MURAKAMI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥54.38B
• Operating Income: ¥4.77B
• Net Income: ¥3.27B
• EPS: ¥309.17

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

Murakami Kaimeido (7292) delivered solid FY2026 Q2 cumulative results with revenue of ¥54.4bn, up 2.7% YoY, indicating stable demand and modest top-line growth. Operating income rose 18.7% YoY to ¥4.77bn, demonstrating strong operating leverage and improved cost efficiency. Ordinary income reached ¥5.56bn, exceeding operating income by ¥0.79bn, suggesting material non-operating gains (likely FX or interest income) that augmented earnings quality this quarter. Net income grew 26.5% YoY to ¥3.58bn, lifting the net margin to 6.58%. Gross margin stood at 14.7%, while operating margin improved to an estimated 8.8% (from roughly 7.6% a year earlier), evidencing cost control and potentially improved product mix and pricing. DuPont analysis shows a calculated ROE of 3.88% based on a net margin of 6.58%, asset turnover of 0.474x, and financial leverage of 1.24x. The balance sheet is conservative with total assets of ¥114.7bn and total liabilities of ¥23.3bn; equity stands at ¥92.2bn. Despite the disclosed equity ratio of 0.0% (unreported in XBRL), a calculated equity ratio is approximately 80.4%, underscoring a very strong solvency position. Liquidity is ample with a current ratio of ~392% and quick ratio of ~384%, and working capital of ¥58.6bn, providing meaningful buffer against cyclical headwinds. The effective tax rate, calculated from disclosed tax expense, is about 27.5%, consistent with a normalized range for a domestic manufacturer. Cash flow statements (operating, investing, financing) and D&A were not disclosed in this dataset (shown as zeros), limiting assessment of cash conversion and capital intensity; EBITDA is likewise not inferable. Interest expense was not disclosed; given low leverage, financial risk appears structurally low. EPS was ¥309.17 for the period; based on net income, this implies roughly 11.6 million shares, though share count was not disclosed and this estimate should be treated cautiously. Dividend data (DPS and payout ratio) were not disclosed, so distribution capacity and policy cannot be evaluated from this dataset alone. Overall, profitability momentum and balance sheet strength are evident, but the lack of cash flow data introduces uncertainty about earnings quality and reinvestment needs. Monitoring the sustainability of non-operating gains and margin improvements will be key to assessing the outlook into 2H.

Profitability Analysis

ROE decomposition (DuPont): Net margin 6.58% × asset turnover 0.474 × financial leverage 1.24 = ~3.88% ROE. Operating margin is ~8.78% (¥4.77bn / ¥54.39bn), up an estimated ~1.15pp YoY (prior OPM ~7.63%), indicating positive operating leverage from modest revenue growth (+2.7% YoY) and effective cost management. Gross margin of 14.7% suggests a disciplined cost base; the gap between gross and operating margins (~5.9pp) reflects controlled SG&A. Ordinary income exceeds operating income by ~¥0.79bn, implying non-operating tailwinds (e.g., FX gains, interest income), which supported margin expansion at the pre-tax level; this component may be volatile. Net income margin improved to 6.58% from an estimated ~5.37% a year earlier, aided by both operating improvement and non-operating gains. Effective tax rate is ~27.5% (¥1.355bn tax / ~¥4.934bn pre-tax), consistent with normalized taxation. Asset turnover of 0.474x indicates moderate capital intensity typical of auto parts manufacturing; further improvement would support ROE given conservative leverage. EBITDA and interest coverage cannot be assessed due to undisclosed D&A and interest expense; hence, margin quality analysis excludes depreciation effects. Overall, margin quality improved YoY, with evidence of operating leverage and a non-operating boost that should be normalized when assessing core run-rate.

Growth Assessment

Top-line growth of +2.7% YoY to ¥54.4bn indicates stable demand and likely steady order volumes with key OEM customers. Operating income growth of +18.7% outpaced revenue, pointing to mix and efficiency benefits rather than price-driven expansion alone. Net income growth of +26.5% reflects both operating leverage and the contribution from non-operating gains; sustainability of the latter is uncertain. Using derived prior-period figures, operating margin expanded by ~1.15pp and net margin by ~1.21pp YoY, suggesting structural cost improvements and potentially favorable FX. Given Murakami Kaimeido’s exposure to automotive cycles, growth durability will hinge on OEM production schedules, platform launches, and regional demand normalization. The gap between ordinary and operating income highlights FX sensitivity; a reversal in currency could temper ordinary income growth. Without cash flow and capex disclosures, it is unclear whether growth is being supported by higher capital intensity or by working-capital efficiency; this is a key data limitation. Inventory appears low relative to current assets (¥1.60bn inventories vs ¥78.60bn current assets), which may reflect classification differences; inventory management effectiveness cannot be confirmed from this snapshot. Outlook into 2H will depend on maintaining operating margin gains while non-operating items normalize; steady mid-single-digit revenue growth with stable to slightly higher operating margins seems plausible if cost initiatives persist. Customer concentration and pricing negotiations with OEMs remain important determinants of growth quality.

