Toyo Seikan Group Holdings,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥484.30B
• Operating Income: ¥30.16B
• Net Income: ¥13.32B
• EPS: ¥222.01

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

Toyo Seikan Group Holdings (59010) delivered a solid FY2026 Q2 (cumulative) performance with clear operating leverage: revenue rose 4.3% YoY to ¥484.3bn while operating income surged 64.7% YoY to ¥30.2bn. Gross profit reached ¥65.5bn, implying a gross margin of 13.5%, and operating margin expanded to 6.23%, reflecting improved cost pass-through, mix, and/or SG&A discipline. Ordinary income was ¥33.4bn, and net income increased 177% YoY to ¥34.1bn, pushing net margin to 7.05%. DuPont analysis indicates ROE of 5.00%, driven by a 7.05% net margin, 0.411x asset turnover, and 1.72x financial leverage, translating to an ROA of roughly 2.9%. Liquidity is robust with a current ratio of 210% and a quick ratio of 167%, supported by ¥594.3bn of current assets versus ¥282.5bn of current liabilities and sizable working capital of ¥311.9bn. The capital structure appears conservative to moderate with total liabilities of ¥508.0bn and equity of ¥683.1bn (debt-to-equity ~0.74x), consistent with stable solvency. Interest coverage is healthy at 13.5x, underscoring improved earnings headroom against ¥2.23bn of interest expense. The relationship between ordinary income and net income suggests non-operating/extraordinary gains and a below-normal effective tax burden in the period; reported “effective tax rate 0.0%” is an artifact of data omissions, as tax expense of ¥5.69bn was recognized. Cash flow statements and depreciation are not disclosed in the provided data (zeros indicate missing, not actual zero), so EBITDA and OCF-based quality metrics cannot be validated. Equity ratio shown as 0.0% is also a non-disclosure artifact and not reflective of actual solvency. Dividend and share data are likewise not disclosed, so payout analysis relies on earnings rather than cash coverage. Overall, performance momentum is favorable, with meaningful profitability inflection and adequate balance sheet strength, but limited cash flow visibility and interim period effects temper confidence in the durability of margin gains. Monitoring cost inflation pass-through, FX, and demand normalization across metal/plastic/functional materials will be key to assessing sustainability into 2H and FY close.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.05%
• asset_turnover: 0.411x
• financial_leverage: 1.72x
• calculated_ROE: 5.00%
• implied_ROA: ≈2.9% (7.05% × 0.411) margin_quality: Gross margin of 13.5% and operating margin of 6.23% indicate improved pricing/mix and/or cost control versus revenue growth of 4.3% YoY. Net margin at 7.05% exceeds ordinary margin (~6.9%), implying contribution from non-operating gains and a below-normal tax burden in the period. Interest burden remains modest relative to operating income. operating_leverage: Operating income grew 64.7% YoY on 4.3% revenue growth, evidencing strong operating leverage from cost pass-through, efficiencies, and SG&A discipline. Sensitivity to volume and input costs remains, but current run-rate suggests effective margin recovery.

Growth Assessment

revenue_sustainability: Revenue growth of 4.3% YoY is consistent with stable end-market demand and pricing. Sustainability depends on continued pass-through of raw material costs (metal, resin), product mix in beverage/food cans and functional materials, and regional demand trends. profit_quality: Profit expansion outpaced sales, driven by margin improvement. Net income exceeded ordinary income, indicating non-operating/extraordinary factors boosted bottom-line; thus, underlying recurring earning power is closer to ordinary income unless disclosed otherwise. outlook: If cost normalization and price pass-through persist, operating margin could remain above recent historical troughs. Watch for 2H seasonality, raw material price volatility, and FX impacts on imports/exports. Absent cash flow data, near-term growth quality is inferred primarily from P/L strength and balance sheet resilience.

