Yokohama Maruuo Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.75B
• Operating Income: ¥132M
• Net Income: ¥252M
• EPS: ¥36.30

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

Verdict: A mixed FY2026 Q2—core operations were flat-to-soft, but stronger non-operating dividend income lifted ordinary profit, while cash generation was solid. Revenue declined 0.9% YoY to 187.45, with gross profit of 16.68 and SG&A of 15.35, resulting in operating income of 1.32 (-2.6% YoY). Ordinary income rose 13.8% YoY to 3.60, driven by non-operating income of 2.38, of which 2.29 came from dividends. Net income was essentially flat at 2.31 (-0.1% YoY), translating to a net margin of 1.23%. Gross margin stood at 8.9%, while the operating margin was about 70 bps; EBITDA was 2.14, implying an EBITDA margin near 1.1%. Ordinary income margin improved to 1.92% from roughly 1.67% a year ago (about +25 bps), while operating margin compressed slightly by about 1–2 bps. Cash quality was robust with operating cash flow of 4.08, yielding OCF/NI of 1.77x, indicating earnings backed by cash. Liquidity remained strong (current ratio 198%, quick ratio 159%) and leverage conservative (D/E 0.46x; interest coverage 26.4x). However, capital efficiency is a concern with ROIC at 0.6%, well below the 5% warning threshold. Non-operating income dominance (non-op income at 103% of operating profit) signals dependence on investment income rather than core trading margins. The equity base is sizable at 188.77, but asset turnover is modest at 0.68x, keeping ROE at a low 1.2%. The reported payout ratio is high at 141.5%, raising sustainability questions absent detailed dividend data. Forward-looking, stable cash generation and low leverage provide resilience, but improving core margin and capital efficiency is essential to drive sustainable ROE/ROIC. Dividend reliance in ordinary income creates exposure to market conditions for investment securities. Near term, expect results to track non-operating dividend trends and fishery market dynamics; medium term requires SG&A discipline and working capital efficiency to lift operating margins.

Profitability Analysis

ROE decomposition (DuPont): ROE 1.2% = Net Profit Margin 1.2% × Asset Turnover 0.680 × Financial Leverage 1.46x. The biggest driver is the low net margin, as asset turnover is moderate and leverage is conservative. Ordinary income increased YoY due to higher dividend income (2.29 out of 2.38 non-operating), but operating profit fell 2.6% on slightly weaker top line and a tight gross-to-operating spread (GPM 8.9% versus OPM ~0.7%). Operating margin compressed slightly (~1–2 bps), while ordinary margin expanded roughly 25 bps on non-operating gains, highlighting limited operating leverage. The business reason: core wholesale/trading margins remain thin, and SG&A (15.35) continues to absorb most gross profit (16.68), leaving minimal operating room; dividends from investment securities cushioned results. Sustainability: operating softness appears structural given low spread between gross profit and SG&A; the dividend uplift is inherently more volatile and not fully controllable. Watch for SG&A growth outpacing revenue—this period, operating income fell faster than revenue (-2.6% vs -0.9%), suggesting slight negative operating leverage.

Growth Assessment

Revenue declined 0.9% YoY to 187.45, reflecting subdued volume/price in marine products. Operating income fell 2.6% YoY to 1.32, indicating pressure at the core level. Ordinary income grew 13.8% to 3.60 on higher dividend income, offsetting core softness. Net income was flat at 2.31 (-0.1% YoY). Margin dynamics: ordinary margin expanded (~+25 bps) while operating margin slightly compressed (~1–2 bps), consistent with non-operating tailwinds. Profit quality is mixed: OCF/NI of 1.77x signals healthy cash conversion, but profit composition is skewed toward non-operating dividends (non-operating income at 103% of operating profit). Outlook: near-term growth hinges on stability of dividend income from investment securities and normalization of trading spreads; structural growth will require better SG&A efficiency and working capital rotation to lift ROIC above the current 0.6%.

