Shibusawa Logistics Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥40.05B
• Operating Income: ¥2.18B
• Net Income: ¥3.33B
• EPS: ¥57.48

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: Mixed quarter with weaker core earnings but headline net income boosted by non-recurring gains. Revenue reached 400.45, while operating income fell to 21.78 (-18.7% YoY), indicating softening underlying profitability. Ordinary income declined 14.4% to 26.80, but profit before tax jumped to 48.06, implying approximately 21.3 of extraordinary gains. Net income rose 24.2% YoY to 32.85, largely due to these one-off gains rather than operating improvement. Implied operating margin is approximately 5.4% (21.78/400.45), and EBITDA margin stands at 9.1%, pointing to modest operating leverage in a warehousing/logistics mix. Non-operating income of 6.11 (notably dividend income of 4.20 and interest income of 0.66) provided an 18.6% boost relative to operating profit, highlighting reliance on financial income. ROE is calculated at 5.0% (Net margin 8.2% × Asset turnover 0.342 × Leverage 1.78x), but ROIC is low at 2.0%, signaling capital efficiency concerns for a real-asset-heavy business. Cash flow quality is a watch point: OCF of 23.50 equates to 0.72x of net income, below the >1.0x quality benchmark and below our caution threshold of 0.8x. Liquidity is adequate with a current ratio of 144% and cash of 112.07 against short-term loans of 89.67; interest coverage is strong at 22.9x. Balance sheet remains conservative with D/E at 0.78x and working capital of 86.84. Capex was 13.09, and financing cash outflow was sizeable at -34.51, including 15.60 in share repurchases, indicating ongoing capital returns despite subdued ROIC. The reported payout ratio of 259.4% (data source) suggests dividends and buybacks likely exceeded internally generated free cash in the period; however, DPS itself was unreported. Forward-looking, margin recovery hinges on warehousing utilization, pricing power, and cost pass-through, while earnings normalization is expected as extraordinary gains recede. Key flags are weak ROIC (2.0%), OCF/NI of 0.72x, and the dependence on non-operating/extraordinary items to sustain headline profit. Overall, a decent balance sheet provides flexibility, but improving core operating efficiency and disciplined capital allocation will be essential to lift returns.

Profitability Analysis

ROE decomposition: ROE ~ 5.0% = Net profit margin (8.2%) × Asset turnover (0.342) × Financial leverage (1.78x). Within this mix, asset turnover is the principal drag (0.342x), consistent with asset-intensive warehousing. The net margin of 8.2% is elevated by extraordinary gains (PBT 48.06 vs ordinary income 26.80), inflating ROE temporarily. Operating profitability softened: operating income fell 18.7% YoY, while ordinary income fell 14.4% YoY, indicating margin compression at the core level (implied operating margin ~5.4% this period; prior-period margin not disclosed but directionally weaker given OI decline). Non-operating income (6.11) and especially one-off items between ordinary and pre-tax profit (~21.3) were the largest positive deltas, not sustainable drivers. Sustainability assessment: the contribution from extraordinary gains is one-time; absent such gains, net margin and ROE would be materially lower. Warning signs: core cost growth likely exceeded revenue growth (SG&A 22.27 is flatly reported without YoY, but OI decline vs revenue base suggests operating deleveraging), and non-operating income dependency increased (dividend income 4.20 notable). Conclusion: ROE is currently maintained more by leverage and one-off gains than by recurring operating efficiency; structural improvements in asset turnover and operating margin are needed.

Growth Assessment

Top-line scale is 400.45, but YoY revenue growth was not disclosed, limiting volume/price decomposition. Operating income declined 18.7% YoY and ordinary income by 14.4%, pointing to weaker core growth and/or margin pressure, likely from higher costs or slower throughput in logistics/warehousing. Net income rose 24.2% YoY due to extraordinary items (difference between ordinary income 26.80 and PBT 48.06), not from underlying growth. Non-operating income of 6.11 (dividends and interest) provided ancillary support but is partly market-driven. EBITDA of 36.48 (9.1% margin) confirms moderate operating scale but little incremental margin expansion this quarter. Profit quality is mixed: headline growth at the bottom line conflicts with declining operating profits and subpar cash conversion (OCF/NI 0.72x). Outlook: absent repeated one-offs, net income likely normalizes closer to ordinary income trajectory; any growth will depend on utilization, contract repricing, and cost pass-through, as well as macro freight/real-estate demand. Investment securities income introduces market sensitivity to profit growth.

