FURYU CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.48B
• Operating Income: ¥1.80B
• Net Income: ¥1.13B
• EPS: ¥42.51

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

Verdict: A solid quarter with margin-driven profit growth despite flat revenue. Revenue was 214.82 (−0.4% YoY), while operating income rose to 17.96 (+37.6% YoY) and net income reached 11.25 (+25.1% YoY), evidencing strong operating leverage. Operating margin expanded to 8.4% (17.96/214.82), implying a significant YoY improvement versus last year’s implied ~6.1%, or roughly +231 bps. Gross profit was 84.46 for a gross margin of 39.3%, indicating healthy value-add even as top-line was broadly stable. SG&A was 66.50, representing 31.0% of sales; operating profit expansion suggests tighter cost discipline and/or mix improvement. Ordinary income of 17.83 was slightly below operating income due to small net non-operating expense (−0.12), and non-operating items remained immaterial (non-operating income ratio 0.1%). EPS (basic) was 42.51 JPY on average shares of 26.48 million, consistent with the reported net income. Cash generation was robust: operating cash flow of 19.59 exceeded net income (OCF/NI = 1.74x), supporting the quality of earnings. With reported capex of 9.13, implied free cash flow was approximately 10.46, sufficient to broadly cover financing outflows of 10.40 (likely dividends). The balance sheet remains conservative with cash and deposits of 113.38 and current assets of 219.35 against current liabilities of 47.58, driving a current ratio of 461%. Leverage is low (D/E 0.23x; financial leverage 1.23x) and interest expense is negligible, as evidenced by a very high interest coverage ratio. ROE is 5.0% per DuPont, with ROIC at 10.6%—above the 8% excellence threshold—signaling value creation at the project/investment level even as consolidated ROE remains modest due to a cash-rich balance sheet. The effective tax rate is 33.8%, slightly dilutive to net margin relative to operating performance. Forward-looking, cost control and product mix appear to be the key profit drivers, and sustaining the improved operating margin will be essential given modest top-line dynamics. Dividend sustainability looks acceptable near term given OCF and cash reserves, though the calculated payout ratio of 98.1% warrants monitoring if earnings momentum slows. Overall, the company enters the next half with strong liquidity, improving profitability, and adequate cash flow coverage of shareholder returns.

Profitability Analysis

DuPont decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 5.2% × 0.777 × 1.23 ≈ 5.0%. The largest change this quarter appears in the net margin, with operating margin expanding to ~8.4% and net margin at ~5.2%, while leverage stayed low (1.23x) and asset turnover modest (0.777). The business reason for higher margins likely includes SG&A discipline (SG&A at ~31% of sales), improved product mix in higher-margin categories, and minimal drag from non-operating items. This improvement seems operational rather than one-time, given negligible non-operating contributions and no evident windfalls; however, sustaining it will depend on maintaining mix and cost control amid flat revenue. With revenue down 0.4% YoY but operating income up 37.6%, operating leverage was positive; any reacceleration of sales could further enhance profitability. Watch for any future period where SG&A growth outpaces revenue growth, which would reverse the leverage; at present, the trend is favorable.

Growth Assessment

Top-line was essentially flat (−0.4% YoY), but profit growth was strong due to margin expansion. Gross margin at 39.3% and operating margin at 8.4% demonstrate improved efficiency and/or mix. Ordinary income growth (+32.0% YoY) confirms operating improvements flowed through despite minor non-operating expenses. EPS rose in line with net income growth. Given the lack of reported segment detail, sustainability of revenue is uncertain and likely hit-driven in entertainment/content; near-term outlook hinges on ongoing product pipeline and seasonal demand. ROIC at 10.6% indicates solid returns on invested capital, supporting future growth investments if maintained. Overall growth quality is good this quarter, but top-line acceleration is needed for a more durable uptrend.

Financial Health

Liquidity is very strong: current ratio 461% and quick ratio 391.5%, with cash and deposits of 113.38 greatly exceeding current liabilities of 47.58. No warning triggers (Current Ratio well >1.0; D/E 0.23x well <2.0). Maturity mismatch risk is low: cash, receivables (38.87), and inventories (33.06) comfortably cover short-term obligations. Interest-bearing debt details are unreported, but interest expense is essentially zero, and interest coverage is extremely high (17,269x), indicating minimal financial risk. Total equity of 225.42 implies ample buffer against shocks. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

OCF/Net Income of 1.74x signals high-quality earnings with cash conversion above benchmarks. Using reported capex (9.13), implied free cash flow is approximately 10.46 (OCF 19.59 minus capex 9.13), despite investing cash flow details being otherwise unreported. Financing cash outflow was −10.40 (likely dividends; buybacks were negligible), implying dividends were broadly covered by FCF in the period. Working capital components were not disclosed, limiting diagnosis of drivers; however, the strong OCF relative to NI suggests either stable working capital or a release, not an adverse build. No obvious signs of working capital manipulation can be inferred from the available data.

Dividend Sustainability

The calculated payout ratio is high at 98.1%, which is above the typical sustainability benchmark (<60%) and warrants monitoring. Nonetheless, implied FCF of ~10.46 appears to cover financing outflows of 10.40, suggesting near-term coverage is adequate. Large cash reserves (113.38) further support flexibility. Absent DPS disclosure, the exact dividend burden is uncertain; if earnings or OCF soften, a payout near ~100% would pressure reinvestment capacity. Policy-wise, stable-to-progressive dividends seem supportable short term given cash and OCF, but medium-term sustainability depends on sustaining current margins and capex discipline.

Risk Assessment

Business Risks:

• Hit-driven product/content pipeline risk affecting revenue visibility
• Inventory obsolescence risk in prizes/merchandise categories
• Seasonality in consumer entertainment demand
• Potential licensing/IP royalty cost fluctuations impacting margins

Financial Risks:

• High payout ratio (~98%) leaves limited buffer if earnings decline
• Tax rate at 33.8% reduces net margin sensitivity to pre-tax improvements
• Limited transparency on interest-bearing debt details (though leverage appears low)

Key Concerns:

• Top-line contraction (−0.4% YoY) despite strong profit growth
• Sustainability of SG&A discipline and product mix-driven margin gains
• Data gaps (segment performance, investing CF detail, DPS) constrain forward assessment

Investment Implications

Key Takeaways:

• Strong margin-led earnings growth with operating margin up to ~8.4%
• High-quality cash earnings (OCF/NI 1.74x) and implied FCF covering shareholder returns
• Conservative balance sheet with abundant liquidity and minimal interest burden
• ROIC at 10.6% indicates value-accretive operations despite modest consolidated ROE (5.0%)
• Payout ratio near 100% is a monitoring point if profitability normalizes

Metrics to Watch:

• Operating margin sustainability and SG&A ratio trend
• Revenue trajectory by product/category (when disclosed) to confirm growth resumption
• OCF versus NI and working capital movements
• Capex intensity relative to growth opportunities
• Dividend policy disclosures (DPS, payout) and financing CF components

Relative Positioning: Within consumer entertainment peers, the company exhibits above-average cash conversion and liquidity, improving operating efficiency, and conservative leverage, balanced by moderate ROE and a high payout ratio that could constrain reinvestment if growth stalls.

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