YAMAZEN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥259.84B
• Operating Income: ¥5.11B
• Net Income: ¥2.65B
• EPS: ¥49.12

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

Yamazen Co., Ltd. (8051) reported FY2026 Q2 consolidated results under JGAAP with solid top-line growth and pronounced margin recovery. Revenue rose 4.4% year over year to ¥259.8bn, while operating income surged 48.4% to ¥5.1bn, indicating strong operating leverage. Net income increased 62.9% to ¥4.18bn, with net margin improving to 1.61%, supported by better cost control and a modest uplift from non-operating items. Gross profit reached ¥37.35bn, translating to a gross margin of 14.4%, broadly consistent with the company’s distribution-oriented model. Operating margin improved to 1.97%, up from roughly 1.4% a year ago by back-calculation, evidencing effective SG&A discipline and possibly improved sales mix or pricing. Ordinary income exceeded operating income by ¥0.30bn, implying positive non-operating contributions that more than offset ¥0.11bn of interest expense. The DuPont bridge shows ROE of 3.24% (NPM 1.61% × asset turnover 0.852 × leverage 2.36), reflecting low margins, efficient asset use for a trading firm, and moderate leverage. Liquidity is sound, with a current ratio of 159.6% and quick ratio of 130.3%, pointing to comfortable short-term coverage even before inventory realization. Working capital stands at ¥85.6bn, and inventory is ¥42.1bn; inventory-to-COGS implies roughly 73 days on hand, reasonable for an industrial distributor. Operating cash flow was ¥3.97bn, at 0.95x net income, indicating acceptable earnings-to-cash conversion for the half-year despite some working capital absorption. Interest coverage is a robust 47.7x, evidencing low financial risk from interest-bearing debt. Total equity is ¥129.1bn against total assets of ¥305.1bn, implying an equity ratio around 42% by calculation, despite the reported equity ratio field being unpopulated. Several items (cash and equivalents, investing cash flows, dividends, shares outstanding) are shown as zero; per the data specification, these should be interpreted as undisclosed rather than true zeros, and related analyses are constrained. Overall, the quarter demonstrates resilient demand and improved profitability, with healthy liquidity and conservative financial risk. The outlook hinges on the industrial capital goods cycle and inventory normalization, but the company enters the second half with improved earnings momentum and solid balance sheet support.

Profitability Analysis

ROE is 3.24%, decomposed as net profit margin 1.61%, asset turnover 0.852x, and financial leverage 2.36x. The key driver of the YoY ROE improvement is margin expansion: operating income rose 48.4% on 4.4% revenue growth, lifting operating margin to 1.97% (from ~1.4% a year ago). Gross margin is 14.4%, consistent with a trading/distribution model, suggesting the margin improvement came primarily from SG&A efficiency and mix/pricing rather than gross spread expansion alone. EBITDA of ¥7.43bn yields a 2.9% margin, providing an additional cash earnings buffer above operating income. Ordinary income exceeded operating income by ¥0.30bn, implying net non-operating gains (roughly ¥0.41bn gross offset by ¥0.11bn interest), which modestly enhanced profitability. Interest burden is light, with interest coverage at 47.7x, so financing costs are not a headwind. Operating leverage was clearly positive in the half, as modest top-line growth translated into outsized operating profit growth. While the net margin at 1.61% remains thin, the improvement trajectory is favorable and consistent with disciplined cost control.

Growth Assessment

Revenue grew 4.4% YoY to ¥259.8bn, indicating steady demand across key product lines in the period. The quality of growth is underscored by a 48.4% increase in operating income, showing that growth was accompanied by improved cost efficiency and operating leverage. Net income growth of 62.9% outpaced operating income, supported by better non-operating results and controlled interest expense. Given the distribution-centric model with exposure to industrial capital goods and consumer-related products, sustainability will hinge on capex trends, corporate production activity, and retail channel health in 2H. Margin gains appear more structural than one-off, driven by SG&A control and likely mix benefits, though persistence will depend on volumes and pricing discipline. The asset turnover of 0.852x is consistent with efficient use of the asset base, supporting growth without excessive balance sheet expansion. Inventory levels (¥42.1bn) look manageable relative to COGS, suggesting no apparent overstocking at mid-year. Outlook-wise, continuation of mid-single-digit revenue growth with maintained cost discipline could support further operating margin normalization; however, macro-sensitive end-markets introduce volatility to the trajectory. Non-operating contributions were modestly positive and not a primary growth driver. Overall, growth quality in the half is good, with evidence of improved efficiency and scalability.

