Azuma Shipping Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥213M
• Net Income: ¥258M
• EPS: ¥5.94

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

For FY2026 Q2 (consolidated, JGAAP), 東 海運株式会社 reported operating income of 213 million yen, a decline of 24.6% year over year, and net income of 166 million yen, down 33.0% year over year. Revenue, gross profit, and cash flow figures were not disclosed in the available XBRL (zeros indicate unreported, not actual zeros), which limits margin and cash conversion analysis. Ordinary income was 294 million yen, exceeding operating income by 81 million yen, indicating positive non-operating contributions that offset financing costs. Interest expense was 34.5 million yen, implying an interest coverage ratio of about 6.2x based on operating income, which is comfortable for the period. The significant YoY contraction in operating and net income suggests margin pressure and/or weaker demand and higher costs, though the absence of revenue data prevents precise attribution. Net income of 166 million yen and an EPS of 5.94 imply roughly 28.0 million shares outstanding (back-solved), as share count data were not disclosed. The balance sheet appears solid: total assets were 40.986 billion yen, total liabilities 23.578 billion yen, and total equity 17.716 billion yen. While the reported equity ratio shows 0.0% due to non-disclosure, the implied equity ratio is approximately 43.2% (equity-to-assets), indicating a conservative capital base for a logistics operator. Current assets of 12.858 billion yen and current liabilities of 10.772 billion yen yield a current ratio of 119.4% and working capital of 2.086 billion yen, suggesting adequate short-term liquidity. Debt-to-equity of 1.33x (using total liabilities as a proxy for interest-bearing debt due to disclosure limits) indicates moderate leverage. Cash flow statements were not disclosed, so operating cash flow, investing needs, and free cash flow cannot be assessed this quarter. The gap between ordinary income and operating income highlights reliance on non-operating gains (e.g., investment income, foreign exchange, or equity-method gains) to support earnings this half. The effective tax rate reported as 0.0% is not reliable given missing pretax disclosure; using ordinary income and reported tax expense suggests atypical tax dynamics or period-specific adjustments. Dividend data were not disclosed (DPS and payout reported as zero due to non-disclosure), so distribution policy and coverage cannot be evaluated from this dataset. Overall, results indicate weaker profitability versus the prior year, adequate liquidity, moderate leverage, and some dependence on non-operating items, with material analysis constraints due to missing revenue and cash flow details.

Profitability Analysis

ROE decomposition is constrained by missing revenue. Using period-end balances as a rough proxy, period ROE = net income / equity ≈ 166 million / 17,716 million ≈ 0.9% for the half (not annualized), implying low returns in this interim period. Financial leverage (assets/equity) is approximately 2.31x (40,986 / 17,716), consistent with the provided DuPont leverage. Net profit margin and asset turnover cannot be computed without revenue; the reported 0.00%/0.000 is an artifact of non-disclosure, not actual performance. Operating income declined 24.6% YoY to 213 million yen, pointing to deterioration in core profitability; the lack of gross profit data prevents assessing cost of sales pressures versus SG&A. Ordinary income of 294 million yen exceeds operating income by 81 million yen, implying positive non-operating balance after absorbing 34.5 million yen of interest expense; this partly cushions operating weakness. Interest coverage is about 6.2x (213 / 34.5), indicating manageable financing burden despite lower operating earnings. Margin quality is uncertain given missing revenue and gross profit; however, the YoY decline in both operating and net income signals either weaker pricing, volume softness, or cost inflation. Operating leverage appears unfavorable this period, as the percentage decline in net income (-33%) outpaced the decline in operating income (-24.6%), suggesting amplification from below-the-line items and/or tax effects. Given the balance of evidence, profitability this half is muted and supported by non-operating gains, with core margin resilience unverified.

Growth Assessment

Revenue growth cannot be evaluated due to non-disclosure this quarter. Earnings trends show contraction: operating income -24.6% YoY and net income -33.0% YoY, indicating pressured growth in core operations and greater contraction at the bottom line. The positive spread between ordinary and operating income suggests contributions from non-operating sources (e.g., investment income or FX), which may not be sustainable drivers of earnings growth. Without segment or top-line data, the sustainability of earnings is uncertain; the decline hints at weaker demand, price/mix headwinds, or elevated operating costs. Profit quality is mixed: ordinary income strength relative to operating income raises questions about the repeatability of non-operating gains. EPS of 5.94 aligns with the net income trend and implies a roughly stable share base (inferred ~28 million shares). Outlook from this snapshot is cautious: earnings trajectory is negative YoY, and absent revenue and cash flow details, visibility on recovery drivers is low. Monitoring forthcoming disclosures on revenue trends, segment performance, and cost control will be critical to assess whether this is a transient dip or a structural margin reset.

