MITSUMURA PRINTING CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.70B
• Operating Income: ¥-102M
• Net Income: ¥133M
• EPS: ¥41.84

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

Verdict: Mixed quarter with resilient bottom-line optics but weak core operations, as operating loss persisted while net income turned positive on non-operating income and a large tax credit. Revenue declined 3.8% YoY to 66.95, indicating continued softness in print demand. Gross profit was 12.27, yielding an 18.3% gross margin, but SG&A of 13.30 (19.9% of sales) pushed operating income to -1.02 (operating margin -1.5%). Ordinary income was -0.49 despite 1.07 in non-operating income, underlining structural pressure in the core business. Dividend income of 0.90 covered much of the gap between operating and ordinary loss, highlighting reliance on financial assets. Net income reached 1.28 (+41.7% YoY), driven by a sizable tax credit (income tax -2.01) that more than offset the pre-tax loss of -0.68. Total comprehensive income surged to 9.56, likely reflecting large unrealized gains on investment securities, not operating improvements. EBITDA was 4.07 (margin 6.1%), supported by 5.09 in D&A, but EBIT-based interest coverage was -2.82x, indicating that recurring operating earnings do not cover interest. ROE was 0.7% (DuPont: 1.9% margin × 0.236x turnover × 1.53x leverage), constrained by low asset turnover and thin margins. ROIC printed -0.3%, well below a reasonable cost of capital benchmark and a capital efficiency warning. Liquidity remains strong (current ratio 216.6%), with cash and deposits at 34.36 versus short-term loans of 16.10, mitigating near-term refinancing risk. Operating cash flow of 2.97 exceeded net income (OCF/NI 2.32x), indicating decent earnings quality this quarter; estimated FCF after capex is roughly 0.76. However, the calculated payout ratio of 121.2% suggests potential dividend strain unless supported by asset-derived cash flows; dividend details were not disclosed. Margin comparison vs prior year is not quantifiable from disclosures; directionally, negative operating margin amid lower sales implies ongoing margin pressure, while the net income improvement stems from below-the-line items rather than operating leverage. Forward-looking, stabilization hinges on SG&A control, mix improvement, and less reliance on dividend income and tax effects; without these, ROE and ROIC are likely to remain subdued.

Profitability Analysis

DuPont decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 1.9% × 0.236 × 1.53 ≈ 0.7%. The primary constraints on ROE are low asset turnover and a very slim net margin. Operating margin is -1.5% (operating loss of -1.02 on revenue of 66.95), indicating core operations detract from profitability; the reported positive net margin is due to dividend income and a large tax credit. Gross margin of 18.3% is insufficient to cover SG&A at 19.9% of sales, causing an operating deficit; this ratio mix is the key structural issue. Ordinary loss (-0.49) despite non-operating income of 1.07 emphasizes heavy reliance on financial and non-core income to bridge operating underperformance. While EBITDA margin is 6.1%, D&A of 5.09 indicates an asset-heavy base depressing EBIT and ROIC. Given the lack of YoY segment or cost detail, the largest effective change versus revenue appears to be the net line aided by tax benefits; this looks non-recurring and is unlikely to be a reliable profit driver. Sustainability: unless SG&A is reduced or gross margin improves via mix/pricing, operating losses risk persisting. Concerning trend flags: SG&A ratio (19.9%) exceeds gross margin (18.3%), ensuring negative operating leverage at current scale; reliance on non-operating income (non-operating income ratio 83.3%) heightens earnings volatility.

Growth Assessment

Top-line contracted 3.8% YoY to 66.95, reflecting end-market softness and secular digital substitution pressures in printing. Gross profit of 12.27 implies limited pricing power or cost pass-through, given gross margin at 18.3%. Operating income of -1.02 shows growth did not leverage into profit; instead, negative operating leverage is evident with SG&A exceeding gross profit. Net income growth (+41.7% YoY to 1.28) is not indicative of underlying growth quality, as it stems from non-operating items (dividends) and an outsized tax credit. EBITDA of 4.07 offers some buffer, but conversion to EBIT is weak due to high D&A, consistent with asset intensity. Revenue sustainability is challenged near term without evidence of new growth vectors, product mix shifts, or cost take-out; no R&D or segment disclosures were provided. Outlook hinges on cost discipline and improving order intake; otherwise, revenue declines could persist and pressure margins further.

