AZ-COM MARUWA Holdings Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥113.05B
• Operating Income: ¥6.07B
• Net Income: ¥4.10B
• EPS: ¥29.64

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: Strong quarter with double-digit top-line growth and outsized operating profit expansion, underpinned by margin improvement and solid cash conversion. Revenue rose 11.4% YoY to 1,130.54, while operating income increased 40.2% YoY to 60.68 and net income climbed 40.2% to 39.91. Operating margin improved to about 5.37%, driven by better gross profit conversion and SG&A discipline. Based on back-calculations, operating margin expanded roughly 111 bps YoY (from ~4.26% to ~5.37%). Net margin rose to 3.53%, an improvement of approximately 72 bps YoY (from ~2.81%). Ordinary income margin strengthened to 5.54%, up about 100 bps YoY by our estimate. Gross margin printed at 9.9%, consistent with improved operating leverage given revenue growth outpaced fixed cost absorption. Earnings quality is high: OCF of 70.35 was 1.76x net income, indicating robust cash conversion and limited accrual reliance. Interest coverage is very strong at 53.2x, reflecting manageable financing costs despite a moderate D/E of 1.47x. Liquidity remains healthy with a current ratio of 169%, bolstered by 365.09 in cash and 241.10 in receivables against 373.28 in current liabilities. That said, heavy capex of 171.20 turned FCF negative on our calculation (about -100.85), implying growth investment funding needs despite strong OCF. Total assets expanded to 1,585.51, suggesting capacity build-out that may weigh on near-term asset turnover while supporting future growth. ROE is calculated at 6.2% via DuPont (NPM 3.5% × ATO 0.713 × leverage 2.47x), indicating improvement chiefly from margin gains rather than leverage. ROIC of 7.6% sits within the management target range (7–8%), implying value-accretive investment if sustained. Non-operating income of 4.79 (12.0% of operating income) provided a modest tailwind, with dividends and interest contributing, while non-operating expenses were contained at 2.78. Forward-looking, the combination of higher margins, sufficient liquidity, and strong cash conversion positions the company to execute on its capex plan; the key will be translating capacity additions into sustained ROIC above WACC. Watch for labor cost inflation, driver availability, and fuel/toll pass-through to determine margin durability.

Profitability Analysis

ROE decomposition (DuPont): ROE 6.2% = Net profit margin 3.5% × Asset turnover 0.713 × Financial leverage 2.47x. The largest delta YoY appears to be net margin expansion, inferred from operating income growing 3.5x faster than revenue (+40.2% vs +11.4%), lifting operating margin by ~111 bps to ~5.37%. Business drivers include improved operating efficiency/scale benefits and SG&A discipline (SG&A ratio ~4.52%), with a small lift from non-operating income (dividends/interest). Asset turnover may be under mild pressure near term as total assets rose on capex, though revenue growth partially offsets. Leverage is stable/moderate at 1.47x D/E and 2.47x in the DuPont construct; leverage is not the key ROE driver. Sustainability: margin gains look partly structural (scale, mix) but will face headwinds from labor cost inflation and logistics capacity constraints; non-operating contributions are modest and less volatile. Watch for any trend where SG&A growth surpasses revenue growth; current quarter indicates positive operating leverage.

Growth Assessment

Revenue growth of 11.4% YoY indicates healthy demand and/or capacity expansion in core logistics segments. Operating income growth of 40.2% suggests strong operating leverage and improved cost efficiency. Ordinary income rose 36.0% and net income 40.2%, confirming broad-based earnings momentum. Non-operating income (4.79) contributed but remains a secondary driver relative to operating profit. The capex outlay of 171.20 points to continued network/fleet/IT investments that should sustain mid-term growth if utilization ramps. ROIC at 7.6% is at the targeted range, implying investments are close to value-accretive levels; sustaining >8% would be a positive inflection. Outlook hinges on maintaining utilization, pass-through of fuel/toll costs, and securing labor in a tight market. Near-term, asset turnover could soften as new assets come online; revenue scaling is needed to defend ROIC.

