Nippi,Incorporated FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.02B
• Operating Income: ¥2.06B
• Net Income: ¥1.14B
• EPS: ¥470.15

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

Nippi Co., Ltd. (79320) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a modest revenue contraction. Revenue was ¥24.02bn (-3.9% YoY), while operating income increased 24.9% YoY to ¥2.06bn, evidencing strong operating leverage and cost control. Gross profit of ¥6.34bn translates to a 26.4% gross margin, with SG&A estimated at ¥4.29bn (17.9% of sales). Operating margin expanded to 8.6%, and ordinary income reached ¥2.15bn, supported by limited interest burden and positive non-operating items. Net income was ¥1.35bn (+21.9% YoY), with a reported net margin of 5.62%. OCF was robust at ¥2.69bn, implying an OCF margin of ~11.2% and an OCF/NI ratio of 1.99, indicating good earnings-to-cash conversion for the half. The balance sheet is conservative: total assets of ¥70.39bn and equity of ¥40.61bn imply an equity ratio of approximately 57.7% (computed; the reported 0% is an undisclosed placeholder), and the current ratio is a healthy 188%. Debt-to-equity (using total liabilities) is 0.73x, though interest-bearing debt is not specified. DuPont decomposition shows ROE of 3.33% for the half-year (annualized ~6.7%) driven by a 5.62% net margin, 0.341x asset turnover, and 1.73x financial leverage. Interest coverage is strong at 32.1x, reflecting low financial risk. The gap between ordinary income and pre-tax earnings implied by the tax charge suggests roughly ¥0.3bn of net extraordinary or other adjustments. Dividend data indicate no interim DPS disclosed (0.00 placeholder), and payout ratio shows 0% for the period. Several items are not disclosed in XBRL (cash balance, investing cash flows, share count, equity ratio), limiting certain trend and per-share analyses. Overall, profitability improved on a lower sales base, cash flow quality is solid, and the balance sheet remains strong, but ROE is still modest and visibility on capex/FCF is limited.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.62%
• asset_turnover: 0.341
• financial_leverage: 1.73
• calculated_ROE_half_year: 3.33% (annualized ~6.7%)
• ROA: 1.92% (NPM x ATO) margin_quality:
• gross_margin: 26.4% (¥6,344m GP on ¥24,020m sales)
• operating_margin: 8.6% (¥2,056m OI)
• ordinary_margin: 8.9% (¥2,146m)
• net_margin: 5.62% (¥1,351m)
• SGA_ratio_est: 17.9% (¥4,288m)
• commentary: Operating margin expansion despite revenue decline points to effective cost control/mix improvement. Non-operating income net of interest appears positive (ordinary income exceeded operating income by ~¥90m despite ¥64m interest expense). operating_leverage: Revenue declined 3.9% YoY while operating income grew 24.9% YoY, indicating favorable operating leverage from lower fixed cost intensity and/or improved product mix. EBITDA margin of 11.5% (¥2,767m) supports improved operating efficiency.

Growth Assessment

revenue_sustainability: Top-line contraction (-3.9% YoY) suggests softness in certain end-markets; sustainability will depend on segment mix (e.g., higher-margin collagen/biomaterials vs. legacy products) and pricing power. No segment breakdown was disclosed here. profit_quality: Net income growth (+21.9% YoY) outpaced revenue due to margin expansion. Interest burden is small (¥64m), and ordinary income benefited from net non-operating gains (~¥154m before interest). Tax expense implies an effective tax rate near the low 20s rather than 0%. outlook: If margin discipline persists, H2 profitability could remain robust even on flattish sales. However, sustaining growth will require stabilizing volumes and/or price increases. Watching order trends, cost inflation (energy/raw materials), and FX is key. Absent disclosure on backlogs or guidance, near-term growth visibility is moderate.

