Kyushu Railway Company FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥237.62B
• Operating Income: ¥40.89B
• Net Income: ¥22.64B
• EPS: ¥144.93

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

JR Kyushu (9142) delivered a solid FY2026 Q2 performance with broad-based operating recovery and clear operating leverage, though bottom-line growth lagged due to non-operating/tax effects. Revenue rose to 237.6 billion yen (+14.0% YoY), reflecting continued normalization of mobility demand and resilient non-rail contributions (retail, real estate, and hospitality likely contributors, though segment detail is not disclosed here). Operating income surged 38.4% YoY to 40.9 billion yen, expanding the operating margin to roughly 17.2%, underscoring improving mix and cost discipline. Ordinary income was 41.0 billion yen, broadly in line with operating income, indicating relatively contained non-operating drag given interest expense of 1.45 billion yen. Net income declined slightly to 22.3 billion yen (-1.4% YoY), suggesting headwinds below the operating line (e.g., prior-year one-offs, higher minority interests, or valuation-related items) despite strong core performance. EBITDA was 59.7 billion yen (25.1% margin), highlighting healthy cash earnings and capacity to fund maintenance capex in a capital-intensive business. The DuPont-derived ROE is 4.71% based on a 9.40% net margin, 0.203x asset turnover, and 2.47x financial leverage; however, investors should note this period is a half-year snapshot and turnover/ROE may not be directly comparable to full-year levels. Liquidity is tight but adequate with a current ratio near 1.01x and quick ratio around 0.91x; working capital stands at 1.44 billion yen, implying a thin buffer typical for rail operators with steady inflows. The balance sheet is moderately levered with total liabilities of 681.9 billion yen and equity of 474.1 billion yen, implying an equity ratio around 40.4% (computed) and debt-to-equity about 1.44x (provided). Interest coverage is robust at about 28x based on operating income, indicating strong serviceability of financial obligations. Operating cash flow of 54.8 billion yen exceeds net income by 2.45x, pointing to strong cash conversion, although detailed working capital and capex data are not available. Investing cash flow and cash/equivalents are shown as zero in the dataset, which should be interpreted as undisclosed rather than truly zero; thus, free cash flow cannot be reliably derived from the provided numbers. Reported effective tax rate appears as 0.0% in calculated metrics, but an income tax charge of 7.19 billion yen is disclosed, indicating the effective tax metric is not comparable due to missing pretax profit segmentation. Dividend information shows zero (unreported), which is inconsistent with JR Kyushu’s typical shareholder return practices; payout and coverage cannot be assessed without disclosed DPS and capex. Overall, the set of disclosed metrics points to strengthening core profitability, good interest coverage, and reasonable leverage, with the primary analytical gaps in capex, cash balance, and dividend detail. Data limitations necessitate cautious interpretation of ROE, FCF, and payout metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 9.40%
• asset_turnover: 0.203
• financial_leverage: 2.47
• calculated_ROE: 4.71%
• notes: ROE and turnover are based on a half-year period; period mismatch to balance sheet can distort comparability to full-year figures. margin_quality:
• revenue: 237.6bn yen (+14.0% YoY)
• operating_income: 40.9bn yen (+38.4% YoY)
• operating_margin: ≈17.2%
• EBITDA: 59.7bn yen
• EBITDA_margin: 25.1%
• net_income: 22.3bn yen (-1.4% YoY)
• commentary: Significant operating margin expansion indicates favorable operating leverage and cost control. Net margin lagged due to non-operating/tax/minority factors despite strong operating gains. operating_leverage:
• evidence: Operating income growth (+38.4% YoY) outpaced revenue growth (+14.0% YoY).
• implication: High fixed-cost absorption in core rail and recovery in ancillary businesses amplified profitability.

Growth Assessment

revenue_sustainability: Top-line growth of +14% YoY suggests continued recovery in passenger volumes and non-rail segments. Sustainability will depend on domestic/inbound travel trends, fare mix, and real estate/retail momentum. profit_quality: Operating profit growth is strong and broad-based, with EBITDA margin at 25.1%. The divergence between operating and net income implies transitory non-operating impacts rather than deterioration in core profitability. outlook: With mobility normalization and tourism tailwinds, revenue and operating profit should remain supported near term; watch for cost inflation (energy, labor) and seasonality into H2. Limited disclosure on extraordinary items and minorities adds uncertainty to the bottom-line trajectory.

