TAIYO YUDEN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥177.62B
• Operating Income: ¥9.02B
• Net Income: ¥3.57B
• EPS: ¥44.37

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

Taiyo Yuden (6976) delivered a solid FY2026 Q2 (first half) performance characterized by modest top-line growth and stronger operating leverage. Revenue rose 5.8% YoY to ¥177.6bn, while operating income increased 19.1% YoY to ¥9.0bn, indicating effective cost control and mix improvements. Gross profit reached ¥37.4bn with a gross margin of 21.0%, and operating margin improved to roughly 5.1%, signaling margin recovery from cyclical lows. Net income grew 55.3% YoY to ¥5.54bn, aided by improved operations and stable non-operating items, with an implied effective tax rate around 21% based on disclosed taxes and ordinary income. DuPont analysis shows a calculated ROE of 1.71% (net margin 3.12% × asset turnover 0.299 × financial leverage 1.83), reflecting still-soft profitability and asset intensity typical of the MLCC and components cycle. Cash generation was a relative bright spot: operating cash flow was ¥16.8bn, translating to OCF/Net Income of 3.04x, which supports the quality of earnings in this period. Liquidity is strong with a current ratio of 3.5x and a quick ratio of 3.1x, and capital structure remains conservative with a D/E of 0.78x and interest coverage of 22.3x. Inventories at ¥31.2bn appear lean relative to sales, consistent with ongoing channel normalization in components. Asset turnover at 0.299 suggests continued capacity underutilization and cyclical demand recovery rather than structural acceleration, keeping ROE subdued. Depreciation of ¥21.9bn underscores a capital-intensive footprint; however, investing cash flows and capex details were not disclosed, limiting free cash flow assessment. Financing cash inflow of ¥9.45bn suggests changes in debt or other financing, but the composition was not provided. Reported metrics showing zero values (equity ratio, cash and equivalents, investing cash flow, dividends) are deemed undisclosed rather than true zeros, so conclusions on those items are constrained. Overall, the print points to a gradual recovery with improving margins and robust cash conversion, but full normalization of returns will likely depend on a stronger demand upcycle in automotive, industrial, and AI/server-related electronics. The balance sheet and cash generation provide flexibility to navigate the cycle and support future capex and shareholder returns when disclosed.

Profitability Analysis

ROE of 1.71% results from net margin 3.12%, asset turnover 0.299, and financial leverage 1.83. Operating margin is about 5.1% (¥9.0bn/¥177.6bn) versus stronger YoY growth in operating income (+19.1% YoY) than revenue (+5.8% YoY), indicating positive operating leverage. Gross margin of 21.0% suggests some improvement in pricing/mix or cost efficiencies; however, the spread from gross to operating margin (~16pp) indicates continued fixed-cost absorption and SG&A drag typical of the cycle. EBITDA was ¥31.0bn with a 17.4% margin, evidencing healthy cash earnings relative to operating income. Interest expense is modest at ¥0.41bn, and EBIT/interest coverage is 22.3x, highlighting resilience to financing costs. The implied tax rate is approximately 21% (¥1.70bn tax on ¥8.11bn ordinary income), consistent with a normalized level; the provided 0.0% effective tax metric is not reflective of the disclosed components. Overall profitability is recovering but still muted, with asset intensity and currently modest asset turnover limiting ROE.

Growth Assessment

Revenue grew 5.8% YoY, a moderate recovery consistent with demand stabilization in passive components. Operating income rose 19.1% YoY, outpacing revenue on cost discipline and better utilization, indicating improving operating leverage. Net income advanced 55.3% YoY, benefiting from operating improvement and normalized below-the-line items. Gross margin at 21.0% and EBITDA margin at 17.4% suggest that mix and cost actions are supporting recovery, though margins remain below peak-cycle levels. Sustainability of revenue growth hinges on end-market trends in automotive electronics, industrial automation, smartphones, and AI/server infrastructure, where inventory normalization and content growth are key drivers. The lean inventory position relative to sales supports shipment stability but may constrain upside if demand accelerates rapidly without corresponding capacity. With depreciation at ¥21.9bn in the half, the company remains invested in capacity/technology; capex trends are undisclosed, leaving the pace of future growth capacity uncertain. Overall outlook: gradual recovery continues, with upside dependent on sustained demand in auto/industrial and AI-related applications and on maintaining cost discipline.

