TAMAI STEAMSHIP CO.,LTD FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.47B
• Operating Income: ¥54M
• Net Income: ¥4M
• EPS: ¥1.56

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: FY2026 Q2 was a materially weaker quarter operationally, with profitability collapsing despite solid liquidity and operating cash flow resilience. Revenue fell 11.0% YoY to 24.73, while operating income plunged 87.8% YoY to 0.54, implying a sharp deterioration in core earnings. Ordinary income was a loss of -0.23 due to non-operating burden (non-operating expenses 1.10 exceeded non-operating income 0.32), though bottom-line stayed barely positive at 0.03 helped by a tax credit (-0.21). EBITDA was 4.12 (margin 16.6%), supported by sizable depreciation (3.58), masking the weakness at the operating income level. Operating margin compressed from roughly 15.9% in the prior year to 2.2% this quarter (about -1,370 bps), while net margin shrank from about 13.5% to 0.1% (roughly -1,340 bps). The OCF/Net Income ratio was 120x (OCF 3.61 vs NI 0.03), highlighting cash earnings were much stronger than accounting earnings, driven by depreciation and likely working capital tailwinds. Balance sheet remains conservative: current ratio 346%, quick ratio 346%, and D/E 0.45x, with cash and deposits of 24.62 comfortably covering current liabilities of 9.07. However, ROIC printed at a very low 0.3%, signaling poor capital efficiency relative to asset intensity. Non-operating items were material this quarter (non-operating income ratio 1,080.6%), and non-operating expenses (1.10) and interest (0.12) weighed on ordinary income. Capex was heavy at -27.56, far exceeding OCF, implying negative implied FCF in the period and reliance on financing CF (6.55) and cash on hand. Total comprehensive income was 0.91, far above net income, suggesting favorable OCI items (likely securities valuation gains) that do not translate into operating strength. The effective tax rate was distorted (121.7%) due to small losses at pretax and tax credits, which is not indicative of steady-state taxation. Forward-looking, the combination of margin compression, non-operating headwinds, and elevated capex points to subdued near-term ROIC unless pricing, utilization, or cost conditions improve. Strong liquidity provides runway to execute on fleet/capex plans, but earnings recovery depends on normalization of non-operating losses and restoration of operating margin.

Profitability Analysis

ROE decomposition (DuPont): ROE ≈ Net Profit Margin × Asset Turnover × Financial Leverage = 0.1% × 0.184 × 1.45 ≈ ~0.0% (rounded), consistent with reported ROE 0.0%. The largest driver of deterioration is Net Profit Margin, which fell from roughly 13.5% (prior-year back-calculation) to ~0.1% this quarter. Asset turnover at 0.184 is low for a capital-intensive operator and did not offset the margin collapse; financial leverage at ~1.45x is moderate and stable. Business drivers: revenue fell 11% YoY while operating income fell 87.8% YoY, indicating severe negative operating leverage—fixed cost absorption likely worsened amid softer volumes/rates and higher operating costs (e.g., crew, maintenance, fuel). Non-operating burden (expenses 1.10 vs income 0.32) flipped ordinary income into a loss, exacerbating net margin. Sustainability: the margin collapse appears cyclical/operational rather than structural permanent, but recovery requires improvement in freight rates, utilization, or cost pass-through; non-operating losses (e.g., FX, interest, other) may normalize but remain a risk given rate and currency volatility. Flags: SG&A not disclosed, but the scale of operating income decline vs revenue decline points to cost growth outpacing revenue or weakening unit economics; interest coverage at ~4.3x is below the 5x comfort threshold, leaving less buffer if earnings remain subdued.

Growth Assessment

Top-line contracted 11.0% YoY to 24.73, reflecting weaker market conditions or voyage mix. Operating income decline (-87.8% YoY to 0.54) indicates negative operating leverage; EBITDA of 4.12 provides some cushion but not enough to preserve operating profit. Ordinary income loss (-0.23) vs small net profit (0.03) was driven by a tax credit; this is not an indicator of sustainable earnings power. Non-operating composition: dividend income 0.23 and interest income 0.04 provided partial offset to non-operating expenses (1.10), but the net drag was significant. Profit quality skewed toward depreciation add-backs and working capital in OCF rather than recurring profitability. Outlook hinges on freight rates/charter conditions, fuel costs, and asset deployment; a recovery in rates or improved utilization could quickly lift operating margin given high fixed-cost base, but the reverse also holds. Near term, heavy capex (-27.56) suggests a fleet or asset program that could enhance capacity/efficiency in outer periods, yet depress near-term FCF and ROIC. Without disclosed guidance, base case is cautious: gradual margin repair needed to restore ROIC above cost of capital.

