Maruzen Showa Unyu Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥72.24B
• Operating Income: ¥7.52B
• Net Income: ¥6.06B
• EPS: ¥306.29

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: Solid Q2 performance with resilient top-line growth and meaningful operating margin expansion, translating into higher ordinary and net profits, supported by clean cash conversion. Revenue rose 1.4% year over year to 722.39, while operating income increased 9.3% to 75.18, indicating positive operating leverage. Ordinary income advanced 9.9% to 81.07, with non-operating income of 7.60 (notably dividend income of 5.34) providing a moderate tailwind. Net income reached 59.80 (+1.5% YoY), with EPS at 306.29 yen. Operating margin improved to 10.4%, up approximately 75 basis points from an implied 9.7% a year ago. Net margin stood at 8.3%, roughly stable given higher taxes and the mix of non-operating items. EBITDA was 98.63, for a 13.7% margin, underscoring healthy operating efficiency. Cash conversion was strong: operating cash flow of 60.65 matched net income (OCF/NI = 1.01x), indicating good earnings quality. Balance sheet strength is notable with a current ratio of 220.7% and D/E of 0.43x, and cash of 175.83 comfortably exceeding short-term loans of 117.13. Interest coverage is 47x, signaling low refinancing risk despite 2.52x debt/EBITDA. ROE is modest at 4.3%, constrained by low asset turnover (0.363x) and a capital-heavy asset base. ROIC at 3.6% flags capital efficiency as an area to improve. Non-operating income (12.7% of operating income) contributed positively this quarter, but its durability depends on market conditions for securities and affiliate dividends. Comprehensive income (85.95) exceeded net income, suggesting favorable valuation gains in OCI that may not repeat. Forward-looking, sustained operating efficiency, disciplined capex, and stable dividend income streams are key to support earnings and dividends amid sector headwinds such as labor constraints and fuel cost variability.

Profitability Analysis

ROE decomposition (DuPont): ROE 4.3% = Net Profit Margin 8.3% × Asset Turnover 0.363 × Financial Leverage 1.43x. The largest incremental driver this quarter appears to be margin improvement: operating margin expanded to 10.4% from an implied 9.7% (+~75 bps), aided by cost control and modest support from non-operating dividend income. Asset turnover remains low at 0.363, reflecting a capital-intensive logistics model and an expanding asset base outpacing revenue growth. Financial leverage is moderate (1.43x), with D/E 0.43x; leverage contribution to ROE is stable and conservative. Business rationale: pricing discipline and mix likely supported operating margin, while dividend income (5.34) lifted ordinary income; tax rate (30.2%) was in a normal range. Sustainability: operating margin gains look more durable than non-operating boosts, but will be tested by wage inflation and fuel costs; dividend income durability depends on investee performance and market conditions. Watch for SG&A trends relative to revenue—limited disclosure prevents a full view, but operating income outgrew revenue, implying positive operating leverage this quarter.

Growth Assessment

Revenue growth of 1.4% YoY is modest but positive amid a soft macro logistics backdrop. Operating income grew 9.3% YoY, outpacing sales, signaling improved efficiency/pricing. Ordinary income +9.9% benefited from non-operating items (dividend income 5.34; interest income 0.62), which may be less predictable. Net income +1.5% YoY lagged operating growth due to a normalizing effective tax rate and below-the-line dynamics. EBITDA margin at 13.7% and operating margin at 10.4% indicate healthy core profitability. With asset turnover at 0.363, scaling earnings will require either stronger volume/pricing or tighter asset discipline. Outlook hinges on volume recovery in domestic/contract logistics, cost pass-through (fuel surcharges), and labor productivity amid the 2024 logistics reforms. Near-term growth quality is good given OCF alignment with NI; medium-term sustainability depends on maintaining margin discipline and calibrating capex to demand.

