Nagoya Railroad Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥17.17B
• Net Income: ¥21.96B
• EPS: ¥57.44

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

名古屋鉄道株式会社 (Meitetsu) reported FY2026 Q2 (first half) consolidated results under JGAAP with several key data points undisclosed in XBRL (notably revenue and cash/investing details), which limits full margin analysis. Nonetheless, operating income was ¥17.167bn, down 29.0% YoY, indicating meaningful operating pressure versus the prior year’s recovery phase. Ordinary income reached ¥19.317bn, implying net positive non-operating contributions despite ¥1.685bn in interest expense, likely from investment income and other non-operating gains. Net income was ¥11.263bn, down 47.8% YoY, suggesting a sharper contraction at the bottom line than at the operating level, potentially reflecting higher tax burden, mix effects, or reduced special gains year-on-year. Depreciation and amortization were ¥20.304bn, bringing EBITDA to ¥37.471bn for the half, highlighting the capital-intensive nature of the rail and related businesses. Operating cash flow was solid at ¥29.797bn, exceeding net income by 2.65x, pointing to robust cash conversion and limited accrual build in the period. Balance sheet leverage is moderate for a railway operator, with total assets of ¥1.523tn and equity of ¥503.468bn, implying financial leverage of ~3.03x (assets/equity) and an equity-to-asset ratio around 33% by calculation (Equity Ratio was undisclosed in XBRL). Liquidity is tight: current ratio is 71.9% and quick ratio 69.7%, with negative working capital of ¥99.969bn, indicating reliance on stable operating cash generation and short-term funding. Interest coverage is healthy at ~10.2x (operating income/interest), affording a cushion against rate increases. The effective tax rate is not provided in the calculated metrics, but based on disclosed taxes (¥8.413bn) and ordinary income (¥19.317bn), it approximates 43–44%, a relatively high level. Free cash flow cannot be assessed because investing cash flow (and capex) are undisclosed; this is an important limitation for dividend and deleveraging analysis. Dividend data (DPS, payout) are also undisclosed in XBRL, so distribution capacity and policy execution cannot be verified here. Year-on-year declines in operating and net income suggest that the prior year’s post-pandemic rebound tailwinds may be normalizing and/or that cost pressures (e.g., power, labor) have weighed on margins. With depreciation exceeding operating income, earnings remain sensitive to volume, pricing, and cost control; however, strong OCF relative to earnings mitigates near-term cash risk. Overall, Meitetsu shows sound solvency and interest coverage against a backdrop of tight liquidity and incomplete disclosures on revenue and capex, warranting close monitoring of demand trends, energy costs, and capital spending plans in the second half.

Profitability Analysis

ROE_decomposition: Full DuPont cannot be completed due to undisclosed revenue and reported zero metrics in XBRL. Using available data, net income to average equity cannot be precisely measured; on a point basis, H1 ROE is roughly 2.2% (¥11.263bn / ¥503.468bn), not annualized. Financial leverage is ~3.03x (assets/equity). Net margin and asset turnover are not computable without revenue. margin_quality: Operating income ¥17.167bn (-29.0% YoY) and net income ¥11.263bn (-47.8% YoY) indicate margin compression and/or adverse mix versus the prior year. Depreciation ¥20.304bn exceeds operating income, underscoring heavy fixed-cost absorption typical of rail operations. The implied effective tax burden is high (~43–44%), contributing to deeper YoY decline in net income than operating income. operating_leverage: EBITDA of ¥37.471bn vs. operating income of ¥17.167bn shows sizable non-cash charges; profitability is sensitive to volume/pricing. The YoY drop in operating income suggests negative operating leverage in the period, potentially from softer demand normalization vs. prior-year rebound and/or elevated input costs (e.g., electricity). Interest coverage at ~10.2x indicates that financial expenses are not the primary profitability constraint.

Growth Assessment

revenue_sustainability: Revenue is undisclosed; thus topline growth cannot be measured. The decline in operating income suggests growth headwinds or cost pressure offsetting any underlying revenue trends. profit_quality: OCF/Net Income of 2.65x and OCF/EBITDA of ~79.5% (¥29.797bn/¥37.471bn) indicate good cash realization and low accrual intensity this half. Non-operating items netted positive (ordinary income exceeded operating income by ~¥2.15bn), but underlying operating profitability weakened YoY. outlook: With demand normalization likely moderating versus prior-year recovery and cost inflation (notably energy and labor) still relevant, near-term growth in operating profit may depend on fare measures, mix improvements in non-rail segments (real estate, hotels, leisure), and cost efficiency. Capex plans (undisclosed) will influence capacity, safety, and long-term growth but may weigh on near-term free cash flow.

