MITSUMURA PRINTING CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.70B
• Operating Income: ¥-102M
• Net Income: ¥-339M
• 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

Mitsumura Printing Co., Ltd. (TSE:7916) reported FY2026 Q2 consolidated results under JGAAP showing revenue of ¥6.695bn, down 3.8% YoY, reflecting continued softness in core printing demand. Gross profit was ¥1.098bn, implying a gross margin of 16.4%, which is modest for the sector and suggests limited pricing power amid input cost pressures. Operating income remained in the red at -¥102m (flat YoY), indicating that SG&A savings were insufficient to offset lower volumes and/or lingering cost inflation. Ordinary income improved to -¥49m, while net income turned positive at ¥128m (+41.7% YoY), implying material non-operating and/or extraordinary gains offsetting the operating loss. EBITDA was ¥380m (5.7% margin), highlighting some underlying cash earnings capacity despite negative EBIT, supported by ¥482m of D&A. The DuPont bridge shows a net margin of 1.91%, asset turnover of 0.236x, and financial leverage of 1.53x, yielding a low calculated ROE of 0.69%, consistent with the reported ROE. Liquidity appears solid with a current ratio of 192.8% and working capital of ¥4.996bn, providing near-term cushion. Solvency is conservative with total liabilities of ¥9.945bn against equity of ¥18.571bn (debt-to-equity 0.54x), limiting balance sheet risk. Operating cash flow of ¥177m exceeded net income (OCF/NI 1.38x), a positive signal for earnings quality this half. However, several items reported as zero (e.g., inventories, investing cash flows, cash balance, equity ratio, shares outstanding) reflect non-disclosure or different tagging, not actual zero values, and constrain deeper analysis of capital intensity, liquidity buffers, and per-share metrics. Interest expense was ¥26m with EBIT-based coverage of -3.9x, underscoring that operating profitability remains the core issue despite manageable leverage. The effective tax rate metric appears distorted (shown as 0.0%) relative to reported income tax of ¥21m, likely due to non-comparable pretax components under JGAAP. Dividend payout is currently nil (DPS ¥0, payout 0%), consistent with the priority of rebuilding sustainable profitability and cash generation. Overall, the quarter shows resilient liquidity and modest cash generation but persistent operating losses and a very low ROE, with net income supported by non-operating items. Visibility on capex, investment cash flows, and cash reserves is limited due to disclosure gaps, which should be monitored closely in subsequent filings.

Profitability Analysis

ROE decomposition (DuPont): Net margin 1.91% × Asset turnover 0.236 × Financial leverage 1.53 = ROE 0.69%. The low ROE is primarily driven by weak profitability (negative operating margin) and slow asset turnover typical of capital-intensive print operations. Gross margin of 16.4% indicates modest value-add; any uptick in paper and energy costs or pricing pressure can quickly compress profits. Operating margin is -1.5% (operating loss of ¥102m on ¥6.695bn sales), signaling that SG&A intensity remains high relative to revenue scale. EBITDA margin of 5.7% shows some operating cash earnings but insufficient to cover D&A and deliver positive EBIT. Interest expense of ¥26m is relatively small, yet negative EBIT results in an EBIT interest coverage of -3.9x; ordinary income improved to -¥49m, suggesting some non-operating support (e.g., financial income, subsidies, or equity method). Margin quality appears fragile, with net income positive due to below-OP or extraordinary factors under JGAAP; sustainability into 2H depends on restoring operating profitability. Operating leverage remains adverse: small revenue declines (-3.8% YoY) led to an operating loss, implying high fixed cost absorption and limited flexibility. To improve ROE, the company needs either volume recovery, price/mix improvement, or structural SG&A and manufacturing cost reductions.

Growth Assessment

Revenue declined 3.8% YoY to ¥6.695bn, consistent with industry headwinds in commercial/educational printing and potential project timing effects. The absence of volume/mix disclosure limits granularity, but the negative top-line print and weak asset turnover (0.236x) point to subdued demand and underutilization of assets. Profit growth at the bottom line (+41.7% YoY net income to ¥128m) is not reflective of core operations, given the operating loss remained unchanged; this likely stems from non-operating gains or improved financial items. EBITDA of ¥380m provides some cushion, but D&A of ¥482m indicates capital intensity and aging asset base that may continue to weigh on EBIT unless utilization improves. Outlook hinges on cost pass-through, mix shift to higher-value segments (e.g., packaging, security/ID, or digital services), and potential recovery in order intake during 2H seasonality; however, near-term growth visibility is limited. Without disclosed backlog, segment data, or capex, we assume cautious revenue stabilization and a focus on cost discipline rather than aggressive expansion. Quality of growth remains questionable until operating income turns positive and is supported by sustained gross margin expansion and SG&A efficiency.

