YONEX CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥79.53B
• Operating Income: ¥8.85B
• Net Income: ¥5.44B
• 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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

Yonex (79060) delivered solid FY2026 Q2 consolidated results under JGAAP, with revenue of ¥79.5bn, up 18.8% YoY, indicating strong demand across core categories. Gross profit reached ¥30.25bn, implying a healthy gross margin of 38.0%, suggesting pricing power and/or an improved mix despite cost inflation headwinds. Operating income rose to ¥8.85bn (+15.0% YoY), translating to an operating margin of 11.1%, evidencing disciplined cost control and moderate operating leverage. Net income was ¥6.37bn (+17.4% YoY), for a net margin of 8.0%, consistent with a quality earnings profile. DuPont analysis shows ROE of 8.61%, derived from an 8.01% net margin, 0.658x asset turnover, and 1.63x financial leverage, reflecting a balanced profitability and capital structure. Liquidity appears strong: current ratio 294% and quick ratio 236%, underpinned by ample current assets relative to short-term obligations. Solvency is conservative with total liabilities/equity of 0.54x, leaving capacity for investment while limiting financial risk. Cash generation is robust with operating cash flow (OCF) of ¥7.71bn and an OCF/Net Income ratio of 1.21, indicating earnings are well supported by cash. EBITDA was ¥10.38bn (13.1% margin), further confirming healthy operating fundamentals. Interest coverage is very strong at about 132x, implying negligible interest burden and resilience to rate fluctuations. Working capital is sizable at ¥48.29bn, supporting growth but necessitating continued inventory discipline (inventories ¥14.47bn). The reported effective tax rate metric of 0.0% is inconsistent with disclosed tax expense; using ordinary income as a proxy for pre-tax suggests an implied tax rate around 26–27%, highlighting a data limitation. Several items are unreported or not disclosed in the data feed (e.g., equity ratio, investing cash flow, cash and equivalents, DPS, outstanding shares), and zeros should be interpreted as missing rather than actual zero. Consequently, free cash flow (FCF) cannot be calculated from the provided data due to absence of investing cash flows and capex detail. Despite disclosure gaps, the available metrics point to improving scale, resilient margins, and solid cash conversion. Key focus areas going forward include sustainability of demand, inventory turnover, FX impacts, and the trajectory of operating margins amid any cost normalization.

From Earnings Presentation: YONEX achieved record-high first-half results for the fiscal year ending March 2026, with net sales of 79,532 million yen (up 18.8% YoY) and operating income of 8,847 million yen (up 15.0%), marking both revenue and profit growth. Badminton was led by the robust Chinese market, while the new tennis product "EZONE" series performed well globally. Despite yen appreciation across all currencies, strong underlying demand absorbed this impact. SG&A expenses increased due to enhanced global marketing (advertising expenses +177 million yen, personnel costs +104 million yen), but gross profit growth exceeded this, maintaining an operating margin of 11.1%. Full-year forecasts were revised upward to net sales of 162,000 million yen (up 17.2% YoY) and operating income of 16,200 million yen (up 14.3%). The company will continue strategic investments based on the robust sports market and Global Growth Strategy (GGS), aiming to expand its fan base and improve profitability. Dividends are planned at 12 yen interim and 12 yen year-end for an annual total of 24 yen, maintaining a stable dividend policy.

Financial Analysis

Profitability

ROE of 8.61% is driven by net margin of 8.01%, asset turnover of 0.658x, and financial leverage of 1.63x (Assets/Equity = ¥120.84bn/¥73.999bn). Gross margin is 38.0% (¥30.25bn/¥79.53bn), reflecting favorable mix and pricing; operating margin is 11.1% (¥8.85bn/¥79.53bn), indicating disciplined SG&A control. EBITDA margin is 13.1% (¥10.38bn/¥79.53bn), providing a buffer against cost volatility. Ordinary income of ¥8.20bn sits slightly below operating income, suggesting minor non-operating headwinds (e.g., FX or other net). Interest expense is minimal at ¥67m, yielding interest coverage of ~132x (Operating income/Interest). Operating leverage appears positive given revenue growth (+18.8% YoY) outpaced operating income growth (+15.0% YoY) by a smaller margin, implying some reinvestment or cost normalization; margins remain structurally sound. Profitability quality is supported by OCF/NI at 1.21x, reducing concern over accrual-based earnings. Overall, profitability is solid with balanced margin expansion potential contingent on product/region mix and cost environment.

