Yamatane Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥43.18B
• Operating Income: ¥3.74B
• Net Income: ¥2.56B
• EPS: ¥117.13

Income Statement

Balance Sheet

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: A strong earnings rebound in FY2026 Q2 with sharp profit growth and margin expansion, but liquidity remains tight and capital efficiency is weak. Revenue rose 12.8% YoY to 431.76, with operating income up 150.9% YoY to 37.36 and net income up 161.9% YoY to 25.55. Operating margin improved materially to 8.7% (calculated) from roughly 3.9% a year ago, implying expansion of about 476 bps. Net margin rose to 5.9% from about 2.6% last year, an expansion of roughly 337 bps. Ordinary income increased 154.5% YoY to 36.40, reflecting stronger operations despite a small non-operating loss (non-op income 4.12 vs non-op expense 5.08). Interest coverage improved to 8.05x (37.36/4.64), well above our 5x strength threshold. The effective tax rate stands at 33.6%, broadly in line with statutory norms. Balance sheet leverage is elevated with D/E at 1.84x, and liquidity metrics are weak: current ratio 0.69 and quick ratio 0.56 indicate a clear near-term funding risk. Working capital is negative at -123.73, with short-term loans (108.50) and current liabilities (397.59) exceeding liquid resources (cash 68.78, AR 94.14). Capital efficiency is poor: ROE is 4.2% and ROIC is just 2.3%, well below the 5% warning threshold, implying value creation headwinds despite profit growth. Profit composition shows operating profit as the primary driver with dividend income (3.89) partly offsetting interest expense (4.64), but net non-operating contributions are negative. Earnings quality cannot be fully assessed due to unreported cash flow data; OCF/NI and FCF are unavailable, limiting confidence in the sustainability of the earnings rebound. The calculated payout ratio is high at 93.2%, suggesting limited buffer if profits soften or if cash generation lags accounting earnings. Forward-looking, the key will be sustaining the expanded operating margin while addressing liquidity and improving ROIC via asset productivity or portfolio optimization. Overall, results are operationally strong for the quarter, but balance sheet and cash flow visibility concerns temper the quality of the beat.

Profitability Analysis

ROE decomposition (DuPont): ROE 4.2% = Net Profit Margin 5.9% × Asset Turnover 0.251 × Financial Leverage 2.84x. The biggest YoY driver appears to be the margin component, given operating income grew ~2.5x versus revenue +12.8%. Operating margin expanded from an estimated ~3.9% to 8.7% (+476 bps), reflecting strong operating leverage and/or favorable mix and cost control. Asset turnover of 0.251 is low, consistent with an asset-heavy warehousing/logistics and food distribution model; no evidence suggests a material change this quarter. Financial leverage at 2.84x remains high and broadly stable, indicating that ROE uplift is not leverage-driven but margin-led. The margin expansion seems partly cyclical/operating leverage-driven; sustainability will depend on maintaining pricing, utilization, and cost discipline in the face of input cost and interest rate pressures. A watch point: SG&A was 33.13; without the prior-year SG&A we cannot confirm whether SG&A growth outpaced revenue, but the large operating profit surge implies fixed-cost dilution this period.

Growth Assessment

Top-line growth of 12.8% YoY to 431.76 demonstrates healthy demand or improved pricing. Operating income growth of 150.9% YoY to 37.36 indicates significant operating leverage and/or margin mix improvements. Ordinary income grew 154.5% to 36.40 despite a small net non-operating loss, underscoring the core operational rebound. Net income rose 161.9% to 25.55, further aided by normalized tax rate dynamics. Sustainability: given limited disclosure on gross profit and segment drivers, we cannot isolate structural versus cyclical components; however, the scale of margin expansion suggests a risk of mean reversion if pricing or volumes normalize. Dividend income (3.89) adds some income stability but is offset by interest expense (4.64), limiting net non-operating support. Outlook hinges on maintaining utilization in logistics assets and stable rice/food-related spreads, alongside careful debt management to protect interest coverage.

