The Sumitomo Warehouse Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥96.69B
• Operating Income: ¥5.42B
• Net Income: ¥7.33B
• EPS: ¥89.79

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 mixed—core operations softened (operating income -14.8% YoY), but bottom-line surged on non-recurring gains, yielding strong cash flow and a sturdy balance sheet. Revenue was 966.9, operating income was 54.24 (-14.8% YoY), ordinary income 76.54 (-7.5% YoY), and net income 69.00 (+33.8% YoY). Operating margin was approximately 5.6% (54.24/966.9), while EBITDA margin was 11.3%, and ordinary margin about 7.9%. Net margin reached 7.1%, boosted by non-operating income of 25.88 and sizable extraordinary gains implied by the gap between ordinary income (76.54) and profit before tax (105.89). Non-operating income equated to a high 37.5% of operating income, indicating greater reliance on non-core items this quarter. Despite lower operating profit, operating cash flow was robust at 129.32, yielding an OCF/Net Income ratio of 1.87x—strong earnings quality on cash conversion. Free cash flow, calculated as OCF minus capital expenditures, was approximately 62.82, comfortably positive even after share repurchases of 29.20. Liquidity is healthy with a current ratio of 146.8% and cash of 472.61 exceeding short-term loans of 152.95. Leverage remains moderate with a reported D/E of 0.60x and strong interest coverage of 21.27x. However, capital efficiency is weak: ROIC was 1.3% (warning), and asset turnover was low at 0.209, reflecting a large, under-earning asset base (notably investment securities of 1,784.01). Comprehensive income of 215.61 far exceeded net income, likely driven by valuation gains on securities—underscoring P/L sensitivity to market movements. The effective tax rate was 30.8%, broadly normal. Dividend information is unreported; the calculated payout ratio of 116.1% suggests potential over-distribution, but source details are unclear. Forward-looking, normalization of extraordinary gains and non-operating contributions could compress net margin unless operating momentum improves. Key watchpoints are recovery in operating margin, stability of non-operating/extraordinary items, and actions to lift ROIC through asset optimization and disciplined capex.

Profitability Analysis

ROE decomposition (DuPont): ROE 2.4% = Net Profit Margin 7.1% × Asset Turnover 0.209 × Financial Leverage 1.60x. The largest drag is the very low asset turnover (0.209), which suppresses ROE despite a decent net margin this quarter. Net margin was elevated by non-operating income (25.88) and implied extraordinary gains (≈29.35 between ordinary and pre-tax), while operating margin (≈5.6%) declined versus last year (operating profit -14.8% YoY). The business reason appears to be softer core logistics/warehouse profitability and heavier reliance on financial and extraordinary items, with investment securities gains and other non-core contributions supporting earnings. Sustainability is questionable: non-operating and extraordinary gains are inherently volatile and unlikely to repeat at the same magnitude, while asset turnover improvements require strategic asset utilization or disposals. Concerning trends include operating income declining faster than we can verify for revenue (YoY revenue unreported) and SG&A at 53.51 without breakdown—raising the risk that cost growth outpaced topline. Overall, ROE is being propped up by leverage and non-core gains rather than structural operating efficiency.

Growth Assessment

Revenue growth YoY is unreported, but ordinary income fell 7.5% and operating income fell 14.8%, indicating negative core momentum. Net income grew 33.8% YoY due to elevated non-operating and extraordinary items, not underlying operations. EBITDA of 108.87 (11.3% margin) shows reasonable operating cash earnings, but margin expansion is unlikely without cost control and higher utilization. Profit quality is mixed: cash conversion is strong (OCF/NI 1.87x), but the composition of profit skews to non-core sources this quarter. Outlook hinges on normalization of non-operating/extraordinary gains and demand trends in logistics/warehousing; absent a rebound in operating profit, net margin will compress. Near-term catalysts include utilization improvements, pricing power in warehouse/storage, and any portfolio actions on investment securities. Medium-term, lifting ROIC from 1.3% will require either higher operating profitability or asset base optimization.

