MOS FOOD SERVICES,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥50.76B
• Operating Income: ¥4.04B
• Net Income: ¥1.79B
• EPS: ¥91.86

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

MOS Food Services reported solid FY2026 Q2 consolidated results under JGAAP, with clear operating leverage and margin expansion. Revenue was ¥50.76bn, up 6.7% YoY, indicating healthy underlying demand and/or pricing/mix improvements. Operating income rose 49.1% YoY to ¥4.04bn, lifting the operating margin to 8.0%, supported by tight SG&A control and a robust gross margin. Gross profit reached ¥22.83bn, translating to a 45.0% gross margin. Net income increased 59.0% YoY to ¥2.83bn, yielding a 5.58% net margin. DuPont analysis shows ROE of 4.96%, comprised of a 5.58% net margin, 0.605x asset turnover, and 1.47x financial leverage. ROA is approximately 3.38% (¥2.83bn/¥83.85bn), reflecting modest capital intensity characteristic of restaurant networks with franchise exposure. The balance sheet is conservative: total equity of ¥57.17bn against total liabilities of ¥26.25bn implies a debt-to-equity ratio of 0.46x and an implicit equity ratio near 68% (despite a reported 0.0% equity ratio, which is an unreported metric rather than an actual zero). Liquidity is strong, with a current ratio of 225.6% and quick ratio of 205.3%, supported by ¥24.35bn in working capital. Interest coverage is a comfortable 44.4x, indicating ample buffer against interest rate or earnings volatility. Operating cash flow was ¥2.17bn; OCF/Net income was 0.76x, suggesting cash conversion was weaker than earnings due to working capital needs or timing effects. A gap between ordinary income (¥4.28bn) and pre-tax (implied ~¥3.58bn) suggests ~¥0.7bn in special items or other below-ordinary adjustments and/or minority interests. Using the implied pre-tax figure (net + income tax), the effective tax rate is approximately 21%, not 0% (the 0% shown is an unreported placeholder). Dividend and share count data were not disclosed in this dataset (zeros indicate unreported), limiting per-share and payout analysis despite EPS being provided. Overall, the company demonstrates improved profitability and robust financial health, while cash conversion and below-ordinary items merit monitoring. Data gaps in cash, investing, dividends, and shares temper analytic precision but do not detract from the clear improvement in core operating performance.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.58% (Net income ¥2.834bn / Revenue ¥50.758bn)
• asset_turnover: 0.605x (Revenue ¥50.758bn / Assets ¥83.852bn)
• financial_leverage: 1.47x (Assets ¥83.852bn / Equity ¥57.172bn)
• calculated_ROE: 4.96%
• ROA: 3.38% (Net income ¥2.834bn / Assets ¥83.852bn) margin_quality:
• gross_margin: 45.0% (¥22.834bn/¥50.758bn), strong for QSR with likely mix/price support
• operating_margin: 7.96% (¥4.041bn/¥50.758bn), +49.1% YoY operating income indicates operating leverage
• ordinary_margin: 8.44% (¥4.284bn/¥50.758bn)
• net_margin: 5.58%
• SG&A_intensity: Approx. ¥18.793bn (Gross profit - Operating income), ~37.0% of sales operating_leverage: Revenue growth of +6.7% YoY versus operating income growth of +49.1% reflects meaningful operating leverage, implying effective cost control and/or scale benefits. EBITDA of ¥6.291bn (12.4% margin) versus depreciation/amortization of ¥2.25bn highlights a reasonable buffer for maintenance and growth investments.

Growth Assessment

revenue_sustainability: Top-line growth of +6.7% YoY suggests healthy same-store trends and/or price/mix; sustainability will depend on traffic resilience, pricing power, and franchise network momentum. profit_quality: Expansion in operating margin to ~8% indicates cost discipline and favorable gross spread; ordinary income outpacing operating income implies supportive non-operating results, though special items reduced pre-tax below ordinary. outlook: If input cost pressures stabilize and labor productivity initiatives persist, the current margin profile appears defensible. Continued growth hinges on store pipeline health, menu innovation, and cost containment amid wage and commodity inflation.

