SHIMOJIMA Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥30.71B
• Operating Income: ¥1.36B
• Net Income: ¥822M
• EPS: ¥45.00

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 (cumulative), Shimojima Co., Ltd. delivered solid topline and margin progression with signs of operating leverage, while cash flow conversion was weak due to working capital drag and several key disclosures were not available. Revenue grew 4.9% year over year to ¥30,707 million, with gross profit of ¥9,275 million and a gross margin of 30.2%, indicating stable to slightly improved product mix and/or pricing discipline. Operating income rose 27.5% to ¥1,357 million, lifting the operating margin to 4.4%, demonstrating strong cost control versus revenue growth. Ordinary income surpassed operating income at ¥1,560 million, implying non-operating tailwinds (e.g., financial income or other gains), though details are not disclosed. Net income increased 28.0% to ¥1,051 million, producing a net margin of 3.42%; EPS was ¥45.00. DuPont decomposition indicates a calculated and reported ROE of 2.94%, driven by a net margin of 3.42%, asset turnover of 0.719, and low financial leverage of 1.20. The balance sheet is conservative: total assets are ¥42,715 million, equity is ¥35,698 million, and liabilities are only ¥6,665 million (debt-to-equity 0.19x). Liquidity appears very strong with a current ratio of 427.8% and a quick ratio of 322.2%, supported by ¥23,232 million in current assets and ¥5,430 million in current liabilities. Working capital is sizeable at ¥17,802 million, consistent with a wholesale/distribution model that carries inventory (¥5,737 million) and receivables, but it also likely contributed to a negative operating cash flow. Operating cash flow was reported at -¥997 million, resulting in an OCF/Net Income ratio of -0.95, flagging near-term cash conversion pressure despite higher earnings. EBITDA was ¥1,849 million (EBITDA margin 6.0%), reflecting moderate operating cash generation capacity before working capital effects, but we lack capex detail to evaluate free cash flow. Dividend-related figures (DPS and payout) were reported as zero, which likely indicates non-disclosure rather than actual zero; similarly, several items such as cash and equivalents, investing cash flow, interest expense, outstanding shares, and equity ratio are shown as zero and should be treated as unreported under the provided instruction. The implied effective tax rate appears around the high-20% range (income tax of ¥426 million versus ordinary income of ¥1,560 million), suggesting that the “0.0%” effective tax rate metric is not reliable. Overall, profitability is trending positively on modest revenue growth, aided by operating leverage and potential non-operating gains, while the balance sheet remains robust with limited leverage. The main near-term concern is the negative operating cash flow, likely stemming from working capital build and seasonality; monitoring H2 cash conversion will be important. Given data omissions in cash, capex, and dividends, and the interim nature of Q2 results, conclusions should be tempered pending fuller-year disclosures.

Profitability Analysis

ROE_decomposition: DuPont: ROE 2.94% = Net margin 3.42% × Asset turnover 0.719 × Financial leverage 1.20. The low leverage limits ROE magnification, so earnings improvement must primarily come from margins and turnover. margin_quality: Gross margin 30.2% appears healthy for a packaging/wholesale mix and supports a 4.4% operating margin (¥1,357 million OI on ¥30,707 million sales). Ordinary income exceeds operating income (¥1,560 million vs. ¥1,357 million), indicating non-operating supports; sustainability of these supports should be monitored. Net margin at 3.42% improved with operating leverage, but quality depends on recurring nature of non-operating items. operating_leverage: Revenue +4.9% YoY versus operating income +27.5% YoY implies strong incremental margins and cost discipline. EBITDA of ¥1,849 million (6.0% margin) versus OI of ¥1,357 million indicates D&A of ¥492 million, suggesting moderate fixed cost base; continued revenue growth could further lift OPM if mix/pricing hold.

Growth Assessment

revenue_sustainability: Topline +4.9% YoY to ¥30.7 billion is steady. Without segment/geography disclosure, sustainability rests on continued demand in packaging/retail supplies and stable customer retention; watch for seasonality into H2. profit_quality: Operating margin expansion (4.4%) and ordinary income above operating income indicate both core efficiency gains and non-operating contributions. The implied tax burden (~27–29%) looks normal, supporting profit quality; however, the negative OCF versus positive earnings tempers quality until cash conversion improves. outlook: With low leverage and improved margins, earnings trajectory can remain positive if revenue growth persists and gross margin remains near 30%. Key to sustaining growth will be inventory discipline and SG&A efficiency; non-operating gains, if one-off, could normalize ordinary income.