Financial Health

Liquidity: Current ratio 144% (adequate but slightly below the 150% benchmark), quick ratio reported at 144% (note: inventory unreported; quick ratio may be overstated). Cash and deposits of 112.07 cover short-term loans of 89.67, mitigating near-term refinancing risk. Working capital is 86.84, supporting operations. Solvency: D/E 0.78x is conservative for an asset-heavy logistics company, and interest coverage is strong at 22.93x. Total liabilities 512.35 vs equity 657.13 underpin balance sheet resilience. Maturity profile: current liabilities 197.21 vs current assets 284.05 suggests no material maturity mismatch; noncurrent liabilities 315.14 primarily long-term loans 122.99 appear manageable relative to EBITDA (Debt/EBITDA 5.83x reported in dataset, within but near the upper end of healthy ranges). Off-balance sheet obligations: none reported. No explicit red flags (Current ratio >1.0 and D/E <2.0).

Cash Flow Quality

OCF was 23.50 vs net income of 32.85, yielding OCF/NI of 0.72x, below the 0.8x threshold and indicating weaker cash conversion this period. Potential drivers include working capital build or timing effects (receivables/inventories unreported), but details are not disclosed. Capex was 13.09; on an implied basis, OCF - Capex suggests positive but modest FCF (~10.4), likely insufficient to cover the full extent of capital returns given financing CF of -34.51 and buybacks of 15.60 (dividends unreported). No apparent signs of aggressive working capital manipulation can be confirmed due to data gaps (receivables, payables, inventories unreported), but the divergence between OCF and NI warrants monitoring. Overall, earnings quality is mixed: elevated net income assisted by non-recurring gains and sub-1.0x cash conversion.

Dividend Sustainability

The reported payout ratio is 259.4% (data-provided), implying distributions in excess of earnings; however, DPS and total dividends were unreported, and the ratio may reflect interim timing or inclusion of share repurchases. On an implied basis, FCF (~10.4 from OCF 23.50 minus capex 13.09) appears insufficient to fund both dividends (unknown) and buybacks (15.60) without drawing on cash or incremental leverage. Balance sheet capacity exists (cash 112.07, D/E 0.78x), but with ROIC at 2.0%, high cash returns could be questioned for sustainability unless core cash generation improves. Policy outlook likely favors stable dividends typical of logistics/warehouse operators, but buyback pace may need to align with FCF to avoid erosion of financial flexibility if operating momentum does not improve.

Risk Assessment

Business Risks:

• Core margin pressure: operating income down 18.7% YoY with implied operating margin ~5.4%.
• Demand cyclicality in warehousing/logistics utilization and pricing power.
• Cost inflation (labor, utilities, maintenance) and limited short-term pass-through.
• Execution risk on capex/warehouse expansions affecting utilization and returns.
• Dependence on non-operating and extraordinary items to support headline profit.

Financial Risks:

• Earnings quality: OCF/NI at 0.72x (<0.8) signals weaker cash conversion.
• Low ROIC at 2.0% (<5% warning) indicates capital efficiency risk.
• Market-related income (dividends/interest) adds volatility to ordinary income.
• Potential overdistribution: reported payout ratio 259.4% and buybacks 15.60 vs modest implied FCF.
• Debt/EBITDA reported at 5.83x, limiting headroom if EBITDA weakens.

Key Concerns:

• One-off gains (~21.3) boosted PBT and net income; non-repeatability risk in coming quarters.
• Data gaps (gross profit, revenue YoY, working capital components) obscure margin and cash dynamics.
• Interest rate exposure on refinancing long-term loans (122.99) amid potential rate volatility.
• Asset turnover at 0.342x drags ROE; requires operational initiatives to lift utilization.

Investment Implications

Key Takeaways:

• Headline net income growth (+24.2% YoY) is non-recurring; core profits fell.
• Implied operating margin ~5.4% and EBITDA margin 9.1% reflect modest underlying profitability.
• ROE 5.0% is supported by leverage and one-offs; ROIC 2.0% highlights structural inefficiency.
• Cash conversion weak (OCF/NI 0.72x); monitor for normalization.
• Balance sheet is sound (current ratio 144%, D/E 0.78x, interest cover 22.9x), providing flexibility.
• Capital returns (buybacks 15.60) exceeded implied FCF; sustainability depends on OCF recovery.

Metrics to Watch:

• Operating income trend and implied operating margin vs revenue.
• OCF/NI ratio and working capital movements (receivables/inventories once disclosed).
• ROIC trajectory relative to capex and asset utilization.
• Composition of non-operating and extraordinary items; recurrence risk.
• Debt/EBITDA and interest coverage as rates and earnings evolve.
• Dividend disclosure and payout alignment with FCF.

Relative Positioning: Within domestic warehouse/logistics peers, Shibusawa Warehouse shows conservative leverage and solid liquidity but lags on capital efficiency (ROIC 2%) and core profit momentum, leaving it positioned as a stable but return-constrained operator pending improvements in utilization and cost discipline.

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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