YONEX CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥79.53B
• Operating Income: ¥8.85B
• Net Income: ¥6.38B
• EPS: ¥74.55

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

FY2026 Q2 was a solid quarter for Yonex, delivering double-digit top-line growth and healthy profitability, albeit with slight margin compression. Revenue rose 18.8% year over year to 795.32, driven by strong global demand across categories and geographies. Operating income increased 15.0% to 88.47, while ordinary income rose 11.6% to 81.99 and net income climbed 17.4% to 63.71. Gross profit reached 348.75, implying a gross margin of 43.9%, which remains robust for the sporting goods segment. Operating margin was 11.1%, down about 37 bps versus the prior-year level we infer at approximately 11.5% (operating income growth lagged revenue growth). Net margin was 8.0%, a modest compression of roughly 9 bps year over year, consistent with higher non-operating expenses (7.95) outweighing non-operating income (1.48). Cash generation was healthy: operating cash flow of 77.50 exceeded net income (OCF/NI of 1.22x), suggesting good earnings quality. That said, total comprehensive income (53.54) trailed net income due to negative other comprehensive items, likely currency translation losses given Yonex’s global footprint. Liquidity and solvency are strong, with a current ratio of 312.7%, quick ratio of 258.7%, and interest coverage of 72.5x. Balance sheet strength is reinforced by cash and deposits of 348.56 against long-term loans of 149.66, indicating a substantial net cash position. ROE stands at 8.6%, supported by an 8.0% net margin, asset turnover of 0.658x, and financial leverage of 1.63x; reported ROIC of 11.6% is comfortably above an 8% excellence threshold. SG&A was 260.28, about 32.7% of sales, indicating ongoing investment in growth and brand that modestly pressured operating leverage. Capex was sizable at 66.21, leaving an estimated FCF proxy of roughly 11.29 (OCF minus capex), which may be seasonally depressed by front-loaded investments. The implied payout ratio of 32.1% appears conservative, though dividend coverage relative to H1 FCF depends on timing and seasonality. Forward-looking, the key watchpoints are margin preservation amid cost inflation, FX volatility, and inventory discipline as growth normalizes from a high base.

Profitability Analysis

ROE (8.6%) = Net Profit Margin (8.0%) × Asset Turnover (0.658x) × Financial Leverage (1.63x). The most notable year-over-year change is slight pressure on net profit margin, as operating income growth (+15.0%) lagged revenue growth (+18.8%), and non-operating expenses (7.95) exceeded non-operating income (1.48). Business-wise, higher SG&A to support demand, marketing, and distribution likely weighed on operating margin, while FX and other non-operating items reduced ordinary profit conversion. This looks largely cyclical and investment-driven rather than structural; with scale benefits and cost normalization, some margin recovery is plausible. Still, the mix shift and continued brand investment suggest only gradual improvement, not a quick snap-back. A potential concern is that SG&A growth appears to be running ahead of revenue growth (as implied by margin compression), which warrants monitoring for operating leverage risk.

Growth Assessment

Top-line growth of 18.8% indicates strong sell-through and continued brand momentum in core categories (badminton, tennis), alongside healthy international expansion. Operating income growth of 15.0% trailed revenue, pointing to incremental cost investments or cost inflation in the period. Non-operating headwinds (net expense of 6.47 when netting 1.48 and 7.95) constrained ordinary profit growth to +11.6%. EBITDA of 105.17 (13.2% margin) supports resilience in cash earnings. Sustainability hinges on maintaining pricing power and product innovation while managing currency and input costs (e.g., carbon fiber, logistics). With ROIC at 11.6%, Yonex is creating value above its likely cost of capital; sustaining double-digit ROIC would underpin medium-term growth investment. Outlook is constructive but moderated by slight margin pressure and FX-driven OCI volatility; near-term growth should continue if demand remains robust and inventory stays balanced.