Financial Health

Liquidity: Current ratio 0.69 and quick ratio 0.56 both flag a clear short-term liquidity risk; current liabilities (397.59) exceed current assets (273.86). Working capital is negative at -123.73, and short-term loans (108.50) plus other current liabilities materially exceed cash (68.78) and receivables (94.14). Solvency: D/E is 1.84x (warning vs 1.5x benchmark) and total long-term loans are 429.92, indicating meaningful leverage. Interest coverage is 8.05x, adequate at present, but vulnerable to rate increases or profit normalization. Maturity mismatch risk is elevated given low liquidity and sizable short-term debt; refinancing and covenant management are key. No off-balance sheet obligations were reported in the provided data.

Cash Flow Quality

OCF/Net Income is not calculable due to unreported cash flow data; thus, earnings quality cannot be validated via cash conversion. Free cash flow and capex are unreported, preventing assessment of maintenance vs growth investment needs and dividend/FCF coverage. Working capital indicators are mixed: AR 94.14 and inventories 52.27 are significant relative to cash 68.78, with current liabilities 397.59 indicating reliance on trade and short-term financing; without YoY deltas, we cannot detect working capital pull-forward or payables stretching. Non-operating items include dividend income (3.89) and interest expense (4.64); net non-operating is slightly negative, suggesting core cash generation must fund debt service. Given liquidity constraints and high payout ratio, sustained positive OCF is essential; monitoring the next disclosure is critical.

Dividend Sustainability

The calculated payout ratio is high at 93.2%, implying limited buffer for volatility. FCF coverage is not calculable due to unreported OCF and capex. With current ratio at 0.69 and D/E at 1.84x, financial flexibility is constrained, increasing the risk that dividends could be pressured if earnings or cash conversion weaken. Policy outlook cannot be inferred from the data provided; we assume maintenance of dividends contingent on sustaining current earnings and liquidity access. Near-term sustainability hinges on cash generation keeping pace with net income and on stable refinancing conditions.

Risk Assessment

Business Risks:

• Margin mean reversion risk after exceptional expansion (~+476 bps YoY in operating margin).
• Logistics utilization and pricing risk affecting asset-heavy operations.
• Food/rice price volatility potentially compressing distribution margins.
• Supplier and customer concentration risks typical in logistics/wholesale (not disclosed here).

Financial Risks:

• Low liquidity: current ratio 0.69 and quick ratio 0.56 indicate short-term funding stress.
• Leverage risk: D/E 1.84x and sizeable long-term loans (429.92) elevate refinancing exposure.
• Interest rate risk: interest expense 4.64 vs coverage 8.05x could deteriorate if rates rise or profits normalize.
• Dividend coverage risk: payout ratio 93.2% with unreported FCF.

Key Concerns:

• ROIC at 2.3% is below the 5% warning threshold, signaling weak capital efficiency.
• Negative working capital (-123.73) and reliance on short-term loans (108.50).
• Cash flow disclosure gap: OCF/FCF unreported, limiting validation of earnings quality.
• Net non-operating contribution is negative (non-op income 4.12 vs non-op expense 5.08), underscoring dependence on operating profit.

Investment Implications

Key Takeaways:

• Strong profit inflection with operating income +150.9% YoY and broad margin expansion.
• Liquidity is the primary constraint: current ratio 0.69; quick ratio 0.56.
• Leverage elevated at D/E 1.84x; interest coverage acceptable at 8.05x but sensitive to rates and earnings.
• ROE 4.2% and ROIC 2.3% indicate subpar capital efficiency despite the earnings rebound.
• Dividend payout ratio is high (93.2%) and may not be durable without robust OCF.

Metrics to Watch:

• Operating margin trend and gross profit disclosure in subsequent quarters.
• OCF/Net Income and FCF once reported; capex intensity and timing.
• Working capital movements (AR, inventory, payables) and short-term debt rollovers.
• ROIC trajectory and asset turnover improvements.
• Interest coverage and average borrowing costs amid rate environment.

Relative Positioning: Versus domestic logistics/warehousing and food distribution peers, the quarter’s profitability is strong on margins, but the company screens weaker on liquidity and capital efficiency (ROIC 2.3%, ROE 4.2%), leaving less buffer to absorb cyclical or financing shocks.

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