MISUMI Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.85B
• Operating Income: ¥121M
• Net Income: ¥427M
• EPS: ¥29.91

Income Statement

Balance Sheet

Cash Flow Statement

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 (consolidated, JGAAP), Misumi reported revenue of ¥28.85bn, down 0.7% YoY, indicating a relatively stable top line amid a soft demand backdrop. Gross profit was ¥5.98bn, translating to a gross margin of 20.7%, which is respectable for a distribution-oriented business model but shows limited pricing power downstream. Operating income improved sharply to ¥121m (+210.7% YoY), highlighting strong operating leverage from a very low base; however, the absolute operating margin remains thin at 0.4%, underscoring ongoing cost-pressure and scale challenges. Ordinary income reached ¥310m, exceeding operating income, suggesting a material non-operating lift (e.g., financial income or other non-operating gains) partly offset by interest expense of ¥48m. Net income was ¥170m, down 60.0% YoY, implying that below-the-line items (including tax swings and non-operating components) were a headwind vs. the prior year despite improved operating profit. The effective tax figure shows a negative tax expense (¥-8m), driving a reported effective tax rate of roughly 0%, which likely reflects tax credits or deferred tax effects rather than a sustainable run-rate. DuPont metrics point to modest profitability: net margin of 0.59%, asset turnover of 0.683x, and financial leverage of 2.04x produce a calculated ROE of 0.82%—low relative to typical cost of equity. Liquidity is tight but positive with a current ratio of 109.3%, while the quick ratio of 86.2% indicates dependence on inventories (¥3.19bn) to bridge short-term obligations. The capital structure is moderately levered: debt-to-equity is 1.05x and implied financial leverage (assets/equity) is 2.04x, which, combined with thin operating margins, caps interest coverage at 2.5x. Operating cash flow of ¥225m exceeds net income (OCF/NI 1.32x), which is a supportive earnings quality signal, though the absolute cash generation remains limited relative to sales and working capital needs. Reported investing cash flow and cash/equivalents are shown as zero, which should be interpreted as undisclosed rather than true zero; hence free cash flow cannot be robustly assessed beyond the provided “0” placeholder. Financing cash inflow of ¥432m indicates reliance on external funding, consistent with the modest liquidity headroom observed. With no dividend (annual DPS ¥0), payout and FCF coverage ratios are inapplicable; the decision to withhold distributions appears prudent given thin margins and funding needs. Several data points (equity ratio, cash balance, investing CF, share count) are unreported in XBRL, limiting precision in solvency, per-share, and FCF diagnostics; conclusions therefore emphasize disclosed non-zero items. Overall, the quarter shows operating improvement from a low base, stable gross profitability, and acceptable cash conversion, but the business remains constrained by narrow operating margins, modest turnover, and reliance on financing to support liquidity.

Profitability Analysis

ROE_decomposition: ROE 0.82% = Net Margin 0.59% × Asset Turnover 0.683 × Financial Leverage 2.04. The result reflects thin bottom-line profitability, moderate asset intensity, and moderate leverage. margin_quality: Gross margin of 20.7% indicates reasonable spread after cost of sales, but operating margin is only ~0.42% (¥121m/¥28.85bn), implying high SG&A intensity and limited pricing power. Ordinary margin improves to ~1.07% on non-operating items, while net margin is 0.59% due to small absolute profit and tax effects. operating_leverage: Operating income rose +210.7% YoY on a -0.7% YoY revenue decline, evidencing high operating leverage from a low base and likely cost actions. However, the small absolute EBIT suggests that leverage cuts both ways; modest revenue swings can materially affect profit.

Growth Assessment

revenue_sustainability: Revenue declined slightly (-0.7% YoY) to ¥28.85bn, suggesting a stable but subdued demand environment. No segment data disclosed; sustainability hinges on maintaining volumes and pricing within existing channels. profit_quality: Gross margin at 20.7% is stable, but EBIT margin of 0.4% is thin. Ordinary income exceeds operating income, implying non-operating gains that may not be recurring. The negative tax expense (¥-8m) also flatters bottom-line comparability. outlook: Assuming stable demand and continued cost control, incremental margin could improve with scale, but low starting margins and modest asset turnover limit near-term ROE uplift. Non-operating items and tax effects introduce volatility to net income.