Financial Health

liquidity: Current ratio 71.9% and quick ratio 69.7% reflect tight liquidity and reliance on recurring cash inflows; working capital is negative at ¥-99.969bn. Cash and equivalents are undisclosed. solvency: Assets ¥1.523tn, equity ¥503.468bn imply an equity ratio near 33% by calculation; the reported Equity Ratio field is undisclosed. Debt-to-equity is 1.89x (interest-bearing basis as provided). Interest coverage is strong at ~10.2x, supporting solvency under current earnings. capital_structure: Financial leverage is ~3.03x (assets/equity), typical for rail infrastructure. The mix skews to long-lived assets financed with a combination of debt and equity; absence of net debt and cash disclosures limits more granular leverage analysis (e.g., net debt/EBITDA).

Cash Flow Quality

earnings_quality: OCF of ¥29.797bn exceeds net income of ¥11.263bn (2.65x), indicating strong cash conversion. EBITDA-to-OCF conversion is ~80%, consistent with solid working capital management and limited non-cash earnings inflation. FCF_analysis: Investing cash flow is undisclosed; thus free cash flow cannot be computed. Given the sector’s high maintenance and growth capex, true FCF may be materially lower than OCF in practice. working_capital: Negative working capital (¥-99.969bn) and sub-1.0 current/quick ratios imply dependence on ongoing cash generation and short-term funding. No breakdown of receivables/payables is provided; inventory is modest at ¥7.859bn, consistent with services-heavy operations.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are undisclosed; thus we cannot assess payout stringency against earnings. FCF_coverage: FCF is unassessable due to missing investing cash flows; dividend coverage by free cash flow cannot be evaluated from the provided data. policy_outlook: Without disclosed dividends and capex, visibility is limited. Sectorally, stable OCF tends to support dividends over the cycle, but Meitetsu’s tight liquidity and capex needs (typical for rail) argue for careful calibration of distributions.

Risk Assessment

Business Risks:

• Passenger demand volatility (commuting, tourism, inbound travel) affecting fare revenues
• Energy and electricity cost inflation impacting rail operating costs
• Wage inflation and labor shortages pressuring operating margins
• Accident, safety, and service disruption risks
• Natural disasters (earthquakes, typhoons) in the Tokai region interrupting operations
• Competitive dynamics in regional transport and leisure/hotel segments
• Regulatory and fare approval constraints limiting pricing flexibility

Financial Risks:

• Tight liquidity with current ratio 71.9% and negative working capital
• High capital intensity and potential large capex, with investing CF undisclosed
• Interest rate risk on floating-rate debt amid potential rate normalization
• Refinancing concentration risk given reliance on short-term liabilities
• Limited visibility on cash and net debt due to missing disclosures

Key Concerns:

• Sharp YoY decline in operating income (-29.0%) and net income (-47.8%)
• Inability to assess revenue trends and FCF due to undisclosed topline and investing CF
• Elevated implied tax burden (~43–44%) weighing on net profitability
• Liquidity below 1.0x current and quick ratios, requiring sustained cash generation

Investment Implications

Key Takeaways:

• Operating income ¥17.167bn fell 29.0% YoY; net income ¥11.263bn fell 47.8% YoY
• Ordinary income exceeded operating income by ~¥2.15bn despite ¥1.685bn interest, indicating positive non-operating contributions
• OCF ¥29.797bn (2.65x net income) signals strong cash conversion
• Financial leverage ~3.03x with calculated equity ratio near 33%, interest coverage ~10.2x
• Liquidity tight: current ratio 71.9%, quick ratio 69.7%, working capital ¥-99.969bn
• Capex/Investing CF not disclosed; true FCF and dividend capacity remain unclear

Metrics to Watch:

• Disclosed revenue and segment trends (rail passenger volumes, hotel occupancy, real estate rents)
• Energy and power cost trajectory and fare/pricing measures
• Capex plans and disclosed investing cash flows (maintenance vs. growth split)
• Net debt and cash balances; debt maturity profile
• OCF sustainability and working capital movements
• Tax rate normalization and extraordinary items affecting net income

Relative Positioning: Meitetsu is a regional, multi-segment transportation and real estate operator in the Chubu area with moderate leverage and strong interest coverage, but tighter liquidity than some larger national peers; earnings are sensitive to passenger demand and energy costs, and visibility is constrained by undisclosed revenue and investing cash flows this period.

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
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