Financial Health

Liquidity is strong: current ratio 216.6% and quick ratio 216.6% (inventories unreported), with current assets 98.26 covering current liabilities 45.36 by a wide margin. Cash and deposits of 34.36 plus accounts receivable of 18.11 exceed short-term loans of 16.10 and accounts payable of 17.30, suggesting low maturity mismatch risk. Solvency appears conservative: D/E is 0.53x and total liabilities are 98.22 against total equity of 185.71. Interest coverage on an EBIT basis is -2.82x, a warning that operating profits do not currently service interest; however, liquidity mitigates immediate distress. Noncurrent liabilities of 52.86 are meaningful; long-term loan details were unreported, limiting tenor analysis. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

OCF of 2.97 exceeds net income of 1.28 (OCF/NI 2.32x), indicating high-quality earnings this quarter, likely aided by non-cash D&A (5.09) and/or working capital release (details not disclosed). Estimated FCF is approximately 0.76 (OCF 2.97 minus capex 2.21), positive despite operating loss. The sustainability of OCF is uncertain given operating losses; persistence may require continued working capital inflows or ongoing dividend income from securities holdings. No signs of working capital manipulation are identifiable from the limited disclosure; inventories and detailed WC movements were unreported. Financing CF was -7.58, suggesting net debt repayment and/or dividends, but the composition is not disclosed.

Dividend Sustainability

Dividend details were not reported, but a calculated payout ratio of 121.2% implies dividends exceeded current-period earnings. With estimated FCF of 0.76 and unknown dividend outflow, coverage cannot be confirmed; if dividends approximate the implied payout, FCF may be insufficient without drawing on cash or asset monetization. Balance sheet liquidity (cash 34.36) provides near-term flexibility, but sustaining a >100% payout amid operating losses is risky. Policy outlook likely hinges on cash generation from operations improving and stability of dividend income from investment securities; without that, maintaining payout may pressure balance sheet resources.

Risk Assessment

Business Risks:

• Structural decline in print demand and customer digitalization pressures revenue and pricing.
• Gross margin (18.3%) below SG&A ratio (19.9%) drives recurring operating losses at current scale.
• Cost inflation in paper, ink, and energy may be hard to pass through fully.
• Customer concentration risk typical of print jobs (not disclosed but industry common).
• Execution risk in cost restructuring and capacity utilization.

Financial Risks:

• Negative EBIT interest coverage (-2.82x) despite adequate liquidity.
• Earnings reliance on non-operating income (dividend income 0.90; non-operating income ratio 83.3%).
• Volatile tax effects (effective tax rate 296.1%) underpinning net profit; likely non-recurring.
• ROIC at -0.3% signals value-destruction risk if maintained.
• Market valuation risk of investment securities (TCI 9.56 suggests sensitivity to market swings).

Key Concerns:

• Sustained operating losses with shrinking revenue base.
• Dividend sustainability given >100% calculated payout ratio and uncertain FCF coverage.
• Limited disclosure on inventories, long-term debt, and dividend policy limits visibility.
• Asset-heavy structure (high D&A) depresses EBIT and capital efficiency.

Investment Implications

Key Takeaways:

• Core business unprofitable this quarter (operating margin -1.5%) despite positive net income.
• Net income quality is supported by cash flow (OCF/NI 2.32x) but aided by non-core items (tax credit, dividends).
• Liquidity robust (current ratio 216.6%); near-term refinancing risk low.
• Capital efficiency weak (ROIC -0.3%, ROE 0.7%) due to low asset turnover and thin margins.
• High sensitivity to market-driven gains/losses on securities (comprehensive income 9.56).

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio
• Gross margin progression and input cost pass-through
• Equity and dividend income from investment securities
• OCF versus NI and estimated FCF after capex
• Interest coverage and debt tenor (when disclosed)
• ROIC and asset turnover improvement

Relative Positioning: Within Japan’s printing sector, the company appears more asset-heavy with lower asset turnover and greater reliance on financial asset income than peers focused on lightweight, digital-adjacent services; liquidity is stronger than average, but profitability and ROIC lag.

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