TOPPAN Holdings Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥863.62B
• Operating Income: ¥24.79B
• Net Income: ¥37.75B
• EPS: ¥103.92

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

TOPPAN Holdings (7911) reported FY2026 Q2 (cumulative) results with topline resilience but margin pressure. Revenue rose 4.3% YoY to ¥863.6bn, while operating income fell 12.8% YoY to ¥24.8bn, indicating negative operating leverage in the period. Gross profit of ¥191.2bn implies a gross margin of 22.1%, but the operating margin compressed to 2.9%, reflecting higher SG&A, cost inflation, or unfavorable mix. Ordinary income of ¥26.1bn exceeded operating income by about ¥1.3bn, suggesting positive non-operating balance (e.g., interest/dividend income or FX gains) partly offsetting weak core margins. Net income was ¥29.9bn (-9.2% YoY), with a net margin of 3.46%; the net result likely benefited from non-operating and/or extraordinary items, given net income exceeds ordinary income. DuPont analysis shows ROE of 2.12%, driven by modest asset turnover of 0.352x and financial leverage of 1.74x; profitability is the main constraint on ROE. Liquidity remains strong: current ratio 171% and quick ratio 163.5%, with working capital of ¥584.0bn. Leverage is moderate with liabilities-to-equity of 0.78x, and interest coverage is healthy at 9.3x, indicating manageable financial risk. Operating cash flow was ¥40.2bn, exceeding net income (OCF/NI = 1.35x), a positive signal for earnings quality. Investing cash flow and cash balances are unreported (shown as zero), preventing free cash flow estimation and cash runway analysis. The reported effective tax rate metric (0.0%) is not reliable given the presence of income tax expense; tax effects cannot be precisely assessed with available items. Dividend data (DPS and payout) are also unreported for the period, limiting visibility on shareholder return policy within the half. Overall, the company demonstrates revenue growth and solid liquidity, but weaker operating profitability is the key near-term issue. Absent investing cash flow disclosure, capital intensity and capex discipline cannot be evaluated this quarter. Outlook hinges on easing cost pressures, price pass-through in packaging/printing, and demand normalization in electronics-related businesses. Data limitations are material for certain conclusions, but available figures support a cautious interpretation of profitability quality and a positive view on balance sheet strength.

Profitability Analysis

ROE_decomposition: ROE 2.12% = Net margin 3.46% × Asset turnover 0.352 × Financial leverage 1.74. Profitability (net margin) is the primary drag on ROE; leverage is moderate and asset turns are typical for a diversified print/packaging/electronics group. margin_quality: - Gross margin: 22.1% on revenue of ¥863.6bn and gross profit of ¥191.2bn.

• Operating margin: 2.9% (¥24.8bn OI), down YoY as OI declined 12.8% despite +4.3% revenue, indicating margin compression.
• Net margin: 3.46% (¥29.9bn NI); net exceeded ordinary income, pointing to supportive non-operating/extraordinary items.
• EBITDA: ¥63.6bn; EBITDA margin 7.4%, offering cushion over operating profit but still modest for capital-intensive segments. operating_leverage: Negative in the period: revenue +4.3% YoY vs operating income -12.8% YoY indicates fixed cost absorption and/or mix effects outweighed growth. Focus areas likely include SG&A discipline, raw material and energy cost pass-through, and product mix in packaging/electronics.

Growth Assessment

revenue_sustainability: Topline growth of 4.3% YoY suggests stable demand in core segments (packaging, information & communication, and electronics). Sustainability will depend on continued price revisions, secular demand in packaging, and recovery in electronics photomasks/IoT-related orders. profit_quality: Net income benefited from non-operating/extraordinary items given ordinary < net income. Core profitability weakened at the operating level, indicating lower profit quality relative to topline. OCF/NI at 1.35x supports earnings conversion, partially offsetting concern. outlook: If input cost pressures normalize and price pass-through gains traction, margins could recover. Conversely, persistent cost inflation, adverse mix, or softness in electronics would cap operating margin. With limited tax/extraordinary detail, reported bottom line may be more volatile near term.

