Takashima & Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥45.02B
• Operating Income: ¥898M
• Net Income: ¥482M
• EPS: ¥20.35

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

Takashima Co., Ltd. (TSE:80070) posted FY2026 Q2 consolidated results showing resilient profitability despite a modest top-line contraction and weak cash conversion. Revenue declined 3.0% year over year to ¥45.0bn, while operating income slipped 1.2% to ¥0.90bn, implying stable core margins amid softer sales. Gross profit of ¥6.29bn translates to a 14.0% gross margin, suggesting pricing and mix discipline in a thin-margin trading business model. Operating margin was 2.0%, and EBITDA margin 3.1%, consistent with an asset‑light profile underpinned by low depreciation (¥0.49bn). Ordinary income rose above operating income to ¥1.08bn, indicating net non-operating gains (approximately ¥0.22bn gross, offset by ¥0.04bn interest expense). Net income surged 44% YoY to ¥0.70bn, far outpacing operating trends, likely reflecting improved non-operating items versus the prior-year period. DuPont analysis shows ROE of 2.98%, driven by a 1.54% net margin, 0.735x asset turnover, and 2.63x financial leverage; ROA approximates 1.1%. Liquidity appears solid with a current ratio of 148.7% and quick ratio of 129.7%, supported by lean inventories (¥5.29bn) relative to current assets. Balance sheet strength is reasonable: total equity is ¥23.30bn versus total assets of ¥61.29bn, implying an equity ratio of roughly 38% (computed) and a liabilities-to-equity ratio of 1.55x. Interest coverage is strong at 20.4x, reflecting low financial burden. However, operating cash flow was negative ¥1.24bn, a material shortfall versus net income (OCF/NI = −1.79x), pointing to working-capital outflows and seasonality risks. Financing cash flow was an outflow of ¥1.63bn, suggesting debt reduction or distributions, though dividends are not disclosed for the period. Several data points are unreported in the XBRL (e.g., equity ratio, cash balance, DPS, investing cash flow, share counts); zeros reflect non-disclosure rather than true zeros. Overall, core operations are steady with healthy financial flexibility, but cash conversion in the half-year is weak and warrants monitoring. Given the decline in revenue, stable operating profit, and improved net results, the near-term outlook hinges on demand recovery, working-capital normalization, and sustainability of non-operating gains.

Profitability Analysis

ROE is 2.98% on a DuPont basis: net profit margin 1.54% × asset turnover 0.735 × financial leverage 2.63. Gross margin is 14.0% (¥6.29bn/¥45.02bn), indicating adequate spread management for a trading-focused model. Operating margin is 2.0% (¥0.90bn/¥45.02bn); EBITDA margin is 3.1% (¥1.39bn/¥45.02bn), consistent with low capital intensity (D&A ¥0.49bn). Ordinary income (¥1.08bn) exceeds operating income by ¥0.18bn, suggesting positive non-operating contributions (estimated ~¥0.22bn gains net of ¥0.04bn interest expense). Interest coverage is robust at 20.4x (EBIT/interest), underscoring conservative financial risk. Operating leverage appears moderate: a 3.0% revenue decline resulted in only a 1.2% drop in operating income, implying some fixed-cost flexibility and cost control. The ROA implied by DuPont (~1.1%) is modest, typical for volume-driven trading businesses. Effective tax rate based on reported figures approximates 35–36% (¥0.385bn tax on ~¥1.075bn pre-tax), although the pre-calculated metric shows 0.0% (unreported). Margin quality is acceptable but thin; sustainability depends on mix, procurement efficiency, and disciplined SG&A.

Growth Assessment

Top line contracted 3.0% YoY to ¥45.02bn, indicating softer demand or deliberate pruning of lower-margin volumes. Operating income declined only 1.2% YoY to ¥0.90bn, suggesting resilient underlying profitability and cost management. Net income rose 44.0% YoY to ¥0.70bn, driven by non-operating improvements versus the prior-year interim period. Gross profit of ¥6.29bn and stable gross margin point to maintained pricing power in key categories. The gap between ordinary and operating income implies contribution from financial income, equity-method gains, or FX/other items; sustainability into H2 is uncertain. Given negative operating cash flow, H1 earnings quality is pressured by working-capital outflows and likely seasonality; normalization in H2 would be a key indicator for sustainable growth. Without disclosed order trends or segment detail, revenue sustainability cannot be fully assessed; however, the modest revenue decline with stable operating margin suggests no structural deterioration. Near-term outlook hinges on demand recovery in core end-markets, supply chain stability, and inventory discipline. Watch for any re-acceleration in sales while protecting gross margin, and whether ordinary income tailwinds persist.

