MINEBEA MITSUMI Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥778.31B
• Operating Income: ¥44.39B
• Net Income: ¥28.70B
• EPS: ¥71.18

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

MinebeaMitsumi’s FY2026 Q2 consolidated results under IFRS show flat topline performance with revenue at 7,783.14 (100M JPY), essentially unchanged YoY, while operating income declined 5.1% to 443.87, indicating negative operating leverage amid a stable sales base. Gross profit of 1,352.67 implies a gross margin of 17.4%, and EBITDA of 765.35 yields a 9.8% margin, situating the business in a mid-to-low margin profile for a diversified precision/component manufacturer. Operating margin is approximately 5.7% (operating income/revenue), which is adequate but not robust given MinebeaMitsumi’s product mix and capex intensity. Despite the operating softness, net income rose 14.0% to 285.85, supported by below-operating factors and an effective tax rate of 26.8%, although non-operating items are unreported, limiting attribution. DuPont analysis indicates a calculated ROE of 3.6% (net margin 3.7% × asset turnover 0.459 × financial leverage 2.13x), which is modest and likely below the company’s cost of equity. Asset turnover at 0.459 underscores a capital-intensive profile and/or slower inventory turns. Total comprehensive income was 509.00, materially above net income, implying sizeable OCI gains (likely FX translation or valuation effects) and a positive contribution to equity. The balance sheet remains sound with an equity ratio of 46.3% and total equity of 7,952.67, supporting resilience through the cycle. Operating cash flow was strong at 539.10 (OCF/Net income = 1.89x), signaling good earnings quality, but free cash flow was negative (-285.50) due to elevated investing outflows (-824.60) including capex of 423.86. Capex exceeded depreciation (capex/D&A ≈ 1.32x), consistent with continued investment in growth and/or efficiency, but near-term FCF pressure persists. Financing cash flow was positive at 358.96, offsetting FCF deficits while funding dividends (-80.87) and buybacks (-52.81), suggesting reliance on external funding or balance sheet capacity in the period. Liquidity specifics are partially opaque due to unreported current liabilities and cash breakdown, but cash and equivalents are reported at 2,142.56, providing a cushion. The reported debt-to-equity ratio of 1.04x suggests a moderate-to-elevated leverage stance when measured against total liabilities, though interest-bearing debt is unreported, limiting precise solvency analysis. With revenue flat and OP down, focus shifts to margin restoration, mix improvement (automotive/electronics), and inventory normalization to reinstate operating leverage. Data gaps (non-operating income/expenses, current liabilities, interest expense, and segment detail) constrain full diagnostics but the available indicators point to solid cash generation quality, continued reinvestment, and a stable equity base.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 3.7% × asset turnover 0.459 × equity multiplier 2.13x = ROE 3.6% (matches reported). The net margin of 3.7% is modest and reflects limited pricing power and/or cost headwinds; operating margin is approximately 5.7% (443.87/7,783.14). Gross margin at 17.4% indicates modest value-add after cost of sales; compared to EBITDA margin of 9.8%, SG&A and other operating costs absorb a meaningful share of gross profit. Operating income declined 5.1% YoY on flat revenue, indicating negative operating leverage—fixed costs or mix effects likely weighed on margins. EBITDA of 765.35 vs D&A of 321.48 shows reasonable coverage and operating cash generation capacity, but room for margin expansion remains. The tax burden is stable (effective rate 26.8%). Below-operating drivers aided bottom-line growth (net income +14% YoY), but non-operating items are unreported; the large gap between net income and total comprehensive income suggests OCI gains. Overall, profitability is adequate but below high-quality peer levels, with improvement hinging on cost control, product mix, and utilization.

Growth Assessment

Revenue was flat YoY at 7,783.14, signaling stabilization rather than acceleration across end-markets (notably automotive, industrial, and consumer electronics). Operating income declined 5.1% YoY, implying that any mix or cost inflation offset productivity gains; growth in higher-margin niches is needed to re-ignite operating leverage. Net income rose 14.0% YoY despite lower operating profits, implying a favorable below-OP contribution and/or tax effects; sustainability is uncertain without clarity on non-operating items. Capex of 423.86 (capex/D&A ≈ 1.32x) suggests ongoing investment for capacity and product development that can support medium-term growth and productivity. Investing cash outflows (-824.60) exceed capex, indicating potential strategic investments or M&A, which could enhance future growth but raise execution risk. Asset turnover at 0.459 is subdued; improving inventory turns and receivables efficiency would support sustainable growth without balance sheet strain. Outlook hinges on demand normalization in autos/electronics, FX tailwinds, and successful ramp of higher-value components; near-term growth looks measured given flat sales and margin pressure.

