FUJI SEAL INTERNATIONAL,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥109.33B
• Operating Income: ¥11.67B
• Net Income: ¥5.70B
• EPS: ¥171.61

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

Fuji Seal International’s FY2026 Q2 consolidated results under JGAAP show solid top-line growth and pronounced margin expansion, translating into strong earnings momentum. Revenue grew 3.9% year on year to ¥109.3bn, while operating income rose 27.1% to ¥11.7bn, indicating effective cost control and operating leverage. Net income increased 60.5% to ¥9.15bn, aided by margin expansion and minimal interest burden. Gross profit of ¥21.75bn implies a gross margin of 19.9%, while the operating margin improved to roughly 10.7% from an estimated ~8.7% a year ago. Ordinary income of ¥12.00bn exceeded operating income, suggesting net non-operating gains despite interest expense of only ¥0.11bn. Liquidity is strong, with a current ratio of 236.7% and working capital of ¥76.9bn, supporting operational flexibility. The balance sheet appears conservative: total liabilities of ¥64.6bn versus equity of ¥148.4bn yield a debt-to-equity ratio of 0.44x and an implied equity ratio around 69.5% (despite the reported equity ratio being unreported in the dataset). DuPont analysis indicates a net margin of 8.37%, asset turnover of 0.512x, and financial leverage of 1.44x, yielding an ROE of 6.17%. Cash flow quality is sound with OCF of ¥11.84bn and an OCF/Net Income ratio of 1.29, indicating earnings backed by cash generation. EBITDA of ¥16.05bn implies an EBITDA margin of 14.7%, offering ample coverage over modest interest, with interest coverage at 104.2x. Effective tax rate appears around the low 20%s based on disclosed tax and ordinary income amounts, even though the provided summary shows 0.0% (which should be treated as undisclosed). Free cash flow cannot be assessed precisely because investing cash flow is undisclosed; however, OCF strength suggests resilience absent outsized capex. No dividend data are available for the period (DPS shown as zero should be treated as unreported), so payout assessment is constrained. Overall, the company demonstrates improving profitability, robust liquidity, low financial risk, and supportive cash conversion, though limited disclosure on investing cash flows and dividends constrains full assessment.

Profitability Analysis

ROE_decomposition: DuPont shows Net Margin 8.37% x Asset Turnover 0.512 x Financial Leverage 1.44 = ROE 6.17%. Net margin expansion and stable turnover are the main drivers; leverage is moderate and not the key contributor. margin_quality: Gross margin is 19.9% (¥21.75bn/¥109.33bn). Operating margin is approximately 10.7% (¥11.67bn/¥109.33bn), up roughly 200 bps YoY, evidencing cost efficiency and pricing/mix improvements. Ordinary income margin is about 11.0%, with small positive non-operating contributions. The implied effective tax burden is ~22–23% based on ¥2.69bn taxes and ~¥12.0bn pretax, consistent with normalized rates. operating_leverage: Operating income grew 27.1% on 3.9% revenue growth, indicating strong operating leverage through fixed-cost absorption and/or procurement efficiencies. EBITDA margin of 14.7% vs operating margin of 10.7% suggests D&A intensity of ~4.0% of revenue; margin expansion primarily reflects OPEX discipline rather than lower depreciation.

Growth Assessment

revenue_sustainability: Top-line growth of 3.9% suggests modest volume and/or price gains; given the packaging industry’s stable end markets, this appears sustainable absent macro shocks. profit_quality: Net income growth of 60.5% outpaced sales, driven by margin expansion and minimal interest drag. OCF/NI at 1.29 supports the quality of earnings. outlook: Assuming stable demand in consumer packaging and continued cost pass-through, mid- to high-single-digit operating profit growth appears achievable near term. Sensitivities include resin and energy costs, FX impacts on overseas operations, and customer pricing negotiations.

Financial Health

liquidity: Current assets of ¥133.08bn versus current liabilities of ¥56.22bn yield a current ratio of 236.7% and a quick ratio of 216.8%, indicating ample short-term coverage. Working capital is ¥76.86bn. solvency: Total liabilities are ¥64.55bn against equity of ¥148.35bn (debt-to-equity 0.44x). Implied equity ratio is ~69.5% (¥148.35bn/¥213.55bn), reflecting a conservative capital base, notwithstanding the reported equity ratio field showing 0.0% (undisclosed). capital_structure: Low financial leverage (assets/equity 1.44x) and very high interest coverage (104.2x) indicate significant headroom to absorb shocks or fund selective investments.

Cash Flow Quality

earnings_quality: OCF of ¥11.84bn versus net income of ¥9.15bn (OCF/NI 1.29) indicates cash-backed earnings and disciplined working capital. FCF_analysis: Free cash flow cannot be computed due to undisclosed investing cash flow (reported as zero but treated as unreported). Given strong OCF, FCF is likely positive absent unusually high capex, but this cannot be confirmed. working_capital: Healthy liquidity metrics imply effective working capital management; inventories are ¥11.18bn, and the rise/fall in receivables/payables is not disclosed, limiting deeper diagnostics.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥171.61 for the period, but DPS is undisclosed (the reported zero should not be treated as an actual dividend). Thus, payout ratio cannot be assessed. FCF_coverage: FCF coverage of dividends cannot be determined because investing cash flows are undisclosed. policy_outlook: With strong liquidity, low leverage, and improving profitability, capacity for dividends exists; however, without explicit guidance or historical policy data for this period, sustainability and policy trajectory cannot be evaluated.

Risk Assessment

Business Risks:

• Raw material cost volatility (resins, films, energy) impacting margins
• Customer pricing pressure and contract renewals in consumer packaging
• FX fluctuations affecting overseas revenues and costs
• Operational disruptions (supply chain, logistics, or plant utilization)
• End-market demand softness in consumer staples/discretionary packaging

Financial Risks:

• Potential capex cycles not visible due to undisclosed investing cash flows
• Working capital swings affecting near-term cash generation
• Exposure to interest rate/credit conditions for any future borrowing needs (though current leverage is low)

Key Concerns:

• Limited visibility on capex and free cash flow due to missing investing cash flow data
• Mid-year data may reflect seasonality; second-half margin sustainability remains to be validated
• Equity ratio and cash balances are undisclosed in the dataset, constraining ratio precision

Investment Implications

Key Takeaways:

• Solid revenue growth (+3.9% YoY) with strong operating leverage (+27.1% operating income)
• Margin expansion to ~10.7% operating margin and 14.7% EBITDA margin
• Robust cash conversion (OCF/NI 1.29) and very high interest coverage (104.2x)
• Conservative balance sheet: debt-to-equity 0.44x; implied equity ratio ~69.5%
• Non-operating items net positive despite small interest expense
• FCF and dividend visibility limited due to undisclosed investing cash flows and DPS

Metrics to Watch:

• Gross and operating margin trajectory in H2 (cost pass-through, mix, and utilization)
• Investing cash flows and capex intensity (to gauge FCF and ROIC)
• Working capital turns (DSO/DPO/DIO) and inventory levels
• FX impacts on ordinary income and any one-off non-operating items
• Guidance updates for FY2026 full year and any dividend policy disclosures

Relative Positioning: Within Japan-listed packaging peers, Fuji Seal exhibits above-average balance sheet strength, improving profitability, and high cash interest coverage, positioning it favorably on financial resilience; near-term differentiation will hinge on sustaining margin gains and demonstrating consistent free cash flow amid input cost volatility.

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