Marubeni Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.20T
• Operating Income: ¥126.42B
• Net Income: ¥311.97B
• EPS: ¥185.18

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Marubeni (8002) reported FY2026 Q2 consolidated IFRS results with revenue of 42,033.66 (100M JPY), up 8.0% YoY, but operating income fell 12.9% YoY to 1,264.19, indicating pressure on core margins. Gross profit was 5,665.51, implying a gross margin of 13.5%, while SG&A of 4,164.13 consumed 73.5% of gross profit, resulting in a slim operating margin of about 3.0%. Despite weaker operating performance, net income rose 28.3% YoY to 3,054.97, driven by substantial non-operating contributions, notably equity-method income of 1,649.95 and other below-OP gains, as suggested by profit before tax of 3,655.43 vs operating income of 1,264.19. The effective tax rate was low at 14.0%, likely reflecting the nature and geography of earnings and the equity-method contribution. DuPont decomposition shows net margin 7.3%, asset turnover 0.453x, and financial leverage 2.31x, yielding ROE of 7.6% (in line with the reported figure), which is respectable but below top-tier sogo shosha peers. Balance sheet strength is solid with total equity of 40,172.80 and an equity ratio of 41.7%, while the reported debt-to-equity ratio of 1.35x indicates moderate leverage. Operating cash flow was 2,518.41 vs net income of 3,054.97 (OCF/NI = 0.82x), suggesting earnings quality below ideal, consistent with a high non-cash equity-method contribution and likely working capital build. Free cash flow was negative at -1,902.58 as robust investing outflows (-4,420.99) and capex of -853.47 outweighed operating inflows. Financing cash inflow of 1,812.40 helped fund investments, while cash and equivalents stood at 5,691.44, providing liquidity flexibility even as several current items were unreported. Inventory was sizable at 11,803.66, highlighting exposure to commodity price and logistics dynamics. Retained earnings increased to 24,352.72, supporting future investment and shareholder returns, though DPS was unreported; the calculated payout ratio was 51.6%, with FCF coverage for the period at -1.21x. Overall, the quarter shows resilient headline earnings largely supported by associates and below-OP items, while core operating profitability softened. Sustainability of earnings hinges on equity-method income and commodity-linked factors; a recovery in operating income will be key to improving ROE. Data gaps (e.g., interest expense, current liabilities, DPS) limit precision, but available figures indicate a sound balance sheet, investment-led cash outflows, and mixed quality of earnings.

Profitability Analysis

ROE of 7.6% decomposes into a 7.3% net margin, 0.453x asset turnover, and 2.31x financial leverage. Operating margin is about 3.0% (1,264.19 / 42,033.66), reflecting tight spread between gross profit (13.5% margin) and SG&A (SG&A/gross profit 73.5%). The YoY divergence—revenue +8.0% vs operating income -12.9%—signals negative operating leverage in the period, likely due to higher operating costs and/or mix. Profit before tax of 3,655.43 indicates roughly 2,391 of earnings below operating line, predominantly equity-method income (1,649.95) and other non-operating items, which lifted net profit while core operating profitability weakened. The effective tax rate of 14.0% aided bottom line. Margin quality is mixed: core trading/operating margins tightened, while equity-method and valuation-related gains supported consolidated profit. Given the low operating margin, profitability is more reliant on investment income and portfolio performance than on pure trading spreads this period.

Growth Assessment

Top-line growth of 8.0% YoY indicates healthy commercial activity across segments, consistent with broad commodity and infrastructure-related demand. However, operating income declined 12.9% YoY, pointing to margin compression and/or cost inflation, suggesting that revenue growth did not translate into operating profit growth. Net income increased 28.3% YoY, primarily driven by equity-method income and other below-OP factors, which may be less predictable and more cyclical. Sustainability is therefore moderate: revenue momentum appears intact, but profit quality leans on associates and non-operating drivers. With inventories at 11,803.66, near-term revenue may remain supported by trading volumes, yet inventory price dynamics can affect margins. Outlook hinges on stabilization/improvement in operating margin, continued contributions from equity-method investees, and commodity/FX conditions. Absent detailed segment disclosures, we assume resource, power, and food/consumer-related associates contributed meaningfully to the earnings uplift.

