MARUBUN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥102.70B
• Operating Income: ¥2.73B
• Net Income: ¥2.16B
• EPS: ¥37.67

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

Marubun Co., Ltd. reported FY2026 Q2 consolidated results under JGAAP showing top-line resilience but notable margin compression and higher financial costs. Revenue grew 4.2% year on year to ¥102.7bn, while operating income fell 37.4% to ¥2.73bn, indicating weak operating leverage despite sales growth. Gross profit of ¥12.50bn implies a gross margin of 12.2%, consistent with a low-margin distribution model, but operating margin compressed to 2.7%. Ordinary income was ¥1.76bn, materially below operating income due to sizable non-operating costs; reported interest expense of ¥1.75bn nearly consumed EBIT. Net income declined 53.8% to ¥0.99bn, resulting in a slim net margin of 0.96% and EPS of ¥37.67. DuPont decomposition points to modest asset efficiency (asset turnover 0.756x) and elevated leverage (2.27x), yielding a low ROE of 1.64%. Liquidity appears adequate with a current ratio of 164.9% and quick ratio of 102.3%, supported by sizeable working capital of ¥51.4bn; inventories are significant at ¥49.6bn. Operating cash flow was positive at ¥1.48bn and exceeded net income (OCF/NI 1.50x), a constructive signal for earnings quality, although OCF is modest relative to EBITDA. Financing cash outflows of ¥2.80bn suggest net repayments or other financing uses; dividend and capex data are not disclosed in this dataset. Interest coverage is tight at 1.6x, underscoring sensitivity to funding costs while profitability is under pressure. Total assets stand at ¥135.9bn against total equity of ¥60.0bn and liabilities of ¥84.4bn, with a debt-to-equity ratio of 1.41x. The reported effective tax rate appears as 0.0% due to disclosure limitations, even though income tax expense of ¥1.20bn is provided; under JGAAP, extraordinary items and non-controlling interests can also affect the bridge from ordinary to net income. Free cash flow and cash balances are not disclosed here, so leverage and coverage assessments rely on the balance sheet and income statement. Overall, the quarter reflects resilient sales but weaker profitability, elevated financial costs, and adequate liquidity, with cash flow generation positive but modest. The near-term outlook will hinge on margin recovery, working capital discipline (particularly inventories), and actions to reduce interest burden or optimize capital structure.

Profitability Analysis

ROE_decomposition: ROE 1.64% = Net margin 0.96% × Asset turnover 0.756 × Financial leverage 2.27. Low ROE is driven primarily by thin net margins and only moderate asset efficiency, while leverage is comparatively high for a distributor. margin_quality: Gross margin is 12.2% (gross profit ¥12.50bn on revenue ¥102.70bn). Operating margin is 2.7% (¥2.73bn), down sharply YoY given operating income -37.4% versus revenue +4.2%. Net margin is 0.96%, compressed by large non-operating expenses, notably interest expense of ¥1.75bn that nearly offsets EBIT. operating_leverage: Revenue grew +4.2% YoY but operating income fell -37.4%, indicating negative operating leverage this period—either gross margin pressure, higher SG&A, or both. EBITDA of ¥2.92bn implies an EBITDA margin of 2.8%, only slightly above operating margin, leaving little buffer for non-operating costs.

Growth Assessment

revenue_sustainability: Top-line growth of 4.2% suggests steady demand, but sustainability depends on end-market conditions and inventory normalization; with inventories high (¥49.56bn), revenue could be influenced by channel inventory movements. profit_quality: Profit growth is weak: operating income down 37.4% and net income down 53.8% indicate deteriorating mix or higher cost base. The gap between operating and ordinary income is driven by high interest costs, which lowers the quality of earnings after financing. outlook: For recovery, the company needs to stabilize gross margins, control SG&A, and reduce financing costs. Given thin structural margins, small pricing or cost shifts can materially affect profitability. Back-half performance will hinge on working capital efficiency and potential easing of interest burden.

Financial Health

liquidity: Current ratio 164.9% and quick ratio 102.3% indicate adequate short-term liquidity. Working capital of ¥51.38bn provides a cushion, though the reliance on inventories (¥49.56bn) highlights the importance of turnover. solvency: Debt-to-equity of 1.41x and leverage of 2.27x suggest a geared balance sheet. Interest coverage is tight at 1.6x (EBITDA/interest), leaving limited room for earnings volatility. capital_structure: Total assets ¥135.90bn funded by equity ¥59.98bn and liabilities ¥84.39bn. Financing cash outflow of ¥2.80bn implies net repayments or other financing uses; optimization of debt mix could improve interest costs.

Cash Flow Quality

earnings_quality: OCF of ¥1.48bn exceeds net income of ¥0.99bn (OCF/NI 1.50x), a positive signal that earnings are backed by cash generation this period. FCF_analysis: Free cash flow is not disclosed here; investing cash flow is shown as 0 (unreported), so FCF cannot be reliably determined. Relative to EBITDA (¥2.92bn), OCF conversion is moderate, suggesting working capital and interest/tax outflows consumed a notable portion of cash earnings. working_capital: Inventories are substantial at ¥49.56bn; with quick ratio just above 1.0x, timely inventory turnover and receivables collection are critical to sustain OCF.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.00, which in this dataset indicates not disclosed. Based on NI of ¥0.99bn and tight coverage ratios, high payouts would be difficult to sustain without improved profitability. FCF_coverage: FCF coverage is not ascertainable due to undisclosed capex and investing CF; thus, dividend coverage by FCF cannot be evaluated from the provided data. policy_outlook: Given elevated leverage and compressed net margins, a conservative capital return stance would be consistent until operating margins and interest coverage improve; actual policy remains undisclosed here.

Risk Assessment

Business Risks:

• Margin pressure in a low-margin distribution model, with sensitivity to pricing and supplier terms
• Inventory risk given large inventories relative to current assets
• Operating leverage to end-market cycles despite thin margins
• Potential supply chain and lead-time variability affecting gross profit

Financial Risks:

• High interest burden (¥1.75bn) leading to low interest coverage (1.6x)
• Leverage at 1.41x D/E increases sensitivity to earnings downturn
• Cash flow dependency on working capital movements
• Potential refinancing risk if funding costs rise

Key Concerns:

• Sharp YoY decline in operating and net income despite revenue growth
• Ordinary income materially below operating income due to non-operating costs
• Thin EBITDA margin (2.8%) leaves limited buffer for shocks
• Limited disclosure on cash and investing flows, complicating FCF assessment

Investment Implications

Key Takeaways:

• Sales growth (+4.2% YoY) but significant margin compression with operating income down 37.4%
• Net margin at 0.96% and ROE at 1.64% reflect low profitability
• Interest expense (¥1.75bn) nearly offsets EBIT, constraining ordinary income
• Liquidity is adequate (current ratio 165%, quick ratio 102%), but inventory-heavy
• OCF exceeds net income (1.50x), yet absolute cash generation is modest
• Leverage (D/E 1.41x) and tight coverage (1.6x) elevate financial risk

Metrics to Watch:

• Gross and operating margin trends by quarter
• Interest coverage and effective interest rate on debt
• Inventory days and overall working capital turnover
• Operating cash flow conversion versus EBITDA
• Debt levels and financing cash flows (repayments/refinancing)
• Ordinary income to operating income gap (non-operating items)

Relative Positioning: Within trading/distribution peers, Marubun exhibits typical low margins but currently weaker operating leverage and tighter interest coverage; liquidity is serviceable, while leverage and financing costs are comparatively elevated.

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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