Financial Health

Liquidity is strong: current ratio ~392% (¥78.60bn / ¥20.03bn), quick ratio ~384% (excluding inventories), and working capital of ¥58.57bn provide substantial cushion. Solvency appears robust: calculated equity ratio ~80.4% (¥92.22bn / ¥114.70bn) despite the reported 0.0% (unreported), and liabilities-to-equity of ~0.25x indicate low leverage. Total liabilities are ¥23.26bn against sizeable equity, suggesting limited refinancing risk and high debt capacity if needed. Interest expense was not disclosed; given the low liability base, financial risk from interest burden is likely minimal. Asset structure shows large current assets; however, the composition (e.g., cash vs. receivables) is not provided, constraining a deeper liquidity quality assessment. No information on contingent liabilities or off-balance-sheet items is available from this dataset. Overall, the capital structure is conservative, supporting resilience through the cycle.

Cash Flow Quality

Operating, investing, and financing cash flows were undisclosed (shown as zeros in XBRL), so OCF/NI and FCF cannot be meaningfully assessed. As such, earnings quality, cash conversion, and reinvestment intensity remain unverified for this period. The absence of D&A disclosure prevents EBITDA and a clearer view of non-cash components of earnings. Working capital quality cannot be evaluated beyond absolute balances; inventories are reported at ¥1.60bn, but receivables and payables are not disclosed, making it impossible to assess turnover or cash conversion cycles. Non-operating gains elevated ordinary income above operating income, which may not translate into cash at the same rate as core operations; this is a consideration for cash earnings quality. Until OCF and capex are available, we treat free cash flow coverage of dividends as indeterminate.

Dividend Sustainability

Dividend per share and payout ratio are undisclosed in this dataset (zeros reflect unreported values). With net income of ¥3.58bn and a strong balance sheet (equity ratio ~80%), capacity to pay dividends appears supported in principle, but without OCF and capex information, free cash flow coverage cannot be assessed. Historical policy and payout trends are not provided here, limiting visibility on policy stability. EPS of ¥309.17 suggests earnings power adequate for ordinary dividends if free cash flow is positive; however, lack of cash flow disclosure prevents a robust sustainability assessment. We therefore consider dividend outlook indeterminate based solely on this data snapshot.

Risk Assessment

Business Risks:

• Automotive cycle sensitivity affecting OEM production and order volumes
• Pricing pressure from OEM customers impacting margins
• Product mix and platform transition risks amid CASE/EV trends
• Foreign exchange volatility affecting ordinary income and export competitiveness
• Raw material and logistics cost fluctuations
• Supply chain disruptions (semiconductors, components)
• Customer concentration risk typical of Tier-1 suppliers

Financial Risks:

• Limited visibility on cash generation due to undisclosed cash flow statements
• Potential volatility in non-operating income (e.g., FX gains) impacting earnings quality
• Working capital swings not quantifiable without receivables/payables data
• Capex requirements unknown; risk of higher capital intensity affecting FCF

Key Concerns:

• Sustainability of margin expansion given modest revenue growth
• Dependence on non-operating gains in ordinary income
• Lack of disclosure on OCF and capex impeding FCF assessment

Investment Implications

Key Takeaways:

• Solid YoY profit growth with clear operating leverage; operating margin up ~1.15pp
• Ordinary income exceeded operating income by ~¥0.79bn, indicating FX/other non-operating support
• Very strong balance sheet with calculated equity ratio ~80% and low liabilities
• Liquidity ample with current ratio ~392% and quick ratio ~384%
• Cash flow and D&A not disclosed, limiting earnings quality and FCF visibility

Metrics to Watch:

• Operating margin trajectory and SG&A ratio
• Ordinary vs. operating income gap (FX/financial income contribution)
• OCF/Net income and free cash flow once disclosed
• Capex levels and depreciation trends (capital intensity)
• Inventory, receivables, and payables turnover (working capital efficiency)
• FX rates sensitivity and hedging impact

Relative Positioning: Within Japan small/mid-cap auto parts peers, Murakami Kaimeido exhibits stronger-than-average balance sheet resilience (low leverage, high equity ratio) and improving profitability, though current-period earnings benefited from non-operating gains and cash flow transparency is limited.

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