Growth

Top-line growth of 18.8% YoY to ¥79.53bn suggests robust demand in racquet sports and related categories, likely supported by international expansion and product refresh cycles. Operating income growth of 15.0% and net income growth of 17.4% indicate broadly sustainable profit growth, though slightly lagging revenue at the operating line points to some reinvestment or cost pressure. Asset turnover of 0.658x, in concert with growth, signals effective utilization of an expanding asset base; further efficiency gains could elevate ROE. The 38.0% gross margin and 13.1% EBITDA margin imply a healthy mix that can support reinvestment, marketing, and R&D to sustain growth. Absence of segment/region disclosures in this dataset limits visibility on drivers (e.g., badminton vs. tennis, Japan vs. overseas). Outlook hinges on continued channel momentum, inventory health, and FX (yen levels) affecting export competitiveness and translation. Near-term, revenue growth appears supported by market share gains and product cycle strength; medium-term sustainability will depend on innovation cadence, distribution breadth, and cost normalization in logistics and materials.

Financial Health

Total assets are ¥120.84bn with total equity of ¥73.999bn and total liabilities of ¥40.124bn, implying a liabilities-to-equity ratio of 0.54x and financial leverage (A/E) of 1.63x—both conservative. Liquidity is strong: current assets ¥73.22bn vs. current liabilities ¥24.93bn gives a current ratio of 293.7%; quick ratio is 235.6% after deducting inventories of ¥14.47bn. Working capital stands at ¥48.29bn, offering ample operating flexibility but requiring disciplined inventory and receivables management. Interest burden is de minimis (¥67m), and interest coverage is ~132x, indicating low refinancing risk. The reported equity ratio of 0.0% appears unreported rather than truly zero; based on provided totals, equity/asset ratio approximates 61.2% (¥73.999bn/¥120.838bn). Overall solvency and liquidity are strong, supporting capacity for investment and resilience to shocks.

Cash Flow

Operating cash flow (OCF) of ¥7.71bn against net income of ¥6.37bn yields an OCF/NI ratio of 1.21x, indicating solid earnings quality and manageable accruals. EBITDA of ¥10.38bn provides additional coverage for non-cash items and potential capex. Free cash flow cannot be computed from the provided data because investing cash flow is unreported (shown as 0 indicates missing); thus, FCF and FCF coverage metrics are not assessable here. Working capital appears a contributor to liquidity strength, but without detail on changes in inventories, receivables, and payables, the durability of OCF cannot be fully appraised. Cash and equivalents are shown as 0 in the dataset, which should be treated as undisclosed; therefore, net cash/debt positioning cannot be determined from this feed. Overall, cash conversion looks healthy based on OCF/NI, but full FCF assessment awaits capex and investment detail.

Dividend Sustainability

Dividend per share (DPS) and payout ratio are shown as 0, which indicates non-disclosure in this dataset rather than actual zero. With EPS of ¥74.55 and OCF of ¥7.71bn, coverage would likely be adequate for a moderate dividend if one is declared, but absent DPS and capex details, FCF coverage cannot be assessed. Policy cues (target payout ratio, stability vs. flexibility) are not available in the provided data. Given strong liquidity and low leverage, financial capacity for shareholder returns appears available, but sustainability should be evaluated against actual cash distributions, capex needs, and working capital investment once disclosed.

