Yamadai Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.02B
• Operating Income: ¥-164M
• Net Income: ¥-162M
• EPS: ¥-145.82

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

For FY2026 Q2, Yamada Co., Ltd. (7426) reported revenue of ¥2.016bn, up 8.6% YoY, indicating volume and/or price-driven top-line growth despite a difficult operating backdrop. Gross profit was ¥238.685m, translating to an 11.8% gross margin, which appears thin for the segment and suggests cost pressures or an unfavorable product mix. Operating income was a loss of ¥164m (flat YoY), implying that SG&A and/or direct cost inflation offset revenue growth and gross profit expansion. Ordinary income was a loss of ¥160m, modestly better than operating income, indicating net non-operating income of roughly ¥4m after ¥6.647m of interest expense—suggesting some financial or other non-operating gains. Net income was a loss of ¥161m (EPS: -¥145.82), resulting in a net margin of -7.99%. DuPont decomposition shows an ROE of -8.15%, driven by negative profitability (net margin -7.99%) and moderate asset turnover (0.438x), amplified by financial leverage of 2.33x. Liquidity remains sound on reported figures with a current ratio of 169.3% and a quick ratio of 156.4%, supported by ¥1.117bn in working capital. The balance sheet shows total assets of ¥4.605bn and total equity of ¥1.976bn, implying a liabilities-to-equity ratio of 1.55x; leverage is notable but not excessive for a mid-cycle business. Interest coverage is poor at -24.7x (based on operating loss), but absolute interest burden (¥6.6m) is modest; the issue is earnings, not financing cost escalation. Cash flow statements were not disclosed (shown as zeros), so operating cash conversion and free cash flow cannot be assessed this period. Depreciation and amortization were also not disclosed (shown as zero), so EBITDA metrics are not meaningful. The equity ratio was not disclosed, despite equity and asset data being available; leverage and solvency should be monitored via D/E and absolute liquidity in lieu of the missing metric. Dividend details were not disclosed (DPS shown as zero), consistent with a loss-making interim period, and capital allocation appears focused on stabilizing earnings. Overall, the quarter reflects improving demand (revenue growth) but persistent cost/margin pressure preventing operating breakeven. Key watchpoints for the second half include gross margin recovery, expense discipline, and working capital management to protect liquidity in the absence of confirmed operating cash inflows.

Profitability Analysis

ROE_decomposition: ROE -8.15% = Net margin (-7.99%) × Asset turnover (0.438x) × Financial leverage (2.33x). The negative margin is the dominant driver of the negative ROE; asset utilization is moderate and leverage amplifies the loss. margin_quality: Gross margin is 11.8% on ¥2.016bn of sales, indicating tight pricing power and/or elevated input costs. The spread from gross profit to operating loss suggests SG&A and other operating costs outpaced gross profit, preventing operating leverage benefits in the face of higher sales. operating_leverage: Revenue grew 8.6% YoY, yet operating income was flat at a ¥164m loss, implying negative operating leverage this period—fixed costs and/or cost inflation offset top-line growth. The slight improvement from operating to ordinary loss (¥164m to ¥160m) indicates small non-operating support, not structural operating improvement.

Growth Assessment

revenue_sustainability: Top-line growth of 8.6% YoY suggests resilient demand or improved pricing. Sustainability will depend on end-market conditions and the company’s ability to pass through costs; current gross margin levels imply limited headroom if input cost volatility persists. profit_quality: Loss at operating and net levels despite higher revenue indicates weak cost absorption and/or pricing pressure. Ordinary income benefited slightly from non-operating items (net ~¥4m), which are non-core and not a basis for sustained profitability. outlook: To restore profitability, management likely needs gross margin improvement (pricing, mix, procurement) and stricter SG&A control. H2 seasonality and potential cost normalization could narrow losses, but visibility is low without disclosed cash flow and D&A details. Monitoring monthly sales and margin trends will be critical.

