JMS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥32.22B
• Operating Income: ¥-19M
• Net Income: ¥-263M
• EPS: ¥-7.78

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

JMS (TSE: 77020) reported FY2026 Q2 consolidated results under JGAAP showing top-line softness and near-breakeven operations, with a modest net loss but improving bottom-line trend year on year. Revenue was ¥32.216bn, down 4.8% YoY, indicating demand or pricing pressure in core medical device/consumable categories. Gross profit was ¥7.583bn, implying a gross margin of 23.5%, which is adequate for a consumables-heavy portfolio but suggests cost of goods pressures versus prior norms (historical benchmarks not provided). Operating income was slightly negative at ¥-19m (down 42.7% YoY), effectively breakeven at the operating level despite revenue contraction, supported by cost controls and depreciation add-backs. Ordinary income was ¥-46m, reflecting financing costs (interest expense ¥160m) and non-operating items, while net income was ¥-190m, an 11.7% YoY improvement, pointing to better non-operating/tax line dynamics compared with the prior year. EPS was ¥-7.78. EBITDA reached ¥1.925bn (6.0% margin), signaling underlying cash earnings capacity even as EBIT slipped marginally negative. ROE (DuPont) was -0.47%, driven by a slim negative net margin (-0.59%), modest asset turnover (0.388x), and leverage of 2.04x. Liquidity appears solid with a current ratio of 178.6% and quick ratio of 136.0%, and working capital of ¥20.144bn, which should cushion near-term operating volatility. Balance sheet shows total assets of ¥83.016bn and total equity of ¥40.744bn, implying moderate leverage (debt-to-equity 0.99x), though the reported equity ratio is not disclosed in this dataset. Operating cash flow was positive at ¥255m in the period, exceeding the net loss, indicating non-cash charges and/or working capital tailwinds; investing cash flow is not disclosed here. Financing cash flow was an outflow of ¥408m, likely debt repayment or lease-related, with dividends at zero for the period (annual DPS 0). Interest coverage based on EBIT was -0.1x, highlighting sensitivity to interest costs while operating profit is slightly negative; however, positive EBITDA provides some buffer. Inventory stood at ¥10.913bn (23.9% of current assets), an important lever for cash conversion going forward. Overall, JMS remains operationally resilient but exposed to volume/pricing pressure and cost inflation, with improved bottom-line trajectory versus last year but still in loss. Data limitations (e.g., cash and equivalents, investment cash flows, share count) constrain full ratio analysis; the assessment focuses on available disclosed metrics.

Profitability Analysis

ROE of -0.47% reflects a negative net profit margin (-0.59%), modest asset turnover (0.388x), and financial leverage of 2.04x. The margin compression is the principal ROE drag, as leverage is moderate and asset efficiency is typical for the sector. Gross margin at 23.5% suggests stable product mix but potential input cost or pricing headwinds; with revenue down 4.8% YoY, operating leverage turned negative, pushing EBIT slightly below zero. EBITDA margin of 6.0% indicates underlying cash earnings capacity; depreciation/amortization (¥1.944bn) represents a sizable non-cash burden versus small operating loss, implying that modest revenue recovery or cost actions could restore positive EBIT. Interest expense of ¥160m weighed on ordinary income; EBIT-based interest coverage is -0.1x, but the EBITDA cushion (¥1.925bn) implies coverage on a cash earnings basis is considerably better (contextual, not provided as a formal metric). The ordinary to net loss step-up (¥-46m to ¥-190m) suggests non-operating/tax effects; the effective tax rate metric is shown as 0.0% in this dataset, limiting interpretation. Overall profitability quality is mixed: gross margin is acceptable, EBITDA positive, but operating leverage is adverse at current volumes.

Growth Assessment

Revenue declined 4.8% YoY to ¥32.216bn, pointing to soft demand or procurement/pricing pressure in hospital channels. Operating income deterioration (-42.7% YoY) indicates negative operating leverage as fixed costs were not fully absorbed amid lower volumes. Despite this, net income improved 11.7% YoY to ¥-190m, indicating some improvement below operating line (e.g., non-operating items, FX, or tax). Sustainability of revenue depends on procedure volumes, hospital utilization, and tender cycles; without segment detail, we assume consumables resilience with selective weakness in devices. Gross margin at 23.5% suggests stable production efficiency but limited pricing power; scope exists for mix improvements or cost pass-through to support recovery. Asset turnover of 0.388x reflects a low-turn structure for mid-year reporting; normalization with stronger sales could lift efficiency. Near-term outlook hinges on volume recovery, input cost stabilization, and SG&A discipline; a small uplift in sales could swing EBIT positive given proximity to breakeven. Absent disclosed backlog or orders, growth visibility is limited; monitoring Q3 trends and inventory movement will be key to assessing demand normalization.

