YAMAZAKI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.27B
• Operating Income: ¥-90M
• Net Income: ¥37M
• EPS: ¥-26.70

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, 株式会社ヤマザキ reported consolidated revenue of 1,266,000,000, down 19.1% YoY, indicating a challenging demand or pricing environment. The company posted an operating loss of 90,000,000 (flat YoY at -0.0% change), suggesting limited progress in cost control or scale efficiency despite reduced sales. Ordinary income was -99,000,000 and net income -118,000,000, with EPS at -26.70, underscoring continued earnings pressure below the operating line. DuPont-derived ROE is -9.78%, driven by a negative net margin of -9.32%, muted asset turnover of 0.358, and moderate financial leverage of 2.93x. Gross margin is cited at 25.1% and EBITDA came in at -18,330,000 (EBITDA margin -1.4%), reflecting insufficient gross profitability to cover operating expenses. Depreciation and amortization of 71,670,000 suggests a tangible asset base that may constrain short-term flexibility but provides non-cash add-backs supporting operating cash flow. Interest expense was 9,951,000 with an interest coverage ratio of -9.0x, highlighting near-term pressure on debt service capacity from earnings. Liquidity appears adequate with a current ratio of 116.9% and working capital of 315,700,000, albeit with quick ratio equal to current ratio due to inventories not being disclosed. Balance sheet leverage is notable with a debt-to-equity ratio of 2.10x; based on reported assets of 3,540,000,000 and equity of 1,207,000,000, the implied equity ratio is approximately 34.1% (the disclosed 0.0% equity ratio appears undisclosed rather than zero). Operating cash flow was positive at 198,476,000 despite the net loss, yielding an OCF/Net Income ratio of -1.68, which implies significant non-cash and working capital contributions to cash generation. Investing cash flow is not disclosed (reported as 0), constraining visibility on capital intensity; therefore, Free Cash Flow cannot be reliably assessed from the provided data despite a calculated placeholder of 0. Financing cash flow was -125,969,000, indicating net debt repayment or dividend/other financing outflows, consistent with deleveraging or funding flexibility. The company paid no dividend (DPS 0.00), which is appropriate given negative earnings and uncertain FCF visibility. Overall, the period reflects revenue pressure, operating losses, adequate liquidity, and manageable but meaningful leverage. Cash generation from operations is a relative bright spot, but sustainability depends on the durability of working capital tailwinds and margin stabilization. Data gaps (inventories, cash and equivalents, investing cash flows, share count) limit granularity on inventory risk, FCF quality, and per-share implications, which should be monitored in future disclosures.

Profitability Analysis

ROE of -9.78% decomposes into a net margin of -9.32%, asset turnover of 0.358, and financial leverage of 2.93x; the negative margin is the primary drag on equity returns. Revenue contraction of 19.1% YoY indicates deleveraging of fixed costs, which, coupled with a modest gross margin (25.1%), resulted in an operating loss of 90,000,000. EBITDA of -18,330,000 suggests that gross profit was insufficient to cover selling, general, and administrative expenses, albeit depreciation of 71,670,000 provides material non-cash support to cash flows. Ordinary income of -99,000,000 and interest expense of 9,951,000 yield an interest coverage ratio of -9.0x, underscoring earnings-based debt service pressure. The net loss of -118,000,000 and an effective tax rate effectively near 0% are consistent with loss-making status. Operating leverage remains unfavorable in the current volume environment; stabilization of revenue or further cost actions will be necessary to restore positive EBIT. The reported gross margin of 25.1% and the calculated EBITDA margin of -1.4% imply tight contribution margins; cost inflation or pricing pressure would exacerbate this. Asset turnover at 0.358 is modest, suggesting suboptimal asset utilization or cyclical softness in order intake/shipments.

Growth Assessment

Top-line declined 19.1% YoY to 1,266,000,000, indicating weaker demand, pricing, or mix deterioration. The flat YoY operating loss (-90,000,000) implies that cost reductions offset some of the volume decline, but not enough to return to profitability. Net income fell 98.3% YoY to -118,000,000, reflecting additional non-operating headwinds. With asset turnover at 0.358 and EBITDA margin at -1.4%, near-term growth quality is weak, and incremental volumes would need to be margin-accretive to improve profitability. Sustainability of revenue remains uncertain without visibility on order backlog or end-market trends. Profit quality is strained, as negative EBIT persists despite decent gross margin indications; SG&A discipline and product mix improvement are critical. Outlook hinges on demand normalization, pricing power, and potential restructuring benefits; absent these, growth may remain below breakeven levels.

