YAMANO HOLDINGS CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.16B
• Operating Income: ¥100M
• Net Income: ¥-64M
• EPS: ¥0.39

Income Statement

Balance Sheet

Cash Flow Statement

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

Yamano Holdings (7571) posted FY2026 Q2 consolidated results under JGAAP showing modest top-line growth with material improvement in operating profitability off a low base. Revenue rose 4.6% YoY to ¥7,161 million, while operating income nearly doubled to ¥100 million (+95.3% YoY), indicating better cost execution or mix despite a still-thin margin profile. Gross profit reached ¥3,415 million, implying a robust gross margin of 47.7%, but SG&A intensity remains high, capping operating margin at 1.4%. Ordinary income was ¥69 million and net income was ¥13 million (+665.1% YoY), translating to a very slim net margin of 0.18%. DuPont decomposition yields ROE of 1.0%, driven by low margins (0.18% NPM), moderate asset turnover (0.882x), and high financial leverage (6.26x). Balance sheet leverage is elevated: total liabilities of ¥6,629 million against equity of ¥1,298 million implies debt-to-equity of 5.11x and an equity ratio around 16% (equity/asset), although the disclosed equity ratio field is unreported. Liquidity is adequate with a current ratio of 126%, supported by ¥1,260 million of working capital. Operating cash flow came in at ¥130 million, yielding an OCF/Net Income ratio of ~10x, reflecting strong cash conversion relative to the low profit base. Financing cash flow was an outflow of ¥378 million, suggesting debt repayment or other financing uses; cash and equivalents and investing cash flows were not disclosed in the XBRL items provided. EBITDA was ¥126 million (1.8% margin), and interest coverage was 7.5x, sufficient but sensitive to earnings volatility. With annual DPS at ¥0 and payout ratio 0%, capital allocation appears focused on balance sheet resilience and/or reinvestment rather than returns to shareholders at this stage. Revenue growth momentum looks steady but modest, while the step-up in operating income indicates early benefits from cost control or a favorable mix shift. Sustainability of the profit improvement will hinge on further SG&A discipline and stable gross margins. Overall, Yamano exhibits improving earnings traction but remains constrained by thin margins and high leverage, with cash flow quality looking better than accounting profits suggest this quarter. Data limitations (notably unreported inventories, cash, investing flows, share count) temper precision, so conclusions emphasize the disclosed non-zero data.

Profitability Analysis

ROE_decomposition:

• net_profit_margin_percent: 0.18
• asset_turnover_x: 0.882
• financial_leverage_x: 6.26
• calculated_ROE_percent: 1.0 margin_quality: Gross margin of 47.7% is strong for a consumer/retail-oriented mix, but the operating margin of 1.4% highlights heavy SG&A. Estimated SG&A equals roughly ¥3,315 million (Gross profit ¥3,415m minus operating income ¥100m), or about 46.3% of sales, indicating limited operating efficiency headroom unless costs can be structurally lowered. Net margin at 0.18% remains extremely thin and vulnerable to minor negative shocks. operating_leverage: YoY operating income +95.3% on revenue +4.6% suggests favorable operating leverage from SG&A control and/or improved mix. Given the low base, incremental margin appears positive; sustaining this will require continued SG&A discipline and stable gross margins.

Growth Assessment

revenue_sustainability: Top-line expanded 4.6% YoY to ¥7,161 million, a steady but unspectacular pace consistent with mature consumer markets. Visibility into mix (stores/services) is limited; growth appears organic with no disclosed M&A impacts. profit_quality: Operating income growth outpaced sales, implying cost traction. Net income growth was large in percentage terms but modest in absolute yen, and the net margin remains very low, underscoring fragile bottom-line quality. outlook: If SG&A intensity can be reduced further or sales mix continues to favor higher-margin categories, operating margin can trend above the current 1.4%. However, high leverage constrains flexibility, making sustained gross margin strength and stable demand conditions important for maintaining momentum.

