YOKOHAMA GYORUI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.98B
• Operating Income: ¥122M
• Net Income: ¥96M
• EPS: ¥15.43

Income Statement

Balance Sheet

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

Verdict: FY2026 Q2 was a solid improvement in profitability on modest topline growth, with margins expanding and ordinary income up sharply, albeit with thin net margins and limited visibility on cash flows. Revenue rose 6.7% YoY to 99.77, while operating income increased 77.9% YoY to 1.22 and ordinary income rose 59.8% YoY to 1.42. Net income grew 19.2% YoY to 0.96, implying a net margin of roughly 1.0% on a traditionally low-margin wholesale model. Gross profit was 8.54, yielding a gross margin of 8.6%, and SG&A was 7.85, or 7.9% of sales. Operating margin improved to about 1.22%, supported by other operating items given the gap between gross profit minus SG&A and reported operating income. Based on growth rates and current sales levels, operating margin expanded by roughly 49 bps YoY (to ~122 bps from ~73 bps), signaling improved operating leverage. Net margin likely widened by around 10 bps YoY to ~96 bps from ~86 bps, though the effective tax rate of 8.9% and the relationship between profit before tax and net income suggest the presence of extraordinary items/other below-the-line effects. Non-operating income was 0.22 and non-operating expenses 0.02; net non-operating gains contributed meaningfully to ordinary income, consistent with a reported non-operating income ratio of 22.9%. Liquidity is adequate with a current ratio of 148% and working capital of 10.16, and leverage at the liabilities-to-equity level is moderate at 1.12x. Interest coverage is strong at 63x, indicating limited near-term financing stress. ROE is 3.7% via DuPont (1.0% margin × 1.851x turnover × 2.09x leverage), and ROIC at 4.8% is below the 5% threshold, highlighting capital efficiency challenges. Earnings quality cannot be assessed due to unreported cash flows; OCF/NI and FCF are unavailable, which is a material limitation. Receivables at 20.62 versus payables at 14.40 indicate a working capital-heavy profile typical for food wholesale, leaving results sensitive to collection and pricing dynamics. Forward-looking, sustaining the higher operating margin will be crucial as any reversal in pricing/spread or increase in SG&A could quickly compress earnings. With dividends and cash flow data unreported, dividend sustainability cannot be verified, though the calculated payout ratio of 39.3% appears conservative on earnings. Overall, the quarter shows improved profitability and discipline, but structurally thin margins, sub-5% ROIC, and limited cash flow disclosure temper the outlook.

Profitability Analysis

ROE decomposition: ROE 3.7% = Net Profit Margin (~1.0%) × Asset Turnover (1.851x) × Financial Leverage (2.09x). The largest driver of YoY improvement is margin expansion: operating income grew 77.9% on 6.7% sales growth, implying higher operating margin (~49 bps expansion to ~1.22%). Asset turnover at 1.851x is healthy for a wholesaler and likely stable YoY given modest sales growth and broadly steady asset base (total assets 53.90). Financial leverage at 2.09x (assets/equity) is moderate and not the primary driver. Business reason: improved spreads and/or better expense control (SG&A at 7.9% of sales) alongside other operating items likely lifted operating income. Sustainability: only partially; seafood wholesale margins are structurally thin and sensitive to procurement costs, FX, and demand from foodservice/retail; absent structural pricing power, margin gains can be volatile. Watch for SG&A growth relative to revenue—current SG&A ratio is tightly matched to gross margin (8.6% GM vs 7.9% SG&A), leaving little buffer; any SG&A creep above revenue growth would quickly erode operating profit.

Growth Assessment

Revenue grew 6.7% YoY to 99.77, consistent with stable demand/pricing in the seafood wholesale channel. Operating income rose 77.9% YoY to 1.22, indicating improved spread management and/or operating efficiency beyond pure volume growth. Ordinary income increased 59.8% to 1.42, aided by net non-operating gains (0.22 income, 0.02 expense). Net income rose 19.2% to 0.96; the smaller NI growth versus OI growth suggests below-the-line effects and a low effective tax rate, as well as the potential presence of extraordinary gains affecting the PBT–NI bridge. Profit growth quality is moderately positive at the operating level but partially reliant on non-operating items. Outlook hinges on sustaining gross margin while maintaining SG&A discipline; given a current gross margin of 8.6% and SG&A at 7.9%, the operating margin buffer is thin. With ROIC at 4.8% (below the 5% warning threshold), future growth should be evaluated for return adequacy. Revenue sustainability will depend on seafood procurement conditions, FX for imports, and restaurant/retail demand. Absent cash flow disclosure, we cannot corroborate whether growth is supported by cash conversion.