Business Outlook

Full-year forecasts anticipate net sales of 162,000 million yen (up 17.2% YoY) and operating income of 16,200 million yen (up 14.3%). The sports market is expected to remain robust, with continued demand for badminton in China and Asia, and sales expansion in tennis driven by new product effects and DTC strengthening globally. FX assumptions have been revised toward yen depreciation (USD 150 yen, RMB 21.0 yen, etc.), incorporating translation tailwinds. However, marketing enhancements and personnel/IT investments based on the Global Growth Strategy (GGS) will continue, with SG&A expenses expected to remain on an upward trend, though operating margin will be maintained at 10.0% through revenue growth effects. North America will continue internal organizational strengthening and DTC investment in the second half, with segment profit margin expected to recover gradually. Europe expects improved profitability through reduced advertising expenses related to international tournaments. Inventory will be maintained at appropriate levels, with limited deterioration in working capital expected.

Management Guidance

Management evaluated that "robust trends in the sports market and marketing activities leveraging international tournaments and sponsored athlete performances were successful." Based on first-half outperformance, full-year forecasts were revised upward. Going forward, management clearly stated their policy to "strengthen strategic investments toward growth outlined in the Global Growth Strategy (GGS)," emphasizing fan base expansion and brand recognition enhancement. While FX has trended toward yen depreciation compared to initial assumptions, management emphasizes underlying demand-based growth and has conservatively set FX assumptions (USD 150 yen, etc.). Dividend policy states "maintaining stable and appropriate dividend levels as a basic policy," with interim dividend of 12 yen (no special dividend), year-end dividend of 12 yen for an annual total of 24 yen. While DOE is not disclosed, management suggests room for increased dividends in line with profit growth. Medium-term goals include improving profitability and capital efficiency through "marketing for market vitalization and brand recognition expansion" and "deepening the Head to Toe proposition."

Strategic Initiatives

• Continue strategic investments based on Global Growth Strategy (GGS): marketing enhancement (advertising and personnel costs), DTC expansion, product development
• Strengthen "Head to Toe" proposition in badminton, with integrated offerings of rackets, apparel, bags, shoes, and accessories to improve average customer spend and brand loyalty
• Global rollout of new tennis product "EZONE" series. Expand recognition through marketing leveraging international tournament adoption
• Full-scale DTC launch in North America: EC site opened in the U.S. in April. Focus on improving product access, brand recognition expansion, and "Head to Toe" information dissemination
• Grassroots promotional activities in the Chinese market and marketing leveraging local representative team performances. International tournament in May recorded record-high attendance on the final day, activating the market
• Business facility development: real estate acquisition and capital investment related to new tennis factory (main driver of investment CF -7,256 million yen) to strengthen medium- to long-term production and supply capabilities
• Thorough product quality management: as losses from quality issues in certain products pressured gross margin, pursue quality control and cost reduction in parallel

Risk Assessment

Business Risks:

• Demand cyclicality in racquet sports and fitness categories impacting sell-through and channel inventory
• Product cycle and innovation risk across badminton, tennis, and golf equipment and apparel
• Raw material cost volatility (carbon fiber, resins, aluminum) affecting gross margin
• FX exposure (JPY volatility) impacting export competitiveness and translation of overseas earnings
• Geographic concentration risks in key growth markets (e.g., Asia) including regulatory and macro factors
• Supply chain and logistics disruptions affecting lead times and freight costs
• Inventory obsolescence risk due to seasonality and model refresh cycles
• Brand marketing and sponsorship ROI uncertainty

Financial Risks:

• Working capital intensity (inventory and receivables) potentially absorbing cash in growth periods
• Limited visibility on cash and investing flows due to disclosure gaps in this dataset
• Potential tax rate variability across jurisdictions (implied ~26–27% vs. reported metric inconsistency)
• Currency translation and transaction impacts on earnings volatility
• Interest rate changes have limited impact currently but could affect future financing costs if leverage increases

Key Concerns:

• Incomplete disclosure of investing cash flow, cash balance, and dividend data impedes FCF and payout analysis
• Sustainability of elevated revenue growth amid potential normalization of post-pandemic sports demand
• Need for ongoing inventory discipline to protect cash conversion as scale increases

Risk Factors from Presentation:

