YUASA FUNASHOKU Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥62.55B
• Operating Income: ¥1.64B
• Net Income: ¥1.01B
• EPS: ¥72.91

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

Yuasa Funashoku Co., Ltd. (TSE:80060) delivered solid top-line growth and strong operating leverage in FY2026 Q2. Revenue rose 2.4% YoY to ¥62.6bn, while operating income surged 32.2% YoY to ¥1.64bn, indicating effective cost control and/or favorable sales mix. Gross profit reached ¥4.62bn, implying a gross margin of 7.4%, consistent with a low-margin trading/wholesale model. Operating margin improved to 2.6% (operating income/revenue), up notably from last year given the outsized operating income growth. Ordinary income of ¥1.90bn exceeded operating income by ¥0.26bn, reflecting positive non-operating contributions, while interest expense remained de minimis at ¥7m. Net income rose 27.9% YoY to ¥1.29bn (EPS ¥72.91), translating to a net margin of 2.06%. DuPont diagnostics show ROE of 3.13%, driven by net margin of 2.06%, asset turnover of 0.937x, and financial leverage of 1.62x, a conservative capital structure for a trading business. Liquidity appears sound, with current ratio at 147% and quick ratio at 139%, supported by limited inventory exposure (inventories ¥1.89bn). Balance sheet leverage is low; total liabilities/total equity is approximately 0.61x, corresponding to an equity ratio around 61.6% (our calculation using period-end balances). Interest coverage is robust at 234x, underscoring minimal financial risk from borrowing costs. Cash conversion, however, is weak this half: operating cash flow (OCF) was ¥129m versus net income of ¥1.29bn (OCF/NI=0.10), likely reflecting working capital absorption typical of 1H seasonality in wholesalers. Free cash flow could not be assessed due to unreported investing cash flows; the reported FCF value of 0 should be treated as undisclosed rather than actual zero. Financing cash flow was an outflow of ¥459m, potentially reflecting debt repayments and/or dividends, though dividend data are not disclosed in the period. Several items (equity ratio, cash and cash equivalents, investing cash flows, share count, DPS/BVPS) are unreported in XBRL, which limits precision on certain ratios and payout analysis. Overall, profitability momentum and balance sheet resilience are clear positives, but the low ROE and weak cash conversion in the period temper the quality of earnings. Monitoring the 2H cash release and sustainability of margin gains will be key for assessing the full-year trajectory.

Profitability Analysis

ROE_decomposition: ROE 3.13% = Net margin 2.06% × Asset turnover 0.937× × Financial leverage 1.62×. Net income ¥1.29bn on revenue ¥62.56bn yields the 2.06% margin; asset turnover aligns with trading characteristics; leverage is conservative (Assets ¥66.75bn / Equity ¥41.11bn ≈ 1.62×). margin_quality: Gross margin 7.4% (¥4.62bn/¥62.56bn) supports a 2.6% operating margin and 2.06% net margin. Operating income grew 32.2% YoY on 2.4% revenue growth, implying SG&A efficiency and/or mix shifts. Ordinary income exceeded operating income by ¥262m, indicating supportive non-operating gains (e.g., dividends, equity method income) rather than financial burden (interest expense only ¥7m). Our computed effective tax rate is ~26.4% (tax ¥461m / pre-tax ¥1.748bn). operating_leverage: Revenue +2.4% YoY vs operating income +32.2% YoY shows high incremental margins in the period. EBITDA of ¥1.86bn implies an EBITDA margin of 3.0% and D&A of ¥216m (~0.35% of sales), indicating a relatively asset-light model where small gross profit gains drop through to operating profit.

Growth Assessment

revenue_sustainability: Revenue grew 2.4% YoY to ¥62.56bn, consistent with steady demand in a wholesale/trading context. Inventory levels are low (¥1.89bn), suggesting rapid turnover and a focus on agency transactions, which can stabilize revenue but cap gross margins. profit_quality: Operating income growth outpaced sales due to improved operating efficiency and favorable non-operating items. However, cash conversion lagged (OCF/NI=0.10), indicating earnings were not fully backed by cash in 1H, likely due to working capital build or timing effects. outlook: If gross margin discipline and SG&A efficiency persist, full-year margins could remain above last year’s levels. Key to sustaining profit growth will be normalizing working capital and maintaining positive non-operating contributions. Watch for 2H seasonality to release cash and confirm the durability of margin improvements.

