NISSIN SHOJI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥20.14B
• Operating Income: ¥-62M
• Net Income: ¥63M
• EPS: ¥-39.10

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, Nisshin Shoji Co., Ltd. reported revenue of ¥20.145 billion, up 4.0% YoY, but profitability deteriorated with an operating loss of ¥62 million and a net loss of ¥261 million. Gross profit was ¥3.609 billion, translating to a gross margin of 17.9%, while the operating margin slipped to -0.31%, indicating cost pressure and limited operating leverage. Ordinary income came in positive at ¥141 million, implying meaningful non-operating gains offsetting operating weakness, but these were insufficient to prevent a net loss after taxes. The net profit margin was -1.30%, and DuPont analysis indicates ROE of -1.0%, driven primarily by negative margins despite moderate asset turnover (0.460x) and conservative leverage (financial leverage 1.68x). EBITDA was ¥194 million and, relative to ¥69.9 million of interest expense, suggests EBITDA-based interest coverage of roughly 2.8x, but EBIT-based coverage is negative (-0.9x), highlighting thin underlying operating earnings. Cash generation was supportive relative to the income statement: operating cash flow was positive at ¥217 million despite the net loss, yielding an OCF/Net Income ratio of -0.83, typically a favorable indicator for earnings quality in a loss-making quarter. Liquidity appears robust with a current ratio of 284% and a quick ratio of 244%, underpinned by working capital of approximately ¥10.14 billion. The capital structure looks moderate with a debt-to-equity ratio of 0.65x, suggesting manageable solvency risk in the near term. Ordinary income exceeding operating income by roughly ¥203 million (and by an estimated ~¥273 million before interest) indicates reliance on non-operating gains, which may be less recurring than core earnings. Income tax expense of ¥165 million despite a pre-tax loss complicates bottom-line comparability this period and may reflect non-recurring or timing-related items (e.g., deferred tax effects), making the reported effective tax rate metric less meaningful. Several disclosures are not available in the dataset (e.g., cash and equivalents, investing cash flows, equity ratio, share count, DPS), limiting precision in FCF and per-share analyses. Inventory of ¥2.216 billion within current assets of ¥15.64 billion suggests a relatively liquid current asset mix, consistent with the strong quick ratio. Overall, the profile is of a low-margin, turnover-driven model that faced cost and operating pressure, buffered by non-operating gains and solid liquidity. Near-term focus should be on restoring operating profitability, managing SG&A relative to gross profit, and sustaining positive operating cash flow.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.013
• asset_turnover: 0.46
• financial_leverage: 1.68
• calculated_ROE: -0.01
• interpretation: Negative ROE is driven by a -1.30% net margin; asset turnover is moderate for a trading/distribution-type model, and leverage is conservative, so margin restoration is the primary lever for ROE improvement. margin_quality:
• gross_margin: 0.179
• operating_margin: -0.0031
• ordinary_margin: 0.007
• net_margin: -0.013
• observations: ['Gross profit of ¥3.609bn against revenue of ¥20.145bn yields 17.9%, but SG&A and other operating expenses slightly exceeded gross profit, producing an operating loss of ¥62m.', 'SG&A (and other operating costs) are inferred at ¥3.671bn (gross profit minus operating income), indicating limited cost flexibility.', 'Ordinary income (¥141m) above operating income implies material non-operating gains (¥203m uplift), which may not be durable.'] operating_leverage:
• assessment: High sensitivity to SG&A and fixed costs given slim gross margin headroom; a modest revenue increase (+4% YoY) did not translate into operating profit, suggesting unfavorable operating leverage this period.
• interest_coverage: {'EBIT_based': -0.89, 'EBITDA_based': 2.78, 'comment': 'Interest is covered by EBITDA but not by EBIT, emphasizing pressure at the operating income level.'}

Growth Assessment

revenue_sustainability: Revenue grew 4.0% YoY to ¥20.145bn, a steady but modest pace consistent with volume/price dynamics in low-margin businesses. Sustainability will hinge on demand conditions and pricing power; current data suggests stable top-line but not accelerating growth. profit_quality: Positive ordinary income and OCF despite an operating loss indicate some supportive non-operating factors and working capital management; however, negative operating margin and tax expense against a loss cloud underlying profit quality. outlook: Near-term earnings trajectory depends on SG&A discipline and gross margin resilience. Without structural margin gains or cost reductions, profitability could remain volatile and reliant on non-operating items.