Financial Health

liquidity: Current assets ¥2.728bn vs current liabilities ¥1.611bn yield a current ratio of 169.3% and quick ratio of 156.4% (inventory ¥208m). Working capital is ¥1.117bn, offering a buffer despite operating losses. solvency: Total liabilities ¥3.056bn vs equity ¥1.976bn implies D/E of 1.55x and financial leverage of 2.33x. Interest expense is modest at ¥6.647m, but recurring operating losses constrain coverage. Equity base remains meaningful, but prolonged losses would pressure solvency over time. capital_structure: Leverage is moderate for asset intensity. Absent cash flow disclosures, we cannot assess net debt or liquidity headroom; focus remains on earnings restoration to maintain covenant and funding flexibility.

Cash Flow Quality

earnings_quality: Operating and net losses point to stressed earnings quality. The small uplift at ordinary income reflects non-operating items, not core improvements. FCF_analysis: Operating CF and investing CF were not disclosed (reported as zero). Therefore, free cash flow cannot be computed and FCF-based coverage ratios are not meaningful this period. working_capital: Inventories are ¥208m (7.6% of sales), suggesting limited balance-sheet risk from stockholding; however, receivables and payables are undisclosed, so cash conversion cycle cannot be analyzed. Working capital of ¥1.117bn supports liquidity but could tighten if revenue growth continues without corresponding cash collection discipline.

Dividend Sustainability

payout_ratio_assessment: Net loss of ¥161m and EPS of -¥145.82 imply no economic capacity to distribute from current-period earnings. The reported payout ratio and DPS as zero are treated as undisclosed rather than actual zero; hence no reliable payout ratio can be derived. FCF_coverage: Free cash flow was not disclosed. Without OCF/FCF data, coverage of any potential dividends cannot be assessed. policy_outlook: Given interim losses and absent cash flow disclosure, a conservative dividend stance is likely prudent until operating profitability is restored. Any future distributions would depend on sustained net profit recovery and demonstrable cash generation.

Risk Assessment

Business Risks:

• Margin pressure from input cost inflation and limited pricing power (gross margin 11.8%).
• Negative operating leverage despite revenue growth, indicating fixed-cost rigidity.
• Dependence on non-operating gains to narrow losses, which are non-recurring by nature.
• Potential demand volatility in core end markets affecting topline and mix.
• Execution risk in cost control and procurement to improve gross margin.

Financial Risks:

• Operating losses leading to weak interest coverage (-24.7x) despite low absolute interest expense.
• Moderate leverage (D/E 1.55x) could become burdensome if losses persist.
• Limited visibility on cash flows due to undisclosed OCF/FCF, complicating liquidity assessment.
• Potential equity erosion if negative ROE (-8.15%) persists.

Key Concerns:

• Sustained operating losses with flat YoY operating result despite higher revenue.
• Low gross margin base, leaving little cushion against cost spikes.
• Absence of cash flow disclosure, limiting analysis of cash conversion and funding runway.

Investment Implications

Key Takeaways:

• Revenue growth of 8.6% did not translate into operating improvement; profitability remains the key challenge.
• Gross margin at 11.8% and negative operating income indicate need for pricing, mix, or cost actions.
• Liquidity appears adequate (current ratio 169.3%, working capital ¥1.117bn), but cash flow opacity is high.
• Leverage is moderate (D/E 1.55x), with low absolute interest costs; the primary issue is earnings, not financing cost.
• ROE of -8.15% is driven by negative margins; asset utilization is moderate at 0.438x.

Metrics to Watch:

• Quarterly gross margin trend and SG&A-to-sales ratio.
• Operating income trajectory and breakeven progress.
• OCF and FCF once disclosed; receivable days and payable terms.
• Interest expense trend and any changes in borrowings.
• Order intake/backlog or leading demand indicators in core markets.

Relative Positioning: Within peers facing cost inflation, the company shows better top-line resilience but weaker operating leverage, with adequate short-term liquidity yet inferior profitability metrics versus a typical profitable peer set.

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