Nippon Yusen Kabushiki Kaisha FY2026 FY Earnings Report

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Executive Summary

For the fiscal year ended March 2026, Revenue / Net Sales were ¥24236.9億 (YoY -¥1650億, -6.4%), Operating Income was ¥1386.0億 (YoY -¥722億, -34.3%), Ordinary Income was ¥2111.3億 (YoY -¥2798億, -57.0%), and Net Income attributable to owners of the parent was ¥3027.9億 (YoY +¥174億, +6.1%). Revenue declined due to normalization of container rates and a large drop in air cargo, and Ordinary Income was halved largely because equity-method investment income contracted to ¥850億 (prior year ¥2,934億). However, pre-tax income was lifted to ¥2768億 by recognition of Special Gains of ¥822億 (gain on sale of available-for-sale securities ¥378億, gain on disposal of fixed assets ¥255億, etc.), resulting in Net Income exceeding the prior year. Operating margin was 5.7% (prior year 8.1%, -2.4pt), and Net Income margin was 12.5% (prior year 11.0%, +1.5pt), reflecting that Special Gains improved profitability metrics.

Drivers of Performance

[Revenue] Revenue decreased to ¥24236.9億 (-6.4%). By segment, Air Cargo Transport fell sharply to ¥411億 (-77.9%), Liners (Scheduled Shipping) was flat at ¥1,809億 (+0.3%), Dry Bulk ¥5,511億 (-9.3%), Automotive ¥5,269億 (-1.0%), Logistics ¥8,048億 (-0.9%), while Energy grew significantly to ¥2,370億 (+32.7%). Overall, normalization of container freight rates and adjustment in air cargo markets were the main downward drivers, and growth in the Energy business did not fully offset the decline.

[Profitability] Operating Income declined substantially to ¥1,386.0億 (-34.3%). Gross profit was ¥4,294億 (gross margin 17.7%, -0.4pt from 18.1% prior year), and SG&A was ¥2,908億 (prior year ¥2,585億, +12.5%), increasing despite lower sales and revealing negative operating leverage. Non-operating items included interest income ¥71億, dividend income ¥98億, equity-method investment income ¥850億 (prior year ¥2,934億); interest expense ¥227億 (prior year ¥201億) and foreign exchange losses ¥40億 were deducted, resulting in total non-operating income of ¥1,082億 and expenses of ¥357億. Consequently, Ordinary Income halved to ¥2,111.3億 (-57.0%). Net Special Gains of ¥656億 (Special Gains ¥822億—gain on sale of available-for-sale securities ¥378億, gain on disposal of fixed assets ¥255億; Special Losses ¥167億—impairment loss ¥14億, valuation loss on available-for-sale securities ¥20億, etc.) boosted pre-tax income, and after income taxes of ¥611億, Net Income attributable to owners of the parent was ¥3,027.9億 (+6.1%). The structure shows revenue and operating / ordinary profit declines, with Net Income supported by one-off Special Gains.

Segment Analysis

Segment operating profit / loss (on an Ordinary Income basis) is as follows: Liners (Scheduled Shipping) ¥498億 (Revenue ¥1,809億, margin 27.5%), Air Cargo Transport ¥22億 (Revenue ¥411億, 5.3%), Logistics ¥102億 (Revenue ¥8,048億, 1.3%), Automotive ¥979億 (Revenue ¥5,269億, 18.6%), Dry Bulk ¥96億 (Revenue ¥5,511億, 1.7%), Energy ¥544億 (Revenue ¥2,370億, 22.9%), Other ¥-0.3億. High-margin segments—Liners, Energy, Automotive—drove earnings while Logistics and Dry Bulk remained low-margin and diluted overall margin. YoY, Automotive decreased to ¥979億 (prior year ¥1,134億, -13.7%), Energy increased to ¥544億 (prior year ¥462億, +17.8%), and Liners dropped substantially to ¥498億 (prior year ¥2,744億, -81.8%).