Financial Health

liquidity:

• current_ratio: 2.844
• quick_ratio: 2.441
• working_capital_yen: 10138889000
• comment: Strong liquidity position with ample buffer above 2.0x on both current and quick ratios. solvency:
• debt_to_equity: 0.65
• equity: 26013000000
• total_assets: 43813000000
• comment: Moderate leverage and sizable equity base support solvency; however, negative EBIT coverage warrants monitoring. capital_structure: Leverage is balanced for a low-margin model; maintaining interest costs near current levels and restoring EBIT positivity are key to preserving flexibility.

Cash Flow Quality

earnings_quality: OCF of ¥217m versus a net loss of ¥261m (OCF/NI = -0.83) suggests cash flows are stronger than accrual earnings this period, aided by non-cash charges (¥256m D&A) and likely working capital release. free_cash_flow_analysis: Investing cash flow was not disclosed, preventing a reliable FCF calculation; reported FCF of 0 should be treated as unavailable, not zero. working_capital_dynamics: Positive OCF despite a loss implies net favorable working capital movements; inventory at ¥2.216bn within current assets appears manageable. Detailed receivable/payable turnover data is not disclosed.

Dividend Sustainability

payout_ratio_assessment: EPS was negative (-¥39.10), and payout metrics are not meaningful; the reported payout ratio and DPS at 0.00 likely reflect nondisclosure rather than an actual zero. FCF_coverage: FCF is not computable due to missing investing cash flow; therefore, cash coverage of dividends cannot be assessed. policy_outlook: Given negative earnings and incomplete disclosure on cash and DPS, visibility on dividend policy execution is limited this period. Priority is likely on earnings normalization and cash preservation.

Risk Assessment

Business Risks:

• Low-margin operating model heightens sensitivity to input costs and pricing.
• Operating leverage risk as SG&A currently exceeds gross profit.
• Potential reliance on non-operating gains to achieve positive ordinary income.
• Demand variability and potential seasonality affecting volumes and mix.
• Competitive pressures that may limit pricing power.

Financial Risks:

• Negative EBIT-based interest coverage (-0.9x) indicates pressure on core earnings.
• Tax expense despite losses introduces earnings volatility and complicates forecasting.
• Dependence on working capital optimization to sustain positive OCF.
• Incomplete disclosure on cash position and investing cash flows limits visibility on liquidity runway and capex needs.

Key Concerns:

• Restoring operating profitability amid thin margins.
• Durability of non-operating income supporting ordinary income.
• Managing SG&A to align with gross profit trajectory.
• Monitoring interest burden relative to EBITDA and path back to positive EBIT.

Investment Implications

Key Takeaways:

• Top-line grew modestly (+4%), but operating performance weakened to a small loss.
• Ordinary income positive due to non-operating items; sustainability uncertain.
• Liquidity is strong; leverage moderate, but EBIT coverage is negative.
• OCF positive despite loss, indicating supportive working capital and non-cash items.
• Data gaps (cash balance, investing CF, DPS, equity ratio, share count) limit deeper valuation and FCF analysis.

Metrics to Watch:

• Operating margin and SG&A-to-gross-profit ratio
• EBIT and EBIT-based interest coverage
• Gross margin trends and pricing/mix effects
• OCF versus net income and working capital movements
• Ordinary income composition (recurring vs. one-off)
• Capex and investing cash flows to gauge true FCF

Relative Positioning: Appears consistent with a low-margin, asset-turnover-driven model with moderate leverage; current profitability trails typical mid-cap distributors due to negative EBIT, though liquidity remains comparatively strong.

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
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