Financial Health

Liquidity is strong: current assets ¥279.3bn vs. current liabilities ¥79.6bn yields a current ratio of 3.5x, and quick ratio of 3.1x after inventories. Working capital is ¥199.6bn, providing a sizable buffer. Solvency appears solid: total liabilities of ¥254.0bn against equity of ¥324.6bn implies D/E of 0.78x, and interest coverage at 22.3x indicates low refinancing risk. Financial leverage in DuPont terms is 1.83x, conservative for the sector. Equity ratio was not disclosed (reported as 0.0%), but the liability/equity mix indicates a healthy equity base. Cash and equivalents were not disclosed, so near-term cash headroom cannot be precisely quantified; however, strong OCF and ample working capital mitigate near-term liquidity concerns. Financing cash inflow of ¥9.45bn suggests incremental funding or other financing activities, but details were not provided.

Cash Flow Quality

Operating cash flow of ¥16.8bn versus net income of ¥5.54bn yields an OCF/NI ratio of 3.04x, indicating strong cash conversion aided by non-cash D&A (¥21.9bn) and likely working capital release or stability. EBITDA of ¥31.0bn supports the quality of operating earnings relative to accounting profit. Free cash flow cannot be assessed due to undisclosed investing cash flows (reported as 0), and capex is not provided; given depreciation scale, underlying capex is likely significant but unknown. Working capital appears well managed given the strong liquidity ratios and lean inventories, though detailed movements (AR/AP/inventory changes) are not available. Overall, earnings quality this period appears solid, but full FCF evaluation awaits investing cash flow disclosure.

Dividend Sustainability

Dividend data (DPS, payout ratio) were reported as zero, which indicates non-disclosure rather than actual zero. Without DPS and share count, we cannot compute payout ratios or FCF coverage precisely. From a capacity standpoint, current OCF is supportive of potential distributions, but lack of capex and investing cash flow data prevents assessment of sustainable FCF coverage. Historically, payout policies in this sector balance investment needs with returns; however, no policy details were provided here. Outlook on dividends remains indeterminate pending disclosure of DPS, board policy, and capex/FCF trajectory.

Risk Assessment

Business Risks:

• Cyclical demand in MLCC and electronic components across auto, industrial, and smartphone markets
• Pricing pressure and competitive dynamics from regional peers
• Supply chain and inventory normalization risks affecting utilization and margins
• Technology transition risk (high-capacitance, high-reliability MLCCs, new materials) requiring sustained capex
• Customer concentration and order volatility in key OEM/EMS channels

Financial Risks:

• Capital intensity with high depreciation and potentially large capex requirements
• Sensitivity of ROE to asset turnover and margin recovery
• Foreign exchange volatility impacting revenue and costs
• Limited visibility on cash balances and investing cash flows due to non-disclosure in this period

Key Concerns:

• Subdued ROE at 1.71% despite improving margins highlights ongoing underutilization
• Incomplete disclosure on investing cash flows, cash balances, and dividends limits FCF and payout analysis
• Margin gap between gross and operating levels suggests room for further cost optimization or scale recovery

Investment Implications

Key Takeaways:

• Top-line recovery (+5.8% YoY) with stronger operating leverage (+19.1% YoY OI) indicates a cyclical upturn
• Cash conversion robust (OCF/NI 3.04x) supporting earnings quality
• ROE remains low (1.71%) due to modest margins and asset intensity
• Balance sheet and liquidity are strong (CR 3.5x, QR 3.1x, D/E 0.78x), providing flexibility
• Capex/FCF and dividend policy not disclosed; full capital return capacity cannot be assessed

Metrics to Watch:

• Gross and operating margin trajectory versus utilization rates
• Capex and investing cash flows to gauge future capacity and FCF
• Inventory levels and order trends in auto/industrial/AI-server end markets
• Asset turnover improvement as a driver of ROE
• FX impacts on revenue and costs
• Working capital movements and OCF sustainability

Relative Positioning: Within passive components, Taiyo Yuden appears to be in margin recovery with solid cash generation and a conservative balance sheet; however, returns lag historical peaks and full capital allocation visibility is limited due to undisclosed investing cash flows and dividends.

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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