Financial Health

Liquidity is strong: current ratio 159.6% and quick ratio 130.3% indicate healthy coverage of short-term obligations even before inventory liquidation. Working capital totals ¥85.63bn, providing operational flexibility. Inventories are ¥42.08bn; inventory to COGS suggests roughly 73 days on hand, reasonable for the business profile. Solvency appears solid; total equity is ¥129.05bn versus total assets of ¥305.13bn, implying an equity ratio of about 42% by calculation (the reported equity ratio field is unpopulated in the dataset). The reported debt-to-equity ratio of 1.27x likely reflects total liabilities to equity rather than interest-bearing debt; interest coverage of 47.7x indicates limited strain from financial liabilities. Ordinary income comfortably exceeds interest expense, underscoring conservative leverage. No cash and equivalents figure was disclosed; however, liquidity ratios imply sufficient readily realizable assets. Overall, the capital structure is balanced with ample buffer to absorb operating fluctuations.

Cash Flow Quality

Operating cash flow was ¥3.97bn, equating to 0.95x net income (¥4.18bn), which is an acceptable conversion in a half-year marked by working capital demands. With depreciation and amortization at ¥2.32bn and EBITDA at ¥7.43bn, the implied working capital outflow and other non-cash adjustments reduced OCF relative to earnings, typical for mid-year seasonal patterns in distribution businesses. Free cash flow cannot be reliably assessed because investing cash flow is undisclosed (listed as zero per data specification). Nevertheless, positive OCF alongside modest interest expense points to sound underlying cash generation capacity. The relationship between EBITDA and OCF suggests cash earnings are largely supported by operations, with some temporary capital tied up in receivables/inventories. Monitoring the OCF-to-NI ratio through year-end will be important to confirm cash realization as working capital unwinds.

Dividend Sustainability

Dividend data (annual DPS and payout ratio) are undisclosed in this dataset, and financing cash flows are negative (−¥8.39bn), which could reflect debt repayment, share repurchases, dividends, or a combination. Without DPS and investing cash flow, FCF coverage of dividends cannot be determined. EPS for the half is ¥49.12; absent reported dividends, a payout ratio cannot be calculated from the provided data. Balance sheet strength (implied ~42% equity ratio by calculation) and positive OCF are supportive of potential distributions, but policy specifics and sustainability cannot be assessed from the provided figures. We therefore refrain from drawing conclusions on dividend trajectory and encourage monitoring official guidance and year-end proposals.

Risk Assessment

Business Risks:

• Exposure to cyclical industrial demand and capex cycles in machine tools/FA-related segments
• Inventory risk if demand slows, potentially pressuring margins and cash conversion
• Pricing pressure and competitive intensity in distribution channels
• Supply chain volatility affecting product availability and delivery schedules
• FX fluctuations impacting import costs and pricing (if procurement is FX-linked)
• Customer credit risk in a broad B2B distribution network

Financial Risks:

• Working capital swings that can suppress near-term operating cash flow
• Potential increase in interest expense if rates rise or debt mix changes
• Non-operating income variability affecting ordinary income stability
• Concentration of liabilities relative to equity if leverage were to increase from current levels

Key Concerns:

• Sustainability of margin improvement amid macro uncertainty in 2H
• Execution on inventory and receivables management to maintain OCF/NI ≥ 1.0x
• Visibility on capital allocation (dividends/buybacks vs. debt repayment) given negative financing CF

Investment Implications

Key Takeaways:

• Solid revenue growth (+4.4% YoY) with strong operating leverage (+48.4% operating income) improved profitability
• ROE at 3.24% is primarily constrained by thin net margins but supported by solid asset turnover and moderate leverage
• Liquidity is strong (current 160%, quick 130%), and interest coverage is very high (47.7x), indicating low financial strain
• OCF broadly matched earnings (0.95x NI), with some working capital absorption typical for the business
• Non-operating gains modestly supported ordinary income; interest burden remains low

Metrics to Watch:

• Operating margin and SG&A ratio to confirm sustained efficiency gains
• OCF/Net Income ratio and working capital turns (inventory and receivables days)
• Asset turnover trend as a proxy for balance sheet efficiency
• Order trends/backlog in industrial segments and book-to-bill indicators
• Interest-bearing debt and interest coverage to track financial risk
• Dividend disclosures and capital allocation guidance at year-end

Relative Positioning: Within Japanese industrial distributors/trading firms focused on machinery and lifestyle goods, Yamazen exhibits healthy liquidity and conservative interest burden, with improving margins in FY2026 H1; overall profitability (net margin, ROE) remains modest versus higher-margin peers, but operational leverage and balance sheet strength support continued normalization if demand holds.

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