Financial Health

Liquidity appears adequate: current assets of 12.858 billion yen versus current liabilities of 10.772 billion yen yield a current ratio of 1.19x and working capital of 2.086 billion yen. Quick ratio equals current ratio due to undisclosed inventories. Solvency is solid with equity of 17.716 billion yen and total liabilities of 23.578 billion yen; the inferred equity ratio is approximately 43.2% (equity/assets), despite the reported 0.0% placeholder. Leverage using total liabilities/equity is 1.33x; interest coverage of 6.2x indicates manageable debt service at current earnings. Absence of cash and cash equivalents disclosure prevents a cash-based liquidity cross-check and net debt calculation. No maturity profile or interest-bearing debt breakdown is available, so refinancing and interest rate risk cannot be precisely assessed. Overall, the balance sheet provides a reasonable buffer against earnings volatility, but further detail on cash balances and debt composition is needed.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed (zeros indicate non-reporting), preventing assessment of cash earnings conversion. As a result, OCF/net income, free cash flow, and working capital cash dynamics cannot be evaluated this quarter. With working capital positive by 2.086 billion yen on the balance sheet, there is headroom, but we cannot determine whether changes in receivables/payables supported or drained cash. Depreciation and amortization were also not disclosed, limiting EBITDA estimation and accruals analysis. Given net income of 166 million yen and interest expense of 34.5 million yen, cash interest burden appears modest, but this cannot be validated without OCF. Cash flow quality is therefore indeterminate pending future reporting.

Dividend Sustainability

Dividend per share and payout ratio are shown as zero due to non-disclosure; no interim dividend information is available in this dataset. With net income at 166 million yen for the half year and an inferred share count of roughly 28 million, capacity for distributions exists in principle, but sustainability hinges on operating cash flow and capex needs, both undisclosed. Free cash flow coverage cannot be computed. The balance sheet (equity ratio ~43%) provides some flexibility, yet without OCF and capex data it is not possible to judge recurring distributable cash. Policy outlook cannot be inferred from the data provided; future disclosures on dividend guidance and cash generation will be key.

Risk Assessment

Business Risks:

• Cyclical demand in logistics and shipping segments affecting volumes and pricing
• Fuel and energy cost volatility impacting operating costs and surcharges
• Foreign exchange fluctuations influencing non-operating income and cost base
• Customer concentration and contract renegotiation risk common in logistics
• Port congestion, supply chain disruptions, and labor availability constraints
• Regulatory and environmental compliance costs (e.g., emissions-related investments)

Financial Risks:

• Reliance on non-operating gains to support earnings in the period
• Interest rate risk on floating-rate debt (debt composition undisclosed)
• Working capital swings affecting cash generation (OCF not disclosed)
• Refinancing and liquidity visibility limited by missing cash and debt details
• Tax expense volatility suggested by mismatch between reported tax and income line items

Key Concerns:

• Operating income down 24.6% YoY and net income down 33.0% YoY, indicating weakening core profitability
• Lack of revenue and cash flow disclosure limits visibility into margin structure and cash conversion
• Ordinary income exceeding operating income implies earnings dependence on non-operating items
• Inability to assess dividend capacity and sustainability due to absent OCF and capex data

Investment Implications

Key Takeaways:

• Core earnings weakened YoY; operating income 213 million yen (-24.6% YoY) and net income 166 million yen (-33.0% YoY)
• Ordinary income outpaced operating income by 81 million yen, indicating non-operating support
• Interest coverage ~6.2x and equity ratio ~43% suggest manageable financial risk despite earnings softness
• Liquidity is adequate (current ratio ~1.19x; working capital 2.09 billion yen), but cash position is undisclosed
• Material data gaps (revenue, cash flows, D&A) constrain margin and cash quality analysis

Metrics to Watch:

• Revenue and gross margin disclosure in subsequent quarters
• Segment-level operating income and cost drivers (fuel, labor, subcontracting)
• Operating cash flow, capex, and free cash flow to assess dividend capacity
• Interest-bearing debt breakdown, maturity profile, and effective interest rate
• Composition of non-operating income (FX, investment, equity-method) and its sustainability
• Tax rate normalization versus this period’s reported tax expense

Relative Positioning: Within TSE-listed logistics peers, the company shows weaker interim profitability this year with moderate leverage and adequate liquidity; reliance on non-operating gains this half places it toward the cautious end of the spectrum until revenue and cash flow disclosures restore visibility.

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