Financial Health

Liquidity: Current ratio 146.8% and quick ratio 146.8% indicate healthy short-term coverage; no warning (both >1.0). Cash and deposits of 472.61 comfortably exceed short-term loans of 152.95, limiting maturity mismatch risk; current assets (796.42) exceed current liabilities (542.35). Solvency: Reported D/E 0.60x is conservative; interest coverage is strong at 21.27x. Total assets 4,621.32 vs total equity 2,886.54 implies financial leverage of 1.60x—moderate. Long-term debt (264.70) is manageable relative to cash and EBITDA. Off-balance sheet obligations are not disclosed in the dataset; if present (e.g., long-term leases or guarantees common in logistics), they could modestly increase effective leverage, but no data provided. No explicit red flags on liquidity or solvency.

Cash Flow Quality

OCF/Net Income = 1.87x (>1.0) indicates high-quality earnings and strong cash conversion. Calculated FCF = OCF (129.32) - Capex (66.50) ≈ 62.82, providing internal funding for shareholder returns and debt service. Financing CF was -85.43, including share repurchases of -29.20; dividends paid were unreported. Working capital details are limited (AR/AP/inventories unreported), but the strong OCF alongside declining operating income suggests favorable WC movements or strong collections; no explicit signs of manipulation from available data. With cash 472.61 and positive FCF, funding capacity for maintenance capex and modest growth investments appears adequate.

Dividend Sustainability

Annual DPS is unreported, and total dividends paid are N/A; however, a calculated payout ratio of 116.1% implies distributions may exceed current period earnings. Given FCF of approximately 62.82 and share buybacks of 29.20, aggregate shareholder returns could remain covered if cash dividends are modest; without explicit dividend data, FCF coverage of dividends cannot be confirmed. Balance sheet capacity (cash 472.61, conservative leverage) supports continuity of dividends in the near term, but sustainability at a >100% payout ratio would not be prudent if replicated. Policy outlook likely prioritizes stability, but future payouts should align with normalized earnings (stripping out extraordinary gains) and FCF.

Risk Assessment

Business Risks:

• Core margin pressure: operating income -14.8% YoY and operating margin ~5.6%
• Volume/demand volatility in logistics/warehousing tied to domestic/global trade cycles
• Pricing pressure and competition in contract logistics and storage
• Execution risk on capex for warehouse/port facilities (66.50 invested this period)

Financial Risks:

• Profit composition risk: high reliance on non-operating and extraordinary gains this quarter
• Market valuation risk on investment securities (1,784.01) driving volatile comprehensive income
• Interest rate risk on floating-rate debt, though leverage is moderate
• Potential off-balance sheet lease/guarantee exposures (not disclosed)

Key Concerns:

• Very low ROIC at 1.3% (below 5% threshold), indicating poor capital efficiency
• Low asset turnover (0.209) constraining ROE despite adequate margins
• Unclear dividend burden with a calculated payout ratio of 116.1% amid unreported DPS
• Earnings normalization risk as non-recurring gains fade

Investment Implications

Key Takeaways:

• Headline net income strength (+33.8% YoY) is non-core; operating profit declined double digits
• Cash generation is solid (OCF/NI 1.87x; FCF ≈ 62.82), supporting balance sheet resilience
• Leverage and liquidity are conservative (D/E 0.60x; current ratio 146.8%)
• Capital efficiency is the main weakness (ROIC 1.3%; asset turnover 0.209)
• Earnings are more sensitive to market/extraordinary factors than core operations this quarter

Metrics to Watch:

• Operating margin progression and cost control (SG&A trends vs revenue)
• Non-operating income ratio and extraordinary gains frequency/size
• ROIC improvement and asset turnover (asset optimization, disposals, utilization)
• OCF/NI and FCF versus dividends and buybacks
• Valuation changes in investment securities and impact on OCI/comprehensive income

Relative Positioning: Within domestic logistics/warehouse peers, Sumitomo Warehouse exhibits conservative leverage and strong interest coverage but lags on capital efficiency (ROIC 1.3%) and showed weaker core profit momentum this quarter; performance is more reliant on non-core gains relative to a purely operations-driven earnings model.

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
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