Key Financial Metrics

[Profitability] Operating margin 5.7% (prior year 8.1%, -2.4pt), Ordinary Income margin 8.7% (prior year 19.0%, -10.3pt), Net Income margin 12.5% (prior year 11.0%, +1.5pt). ROE was 9.6% (prior year 17.1%, -7.5pt), while Equity Ratio remained high at 60.4% (prior year 67.6%, -7.2pt). [Cash Quality] Operating Cash Flow (OCF) was ¥4,734億, 1.56x Net Income ¥3,028億; OCF subtotal including depreciation ¥1,752億 was ¥3,151億, indicating solid cash generation before working capital changes. Accrual ratio ((Net Income - OCF) / Total Assets) was about -3.3%, favorable and indicating strong cash backing for profits. [Investment Efficiency] Total assets rose materially to ¥5兆2,017億 (prior year ¥4兆3,268億, +20.2%), and total asset turnover fell to 0.47x (prior year 0.60x). Tangible fixed assets ¥1兆6,307億 (prior year ¥1兆3,013億, +25.3%), goodwill ¥2,506億 (prior year ¥229億, +995.8%), intangible fixed assets ¥2,933億 (prior year ¥540億, +443.2%) reflect asset growth from M&A and capex. [Financial Soundness] Equity Ratio 60.4%; interest-bearing debt total ¥9,067億 (short-term borrowings ¥1,552億 + long-term borrowings ¥6,095億 + bonds ¥1,420億); net interest-bearing debt after deducting cash & deposits ¥2,146億 was ¥6,921億. Debt/Equity ratio 28.8%, Interest Coverage (Operating Income / Interest Expense) 6.1x, indicating adequate debt servicing capacity. Current ratio was 99.0% (current assets ¥8,655億 / current liabilities ¥8,739億), slightly below 1.0, requiring attention to short-term liquidity, though cash / short-term liabilities coverage is about 1.2x.

Cash Flow Analysis

Operating Cash Flow was ¥4,734億 (prior year ¥5,108億, -7.3%), calculated by adjusting the OCF subtotal ¥3,151億 with interest & dividends received ¥2,255億, interest paid -¥209億, income taxes paid -¥464億, etc. Working capital used funds via increase in trade receivables -¥189億 and inventory increase -¥61億, partially offset by increase in trade payables +¥167億. Investing Cash Flow was -¥3,712億, driven by acquisitions of tangible & intangible fixed assets -¥3,045億 and acquisition of subsidiary shares -¥2,631億; inflows included proceeds from sale of fixed assets ¥823億, proceeds from sale/redemption of investment securities ¥671億, and proceeds from sale of subsidiaries ¥976億, resulting in Free Cash Flow of ¥1,021億. Financing Cash Flow was -¥334億: proceeds from long-term borrowings ¥2,170億 and bond issuance ¥428億 (total ¥2,598億) were offset by repayment of borrowings -¥417億, bond redemptions -¥330億, share buybacks -¥1,441億, and dividend payments -¥1,330億 (of which ¥1,315億 to owners of the parent), yielding net outflow. Ending cash increased to ¥2,146億 (prior year ¥1,560億, +37.5%). OCF/EBITDA (Operating CF / (Operating Income + Depreciation)) was approx. 1.51x, indicating strong cash generation.

Quality of Earnings

Of Ordinary Income ¥2,111.3億, Operating Income ¥1,386.0億 is core operating earnings, and total non-operating income ¥1,082億 (interest income ¥71億, dividend income ¥98億, equity-method investment income ¥850億, etc.) represents non-operating recurrent income. Equity-method investment income ¥850億 accounted for 40.3% of Ordinary Income, indicating high sensitivity to external market conditions. Meanwhile, net Special Gains ¥656億 (Special Gains ¥822億—gain on sale of available-for-sale securities ¥378億, gain on disposal of fixed assets ¥255億; Special Losses ¥167億) were temporary and lifted pre-tax income by 23.7%. Given Operating Cash Flow is 1.56x Net Income, accrual ratio of about -3.3% is favorable and overall earnings quality is high; however, the large share of equity-method investment income increases earnings volatility tied to market fluctuations. Comprehensive income was ¥4,319億 (¥4,232億 attributable to owners of the parent); the gap with Net Income ¥3,028億 (+¥1,204億) was due to foreign currency translation adjustments ¥595億, retirement benefit adjustments ¥871億, and other comprehensive income of equity-method investees ¥618億, reflecting asset revaluation and improvement in pension liabilities.

Forecasts / Guidance

Full-year forecast for FY March 2026: Revenue ¥2兆6,050億 (YoY +7.5%), Operating Income ¥1,450億 (+4.6%), Ordinary Income ¥1,850億 (-12.4%), Net Income attributable to owners of the parent ¥1,950億 (-35.6%), EPS ¥464.91, and dividend ¥100. Assumed FX: USD/JPY = 155 (H1 157, H2 153); fuel price assumption average US$741.08/MT (H1 806.55, H2 675.62). Progress in the first three months reached 93.1% of Revenue, 95.6% of Operating Income, 114.1% of Ordinary Income, and 155.3% of Net Income of the full-year plan, indicating results already above the full-year pace and suggesting conservative second-half assumptions. While an increase in operating profit is expected, normalization of equity-method investment income is embedded in forecasts, leading to decreases in Ordinary and Net Income; market conditions (rates, fuel) and FX remain the main drivers.