Financial Health

liquidity: Current ratio 427.8% (¥23,232m CA / ¥5,430m CL) and quick ratio 322.2% reflect ample short-term liquidity; working capital is ¥17,802m. Several cash-related items are undisclosed (cash & equivalents shown as 0), so actual cash buffer is unknown. solvency: Total liabilities ¥6,665m vs. equity ¥35,698m → debt-to-equity 0.19x, indicating a conservative capital structure. Financial leverage of 1.20 (assets/equity) confirms low gearing. capital_structure: Equity-heavy balance sheet provides resilience. Interest expense is shown as 0 (unreported), so interest coverage cannot be assessed from the provided metrics; ordinary income exceeding operating income suggests limited finance cost burden.

Cash Flow Quality

earnings_quality: OCF/Net Income is -0.95 (OCF -¥997m vs. NI ¥1,051m), indicating weak cash conversion for H1. This likely reflects working capital build (inventory/receivables) consistent with growth and seasonality. FCF_analysis: Investing cash flow and capex are undisclosed (reported as 0). Therefore, free cash flow cannot be reliably calculated; the reported FCF of 0 should be treated as not available. working_capital: Inventories are ¥5,737m, and overall working capital is ¥17,802m. While supportive of service levels, it ties up cash and likely drove negative OCF in the period; inventory and receivables turnover should improve in H2 to normalize cash.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥45.00, but DPS and payout ratio are shown as 0, which should be treated as undisclosed. Without actual DPS, payout cannot be assessed. FCF_coverage: Capex and investing cash flows are not disclosed; hence, FCF and dividend coverage are indeterminable. Negative OCF in H1 suggests weak interim coverage even if a dividend exists, pending H2 normalization. policy_outlook: With low leverage and improving earnings, the balance sheet could support shareholder returns; however, absent DPS/policy disclosure, conclusions are limited. Watch for year-end guidance on dividends and capital allocation.

Risk Assessment

Business Risks:

• Demand cyclicality in retail/foodservice/consumer-facing customers affecting packaging volumes
• Raw material price volatility (paper, plastics) impacting gross margin
• Inventory obsolescence and markdown risk in a broad SKU portfolio
• Logistics and freight cost fluctuations affecting SG&A
• Customer concentration and pricing pressure in wholesale channels
• Seasonality causing intra-year profit and cash flow variability

Financial Risks:

• Negative operating cash flow driven by working capital build in H1
• Potential normalization of non-operating gains reducing ordinary income
• Limited visibility on cash, capex, and interest-bearing debt due to unreported items
• FX exposure on imported materials if applicable (margin risk)

Key Concerns:

• OCF/NI at -0.95 despite higher earnings
• Reliance on non-operating items to lift ordinary income above operating income
• Lack of disclosure on cash, capex, dividends, and interest expense in this dataset

Investment Implications

Key Takeaways:

• Revenue grew 4.9% YoY to ¥30.7bn with notable operating leverage (OI +27.5% YoY)
• Margins improved: gross 30.2%, operating 4.4%, net 3.42%
• ROE at 2.94% reflects low leverage (assets/equity 1.20) and moderate profitability
• Balance sheet is conservative: D/E 0.19x, strong liquidity (current ratio 4.28x)
• Operating cash flow negative at -¥997m, indicating H1 cash conversion issues
• Ordinary income exceeds operating income, suggesting non-operating supports

Metrics to Watch:

• Operating cash flow recovery and OCF/NI ratio in H2
• Inventory and receivables turnover; working capital intensity
• Gross margin stability amid input cost and FX fluctuations
• SG&A ratio and incremental operating margin
• Split of ordinary income to identify recurring vs. non-recurring items
• Capex and investing cash flows (once disclosed) for FCF assessment
• Dividend policy/DPS guidance and payout intent

Relative Positioning: Within Japanese packaging/wholesale peers, Shimojima exhibits a conservative balance sheet and moderate profitability with improving operating leverage; ROE remains modest due to low leverage, and cash conversion needs to improve to match earnings momentum.

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