Financial Health

liquidity:

• current_ratio: 187.7% (CA ¥27.57bn / CL ¥14.69bn)
• quick_ratio: 132.9% (Quick assets ~¥19.52bn)
• working_capital: ¥12.88bn
• commentary: Strong liquidity with ample buffer over short-term obligations. solvency:
• equity_ratio_computed: 57.7% (Equity ¥40.61bn / Assets ¥70.39bn; reported 0% was undisclosed)
• debt_to_equity_total_liabilities_basis: 0.73x
• interest_coverage: 32.1x (EBIT/Interest)
• commentary: Low leverage and high interest coverage indicate conservative solvency risk; interest-bearing debt specifics are not disclosed here. capital_structure: Assets ¥70.39bn, liabilities ¥29.60bn, equity ¥40.61bn. Financial leverage of 1.73x supports a modest ROE profile given conservative balance sheet.

Cash Flow Quality

earnings_quality: OCF/Net Income at 1.99 indicates strong cash realization of earnings for the period. free_cash_flow_analysis: OCF was ¥2.69bn. Investing cash flow and capex are undisclosed (reported as 0 due to non-disclosure), so true FCF cannot be determined from the provided data. working_capital: Inventories were ¥8.05bn at period-end; without beginning balances we cannot quantify inventory or receivables movements, but the high OCF suggests favorable working capital dynamics (e.g., collection or inventory normalization). additional_notes: EBITDA of ¥2.77bn vs. OCF of ¥2.69bn implies limited non-cash add-backs beyond D&A and controlled working capital outflows.

Dividend Sustainability

payout_ratio_assessment: Interim DPS is not disclosed (placeholder 0.00) and payout ratio shows 0%. With net income of ¥1.35bn in H1, there is capacity for distributions, but policy details are not provided. FCF_coverage: Not assessable due to missing capex/investing CF disclosure. OCF coverage of hypothetical dividends would be strong based on H1 OCF, but this is contingent on actual capex. policy_outlook: Given low leverage and solid cash generation, the balance sheet could support dividends. However, without capex plans and explicit policy, sustainability and trajectory cannot be concluded.

Risk Assessment

Business Risks:

• End-market demand variability in industrial materials and collagen/gelatin applications
• Raw material price volatility (e.g., hides/skins, collagen inputs) and energy costs
• Product mix shifts affecting margins
• Regulatory and quality requirements for biomedical and food-grade products
• FX fluctuations impacting import costs and export competitiveness
• Customer concentration risk if large accounts dominate volumes

Financial Risks:

• Potential capex needs not disclosed could pressure FCF in H2
• Extraordinary items (~¥0.3bn negative implied) introduce earnings volatility
• Limited disclosure on interest-bearing debt and cash could mask net leverage dynamics
• Working capital swings (inventories/receivables) could impact OCF

Key Concerns:

• Sustaining margin gains amid a declining revenue base
• Lack of visibility on capex and investing cash flows limits FCF assessment
• ROE remains modest even with leverage low (3.33% for H1; ~6–7% annualized)

Investment Implications

Key Takeaways:

• Profitability improved materially despite a 3.9% YoY revenue decline; OPM 8.6%
• Strong cash conversion with OCF/NI ~2.0 and OCF margin ~11%
• Balance sheet conservative: computed equity ratio ~57.7%, interest coverage 32x
• ROE still modest at 3.33% for the half (annualized ~6.7%), constrained by low asset turnover
• Non-operating line net positive pre-interest; ~¥0.3bn implied extraordinary/other losses reduce pre-tax
• Limited disclosure on capex/investing CF and cash balances constrains FCF and liquidity granularity

Metrics to Watch:

• Revenue trajectory and order trends in H2
• Gross margin and SG&A ratio to sustain OPM expansion
• OCF/NI and working capital days (inventory and receivables)
• Capex and investing cash flows to gauge FCF and ROIC
• Effective tax rate and extraordinary items
• FX impact and raw material/energy cost trends

Relative Positioning: The company exhibits stronger margins and balance sheet resilience than a typical highly leveraged industrial peer, but operates with lower asset turnover and delivers a modest ROE profile; visibility into capex/FCF is below average due to disclosure gaps.

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