due to conservative leverage and asset turnover; margin is the primary driver.
• Data gaps (cash flow, depreciation, inventories, dividend) limit depth of analysis this quarter.

Metrics to Watch:

• Sales volume and price/mix trends to gauge revenue recovery.
• Gross and operating margins to monitor spread sustainability.
• OCF and capex for cash conversion and FCF trajectory once disclosed.
• Inventory levels and turnover to assess working capital intensity.
• Non-operating income components and FX impacts on ordinary income.
• Dividend announcements and payout policy updates.

Relative Positioning: Within Japan’s steel tube sector, the company currently appears defensively positioned with superior balance sheet strength and strong margins, though with modest ROE due to low leverage; visibility on cash generation awaits fuller disclosure.

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