Financial Health

liquidity: Current assets ¥1,406.9bn vs current liabilities ¥822.9bn => current ratio 171%. Quick ratio 163.5% (inventories ¥61.8bn) indicates strong short-term coverage. Working capital stands at ¥584.0bn. solvency: Total liabilities ¥1,096.5bn vs equity ¥1,408.5bn => liabilities-to-equity 0.78x (moderate). Interest coverage 9.3x (EBIT/interest of ¥24.8bn/¥2.7bn) indicates adequate ability to service debt. capital_structure: Financial leverage 1.74x (assets/equity) is conservative to moderate for the sector. Equity ratio not disclosed in the dataset; assessment relies on balance sheet totals. Balance sheet flexibility appears sound.

Cash Flow Quality

earnings_quality: OCF ¥40.2bn vs NI ¥29.9bn => OCF/NI 1.35x, indicating reasonable accrual quality and cash conversion for the half. FCF_analysis: Investing CF is undisclosed (reported as 0), preventing free cash flow calculation. Given capital-intensive businesses, capex could be meaningful; lack of data is a key limitation. working_capital: With strong liquidity metrics and modest inventories relative to current assets, working capital management appears supportive to OCF, but detailed drivers (receivables/payables days) are not available.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are shown as 0.00, which indicates non-disclosure in this dataset rather than actual zero; EPS for the period is ¥103.92. Without declared dividends, payout cannot be assessed for the half. FCF_coverage: FCF is indeterminable due to unreported investing cash flows; dividend coverage by FCF cannot be evaluated this quarter. policy_outlook: Historically, the company has balanced investment with shareholder returns; near-term sustainability would depend on operating cash generation, capex needs (electronics/packaging), and balance sheet capacity, all of which appear generally supportive but not quantifiable here.

Risk Assessment

Business Risks:

• Cost inflation for paper, resin, and energy pressuring margins and price pass-through timing
• Structural decline in legacy printing offset only partially by packaging and digital solutions
• Demand cyclicality in electronics (e.g., photomasks/semiconductor-related) affecting mix
• Customer concentration and pricing pressure from large FMCG and tech clients
• FX volatility impacting overseas revenues/costs

Financial Risks:

• Potential increase in interest burden if rates rise, although current coverage is comfortable
• Capex intensity in electronics and packaging could lift leverage absent strong OCF
• Working capital swings (receivables/payables) could affect cash conversion
• Earnings volatility from non-operating/extraordinary items influencing bottom line

Key Concerns:

• Operating margin compression despite revenue growth (negative operating leverage)
• Limited visibility on capex and FCF due to undisclosed investing cash flows
• Tax and extraordinary item impacts not transparent; reported ETR metric unreliable

Investment Implications

Key Takeaways:

• Topline grew 4.3% YoY to ¥863.6bn; core operating profit declined 12.8% YoY
• Operating margin at 2.9% and EBITDA margin at 7.4% indicate pressure on profitability
• Net margin 3.46% benefited from non-operating/extraordinary items
• OCF of ¥40.2bn with OCF/NI 1.35x supports earnings quality
• Balance sheet is resilient: current ratio 171%, liabilities/equity 0.78x, interest cover 9.3x
• ROE is low at 2.12%, constrained by modest margins and asset intensity
• Key data gaps (investing CF, cash balance, dividends) limit FCF and capital allocation analysis

Metrics to Watch:

• Operating margin progression and SG&A ratio
• Price pass-through and gross margin recovery vs input costs
• OCF/NI ratio and working capital days (DSO/DPO/DOH)
• Capex and investing cash flows to assess FCF and capital intensity
• Non-operating/extraordinary gains/losses impacting ordinary vs net income
• Interest coverage and leverage trajectory amid potential rate moves
• Segment mix trends (packaging vs electronics vs information/communication)

Relative Positioning: Within domestic peers in printing/packaging/electronics, TOPPAN shows better-than-flat revenue growth and strong liquidity, but faces margin compression and a low ROE profile; leverage is moderate and financial flexibility compares favorably, while profitability lags best-in-class packaging-focused 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