Nippon Yusen Kabushiki Kaisha FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.18T
• Operating Income: ¥68.05B
• Net Income: ¥268.28B
• EPS: ¥239.34

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

Nippon Yusen Kabushiki Kaisha (NYK Line) reported consolidated FY2026 Q2 results under JGAAP showing a continued normalization from the post-pandemic peak, with revenue of ¥1,182.1bn (-10.2% YoY) and operating income of ¥68.0bn (-41.2% YoY). Net income came in at ¥102.3bn (-61.5% YoY), implying a net margin of 8.65% and an EPS of ¥239.34 for the period. Profitability compressed notably at the operating line (operating margin ~5.8%), while ordinary income (¥126.8bn) exceeded operating income, indicating meaningful non-operating contributions (e.g., equity-method gains, financial income). The DuPont bridge shows ROE at 3.53% driven by modest net margin (8.65%), low asset turnover (0.270x), and moderate leverage (assets/equity 1.51x). Cash generation was solid relative to earnings, with operating cash flow of ¥230.8bn translating to an OCF/NI ratio of 2.26x, suggesting good earnings quality and working capital release. The balance sheet appears robust with total assets of ¥4,380.5bn, equity of ¥2,893.2bn, and liabilities of ¥1,350.3bn, implying an equity ratio around 66% based on totals (the 0.0% reported equity ratio appears unreported rather than actual). Liquidity is comfortable with a current ratio of 133% and a quick ratio of 121%, supported by ¥173.2bn in working capital. Leverage remains conservative with a debt-to-equity metric of 0.47x and interest coverage at 5.7x, indicating manageable financing risk in a cyclical industry. EBITDA was ¥143.6bn (12.1% margin), reflecting decent underlying cash earnings despite lower freight markets. Effective tax expense of ¥30.9bn implies a tax rate around the low-20% range when inferred from net income, though the “effective tax rate 0.0%” in the metrics appears to be an unreported placeholder. Financing cash flow was negative at -¥256.3bn, consistent with capital returns and/or debt reduction, although specific uses were not disclosed here. Several line items were not disclosed in XBRL (e.g., cash and equivalents, investing cash flow, detailed share data, and dividend per share), which limits depth on FCF and per-share diagnostics. The revenue decline and profit compression are consistent with rate normalization in container shipping and softer bulk markets, while the strong OCF underscores resilient underlying operations and disciplined balance sheet management. Overall, NYK enters the downcycle from a position of financial strength, but earnings sensitivity to freight rates, fuel, and FX remains high. Data limitations (zeros indicating unreported items) should be kept in mind when interpreting FCF and payout metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.65%
• asset_turnover: 0.270x
• financial_leverage: 1.51x (Assets/Equity)
• calculated_ROE: 3.53%
• commentary: ROE softness reflects compressed operating profitability and low asset turnover typical of shipping during normalization. Leverage is moderate and not the primary driver of ROE. margin_quality:
• gross_margin: 20.5% (GP ¥242.2bn on revenue ¥1,182.1bn)
• operating_margin: 5.8% (OI ¥68.0bn)
• EBITDA_margin: 12.1% (EBITDA ¥143.6bn)
• net_margin: 8.65% (NI ¥102.3bn)
• observations: Ordinary income materially exceeds operating income, pointing to non-operating contributions (e.g., equity-method gains). The step-down from gross to operating margin suggests elevated opex/charter/fuel and normalization of container rates. operating_leverage:
• assessment: Negative operating leverage evident with revenue -10.2% YoY vs. operating income -41.2% YoY, indicating cost base rigidity and/or mix headwinds.
• interest_coverage: 5.7x (EBIT/interest expense ¥68.0bn/¥11.9bn), adequate cushion despite downcycle.

Growth Assessment

revenue_sustainability: Top-line decline (-10.2% YoY) aligns with normalization in container freight and softer bulk markets. Recurrence of ordinary income suggests some stability from equity affiliates and logistics segments, but cyclicality remains high. profit_quality: OCF/NI at 2.26x indicates earnings are cash-backed, with likely working capital release. EBITDA margin at 12.1% supports underlying cash earnings despite reduced rates. outlook: Short-term outlook cautious given freight rate volatility, fuel cost variability, and macro uncertainty. Medium-term supported by fleet optimization, contract mix, and potential recovery in global trade; however, supply additions and geopolitical disruptions (e.g., route diversions) may keep volatility elevated.