Financial Health

liquidity:

• current_assets: 214.1bn yen
• current_liabilities: 212.7bn yen
• current_ratio: 100.7%
• quick_ratio: 91.0%
• working_capital: 1.44bn yen
• assessment: Adequate but tight liquidity typical of rail operators; minimal buffer suggests reliance on stable cash generation and committed facilities. solvency_capital_structure:
• total_assets: 1,172.5bn yen
• total_liabilities: 681.9bn yen
• total_equity: 474.1bn yen
• equity_ratio_computed: ≈40.4%
• debt_to_equity: 1.44x (total liabilities/equity proxy)
• interest_expense: 1.45bn yen
• interest_coverage: ≈28.2x (Operating income/interest expense)
• assessment: Moderate leverage with strong interest service capacity. Balance sheet resilience appears adequate for a regulated, asset-heavy rail operator.

Cash Flow Quality

earnings_quality:

• OCF: 54.8bn yen
• net_income: 22.3bn yen
• OCF_to_net_income: 2.45
• interpretation: Cash conversion is strong, suggesting limited accrual build and supportive working capital dynamics in the period. FCF_analysis:
• capex_proxy: Investing CF undisclosed (shown as 0; do not interpret as zero).
• free_cash_flow: Not reliably derivable due to missing investing cash flows.
• commentary: In the rail sector, maintenance and growth capex are structurally significant. Without capex data, FCF sustainability cannot be assessed. working_capital:
• notes: Net working capital is near breakeven. Positive OCF likely benefited from profitability and potentially deferred revenue/seasonal receipts; detailed components are not provided.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to undisclosed DPS; this is not indicative of policy. Historically, the company has maintained dividends, but current data cannot confirm. FCF_coverage: Not assessable: investing cash flows (capex) are undisclosed; FCF not computable. policy_outlook: Given strong operating cash generation and moderate leverage, capacity for distributions appears plausible, but confirmation requires disclosed DPS, capex, and full-year guidance.

Risk Assessment

Business Risks:

• Passenger demand volatility due to macro conditions, pandemics, or natural disasters.
• Energy and labor cost inflation compressing margins in a fixed-fare or regulated environment.
• Exposure to tourism cycles affecting hospitality/retail segments.
• Project and execution risk in real estate development.
• Regulatory changes in rail operations and safety requirements.

Financial Risks:

• Tight liquidity buffer (current ratio ~1.01x) increasing sensitivity to timing of cash inflows/outflows.
• Capex intensity potentially pressuring free cash flow in downcycles.
• Interest rate risk on refinancing and new debt despite currently strong coverage.
• Potential for non-operating or extraordinary losses to introduce earnings volatility.

Key Concerns:

• Net income decline (-1.4% YoY) despite strong operating performance indicates below-the-line headwinds.
• Lack of disclosed investing cash flows and cash balance hampers FCF and liquidity assessment.
• Dividend data not disclosed, preventing evaluation of payout sustainability.

Investment Implications

Key Takeaways:

• Core operations strengthening: revenue +14% YoY and operating income +38% YoY with ~17% operating margin.
• High cash conversion (OCF/NI 2.45x) supports debt service and operational flexibility.
• Moderate leverage with ~28x interest coverage and computed equity ratio ~40%.
• Bottom-line softness YoY likely reflects non-operating/one-off factors rather than core weakness.
• Analytical visibility limited by undisclosed capex, cash, and dividend details.

Metrics to Watch:

• Segment-level margins (rail, retail, real estate, hospitality) and passenger traffic KPIs.
• Capex plans and investing cash flows (maintenance vs. growth).
• Net debt and liquidity headroom (cash, credit lines).
• Non-operating items and minority interests impacting net income.
• Energy costs, wage trends, and fare/mix developments.
• Full-year guidance updates and inbound tourism indicators.

Relative Positioning: Within the domestic rail cohort, JR Kyushu appears to exhibit improving operating leverage and solid interest coverage with moderate balance sheet risk; however, limited disclosure on capex and dividends constrains direct comparability to peers on FCF and shareholder return metrics.

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