Financial Health

Total assets are 16,942.06 and equity is 7,952.67, yielding an equity ratio of 46.3%, a solid capital foundation for a manufacturing group. Total liabilities are 8,301.89; the reported debt-to-equity ratio is 1.04x (based on total liabilities/equity), indicating moderate leverage, though interest-bearing debt is unreported, constraining precise debt service analysis. Liquidity specifics are incomplete: current assets total 9,041.44 (including receivables 2,933.15 and inventories 3,508.69), but current liabilities are unreported, preventing calculation of current and quick ratios; working capital is listed as 9,041.44 but may reflect current assets rather than net working capital. Cash and equivalents at period end are 2,142.56, providing liquidity, but the lack of short-term debt disclosure prevents a full short-term coverage assessment. Accounts payable are 2,136.46, yielding a sizable net working capital investment when combined with inventories and receivables. Total comprehensive income of 509.00 supports equity growth and cushions balance sheet metrics. Overall solvency appears sound, but incomplete liability and interest data limit a definitive view of coverage.

Cash Flow Quality

Operating cash flow of 539.10 vs net income of 285.85 yields OCF/NI of 1.89x, indicating healthy earnings quality with supportive working capital dynamics and non-cash charges (D&A 321.48). Free cash flow was negative at -285.50, as capex of 423.86 and broader investing outflows (-824.60) surpassed OCF—consistent with an investment phase. Capex exceeded depreciation (capex/D&A ≈ 1.32x), implying growth or modernization capex; future FCF should improve if these investments lift margins or asset turns. Financing inflows (358.96) funded shareholder returns (dividends -80.87, buybacks -52.81) and partly offset negative FCF, suggesting temporary reliance on external sources. Working capital composition shows inventories of 3,508.69 and receivables of 2,933.15 vs payables of 2,136.46; inventory intensity likely weighs on asset turnover and FCF sensitivity to demand cycles. Absence of interest expense data precludes interest coverage assessment, but cash generation from operations is robust relative to earnings.

Dividend Sustainability

The calculated payout ratio is 67.2% of net income, elevated for a capex-intensive profile but not necessarily unsustainable if OCF remains strong. However, FCF coverage of dividends is negative (-1.49x) in the period, implying dividends (and buybacks) were not covered by free cash flow and were supported by financing or cash balances. Dividends paid were -80.87 and share repurchases -52.81, totaling -133.68 in shareholder returns. Given capex above depreciation and negative FCF, sustainability hinges on improving operating margins, stabilizing working capital, and normalization of investing cash flows. Lack of annual DPS disclosure and policy detail (e.g., target payout/DOE) limits assessment of policy commitment. With a solid equity base (equity ratio 46.3%), the balance sheet can support dividends in the near term, but medium-term sustainability will depend on restoring positive FCF.

Risk Assessment

Business Risks:

• Demand cyclicality in automotive, industrial, and consumer electronics end-markets affecting volumes and mix
• Pricing pressure from OEMs and competitors in precision components, weighing on margins
• Raw material and energy cost volatility potentially compressing gross margins
• Execution risk on capex and potential M&A (investing CF significantly above capex)
• FX fluctuations (notably USD/JPY and EUR/JPY) impacting revenue translation and costs
• Inventory management risk given sizable inventories and low asset turnover
• Product and customer concentration in specific programs or devices leading to volatility

Financial Risks:

• Negative free cash flow in the period necessitating financing to fund shareholder returns and investments
• Limited visibility on interest-bearing debt and interest expense, complicating coverage assessment
• Potential working capital swings impacting OCF in a flat revenue environment
• Dependence on OCI (FX/valuation) for comprehensive income, introducing equity volatility

Key Concerns:

• Operating margin compression despite flat revenue, indicating negative operating leverage
• Low ROE at 3.6%, below an assumed cost of equity
• Incomplete disclosure of non-operating items and current liabilities, constraining transparency
• FCF deficit amid elevated investment outflows, pressuring near-term self-funding capacity

Investment Implications

Key Takeaways:

• Topline stabilized but operating income declined, revealing negative operating leverage
• ROE is modest at 3.6% driven by low margin and low asset turnover despite moderate leverage
• Earnings quality is strong with OCF/NI at 1.89x, but FCF is negative due to high investing outflows
• Equity ratio of 46.3% indicates a solid capital base supporting ongoing investment
• Total comprehensive income meaningfully exceeded net income, bolstering equity
• Dividend outflows and buybacks were not covered by FCF in the period
• Capex above depreciation suggests continued strategic investment with medium-term payoff potential

Metrics to Watch:

• Operating margin trajectory and gross margin recovery
• Inventory levels and inventory days to improve asset turnover
• Order trends and backlog in automotive/industrial segments
• Capex plan, project ramp progress, and returns on invested capital
• OCF conversion (OCF/NI) and progression back to positive FCF
• FX sensitivity and OCI impacts on equity
• Any disclosure of interest-bearing debt and interest coverage

Relative Positioning: Within Japanese precision components and electromechanical peers, MinebeaMitsumi exhibits mid-single-digit operating margins, robust OCF conversion, and a solid equity base, but currently lags on ROE and asset efficiency; successful execution on mix upgrade and capacity investments is key to closing the profitability gap.

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
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