Financial Health

Liquidity is adequate: current ratio 148.4% (above 1.0 but slightly below the 1.5 comfort benchmark) and quick ratio 148.4% indicate coverage of short-term obligations from liquid assets. No explicit warning thresholds are breached (Current Ratio ≥ 1.0; D/E, defined here as liabilities/equity, at 1.12x < 2.0). Working capital is positive at 10.16, with receivables (20.62) comfortably exceeding short-term loans (1.00) and supporting the payables base (14.40). Maturity mismatch risk appears manageable: current assets 31.16 vs current liabilities 21.00, though reliance on receivables exposes the company to collection risk typical of the sector. Interest-bearing debt disclosed totals at least 3.41 (short-term 1.00, long-term 2.41), implying low financial risk relative to equity (25.74). Interest coverage of 62.95x further supports solvency. No off-balance sheet obligations are reported; data limitations may mask leases or guarantees not disclosed in this snapshot.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported, so OCF/Net Income and FCF cannot be calculated—this is a material limitation for earnings quality assessment. As a working-capital-intensive wholesaler, cash conversion can diverge from earnings due to receivables and payables timing; with AR at 20.62 and AP at 14.40, monitoring collection cycles is critical. Without OCF, we cannot test the OCF/NI ratio against the 0.8 threshold or evaluate FCF coverage of capex and dividends. No signs of working capital manipulation can be asserted or dismissed given missing cash flow details and inventory data.

Dividend Sustainability

Dividend data (DPS, total dividends, FCF) are unreported; therefore, coverage analysis is constrained. The calculated payout ratio of 39.3% appears prudent relative to earnings, suggesting potential sustainability if cash generation aligns with profit. However, absent OCF and capex data, FCF coverage cannot be assessed. Policy outlook cannot be inferred from disclosures here; investors should verify any stated payout or DOE targets in company materials once available.

Risk Assessment

Business Risks:

• Thin structural margins (net margin ~1.0%) expose earnings to small changes in spreads and SG&A.
• Seafood procurement price volatility and availability risk affecting gross margin.
• Demand sensitivity from foodservice/retail customers, including seasonal and macro factors.
• Food safety/quality control and spoilage risk inherent to perishable goods.
• FX exposure on imported seafood impacting cost of goods.

Financial Risks:

• Working capital concentration in receivables (20.62) vs payables (14.40) elevates collection risk.
• ROIC at 4.8% (<5%) highlights capital efficiency challenges vs potential cost of capital.
• Limited disclosure of cash flows and capex obscures cash generation and investment needs.
• Potential reliance on non-operating gains (non-operating income ratio 22.9%) to support ordinary income.

Key Concerns:

• Earnings quality cannot be validated due to unreported OCF/FCF.
• Effective tax rate at 8.9% and NI exceeding PBT suggest below-the-line/extraordinary effects; sustainability uncertain.
• Current ratio (148%) just below the 1.5x comfort benchmark; liquidity is adequate but not ample if conditions tighten.

Investment Implications

Key Takeaways:

• Profitability improved meaningfully: OI +77.9% on +6.7% sales with ~49 bps operating margin expansion.
• Net margin remains ~1.0%, underscoring limited buffer against cost volatility.
• Ordinary income benefited from net non-operating gains; recurring quality should be monitored.
• Balance sheet is sound with strong interest coverage and moderate leverage (L/E 1.12x).
• ROIC 4.8% signals sub-par capital efficiency; focus on returns before incremental growth.
• Data gaps (cash flows, DPS) limit assessment of cash conversion and dividend sustainability.

Metrics to Watch:

• Gross margin vs SG&A ratio (spread maintenance).
• Operating margin trend and other operating income contributions.
• Receivable days and collection trends; AR vs AP balance.
• Tax rate normalization and any extraordinary gains/losses.
• ROIC trajectory relative to 5–8% benchmarks.
• Non-operating income ratio and consistency.

Relative Positioning: Within Japanese seafood wholesalers, the company exhibits typical thin margins but shows improved operating leverage this quarter, balanced by moderate leverage and strong interest coverage; however, ROE and ROIC remain modest, placing it in the conservative-but-low-return cohort pending evidence of durable margin uplift and cash conversion.

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