Financial Health

Total assets are 92,873.95 with total equity of 40,172.80, yielding an equity ratio of 41.7%, solid for a general trading company. Reported debt-to-equity of 1.35x indicates moderate leverage consistent with the asset-heavy trading/investment model. Current assets are 40,214.42, including inventories of 11,803.66; current liabilities were unreported, so current and quick ratios are not calculable. Cash and equivalents are 5,691.44, providing liquidity, while financing cash inflow of 1,812.40 supports investment needs. Retained earnings of 24,352.72 underpin capital strength and dividend capacity. Interest-bearing debt, current liabilities, and interest expense were unreported; thus, we cannot assess interest coverage or near-term refinancing risks quantitatively. Overall solvency appears sound, backed by equity and diversified assets, but reliance on external funding for investment is evident this period.

Cash Flow Quality

Operating cash flow of 2,518.41 is 0.82x net income (3,054.97), below the >1.0x threshold typically indicative of high earnings quality. The gap likely reflects the non-cash nature of equity-method income (1,649.95) and potential working capital absorption; inventory levels are high, though period-on-period changes are unavailable. Free cash flow was -1,902.58 after capex of -853.47, as investing CF totaled -4,420.99, indicating active portfolio investment and/or M&A. Financing CF of +1,812.40 funded part of the deficit, consistent with investment-led strategy. Given these patterns, period cash generation was weaker than accounting profit, and cash conversion depends on dividends from associates and working capital normalization. Without depreciation and interest details, EBITDA and interest coverage cannot be evaluated, limiting deeper quality assessment.

Dividend Sustainability

The calculated payout ratio is 51.6%, implying a balanced return stance relative to earnings; however, DPS and total dividends paid were unreported. FCF coverage of dividends was -1.21x for the period, indicating dividends were not covered by internally generated free cash flow due to heavy investment outflows, though this may reflect timing and H1 seasonality. Balance sheet strength (equity ratio 41.7%) and retained earnings of 24,352.72 provide capacity to sustain policy through cycles, assuming continued earnings and access to financing. Given the significant equity-method component of profits, dividend sustainability hinges on cash distributions from associates and the company’s capex/investment pacing. Policy indications such as DOE or buybacks were unreported; thus, forward assessment relies on maintaining at least stable OCF and prudent investment funding.

Risk Assessment

Business Risks:

• Commodity price volatility impacting trading margins and inventory valuation
• Dependence on equity-method investees for a large share of earnings
• Foreign exchange fluctuations affecting revenue and profit translation
• Geopolitical and supply chain disruptions affecting global trading flows
• Customer credit and counterparty risk in trading and project businesses
• Project execution and cost overrun risks in infrastructure and power investments
• Regulatory and ESG-related shifts impacting resource and energy portfolios

Financial Risks:

• Negative free cash flow driven by sizable investing outflows
• Potential working capital absorption given large inventories
• Exposure to interest rate changes amid moderate leverage (interest coverage unreported)
• Valuation and impairment risk in investment securities and associates
• Refinancing and liquidity visibility limited by unreported current liabilities

Key Concerns:

• Operating income decline (-12.9% YoY) despite revenue growth
• High reliance on non-operating and equity-method income to support net profit
• OCF/NI below 1.0x, indicating softer cash conversion
• FCF negative and dividends not covered by FCF in the period

Investment Implications

Key Takeaways:

• Top-line growth solid (+8.0% YoY) but core operating margin compressed to ~3.0%
• Net income strength (+28.3% YoY) predominantly from equity-method and other below-OP gains
• ROE at 7.6% is below top-tier peer benchmarks and depends on non-operating drivers
• Balance sheet remains sound (equity ratio 41.7%), supporting ongoing investment and returns
• Cash conversion moderate (OCF/NI 0.82x) and FCF negative amid elevated investment

Metrics to Watch:

• Operating income margin trajectory and SG&A efficiency
• Equity-method income level and share of total profit
• OCF/Net income and working capital changes (inventory days, receivable turns)
• Net debt to equity and liquidity headroom
• Capex and investment outflows versus realized cash returns (dividends from associates)
• Effective tax rate normalization and impact on net margin

Relative Positioning: Within the sogo shosha peer set, Marubeni’s ROE (7.6%) trails leaders like Itochu and Mitsui that typically deliver double-digit ROE; equity ratio is mid-range, and reliance on equity-method income this period is higher than peers with stronger core operating margins.

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