Financial Health

Liquidity is strong: current ratio 220.7% and quick ratio 220.7% (cash 175.83 vs short-term loans 117.13) indicate ample short-term coverage; no warning thresholds breached. Solvency is conservative with D/E at 0.43x and interest coverage at 46.99x; debt/EBITDA 2.52x is comfortable for the sector. Maturity mismatch risk is low: current assets of 730.32 exceed current liabilities of 330.84 by 399.48 in working capital. Noncurrent liabilities (267.38) are manageable against stable cash generation. No off-balance sheet obligations were disclosed in the provided data; absence of information limits visibility on lease liabilities or long-term contract commitments.

Cash Flow Quality

OCF/Net Income at 1.01x indicates clean earnings conversion with no immediate red flags. Implied free cash flow is approximately 36.50 (OCF 60.65 minus capex 24.15), suggesting internal funding capacity for dividends and debt service. Working capital detail is limited (AR/AP/inventory not disclosed), restricting analysis of potential period-end timing effects; nonetheless, parity of OCF and NI argues against aggressive working capital optimization this quarter. Financing cash flow of -25.66 suggests net debt reduction and/or dividends, consistent with conservative balance sheet management. Sustainability: if capex remains near 24.15 per half-year, annual FCF should comfortably cover a payout ratio in the high-50% range, barring a downturn.

Dividend Sustainability

The calculated payout ratio is 58.6%, at the upper end of a sustainable range but still acceptable given cash generation. With implied FCF of ~36.50 and estimated dividends around ~35.05 (58.6% of 59.80), FCF coverage is roughly 1.0x—adequate but with limited cushion. Balance sheet strength (net cash relative to short-term debt and low leverage) provides downside protection to the dividend in a softer year. Policy outlook: with ROE at 4.3% and ROIC at 3.6%, management may prioritize steady dividends over aggressive increases unless operating growth accelerates or asset efficiency improves. Lack of disclosed DPS history for the period limits precision on the trajectory.

Risk Assessment

Business Risks:

• Demand softness in domestic logistics impacting volumes and pricing leverage
• Labor shortages and wage inflation under Japan’s 2024 logistics reforms compressing margins
• Fuel price volatility and pass-through timing affecting profitability
• Customer concentration risk typical in contract logistics (not disclosed but common for the industry)

Financial Risks:

• Low capital efficiency (ROIC 3.6%) vs cost of capital, risking value dilution if capex stays elevated
• Dividend income variability from investment securities potentially affecting ordinary income
• Potential OCI volatility (comprehensive income > net income) tied to market valuations
• Interest rate normalization could raise borrowing costs, though current coverage is ample

Key Concerns:

• ROE at 4.3% constrained by low asset turnover (0.363), limiting shareholder value creation
• Thin FCF coverage of dividends (~1.0x) leaves modest buffer for shocks
• Limited disclosure on gross margin and working capital restricts visibility into underlying cost trends

Investment Implications

Key Takeaways:

• Operating margin expanded ~75 bps YoY to 10.4% on modest 1.4% revenue growth, demonstrating operating leverage
• Earnings quality is sound with OCF/NI at 1.01x and interest coverage at 47x
• Balance sheet is robust (current ratio 221%, D/E 0.43x), supporting stability
• Capital efficiency is the main drawback: ROIC 3.6% and ROE 4.3% indicate room for asset efficiency improvements
• Dividend appears covered by FCF but with a limited cushion at a 58.6% payout

Metrics to Watch:

• Operating margin trajectory vs wage and fuel cost trends
• Asset turnover improvements and utilization rates
• Capex intensity and project returns (ROIC uplift)
• Non-operating income dependence (dividend/interest income stability)
• OCF/NI ratio and working capital changes (AR/AP/inventory once disclosed)

Relative Positioning: Within domestic logistics peers, Maruzen Showa shows above-average balance sheet strength and healthy margins, but lags on capital efficiency and asset turnover; near-term defensiveness is solid, while medium-term upside depends on ROIC improvement and disciplined growth.

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
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