Financial Health

Total assets ¥83.016bn, total liabilities ¥40.504bn, and total equity ¥40.744bn indicate moderate leverage; financial leverage is 2.04x and debt-to-equity 0.99x. Liquidity is strong with current ratio 178.6% and quick ratio 136.0%, supported by working capital of ¥20.144bn. Inventories of ¥10.913bn represent 23.9% of current assets, implying potential cash conversion lever if demand softens or procurement cycles lengthen. Interest expense of ¥160m versus negative EBIT raises coverage concerns on an earnings basis, though positive EBITDA provides some cushion. The reported equity ratio is not disclosed in this dataset; therefore, solvency assessment relies on leverage proxies provided. Financing cash outflow of ¥408m suggests debt service/repayments or lease outflows; absence of dividends aids liquidity preservation.

Cash Flow Quality

Operating cash flow was positive at ¥255m despite a net loss of ¥-190m, implying that non-cash charges (notably ¥1.944bn D&A) and working capital movements supported cash generation. The OCF/Net Income ratio is -1.34 (negative due to negative NI), but directionally it indicates cash earnings exceeded accounting loss. Free cash flow could not be determined because investing cash flow is undisclosed in this dataset (shown as zero, which signals not reported); hence FCF and FCF-based coverage metrics are not assessable. Working capital appears ample (¥20.144bn), with inventories at ¥10.913bn; future OCF will be sensitive to inventory normalization and receivables collections given slower sales. EBITDA of ¥1.925bn underscores cash earnings capacity; if capex is disciplined, underlying cash conversion could improve once EBIT turns positive.

Dividend Sustainability

Annual DPS is reported as 0.00 and payout ratio 0.0%, implying dividends are currently suspended or not declared for the period. With net income negative and EBIT near breakeven, retaining earnings to strengthen the balance sheet and fund operations appears prudent. FCF coverage is shown as 0.00x because FCF is not calculable from disclosed data; thus, dividend coverage analysis is not possible. Policy outlook likely remains conservative until sustained profitability and clear free cash flow visibility return. Given positive OCF but uncertain capex requirements (investing CF not disclosed), resumption of dividends would depend on consistent EBIT recovery and clarity on capital expenditures.

Risk Assessment

Business Risks:

• Hospital procurement and tender pricing pressure impacting revenue and margins
• Input cost inflation (resins, packaging, logistics) compressing gross margins
• Demand variability tied to procedure volumes and hospital utilization
• Product mix shifts from higher-margin devices to lower-margin consumables
• Regulatory and quality assurance requirements in medical devices
• Supply chain disruptions affecting inventory and lead times

Financial Risks:

• Negative EBIT leading to weak interest coverage on an earnings basis (-0.1x)
• Leverage near 1.0x debt-to-equity increasing sensitivity to rate and credit conditions
• Working capital intensity and potential inventory build weighing on cash conversion
• Limited visibility on capex due to undisclosed investing cash flows
• FX exposure on imports/exports potentially affecting ordinary income

Key Concerns:

• Top-line decline of 4.8% YoY and negative operating leverage
• Slight operating loss despite positive EBITDA, indicating thin margin of safety
• Undisclosed cash and equivalents and investing CF constrain liquidity and FCF analysis
• Interest expense burden relative to near-breakeven EBIT
• Need for inventory and cost management to restore profitability

Investment Implications

Key Takeaways:

• Revenue down 4.8% YoY with gross margin at 23.5%; operating income slightly negative
• EBITDA positive at ¥1.925bn (6.0% margin), indicating underlying cash earnings
• ROE -0.47% driven by negative net margin; asset efficiency and leverage are secondary factors
• Strong liquidity (current ratio 178.6%, quick ratio 136.0%) provides near-term cushion
• OCF positive at ¥255m despite net loss; FCF not assessable due to undisclosed investing CF
• Debt-to-equity 0.99x and EBIT-based interest coverage -0.1x highlight sensitivity to rates while EBIT is negative

Metrics to Watch:

• Sequential revenue growth and ASPs by product category
• Gross margin progression and procurement/input cost trends
• Operating income inflection to positive and SG&A run-rate discipline
• Inventory turnover and working capital days (DSO/DPO/DIO)
• EBITDA to interest coverage and net leverage trajectory
• Capex intensity and disclosure of investing cash flows to assess FCF

Relative Positioning: Within Japanese medical device/consumables peers, JMS shows resilient liquidity and positive EBITDA but weaker operating profitability in this half, with moderate leverage; restoring positive EBIT and stabilizing margins will be key to narrowing the gap with more profitable peers.

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