Financial Health

liquidity: Current assets ¥6,077 million and current liabilities ¥4,818 million yield a current ratio of 126% and working capital of ¥1,260 million. Quick ratio also reads 126% due to unreported inventories; true quick liquidity may be lower if inventories are present. solvency: Total liabilities ¥6,629 million vs equity ¥1,298 million imply debt-to-equity of 5.11x and an implied equity ratio of ~16% (equity/asset), indicating elevated leverage. Interest coverage at 7.5x is acceptable but would compress rapidly if operating profit softens. capital_structure: High financial leverage (6.26x assets/equity) amplifies ROE despite slim margins, but also raises downside risk. Financing cash outflow of ¥378 million suggests deleveraging or other financing uses during the period.

Cash Flow Quality

earnings_quality: OCF of ¥129.8 million vs net income of ¥13 million yields an OCF/NI ratio ~10x, indicating strong cash conversion relative to accounting profit this quarter (helped by working capital and low D&A). EBITDA of ¥126 million is close to OCF, supporting quality in the period. FCF_analysis: Investing cash flow and capex are unreported, preventing precise FCF calculation. On a proxy basis, absent capex data, we cannot assert positive or negative FCF; the reported FCF figure of 0 reflects non-disclosure rather than true zero. working_capital: Working capital is positive at ~¥1,260 million, aiding liquidity. With inventories unreported, the composition of working capital cannot be assessed (e.g., inventory turns, receivable days), limiting conclusions on structural cash conversion.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 with a payout ratio of 0%. Given a 1.0% ROE and a 0.18% net margin, distributing cash would not be well supported by earnings at this stage. FCF_coverage: FCF is not computable due to missing capex/investing CF data; therefore, coverage metrics are indeterminate this quarter. policy_outlook: With high leverage and thin profitability, the practical stance appears conservative, prioritizing balance sheet health and reinvestment over cash returns until margins and ROE improve.

Risk Assessment

Business Risks:

• Thin operating and net margins leave limited buffer against demand shocks or cost inflation.
• Reliance on SG&A discipline to sustain operating leverage gains.
• Consumer discretionary exposure susceptible to macro slowdowns and changes in spending patterns.
• Potential store/lease cost rigidity if sales soften.
• Product/service mix risk affecting gross margin stability.

Financial Risks:

• Elevated leverage (D/E ~5.1x; assets/equity 6.26x) heightens downside sensitivity.
• Interest coverage, while adequate now (7.5x), could compress quickly on earnings volatility.
• Limited visibility on cash and investing flows constrains assessment of liquidity runway and capex commitments.
• Refinancing and covenant risks if credit conditions tighten.

Key Concerns:

• Sustainability of the recent operating profit improvement from a very low base.
• High SG&A ratio (~46% of sales) constraining margin expansion.
• Data gaps (cash balance, inventories, capex) hindering full evaluation of inventory and FCF dynamics.

Investment Implications

Key Takeaways:

• Revenue grew 4.6% YoY; operating income surged 95% YoY, indicating improved cost efficiency.
• Gross margin is healthy at 47.7%, but operating margin remains thin at 1.4% due to high SG&A.
• ROE is low at 1.0%, supported largely by high financial leverage rather than strong profitability.
• Liquidity is adequate (current ratio ~126%), but solvency is stretched (D/E ~5.1x; implied equity ratio ~16%).
• OCF materially exceeds net income this quarter (OCF/NI ~10x), suggesting better cash conversion than accounting profit implies.
• Dividend remains suspended (DPS ¥0), consistent with focus on balance sheet strength.

Metrics to Watch:

• SG&A-to-sales ratio and further operating margin expansion above 1.4%.
• Gross margin stability at or above ~48%.
• OCF consistency and disclosure of capex to assess true FCF.
• Leverage trajectory (D/E, equity ratio) and interest coverage.
• Revenue growth momentum and any mix shifts supporting margin.
• Working capital metrics (receivable/inventory turns) once disclosed.

Relative Positioning: Versus small-cap consumer/retail peers on the TSE, Yamano shows comparable gross margins but weaker operating margins and higher leverage, resulting in low ROE driven by balance sheet gearing rather than core profitability.

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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