Shareholder Returns

This fiscal year dividend was ¥230 per share (interim ¥115, year-end ¥115, including a commemorative dividend of ¥25), with a payout ratio of 30.4% (based on EPS ¥504.85), at a sustainable level. Total dividends amounted to approximately ¥940億 (based on outstanding shares 408.78 million - treasury shares 3.29 million), covering Free Cash Flow ¥1,021億 at about 1.09x, indicating dividend funding was secured. Meanwhile, share buybacks of ¥1,441億 were executed, making total returns (dividends + buybacks) approx. ¥2,381億 and Total Return Ratio approx. 79% (based on Net Income attributable to owners of the parent ¥3,028億). However, because total returns significantly exceed Free Cash Flow, continuation would require asset disposals or expanded Operating Cash Flow. Forecast dividend for FY March 2027 is ¥100 (excluding commemorative dividend), implying adjustments in capital allocation as earnings normalize.

Risk Factors

1. Market volatility risk: Declines in container freight index (SCFI) or dry bulk index (BDI) would hit Revenue and margins directly. Equity-method investment income ¥850億 (40.3% of Ordinary Income) is highly sensitive to market conditions; deterioration in commodity and non-commodity markets could substantially reduce Ordinary Income. A +10% rise in fuel (bunker) price from the assumed US$741/MT would compress margins by 5–7% in sensitivity.

2. Short-term liquidity risk: Current ratio 99.0% and quick ratio 90.7% are below 1.0, indicating thin current assets ¥8,655億 against current liabilities ¥8,739億 and potential maturity mismatch. Short-term borrowings ¥1,552億 (prior year ¥544億, +185.2%) plus CP ¥400億 against cash ¥2,146億 give coverage of about 1.2x, leaving minimal buffer; increases in working capital or delays in asset disposals could affect liquidity.

3. Structural SG&A escalation risk: SG&A ¥2,908億 (+12.5%) increased amid Revenue decline (-6.4%), revealing negative operating leverage. SG&A / Revenue rose to 12.0% (prior year 10.0%, +2.0pt); increases in fixed costs such as personnel and systems could weigh on medium-term profitability. If Revenue does not recover per plan, margins could deteriorate further.

Industry Benchmark (Reference, Company Aggregation)

Profitability & Returns

Operating margin is 0.6pt below the industry median 6.3%, slightly underperforming, but Net Income margin 12.5% significantly exceeds the median 2.7% due to Special Gains and equity-method income.

Growth & Capital Efficiency

Revenue growth is 11.4pt below the industry median 5.0%, as normalization in container and air cargo markets constrained growth.

※Source: Company aggregation

Points of Note in the Financial Results

1. Maintaining cash generation in a market-normalization phase: OCF ¥4,734億 is 1.56x Net Income and OCF/EBITDA 1.51x, indicating robust cash generation even with normalized container rates. Free Cash Flow ¥1,021億 covers dividends approx. ¥940億 and supports a payout ratio of 30.4%. However, total returns including share buybacks (~¥2,381億) greatly exceed Free Cash Flow, so continuation depends on asset disposals (part of this fiscal year’s Special Gains ¥656億 relates to such disposals) or expansion of OCF.

2. Margin dispersion and structural issues across segments: High-margin segments—Liners (27.5%), Energy (22.9%), Automotive (18.6%)—drive earnings while Logistics (1.3%) and Dry Bulk (1.7%) remain low-margin and dilute the group margin of 5.7%. SG&A rose +12.5% despite Revenue decline, revealing negative operating leverage; improving profitability in Logistics and Dry Bulk (through price revisions and cost reductions) is key to medium-term margin recovery. Also, the large share of equity-method investment income ¥850億 (40.3% of Ordinary Income) increases sensitivity to market conditions, so monitoring commodity and non-commodity markets and investee performance is material to forecast accuracy.

3. Sustainability of liquidity and total returns: Current ratio 99.0% and current liabilities ¥8,739億 vs current assets ¥8,655億 indicate short-term liquidity vulnerability. Short-term borrowings surged to ¥1,552億 (prior year ¥544億, +185.2%), and any rise in working capital or delay in asset disposals could impact liquidity. Total returns (~¥2,381億) far exceed Free Cash Flow ¥1,021億, making continued payouts contingent on asset sale proceeds or sustained expansion in Operating Cash Flow; in a market downturn, adjustment of total returns (the company’s DPS forecast of ¥100 suggests a reduction) may be required.

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This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by our firm from public financial statements. Investment decisions are your responsibility; consult a professional as needed.