NIHON PLAST CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥56.14B
• Operating Income: ¥1.06B
• Net Income: ¥800M
• EPS: ¥59.11

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

Nihon Plast Co., Ltd. (TSE:7291) posted FY2026 Q2 consolidated results showing softer top-line and margin pressure at the operating level, offset by below-the-line gains that lifted net income. Revenue was ¥56.1bn, down 6.9% YoY, indicating demand softness and/or program transitions in the auto supply chain. Gross profit was ¥6.05bn, implying a gross margin of 10.8%, which is modest for the sector and suggests cost pass-through remains incomplete or product mix skewed to lower-margin programs. Operating income declined 30.4% YoY to ¥1.06bn, compressing the operating margin to roughly 1.9%, evidencing meaningful operating leverage to volume and costs. Ordinary income of ¥0.86bn was below operating income, reflecting net non-operating costs including ¥0.47bn interest expense. Despite weaker operating and ordinary results, net income rose 40.2% YoY to ¥1.12bn, implying the presence of extraordinary gains and/or non-recurring items; the divergence raises earnings quality questions for the period. The DuPont framework indicates ROE of 3.33% driven by a thin 2.00% net margin, asset turnover of 0.702x, and financial leverage of 2.38x; profitability remains the main constraint on returns. The balance sheet shows total assets of ¥80.0bn and total equity of ¥33.7bn, implying an equity ratio of about 42% (vs. a reported 0.0% figure that appears undisclosed rather than zero), and liabilities of ¥49.2bn (D/E about 1.46x), pointing to a moderately leveraged capital structure for an auto parts supplier. Liquidity appears adequate with current assets of ¥48.0bn and current liabilities of ¥39.2bn (current ratio ~122%), though inventory and cash details are not disclosed in the provided XBRL, limiting granular assessment. Interest coverage by operating income is approximately 2.3x, acceptable but leaving limited cushion should operating conditions deteriorate further. Cash flow statements were not disclosed in the provided dataset, precluding OCF and FCF assessments; as such, cash flow-based validation of earnings is not possible from this data. Dividend disclosure shows DPS at ¥0 and payout 0%, suggesting either a pause or an undisclosed policy; sustainability analysis therefore focuses on capacity rather than practice. Overall, the quarter reflects pressure on core profitability and sensitivity to volumes/cost inflation, while bottom-line benefited from non-operating/extraordinary factors. The outlook hinges on demand normalization at OEM customers, improved cost pass-through, and disciplined SG&A control to mitigate operating leverage. Data limitations (notably cash flows, depreciation, inventories, and share count) constrain precision in certain ratios and per-share analysis; conclusions are thus based on available non-zero data points and standard inferences for the industry.

Profitability Analysis

ROE decomposition per DuPont: Net profit margin 2.00% × Asset turnover 0.702 × Financial leverage 2.38 = ROE 3.33%, matching the reported calculation. The primary drag is the slim net margin, with leverage providing only a modest boost to returns. Gross margin is 10.8% (¥6.05bn gross profit on ¥56.14bn sales), indicating limited pricing power or incomplete raw-material pass-through and an adverse mix. Operating margin is about 1.9% (¥1.06bn/¥56.14bn), down meaningfully YoY alongside a 6.9% revenue decline, which signals pronounced operating leverage and cost stickiness (fixed overhead absorption likely worsened). Ordinary income below operating income reflects a sizable non-operating burden, notably ¥0.47bn interest, which reduced ordinary margin to ~1.5%. Net income outpacing ordinary income suggests positive extraordinary items and/or tax effects; however, this is unlikely to be structural. Interest coverage stands at ~2.3x (¥1.06bn OI / ¥0.47bn interest), leaving a moderate buffer and underscoring the need to stabilize operating earnings. EBITDA is not disclosed (depreciation reported as 0, likely undisclosed), preventing an assessment of cash-based margins; given the capital intensity of auto parts, true EBITDA margin would be materially above operating margin, but the direction of pressure likely similar. Overall, profitability quality appears mixed: core operations weakened, while the bottom line benefited from below-the-line items, reducing the quality of earnings.

Growth Assessment

Top-line contracted 6.9% YoY to ¥56.14bn, indicating weaker shipment volumes and/or program timing at key OEMs amid a still-normalizing supply chain. The magnitude of the operating income decline (−30.4% YoY to ¥1.06bn) far exceeds the sales decline, evidencing high operating leverage and reinforcing that fixed costs and input inflation are pressuring margins. Ordinary income at ¥0.86bn reflects a drag from financing costs, while net income grew 40.2% YoY to ¥1.12bn, implying non-recurring or non-operating gains; this growth is unlikely to be durable without an improvement in operating profit. With gross margin at 10.8% and operating margin ~1.9%, the earnings base is sensitive to even small volume or pricing shifts; improved cost pass-through and productivity gains are critical for sustainable profit recovery. Revenue sustainability will depend on OEM production plans in Japan and overseas, model refresh cycles, and the company's position on safety/interior components. Near-term outlook is cautious given the revenue decline and margin compression, though easing supply constraints at automakers and potential commodity normalization could aid 2H recovery. Due to the absence of cash flow data and depreciation, we cannot fully assess reinvestment intensity, capacity additions, or maintenance burden, which are important for medium-term growth quality.