Financial Health

Liquidity: Current ratio 116.9% and quick ratio 116.9% indicate coverage of short-term obligations, though the lack of disclosed inventories and cash restricts precision. Working capital stands at 315,700,000, providing a buffer. Solvency: Debt-to-equity is 2.10x, implying meaningful leverage; interest expense of 9,951,000 versus negative EBIT signals reliance on cash rather than earnings for service. Capital structure: With assets of 3,540,000,000 and equity of 1,207,000,000, the implied equity ratio is about 34.1% (the reported 0.0% is undisclosed), offering a moderate equity cushion but not immune to prolonged losses. Ordinary income remains negative, so covenant headroom (if any) could be a consideration. Financing cash outflow of -125,969,000 suggests some deleveraging or reduced external funding during the period.

Cash Flow Quality

Operating cash flow was positive at 198,476,000 despite a net loss of -118,000,000, producing an OCF/Net Income ratio of -1.68. This indicates strong non-cash add-backs (notably 71,670,000 of D&A) and likely working capital release; sustainability of working capital-driven OCF is uncertain. EBITDA was -18,330,000, so OCF outperformance versus EBITDA suggests material working capital inflows. Investing cash flow is undisclosed (reported as 0), preventing a reliable Free Cash Flow estimate; thus, the stated FCF of 0 should be treated as a placeholder. Without capex detail, it is not possible to assess maintenance versus growth investment needs or capital intensity trends. Overall, earnings quality is mixed: accounting earnings are negative, but cash conversion was strong this period due to non-cash and working capital factors.

Dividend Sustainability

The company did not pay a dividend (DPS 0.00), with a payout ratio of 0.0%. Given negative net income (-118,000,000) and lack of visibility on true FCF (investing CF undisclosed), withholding dividends is consistent with capital preservation. OCF was positive at 198,476,000, but absent capex disclosure, FCF coverage of any payout cannot be evaluated reliably. Policy outlook likely remains conservative until profitability (EBIT and net income) turns positive and FCF visibility improves.

Risk Assessment

Business Risks:

• Demand cyclicality leading to 19.1% YoY revenue decline
• Pricing pressure and/or unfavorable mix compressing contribution margins
• Operating leverage risk with negative EBIT despite reported 25.1% gross margin
• Execution risk in cost reductions and restructuring to restore profitability
• Supply chain and lead-time variability impacting deliveries and working capital
• Competitive intensity potentially limiting pricing power

Financial Risks:

• Negative interest coverage (-9.0x) indicating earnings-based debt service pressure
• Leverage at 2.10x debt-to-equity increases sensitivity to earnings volatility
• Reliance on working capital releases to support OCF may be non-recurring
• Limited visibility on capex and liquidity due to undisclosed investing CF and cash balance
• Potential covenant or refinancing risk if losses persist

Key Concerns:

• Sustained operating losses (-90,000,000) with declining revenue
• Uncertain FCF due to lack of investing cash flow disclosure
• Moderate equity cushion (~34% implied equity ratio) but ongoing losses could erode
• Negative EBITDA, albeit close to breakeven, vulnerable to further top-line softness

Investment Implications

Key Takeaways:

• Revenue down 19.1% YoY to 1,266,000,000 with persistent operating loss (-90,000,000)
• ROE -9.78% driven by negative net margin (-9.32%) and modest asset turnover (0.358)
• OCF positive at 198,476,000 despite net loss, aided by D&A and working capital release
• Leverage meaningful (2.10x D/E) with negative interest coverage (-9.0x)
• Liquidity adequate near term (current ratio 116.9%, working capital 315,700,000)
• Dividend suspended (DPS 0.00) appropriately given negative earnings and uncertain FCF

Metrics to Watch:

• Order intake/backlog and book-to-bill to gauge revenue recovery
• EBITDA margin trajectory and SG&A-to-sales ratio for operating leverage
• Capex and investing cash flows to assess true FCF
• Interest coverage and net debt trends for solvency risk
• Working capital turns (receivables and payables days) to test OCF sustainability

Relative Positioning: Within Japanese industrial peers, the company currently sits in a loss-making cohort with moderate balance sheet resilience; near-term positioning hinges on restoring volume/mix and tightening costs to achieve positive EBITDA and EBIT while maintaining liquidity.

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