Financial Health

liquidity:

• current_ratio: 133.1%
• quick_ratio: 120.8%
• working_capital: ¥173.2bn
• commentary: Solid near-term liquidity with sufficient current asset coverage relative to obligations. solvency:
• debt_to_equity: 0.47x
• interest_coverage: 5.7x
• equity_ratio_inferred: ≈66% (Equity ¥2,893.2bn / Assets ¥4,380.5bn), noting the reported 0.0% is unreported.
• commentary: Low leverage and strong equity base provide resilience through the cycle. capital_structure: Balance sheet skewed to equity funding with moderate financial debt. Negative financing CF suggests debt reduction and/or shareholder returns, enhancing solvency but specifics not disclosed.

Cash Flow Quality

earnings_quality: High, with OCF/NI at 2.26x indicating robust cash conversion. D&A of ¥75.5bn supports EBITDA-to-OCF bridge consistency. FCF_analysis: Investing CF not disclosed (reported as 0 due to unreported status), preventing precise FCF estimation. On an OCF basis, internal funding capacity appears healthy, but capex intensity for fleet renewal and environmental compliance remains a key variable. working_capital: Positive OCF implies net inflows from operations; the magnitude versus EBITDA suggests working capital release (e.g., receivables/advance freight timing). Detailed components not disclosed.

Dividend Sustainability

payout_ratio_assessment: Payout ratio reported as 0.0% due to unreported DPS; actual payout cannot be assessed from this dataset. EPS is ¥239.34 for the period. FCF_coverage: FCF coverage cannot be determined because investing cash flows/capex are not disclosed. OCF of ¥230.8bn provides capacity, but sustainability depends on maintenance and strategic capex, and cycle conditions. policy_outlook: NYK historically targets flexible, performance-linked dividends with consideration of balance sheet strength and investment needs. Given conservative leverage and strong OCF, capacity exists, but payout will be sensitive to freight markets and decarbonization capex.

Risk Assessment

Business Risks:

• Cyclicality and volatility of freight rates in container and bulk shipping
• Global trade volume sensitivity and macro slowdown risk
• Geopolitical disruptions affecting routes (e.g., Red Sea, Panama Canal constraints)
• Bunker fuel price volatility and availability
• Competition and capacity additions/orderbook risk depressing rates
• Operational risks including port congestion, labor disruptions, and safety incidents
• Environmental regulations tightening (EEXI/CII, EU ETS), requiring higher capex and potential speed reductions

Financial Risks:

• FX exposure (USD/JPY) impacting revenue and costs
• Interest rate risk on floating-rate debt and lease liabilities
• Equity-method income volatility from affiliates
• Asset impairment risk on vessels under prolonged weak markets
• Working capital swings tied to freight cycles and customer credit risk

Key Concerns:

• Sharp YoY compression in operating income (-41.2%) indicating negative operating leverage
• Limited visibility on capex/investing CF, constraining FCF and dividend analysis
• Dependence on non-operating gains to bridge from operating to ordinary income

Investment Implications

Key Takeaways:

• Earnings normalization continues with revenue -10.2% YoY and operating margin ~5.8%.
• Cash generation is solid (OCF/NI 2.26x), supporting balance sheet strength.
• ROE at 3.53% reflects modest margins and low asset turnover rather than leverage.
• Liquidity and solvency are strong (current ratio 133%, inferred equity ratio ~66%, interest cover 5.7x).
• Ordinary income outpaces operating income, highlighting reliance on non-operating/equity-method contributions.
• Visibility on capex and FCF is limited due to unreported investing CF; dividend assessment remains constrained.

Metrics to Watch:

• Spot and contract freight rate indices (container, dry bulk, energy transport)
• Bunker fuel spreads and efficiency measures impacting voyage costs
• FX (USD/JPY) and interest rates affecting financial items and debt service
• Capex and fleet renewal plans (LNG-fueled, alternative fuels) and resulting FCF
• Equity-method income trends and partner performance
• Working capital movements and OCF sustainability

Relative Positioning: Within Japanese shippers, NYK exhibits a conservative balance sheet and solid cash generation in a downcycle, positioning it defensively; however, profitability is normalizing and remains exposed to industry cyclicality and non-operating income variability.

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