Financial Health

Liquidity is very strong: current ratio 312.7% and quick ratio 258.7%, with no warning thresholds breached. There is no maturity mismatch risk apparent: current assets of 788.47 comfortably exceed current liabilities of 252.17, and cash (348.56) plus receivables (202.44) alone cover current liabilities. Solvency is conservative with a D/E of 0.63x and interest coverage of 72.5x. Long-term loans stand at 149.66 against total equity of 739.99 and substantial cash, implying a net cash position. No off-balance sheet obligations were disclosed in the provided data. There are no explicit flags such as Current Ratio < 1.0 or D/E > 2.0.

Cash Flow Quality

Earnings quality is solid with OCF/Net Income at 1.22x, indicating accruals are not inflating earnings. Using capex data, a simple FCF proxy (OCF – Capex) is about 11.29, positive but modest, likely reflecting front-loaded investment in capacity, tooling, or logistics. Without full investing cash flow disclosure, we cannot confirm total FCF after other investing items, but the large cash buffer mitigates near-term funding risk. Working capital appeared supportive of OCF (given OCF > NI), but lack of prior-period balance details prevents identifying specific drivers (receivables, inventories, or payables). No clear signs of working capital manipulation are visible from the snapshot provided. Overall, cash conversion supports ongoing operations and investment, with adequate flexibility for shareholder returns.

Dividend Sustainability

The indicated payout ratio of 32.1% is conservative relative to earnings, supporting sustainability under normal conditions. On an H1 basis, implied dividends would be roughly 20.45 if applied to H1 net income; against the FCF proxy of ~11.29, this suggests potential undercoverage in the half year, but timing/seasonality and undisclosed investing flows are key variables. The company’s strong net cash position and high liquidity provide ample coverage for dividends through cycles even if capex remains elevated. Given ROIC at 11.6%, reinvestment capacity remains strong while maintaining a moderate payout policy. Absent explicit DPS guidance in the data, we assume a stable to gradually rising dividend trajectory, contingent on maintaining OCF > NI and stable margins.

Risk Assessment

Business Risks:

• Demand normalization risk in badminton/tennis categories after a strong growth period
• Input cost volatility (e.g., carbon fiber, resins, logistics) pressuring gross margin
• FX fluctuation risk (translation and transaction) given large overseas exposure
• Product cycle execution risk and dependence on star products/athlete endorsements
• Channel/inventory risk if wholesale sell-in outpaces sell-through

Financial Risks:

• Negative OCI (FX translation) reducing comprehensive income and net asset value
• Interest rate risk on long-term loans (149.66), though currently well-covered
• Capex intensity (66.21 in H1) potentially compressing near-term free cash flow
• Non-operating expense volatility (7.95) weighing on ordinary profit

Key Concerns:

• Slight operating and net margin compression despite strong sales growth
• Ordinary income growing slower than operating income due to non-operating headwinds
• Comprehensive income below net income, indicating equity volatility from OCI items
• Limited disclosure granularity (SG&A breakdown, investing CF) constrains visibility

Investment Implications

Key Takeaways:

• Robust top-line growth (+18.8% YoY) with resilient profitability (OM ~11.1%)
• Margins compressed modestly (OM down ~37 bps; NPM down ~9 bps) on higher costs/FX
• High-quality earnings with OCF/NI at 1.22x and interest coverage at 72.5x
• Balance sheet strength: net cash profile and ample liquidity (current ratio > 3x)
• ROE at 8.6% and ROIC at 11.6% indicate value-accretive growth
• Capex elevated (66.21), yielding modest H1 FCF proxy (~11.29), but strategic

Metrics to Watch:

• Gross and operating margin progression (bps), especially SG&A as % of sales
• Inventory and receivables turnover to validate sell-through and cash conversion
• FX sensitivity and OCI impacts on equity and comprehensive income
• OCF/NI ratio sustainability and full-year FCF after total investing cash flows
• Capex cadence vs. growth payback; ROIC by project or category, if disclosed

Relative Positioning: Within Japanese sporting goods peers, Yonex combines premium gross margins and conservative leverage with strong ROIC, positioning it favorably on quality and balance sheet strength; near-term, modest margin compression and FX/OCI volatility are the primary differentiators to monitor.

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