Financial Health

liquidity: Current ratio 210.4% and quick ratio 167.4% reflect strong short-term coverage, with working capital of ¥311.9bn. Inventory at ¥121.4bn is manageable relative to current assets. solvency: Total liabilities ¥508.0bn vs equity ¥683.1bn implies debt-to-equity ~0.74x. Interest coverage 13.5x indicates ample buffer. The reported equity ratio of 0.0% is not applicable due to non-disclosure; actual solvency appears sound based on provided totals. capital_structure: Leverage (assets/equity) at 1.72x is moderate. Ordinary income comfortably covers interest expense. No cash balance disclosure is available in this dataset; however, liquidity ratios suggest adequate financial flexibility.

Cash Flow Quality

earnings_quality: OCF, investing CF, financing CF, and depreciation are undisclosed in the provided data (zeros are placeholders). Therefore, OCF/Net Income and EBITDA-based assessments cannot be made from this dataset. FCF_analysis: Free cash flow cannot be computed without OCF and capex. As such, cash-based coverage of dividends or debt service cannot be evaluated here. working_capital: Working capital is sizable at ¥311.9bn, supporting operations. Without cash flow statements, we cannot assess cash conversion cycle dynamics or inventory/receivables monetization.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed in the data provided (zeros indicate non-disclosure). With net income at ¥34.1bn, earnings capacity for dividends appears present, but cash coverage cannot be verified. FCF_coverage: Not assessable due to missing OCF and capex data; reported FCF coverage of 0.00x is a placeholder, not an actual measure. policy_outlook: Without disclosed DPS or policy commentary, assume continuity with historical stance pending official guidance. Sustainability will depend on maintaining current profitability and confirming positive OCF in subsequent filings.

Risk Assessment

Business Risks:

• Raw material price volatility (aluminum, steel, resin) impacting margins
• Demand fluctuation in beverage and food end-markets
• Customer concentration and contract repricing lags for cost pass-through
• Product mix shifts between metal, plastic, and functional materials
• FX movements affecting imported inputs and overseas earnings translation
• Energy costs and logistics disruptions
• Regulatory and environmental compliance costs (recycling, decarbonization)

Financial Risks:

• Potential earnings normalization as non-operating gains subside
• Interest rate increases raising financing costs (though current coverage is strong)
• Working capital swings affecting cash generation (data not disclosed here)
• Capex requirements for capacity upgrades and sustainability initiatives
• Pension/legacy liabilities (not detailed in provided data)

Key Concerns:

• Limited cash flow visibility due to non-disclosure of OCF and capex in this dataset
• Net income exceeding ordinary income suggests non-recurring items may be inflating bottom line
• Interim tax burden appears below normalized levels; full-year effective tax rate may rise
• Sustainability of margin gains if input costs re-accelerate or pricing power wanes

Investment Implications

Key Takeaways:

• Strong margin-led earnings recovery: operating income +64.7% YoY on revenue +4.3% YoY
• Healthy balance sheet with moderate leverage (D/E ~0.74x) and robust liquidity (current ratio ~210%)
• Interest coverage at 13.5x provides cushion against rate and cycle risks
• ROE at 5.0% reflects improved profitability but still constrained by modest asset turnover
• Bottom-line uplift includes non-operating/extraordinary elements; recurring profitability closer to ordinary income
• Cash flow metrics are undisclosed, limiting assessment of earnings-to-cash conversion and dividend capacity

Metrics to Watch:

• OCF and FCF once disclosed (cash conversion, capex intensity)
• Gross and operating margins by segment and region
• Raw material cost indices (aluminum, steel, resin) and pass-through timing
• Ordinary income vs. net income gap (recurring vs. non-recurring mix)
• Effective tax rate normalization into 2H/FY
• Inventory days and receivables collection (working capital efficiency)
• FX rates (USD/JPY, EUR/JPY) and energy costs

Relative Positioning: Within Japanese packaging peers, the company shows solid interim profit recovery and conservative balance sheet metrics; sustained advantage will depend on continued cost pass-through, operational efficiencies, and confirmation of cash generation.

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