Financial Health

liquidity: Current ratio 109.3% and quick ratio 86.2% indicate tight short-term coverage absent inventory conversion. Working capital stands at ¥1.28bn, leaving a narrow cushion for seasonality or delayed collections. solvency: Debt-to-equity at 1.05x and interest coverage at 2.5x suggest manageable but not comfortable leverage given low profitability. Financial leverage (assets/equity) of 2.04x supports ROE but heightens sensitivity to earnings volatility. capital_structure: Total assets ¥42.21bn vs. total equity ¥20.70bn and liabilities ¥21.63bn. Equity ratio is undisclosed in XBRL (reported 0.0% placeholder). The company drew net financing cash inflow of ¥432m, indicating ongoing dependence on funding.

Cash Flow Quality

earnings_quality: OCF of ¥225m exceeds net income of ¥170m (OCF/NI 1.32x), a positive signal for accrual quality in the period. That said, the absolute cash generation remains modest versus sales. FCF_analysis: Free cash flow is shown as 0 due to unreported investing cash flows and capex; thus FCF cannot be reliably assessed. With OCF positive but small, true FCF sensitivity to capex could materially alter cash coverage metrics. working_capital: Inventories of ¥3.19bn are material relative to current assets (¥15.09bn). The quick ratio below 100% highlights reliance on inventory turnover and timely receivables collections to fund operations.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 and the payout ratio is 0%. Given the thin profit base and modest cash generation, a conservative payout stance appears aligned with balance sheet prudence. FCF_coverage: FCF coverage is shown as 0.00x due to missing investing cash flow data; no robust conclusion on dividend cash coverage can be drawn beyond noting the absence of dividends. policy_outlook: With ROE at 0.82% and interest coverage at 2.5x, reinvestment and balance sheet reinforcement likely take precedence over distributions until sustainable margin expansion is realized.

Risk Assessment

Business Risks:

• Thin operating margins (0.4%) amplify earnings sensitivity to small revenue or cost changes
• Dependence on inventory turnover to support liquidity (quick ratio 86.2%)
• Potential volatility from non-operating income that elevates ordinary income above operating income
• Competitive pricing pressure limiting gross-to-operating margin conversion
• Execution risk in cost control required to sustain recent EBIT improvement

Financial Risks:

• Moderate leverage (D/E 1.05x) with limited EBIT buffer (interest coverage 2.5x)
• Tight short-term liquidity (current ratio 109.3%)
• Reliance on external financing (¥432m net financing inflow) amid modest OCF
• Tax volatility (negative tax expense this period) affecting net income comparability
• Data gaps (cash balance, investing CF) complicating cash runway and FCF assessment

Key Concerns:

• Sustainability of EBIT gains in the absence of revenue growth
• Low ROE (0.82%) below typical cost of equity
• Inadequate quick liquidity if inventory conversion slows
• Exposure to interest rate or refinancing risk given leverage and thin margins

Investment Implications

Key Takeaways:

• Top line broadly stable (-0.7% YoY) but profitability remains thin
• Strong YoY rebound in operating income from a low base; absolute margins still modest
• OCF exceeds NI (1.32x), supporting earnings quality, yet cash generation is small relative to sales
• Liquidity is adequate but tight; quick ratio below 100% highlights inventory reliance
• Moderate leverage with limited interest coverage necessitates disciplined cost and working capital management
• Non-operating items and tax benefits inflate ordinary/net income comparability
• Data limitations (cash, investing CF, equity ratio, shares) constrain precision of FCF and per-share analysis

Metrics to Watch:

• Operating margin progression and SG&A ratio
• Inventory days and receivables days to validate quick-liquidity improvement
• Interest coverage and net debt trajectory
• OCF/NI and OCF margin to track earnings quality
• Gross margin stability versus input cost and pricing changes
• Any disclosures on capex and investing cash flows to gauge true FCF

Relative Positioning: Versus domestic distribution/wholesale peers, Misumi’s gross margin is within a reasonable range, but operating margin and ROE are at the low end, with tighter liquidity and similar-to-higher leverage, leaving less buffer against cyclical or cost shocks.

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