Financial Health

Liquidity: Current assets of ¥10.377bn versus current liabilities of ¥5.382bn yield a current ratio of 192.8% and strong working capital of ¥4.996bn; the quick ratio equals the current ratio due to inventories being unreported (0 indicates non-disclosure). Cash and equivalents are undisclosed (reported as 0), so the immediate liquidity buffer cannot be quantified from this dataset. Solvency: Total liabilities of ¥9.945bn and equity of ¥18.571bn imply a debt-to-equity ratio of 0.54x, conservative for the sector. The equity ratio is shown as 0% due to data limitations rather than actual capital structure. Interest burden is manageable in absolute terms (¥26m), but negative EBIT keeps coverage technically negative. Capital structure: Leverage (assets/equity) of 1.53x is modest; there is ample equity base relative to assets, providing flexibility if restructuring or selective investments are needed.

Cash Flow Quality

Earnings quality: OCF of ¥176.8m vs net income of ¥128.0m results in OCF/NI of 1.38x, a constructive signal suggesting supportive working capital movements or non-cash charges (notably ¥482m D&A). Free cash flow cannot be reliably calculated as investing cash flows and capex are undisclosed (reported as 0 due to non-disclosure). Working capital: With strong headline working capital of ¥4.996bn and a near-2.0x current ratio, the company appears to have room to manage receivables and payables; however, the lack of inventory data constrains turnover analysis and the assessment of operational efficiency improvements. Cash conversion: EBITDA of ¥380m and positive OCF indicate reasonable cash conversion from operating activities in the half, but sustainability requires turning EBIT positive and maintaining discipline in receivables/payables. Financing cash flow of -¥289m suggests debt repayment or other financing outflows; dividends are currently nil, so cash was likely deployed to reduce leverage or other financial liabilities.

Dividend Sustainability

The company paid no dividends in the period (DPS ¥0; payout ratio 0%), aligning with the priority to restore operating profitability and safeguard liquidity. With negative operating income and limited visibility on free cash flow (investing cash flows not disclosed), committing to distributions would be premature. OCF was positive at ¥177m, but without capex disclosure, FCF coverage of potential dividends cannot be assessed (reported 0.00x is a placeholder). Policy outlook likely remains conservative until EBIT turns positive, interest coverage improves, and capex requirements are clarified. Once operating margins stabilize and FCF is demonstrably positive after maintenance capex, a modest payout could be reconsidered, subject to maintaining balance sheet strength.

Risk Assessment

Business Risks:

• Structural decline in traditional commercial printing demand and digitization headwinds
• Input cost volatility (paper, ink, energy) with limited pass-through ability
• Customer concentration and competitive pricing pressure in bids
• Project timing variability leading to revenue lumpiness and utilization swings
• Execution risk in shifting mix toward higher-margin segments or services
• Labor cost inflation and skilled labor constraints

Financial Risks:

• Persistent operating losses leading to negative EBIT interest coverage
• Unclear cash balance and capex profile due to non-disclosure, obscuring FCF visibility
• Potential asset impairment risk if utilization remains low relative to D&A
• Working capital volatility affecting OCF in weaker quarters
• Exposure to non-operating/extraordinary items to support bottom line under JGAAP

Key Concerns:

• Operating income remained negative at -¥102m despite cost controls
• Net income positivity relies on non-operating items rather than core operations
• Limited disclosure on inventories, cash, investing cash flows, and share data hampers detailed analysis
• Low ROE of 0.69% driven by weak margins and slow asset turnover
• Interest coverage remains negative, highlighting urgency to restore EBIT

Investment Implications

Key Takeaways:

• Top line declined 3.8% YoY to ¥6.695bn amid ongoing industry headwinds
• Gross margin at 16.4% and EBITDA margin at 5.7% indicate thin economic buffer
• Operating income stayed negative at -¥102m; ROE is a low 0.69%
• Liquidity is solid (current ratio 192.8%; working capital ¥4.996bn) and leverage modest (D/E 0.54x)
• OCF exceeded net income (1.38x), but FCF is indeterminable due to missing investing cash flow data
• Dividend remains suspended (DPS ¥0) pending operating recovery

Metrics to Watch:

• Gross margin progression and SG&A ratio to revenue
• EBITDA margin and inflection to positive EBIT
• OCF/NI ratio and working capital days (receivables, payables, inventories when disclosed)
• Capex and investing cash flows to gauge maintenance vs growth spending
• Order intake/backlog and revenue mix toward higher-margin categories
• Interest coverage and leverage trajectory
• Any disclosure on cash and cash equivalents to assess liquidity buffer

Relative Positioning: Within Japan’s printing and related services peers, Mitsumura exhibits weaker operating margins and ROE but maintains a comparatively conservative balance sheet with adequate liquidity; near-term competitiveness depends on cost discipline and mix shift rather than leverage-fueled growth.

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