Financial Health

Liquidity is solid: current ratio 169.2% and quick ratio 169.2% (no inventories reported), with cash and deposits of 365.09 comfortably covering short-term needs (current liabilities 373.28). No warning on current ratio (<1.0) or D/E (>2.0); D/E is 1.47x, within acceptable bounds but warrants monitoring given elevated capex. Interest-bearing debt detail is partially unreported, but disclosed loans total 235.04 (short 0.17, long 234.87). Interest coverage is strong at 53.23x, suggesting low refinancing stress. Maturity mismatch risk appears low: current assets (631.65) exceed current liabilities (373.28) and cash alone nearly matches current liabilities. Noncurrent liabilities of 569.26 indicate reliance on longer-term borrowing that aligns with capex profile. Off-balance obligations not disclosed; no explicit operating lease or guarantee data reported.

Cash Flow Quality

OCF/Net income of 1.76x signals high earnings quality with strong cash conversion and limited accrual risk. Estimated free cash flow is negative at about -100.85 (OCF 70.35 minus capex 171.20), driven by aggressive investment. Financing cash inflow of 67.71 indicates external funding support for growth capex and possibly dividends. Working capital appears manageable: receivables (241.10) and payables (138.73) are balanced with high cash; no signs of unusual WC manipulation evident from available data. Sustainability: if capex normalizes or revenue utilization improves, FCF should recover; near-term FCF likely negative while expansion continues.

Dividend Sustainability

Reported payout ratio is 110.6%, above the <60% benchmark and above 100%, implying dividends exceeded current earnings on the reported basis. With estimated negative FCF this period, dividends (amount not disclosed) are not covered by internally generated cash and appear reliant on balance sheet/financing inflows. Given OCF strength, medium-term coverage could improve as capex rolls off and new assets contribute, but near-term dividend sustainability depends on capital allocation prioritization and capex cadence. Dividend policy details and DPS were unreported; monitoring guidance and payout policy alignment with ROIC/FCF is essential.

Risk Assessment

Business Risks:

• Labor cost inflation and driver shortages in Japan (2024 workstyle reforms) could pressure margins and capacity.
• Fuel and highway toll volatility may challenge cost pass-through and compress margins.
• Customer concentration typical in logistics could amplify earnings volatility if a large client renegotiates or churns.
• Execution risk on large-scale capex: delays in utilization ramp could depress ROIC and asset turnover.
• Goodwill/intangibles (total ~142.38) carry impairment risk if acquired businesses underperform.

Financial Risks:

• Negative FCF driven by high capex increases reliance on external financing.
• Moderate leverage (D/E 1.47x) could rise if capex and dividends are maintained concurrently.
• Interest rate risk on predominantly long-term borrowings (234.87) if variable-rate exposure is material.
• Working capital swings tied to receivables (241.10) could affect near-term liquidity.

Key Concerns:

• Sustaining recent margin expansion amid rising labor and operating costs.
• Realizing returns on capex to keep ROIC at/above 7–8% target range.
• Dividend coverage given elevated payout ratio (110.6%) and negative FCF.
• Visibility limited by several unreported line items (e.g., detailed SG&A, investing CF, dividend cash out).

Investment Implications

Key Takeaways:

• Quality beat: revenue +11.4% with operating income +40.2% and OCF/NI 1.76x.
• Operating margin expanded ~111 bps to ~5.37%; net margin up ~72 bps to 3.53%.
• ROE 6.2% mainly driven by margin gains; leverage contribution modest.
• ROIC at 7.6% supports investment case if utilization of new assets scales.
• Liquidity strong (current ratio 169%), but capex-heavy phase yields negative FCF.
• Payout ratio at 110.6% is elevated; dividend sustainability hinges on FCF normalization.

Metrics to Watch:

• Operating margin and gross margin trend by quarter.
• ROIC versus WACC and capex returns by project.
• OCF/Net income and FCF progression as new assets ramp.
• Leverage (D/E) and net debt/EBITDA amid continued capex.
• Receivable days and payables days (working capital discipline).
• Labor cost inflation, driver availability, and pass-through of fuel/toll costs.
• Effective tax rate stability (currently 35.4%).

Relative Positioning: The company demonstrates above-peer cash conversion and disciplined operating leverage within the domestic logistics space, albeit entering a capex-intensive phase that depresses FCF and may pressure balance sheet flexibility if maintained alongside elevated payouts.

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