Financial Health

Liquidity is strong: current ratio 197.8% and quick ratio 159.1% well above benchmarks, with cash and deposits of 30.47 supporting working capital. No warning on current ratio (<1.0) or D/E (>2.0); D/E is 0.46x, indicating conservative leverage. Maturity mismatch risk appears low: current assets 75.99 vs current liabilities 38.42, and short-term loans are 6.00, comfortably covered by cash and receivables (cash 30.47 + AR 34.82). Total liabilities are 86.79 against equity of 188.77, supporting solvency. Interest coverage is strong at 26.4x, indicating ample buffer. Off-balance-sheet obligations are not disclosed; none can be assessed from provided data.

Cash Flow Quality

OCF of 4.08 exceeds net income of 2.31, yielding OCF/NI of 1.77x—no earnings quality red flag. With reported capex of -0.17, proxy FCF (OCF - capex) approximates 3.91, suggesting capacity to fund maintenance investment and a modest dividend; however, total dividends paid are unreported, and full investing CF details are unavailable. Working capital appears supportive given cash and receivables coverage of payables; limited data prevents granular analysis of inventory/receivable turns or potential period-end optimization. No signs of aggressive working capital manipulation are evident from the limited disclosures.

Dividend Sustainability

The calculated payout ratio is high at 141.5%, implying dividends in excess of current period earnings; however, DPS and total dividend cash outflow are unreported, limiting precision. Proxy FCF of ~3.91 (OCF 4.08 minus capex 0.17) suggests coverage capacity if dividends are moderate, but sustainability would weaken if the payout truly exceeds earnings on a sustained basis. Given ROE of 1.2% and ROIC of 0.6%, high payouts could constrain reinvestment needed to improve capital efficiency. Policy outlook: without disclosed guidance, assume a preference for stable dividends, but future payout may need to align more closely with cash flow and earnings unless core profitability improves.

Risk Assessment

Business Risks:

• Thin operating margin (~0.7%) leaves limited buffer against input price volatility.
• Dependence on non-operating dividend income (2.29 out of 2.38 non-op), exposing earnings to market/investee performance.
• Seafood price and volume volatility (catch conditions, import supply, auction dynamics) can compress gross margins.
• Energy and logistics cost fluctuations (cold storage, transportation) affecting SG&A and COGS.
• Customer concentration or regional market dependency risk typical in marine wholesale (not disclosed but plausible).

Financial Risks:

• Low ROIC (0.6%) indicating capital inefficiency and low value creation versus cost of capital.
• Potential dividend-policy strain: reported payout ratio 141.5% could be unsustainable if repeated.
• Market value risk on investment securities (157.29) impacting dividends and comprehensive income.
• Interest rate risk modest but present given short-term loans (6.00), though coverage is strong.

Key Concerns:

• Ordinary profit uplift driven by dividends rather than core operations.
• Operating leverage slightly negative (operating income -2.6% vs revenue -0.9%).
• ROE of 1.2% and asset turnover of 0.68 constrain shareholder value creation.
• Data limitations: lack of detailed SG&A breakdown and investing cash flows obscures cost drivers and FCF durability.

Investment Implications

Key Takeaways:

• Core business margins are flat-to-soft; ordinary profit strength is non-operating driven.
• Cash generation is solid with OCF/NI at 1.77x and strong liquidity, reducing near-term balance sheet risk.
• Capital efficiency is a clear weak point (ROIC 0.6%, ROE 1.2%); improvement requires margin and turnover gains.
• High reported payout ratio raises questions about dividend sustainability without earnings/margin uplift.
• Large investment securities portfolio (157.29) is a key earnings swing factor via dividends and valuation.

Metrics to Watch:

• Operating margin progression and SG&A-to-gross-profit ratio.
• Ordinary income composition: dividend income trend and concentration.
• Working capital turns (AR and inventory days) and OCF consistency.
• ROIC trajectory vs. 5–8% thresholds and asset turnover improvement.
• Dividend declarations vs. cash generation (FCF coverage) and payout policy signals.

Relative Positioning: Within marine products wholesalers, the company shows robust liquidity and low leverage but lags on capital efficiency and relies more on non-operating dividends to support ordinary profit, leaving it more exposed to investment income variability than peers with stronger core 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