Financial Health

Liquidity is strong: current ratio 346% and cash 24.62 exceed current liabilities 9.07 by a wide margin; no warning on current ratio (<1.0) or D/E (>2.0). Solvency is conservative: D/E 0.45x and long-term loans 20.11 within total liabilities 41.73; equity base 92.43 supports balance sheet resilience. Maturity profile: low short-term pressure implied by small current liabilities vs cash; primary debt appears longer dated (noncurrent liabilities 32.66), reducing near-term refinancing risk. Interest coverage ~4.32x is below the 5x ‘strong’ benchmark but above the 2x warning threshold; sensitivity to further EBIT declines exists. Off-balance sheet: not disclosed; shipping operators can face charter/lease commitments—data limitations prevent assessment. Overall, liquidity robust, leverage moderate, but earnings softness narrows interest coverage headroom.

Cash Flow Quality

OCF/Net Income at 120.23x flags that accounting earnings understated cash generation this period, driven by large non-cash depreciation (3.58) and likely working capital inflows. However, implied Free Cash Flow is deeply negative given capex of -27.56 versus OCF of 3.61 (indicative FCF ≈ -23.95), necessitating reliance on financing CF (6.55) and cash balances—this is not sustainable without an earnings rebound or capex normalization. Working capital quality: not disclosed by line, but the divergence between OCF and NI suggests non-cash items dominated; absence of receivables/inventories detail limits manipulation detection. Overall, cash conversion is good at the operating level, but investment cash needs currently overwhelm internal funding.

Dividend Sustainability

Dividend data (DPS, total dividends) are unreported; the displayed payout ratio of 5,152% is not reliable without DPS. With net income at 0.03 and implied negative FCF (OCF 3.61 vs capex -27.56), any cash dividends would be covered by balance sheet liquidity rather than internally generated free cash. Given ROIC of 0.3% and ordinary loss, maintaining or increasing dividends would be challenging unless profitability normalizes or capex moderates. Policy outlook cannot be inferred from disclosures; investors should monitor board guidance, payout policy target (if any), and capex cadence.

Risk Assessment

Business Risks:

• Freight rate and volume volatility impacting utilization and pricing, driving negative operating leverage.
• Fuel (bunker) cost fluctuations with limited pass-through raising operating cost base.
• Execution risk on large capex program (-27.56) with delayed earnings uplift and ROIC dilution.
• Asset impairment risk if vessel values soften amid weaker markets.

Financial Risks:

• Interest coverage at ~4.3x leaves limited buffer if EBIT softens further.
• Reliance on financing and cash reserves to fund negative implied FCF during elevated capex.
• Non-operating losses (1.10) including potential FX and other financial items increasing earnings volatility.

Key Concerns:

• Severe margin compression: operating margin down ~1,370 bps YoY to ~2.2%.
• ROIC at 0.3% well below 5% warning threshold, indicating poor capital efficiency.
• Ordinary income in the red despite positive EBITDA points to thin operating profit and non-operating drag.
• Data gaps (no gross profit/SG&A/working capital details) limit visibility on cost structure and cash conversion durability.

Investment Implications

Key Takeaways:

• Core profitability weakened materially; recovery in rates/utilization is needed to restore margins.
• Liquidity is ample (current ratio 346%, cash 24.62), cushioning near-term earnings volatility.
• Capital intensity is elevated now (capex -27.56), depressing implied FCF and ROIC near term.
• Non-operating items are a swing factor; normalization would aid ordinary income.
• Earnings quality mixed: strong OCF vs thin NI, with large depreciation supporting cash, but capex outflows dominate.

Metrics to Watch:

• Operating margin trajectory and voyage economics.
• Interest coverage and ordinary income trend (including FX and other non-operating components).
• OCF versus capex (implied FCF) and capex phasing updates.
• ROIC improvement path as new assets are deployed.
• Cash balance and net debt evolution.

Relative Positioning: Within marine transportation peers, the company shows stronger-than-average liquidity and moderate leverage, but notably weaker current-period profitability and ROIC due to margin compression and heavy capex; near-term positioning is defensive on balance sheet but lagging on returns.

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