Financial Health

liquidity: Current ratio 225.6%, quick ratio 205.3%, and working capital ¥24.345bn indicate ample near-term liquidity. solvency: Debt-to-equity of 0.46x (using total liabilities as proxy) and interest coverage of 44.4x reflect low balance-sheet risk; equity constitutes roughly 68% of assets. capital_structure: Total assets ¥83.85bn funded primarily by equity (¥57.17bn). Interest expense is modest at ¥91m, suggesting limited financial debt; liabilities likely include significant non-interest-bearing items.

Cash Flow Quality

earnings_quality: OCF/Net income of 0.76x indicates moderate cash conversion softness versus earnings, likely from working capital build or timing effects. FCF_analysis: Investing cash flows and capex were not disclosed (reported as zero). Consequently, true free cash flow cannot be determined. EBITDA (¥6.29bn) comfortably exceeds depreciation (¥2.25bn), implying capacity to self-fund maintenance capex under normal conditions. working_capital: Inventory of ¥3.94bn within current assets suggests limited inventory drag. The sizable working capital balance supports operations, though the quarter’s OCF implies some cash tied up in receivables/payables.

Dividend Sustainability

payout_ratio_assessment: Dividend data (DPS, payout) were not disclosed in this dataset; EPS was ¥91.86 but payout cannot be reliably calculated. FCF_coverage: FCF not computable due to unreported investing cash flows and capex; therefore, cash coverage of dividends cannot be assessed. policy_outlook: Given strong liquidity and low leverage, the balance sheet can support distributions in principle, but without disclosed dividends or capital allocation guidance, policy assessment is inconclusive.

Risk Assessment

Business Risks:

• Input cost volatility (beef, poultry, vegetables, cooking oil) affecting gross margin
• Labor cost inflation and staffing constraints impacting store-level margins
• Consumer demand sensitivity to macro conditions affecting traffic and ticket size
• Competitive intensity in domestic QSR and convenience food channels
• Execution risk in menu innovation and promotional cadence
• Franchisee health and support requirements in a mixed company/franchise model

Financial Risks:

• Working capital swings impacting cash conversion (OCF/NI at 0.76x this period)
• Potential special or extraordinary losses (gap between ordinary and pre-tax)
• Interest rate risk is limited but non-zero given reported interest expense
• Capex visibility is low due to unreported investing cash flows

Key Concerns:

• OCF lagging earnings, implying cash conversion risk if sustained
• Unreported investing and cash balances limit FCF and liquidity precision
• Below-ordinary adjustments (~¥0.7bn) reducing pre-tax profit vs ordinary

Investment Implications

Key Takeaways:

• Meaningful margin expansion with operating income up 49.1% on 6.7% revenue growth
• Strong balance sheet with low leverage (D/E ~0.46x) and high liquidity (current ratio ~2.26x)
• ROE at 4.96% driven by improved margins but moderated by modest asset turnover
• Cash conversion (OCF/NI 0.76x) requires monitoring amid potential working capital drag
• Ordinary-to-net gap suggests special items or minority interests impacted bottom line

Metrics to Watch:

• Same-store sales growth, traffic vs. average ticket
• Food cost ratio and labor cost ratio within SG&A
• Operating margin trajectory and EBITDA margin
• OCF/NI and OCF/EBITDA, plus inventory and payable days
• Capex, net store openings/closures, and franchisee metrics
• Effective tax rate and frequency/size of special items

Relative Positioning: Within domestic QSR peers, MOS Food Services exhibits conservative leverage, strong liquidity, and improving operating margins, positioning it as financially resilient with scope to reinvest; near-term differentiation hinges on sustaining traffic and defending gross margin against commodity and wage pressures.

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