Financial Health

Total assets are ¥79.99bn and total equity ¥33.65bn, implying an equity ratio of roughly 42% (computed) despite a reported 0.0% figure that appears undisclosed. Total liabilities are ¥49.17bn, producing a debt-to-equity ratio of ~1.46x, consistent with a moderately leveraged profile for the sector. Current assets of ¥48.02bn vs. current liabilities of ¥39.24bn yield a current ratio of ~1.22x and working capital of ¥8.78bn, suggesting adequate short-term liquidity. The quick ratio equals the current ratio in the provided metrics because inventories were not disclosed; true quick liquidity may be lower once inventories are considered. Interest coverage of ~2.3x indicates manageable but not ample headroom relative to financing costs; sustained operating weakness could pressure covenant headroom if any. Cash and equivalents were not disclosed; thus, we cannot assess net debt, liquidity buffers, or cash concentration across subsidiaries. Overall solvency appears acceptable given computed equity ratio and working capital, but reliance on operating improvement to maintain coverage is evident.

Cash Flow Quality

Operating cash flow, investing cash flow, and financing cash flow figures were not disclosed in the provided data (zeros indicate unreported), preventing direct assessment of OCF/NI, FCF generation, and reinvestment intensity. The reported OCF/Net Income ratio of 0.00 and FCF of 0 should be treated as unavailable, not true zero. With net income exceeding ordinary income in a period of weaker operating profit, earnings quality risk is elevated absent corroborating cash flow. Working capital analysis is constrained by the lack of inventory disclosure; however, the decline in revenue alongside compressed margins raises the possibility of less favorable fixed-cost absorption and potential working capital consumption if receivables days have expanded. Depreciation is undisclosed; therefore, we cannot approximate EBITDA or maintenance capex needs, both critical for free cash flow appraisal in a capital-intensive sector. In sum, cash-based validation of earnings is not possible from the dataset, and we flag low visibility on FCF conversion for the period.

Dividend Sustainability

Dividend per share is shown as ¥0 with a payout ratio of 0%; given the undisclosed share count and cash flows, we treat this as no dividend information rather than a firm policy change. Without OCF/FCF disclosure, coverage analysis cannot be performed; the reported FCF coverage of 0.00x reflects missing data. From a capacity perspective, current profitability (ROE 3.33%, operating margin ~1.9%, interest coverage ~2.3x) suggests limited room for aggressive distributions until operating earnings recover and cash generation is evidenced. Balance sheet leverage is moderate (D/E ~1.46x), which argues for a conservative stance until visibility improves. Policy outlook likely remains cautious, with potential for resumption or increases contingent on stabilization of margins, improved OCF, and clearer mid-term order visibility.

Risk Assessment

Business Risks:

• OEM production volatility and program timing affecting volumes and mix
• Raw material and logistics cost inflation with lagging pass-through
• High operating leverage leading to disproportionate EBIT swings vs. sales
• Product quality and recall risk inherent in safety and interior components
• Foreign exchange fluctuations impacting overseas operations and procurement
• Customer concentration typical of auto suppliers
• Technology transition risk (EV/ADAS interior redesigns) affecting content per vehicle

Financial Risks:

• Interest coverage only ~2.3x, leaving modest buffer
• Moderate leverage (D/E ~1.46x) elevates sensitivity to earnings drops
• Limited visibility on cash and liquidity due to undisclosed cash flow data
• Potential working capital swings not assessable without inventory/receivables data
• Earnings quality uncertainty given net income above ordinary income

Key Concerns:

• Core operating margin compression amid a 6.9% revenue decline
• Dependence on non-operating/extraordinary items to support net profit
• Insufficient disclosure for cash flow, depreciation, and inventories in the period

Investment Implications

Key Takeaways:

• Top-line fell 6.9% YoY while operating income dropped 30.4%, evidencing high operating leverage and cost pressure
• Gross margin is thin at 10.8%, indicating incomplete pass-through and/or adverse mix
• ROE of 3.33% is constrained by a 2.00% net margin despite leverage of 2.38x
• Balance sheet appears moderate with computed equity ratio ~42% and D/E ~1.46x
• Interest coverage of ~2.3x requires operating stabilization to maintain cushions
• Net income growth (+40.2% YoY) likely reflects non-recurring items, not core improvement
• Cash flow visibility is low; OCF and FCF not disclosed

Metrics to Watch:

• Operating margin and gross margin trajectory in 2H
• Pass-through of raw material costs and price revisions with OEMs
• Operating cash flow and free cash flow once disclosed
• Interest coverage and absolute interest expense trend
• Order pipeline and program launches affecting volumes and mix
• Leverage (net debt/EBITDA) once cash and depreciation are available
• Working capital days (inventory, receivables, payables) when disclosed

Relative Positioning: Within Japanese auto parts suppliers, Nihon Plast currently exhibits below-peer operating margins and modest ROE, with moderate leverage and adequate computed equity ratio; near-term positioning depends on restoring cost pass-through and stabilizing volumes relative to peers benefiting from recovering OEM production.

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