• Rising costs: increases in materials and logistics costs pressured gross margin (one factor in -1.3pt gross margin decline)
• Losses from quality issues in certain products (explicitly stated as a specific negative factor in gross margin decline)
• FX fluctuations: yen appreciation creates negative translation impact (first half: -1,665 million yen). Future changes in FX assumptions are a risk factor
• Continued SG&A expense increases: risk of rising SG&A expense ratio due to global marketing enhancement and personnel/DTC investments
• North America profitability: DTC investment and internal organizational strengthening temporarily pressure profit margin (first-half operating income -13.0%)
• Fluctuations in marketing effectiveness dependent on international tournament schedules and athlete performances
• Inventory buildup risk (first-half levels are appropriate, but adjustment risk during demand fluctuations)

Investment Implications

Key Takeaways:

• Revenue growth of +18.8% YoY with stable-to-healthy margins underscores solid demand and execution
• ROE of 8.61% is balanced and supported by strong liquidity and modest leverage
• OCF/Net Income of 1.21x indicates good earnings quality and cash conversion
• Interest coverage of ~132x and liabilities/equity of 0.54x reflect low financial risk
• Disclosure gaps (investing CF, cash, DPS) limit FCF and capital return assessment despite favorable fundamentals

Metrics to Watch:

• Gross margin trajectory and mix (product/region) relative to material and freight costs
• Operating margin and SG&A efficiency as growth scales
• Inventory turnover and working capital days to safeguard cash conversion
• FX rates (JPY) and their impact on revenue and margins
• Capex and investing cash flows to assess true FCF and ROIC
• Tax rate normalization vs. implied effective tax rate
• Order momentum and channel inventory in key markets

Relative Positioning: Within Japan-listed sporting goods peers, Yonex exhibits strong balance sheet quality, solid mid-teens EBITDA margin, and healthy cash conversion, positioning it as a disciplined, brand-driven operator with lower financial risk and steady ROE, albeit with some reliance on sustained product cycle strength and effective inventory management.

Supplementary Insights (Key Highlights)

• First half achieved record-high consolidated net sales and operating income ("record-high" not explicitly stated in GPT analysis)
• Badminton was driven primarily by the Chinese market, with the "Head to Toe" proposition succeeding, expanding sales across a wide range of products including apparel and bags (segment and category details unclear in GPT analysis)
• Tennis was led by the new "EZONE" series in North America and Europe, improving global brand recognition (product-level specificity)
• Currency headwinds across all currencies YoY (USD -2.4%, RMB -2.8%, etc.) resulted in a translation impact of -1,665 million yen, but was absorbed by underlying demand growth (GPT analysis lacks quantitative FX impact assessment)
• Asia segment showed highest growth with sales +26.2% and operating income +19.2% (particularly China and Taiwan), driving consolidated performance (clear quantitative assessment of segment contribution)
• North America saw sales +24.6% but operating income -13.0%. DTC launch (EC site opened in April) drove investment and increased SG&A expenses (GPT analysis lacks specificity on DTC investment)
• Gross margin declined 1.3pt YoY to 43.9%. Impacted by rising costs and losses from quality issues in certain products (quality issues are specific negative factors not mentioned in GPT analysis)
• SG&A expenses increased 15.4%. Main factors: advertising expenses +177 million yen, personnel costs +104 million yen, R&D expenses +23 million yen (detailed breakdown by expense category)
• Full-year forecast revised upward: sales from 148,000 to 162,000 million yen, operating income from 14,800 to 16,200 million yen. FX assumptions also revised toward yen depreciation (USD 140→150 yen, etc.) (forecasts not reflected in GPT analysis)
• Investment CF was -7,256 million yen, primarily due to real estate acquisition for business facilities and capital investment related to new tennis factory (GPT analysis lacked clarity on investment CF breakdown)
• FCF was 494 million yen, down 4,101 million yen YoY. Prioritizing growth investments while securing cash on hand for strategic investments (background of FCF decline clarified)
• Tangible fixed assets +5,475 million yen, interest-bearing debt +7,277 million yen, with capital investment and increased borrowing linked (correspondence between asset and liability changes unclear in GPT analysis)

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