Financial Health

liquidity: Current ratio 147.2% and quick ratio 138.9% reflect healthy near-term coverage, aided by low inventories relative to current assets (inventories ¥1.89bn vs current assets ¥33.31bn). Working capital stands at ¥10.69bn. solvency: Total liabilities are ¥25.00bn against equity of ¥41.11bn (liabilities/equity ~0.61x). Interest expense is minimal (¥7m) with interest coverage at 234x, indicating very low interest-rate risk. capital_structure: Financial leverage of 1.62x (Assets/Equity) and an estimated equity ratio of ~61.6% (our computation) denote a conservatively financed balance sheet suitable for a low-margin business.

Cash Flow Quality

earnings_quality: OCF of ¥129m versus net income of ¥1.29bn yields an OCF/NI of 0.10, indicating weak cash realization this half. This likely reflects working capital investment rather than accrual-driven earnings quality issues, but needs confirmation in 2H. FCF_analysis: Investing cash flow is unreported (shown as 0), so free cash flow cannot be reliably computed. The reported FCF of 0 should be treated as unavailable rather than zero. working_capital: With inventories at ¥1.89bn and strong liquidity ratios, the OCF shortfall likely stems from receivables growth and/or payables changes. Monitoring collection cycles and payable terms will be critical.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are unreported (displayed as 0.00). EPS is ¥72.91 for the period, but without disclosed dividends or full-year guidance, a payout assessment cannot be quantified. FCF_coverage: FCF is not determinable due to missing investing cash flows; consequently, dividend coverage by FCF cannot be assessed for this period. policy_outlook: Given low leverage and strong interest coverage, capacity for distributions exists structurally; however, near-term sustainability should consider the weak 1H cash conversion. Future disclosure on dividend policy and year-end DPS will be decisive.

Risk Assessment

Business Risks:

• Thin margins inherent to wholesale/trading models, increasing sensitivity to pricing and volume shifts
• Commodity/input price volatility and pass-through timing risk affecting gross margin
• Customer concentration and counterparty credit risk typical in B2B distribution
• Dependence on non-operating income components to augment ordinary income
• Potential FX exposure if import/export transactions are material

Financial Risks:

• Weak 1H cash conversion (OCF/NI 0.10) suggesting working capital absorption
• Margin compression risk if operating leverage reverses on slower volumes
• Potential liquidity pressure if receivable collections lengthen despite healthy ratios
• Exposure to interest rate normalization is low but non-zero; absolute debt details not disclosed

Key Concerns:

• Sustainability of operating margin expansion given modest revenue growth
• Normalization of working capital and OCF in 2H to validate earnings quality
• Visibility on dividend policy and capital allocation due to unreported DPS/FCF

Investment Implications

Key Takeaways:

• Profitability improved meaningfully: operating income +32.2% YoY on revenue +2.4% YoY; operating margin ~2.6%
• ROE at 3.13% remains modest; leverage conservative (Assets/Equity 1.62×) limiting financial amplification
• Ordinary income benefited from non-operating gains (¥262m delta vs operating income)
• Cash conversion weak in 1H (OCF/NI 0.10), likely timing-related; needs 2H confirmation
• Balance sheet strength (liabilities/equity ~0.61×, interest coverage 234×) mitigates solvency risk

Metrics to Watch:

• OCF/NI and changes in receivables/payables to track working capital normalization
• Gross and operating margin progression vs prior-year 2H
• Ordinary vs operating income gap to gauge reliance on non-operating items
• Equity ratio (reported) and net cash/debt once C&CE and borrowings are disclosed
• Dividend announcements and cash allocation (capex/M&A) when investing CF is reported

Relative Positioning: Within Japanese trading/wholesale peers, the company shows typical low margins but above-average balance sheet conservatism and strong interest coverage; ROE trails peers with higher turnover or leverage, making sustained margin gains and improved cash conversion key to closing the gap.

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
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