Financial Health

Liquidity is solid: current ratio 148.7% and quick ratio 129.7%, with working capital of ¥13.54bn (¥41.35bn CA − ¥27.81bn CL). Inventories are ¥5.29bn, modest versus current assets, supporting quick liquidity. Solvency appears sound: total liabilities of ¥36.12bn vs equity of ¥23.30bn implies an equity ratio around 38% (computed from non-zero items) and a liabilities-to-equity ratio of 1.55x. Interest burden is light (¥44m), and interest coverage is strong at 20.4x, indicating comfortable headroom. Financial leverage of 2.63x (assets/equity) is moderate. Financing cash outflow of ¥1.63bn suggests deleveraging or distributions; details are undisclosed. Cash and cash equivalents were not disclosed (zero indicates unreported), so the immediate cash buffer cannot be assessed from the provided data. Overall, balance sheet capacity appears adequate to support operations, but working-capital swings should be monitored.

Cash Flow Quality

Operating cash flow was negative ¥1.243bn despite net income of ¥0.695bn, yielding OCF/NI of −1.79x, indicative of significant working-capital outflows or timing effects typical in interim periods. EBITDA of ¥1.39bn exceeds operating income by D&A ¥0.49bn, consistent with accrual profitability; the disconnect to OCF points to changes in receivables, inventories, and payables rather than earnings quality issues per se. Investing cash flow is undisclosed (reported as 0), so free cash flow cannot be precisely determined; based on available data, FCF assessment is constrained. Financing cash flow outflow of ¥1.632bn suggests debt repayment or shareholder returns, but the dividend cash component is not provided. Given the trading-model exposure to working capital, cash conversion in the second half and full year will be critical to validate earnings quality.

Dividend Sustainability

Dividend per share and payout ratio are not disclosed for the period (zeros denote unreported items). With net income of ¥0.695bn and negative operating cash flow in H1, near-term dividend sustainability analysis requires full-year cash flow visibility. Interest coverage is strong and leverage moderate, which typically supports baseline distributions for trading companies, but absent DPS and share count data we cannot compute payout metrics. FCF coverage cannot be assessed because investing cash flow is unreported and OCF is negative in H1. Policy outlook therefore remains uncertain based on the provided dataset; monitor year-end guidance, full-year OCF/FCF, and any board announcements on shareholder returns.

Risk Assessment

Business Risks:

• Thin operating margins (~2%), amplifying earnings sensitivity to volume and pricing.
• Working-capital intensity causing OCF volatility and potential seasonal cash strain.
• Demand softness (−3% YoY revenue) in key end-markets.
• Dependence on non-operating income to lift ordinary income above operating income.
• Supply chain and procurement risks affecting gross margin in a trading model.
• FX exposure impacting ordinary income and inventory costs (if imports/exports material).

Financial Risks:

• Negative operating cash flow in H1 (−¥1.24bn) despite positive earnings.
• Potential mismatch between accrual profits and cash realization if receivables expand.
• Leverage at 1.55x liabilities/equity, requiring ongoing discipline if conditions soften.
• Limited visibility on cash balance and debt structure due to undisclosed items.
• Possible refinancing/timing risk if financing cash outflows persist.

Key Concerns:

• Cash conversion and working-capital normalization in H2.
• Sustainability of non-operating gains supporting ordinary income.
• Protecting gross margin while attempting to reaccelerate revenue.

Investment Implications

Key Takeaways:

• Core profitability is resilient: operating income down only 1.2% on a 3.0% revenue decline.
• Net income up 44% YoY driven by non-operating contributions; durability uncertain.
• ROE at 2.98% reflects thin margins and moderate leverage; ROA ~1.1%.
• Liquidity strong (current ratio 149%, quick 130%); computed equity ratio ~38%.
• OCF/NI at −1.79x highlights H1 cash conversion risk typical of trading models.

Metrics to Watch:

• Operating cash flow and working-capital movements (receivables, inventories, payables).
• Gross margin trajectory and SG&A discipline.
• Ordinary income components (FX, investment income, equity-method gains).
• Leverage and interest coverage as rates and credit conditions evolve.
• Revenue momentum and order visibility into H2.

Relative Positioning: Within Japanese specialty trading peers, Takashima exhibits typical thin operating margins and moderate leverage with strong interest coverage; liquidity appears healthy, but cash conversion in the interim period is weaker than ideal, making H2 normalization a key differentiator versus peers focused on tighter working-capital cycles.

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