Nippon Television Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥234.48B
• Operating Income: ¥33.21B
• Net Income: ¥28.88B
• EPS: ¥105.66

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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 quarter with significant profit recovery driven by margin expansion and robust non-operating income, albeit with persistently low capital efficiency. Revenue rose to 2,344.81 (+8.1% YoY), while operating income surged to 332.10 (+57.1% YoY), highlighting strong operating leverage. Ordinary income increased to 398.01 (+64.1% YoY) and net income to 263.98 (+65.3% YoY), outpacing top-line growth. Operating margin improved to 14.2%, implying an estimated expansion of roughly 440 bps YoY (from ~9.8% to ~14.2%) based on growth back-calculations. Net margin rose to 11.3%, also expanding by an estimated ~390 bps YoY (from ~7.4% to ~11.3%). Gross margin stands at 37.3% (874.56 gross profit on 2,344.81 revenue), indicating healthy content cost control relative to revenue. Non-operating income contributed meaningfully: net non-operating gains of 65.91 (69.81 income minus 3.90 expenses) added ~19.8% on top of operating income, with dividends (13.35) and interest income (13.52) notable. The effective tax rate was 28.1%, consistent with a normalized rate and not a major driver of volatility. Balance sheet strength is a highlight: current ratio 258.8%, quick ratio 253.4%, and debt-to-equity 0.24x, underpinned by cash and deposits of 985.55 and investment securities of 6,500.68. Interest coverage is extremely strong at 301.9x given minimal interest expense (1.10). However, DuPont indicates low capital efficiency: ROE is 2.6% = 11.3% net margin × 0.186 asset turnover × 1.24x leverage. ROIC is 2.6%, well below the typical 7–8% target seen in capital-efficient peers, flagged as a capital efficiency concern. Earnings quality cannot be fully assessed due to unreported cash flow figures (OCF/FCF N/A). Dividend sustainability looks reasonable on a 40% payout ratio basis, but cash flow coverage cannot be confirmed. Forward-looking, if advertising and content monetization tailwinds persist, elevated margins could continue; yet heavy securities holdings and non-operating contributions introduce variability, and structurally low asset turnover caps ROE without portfolio optimization or asset-light growth.

Profitability Analysis

ROE decomposition (DuPont): ROE 2.6% = Net Profit Margin (11.3%) × Asset Turnover (0.186) × Financial Leverage (1.24x). The largest driver of YoY improvement is the net margin, inferred from operating income growth (+57.1%) far exceeding revenue growth (+8.1%), implying ~440 bps expansion in operating margin and ~390 bps in net margin. Business rationale: a recovering ad market mix, disciplined programming/content costs, and net non-operating gains (dividends/interest) supported ordinary income. Asset turnover remains structurally low at 0.186 due to a large non-operating asset base (investment securities 6,500.68) relative to revenue-generating assets. Financial leverage is modest (D/E 0.24x; leverage 1.24x), reflecting an equity-heavy balance sheet that constrains ROE upside. Sustainability: Margin gains tied to ad recovery and cost control are partly sustainable but vulnerable to macro/ratings volatility; non-operating income (dividends/interest) is recurring but market-sensitive. Concerning trends: capital efficiency is weak (ROIC 2.6%); asset intensity and large securities portfolio depress asset turnover; SG&A granularity is unreported, limiting visibility on fixed cost creep. Overall, higher margins, not leverage or turnover, are the main ROE lever this quarter, but durability depends on advertising momentum and content cost discipline.

Growth Assessment

Top-line growth of 8.1% YoY (to 2,344.81) appears cyclical and likely tied to improving TV/streaming ad demand and content-driven revenues. Profit growth was outsized: operating income +57.1%, ordinary income +64.1%, and net income +65.3%, signaling strong operating leverage and a supportive non-operating tailwind (net +65.91). The current operating margin of ~14.2% is above historical mid-cycle levels for TV broadcasters, suggesting normalization from a weak prior year and/or better content mix. With effective tax at 28.1%, bottom-line gains reflect true pre-tax strength rather than tax one-offs. Sustainability hinges on ad market resilience, ratings/content pipeline performance, and monetization of digital platforms; cost control will remain critical to defend the new margin level. Absent evidence of one-time gains, the non-operating contributions (dividends/interest) appear recurring but are sensitive to market rates and investee distributions. Given low asset turnover (0.186), transformational growth is unlikely without portfolio optimization or higher digital revenue scaling. Outlook: cautiously constructive on profitability if macro and ad conditions hold, but growth sensitivity to cyclical advertising and rights costs should be assumed.

Financial Health

Liquidity is robust: current ratio 258.8% and quick ratio 253.4%, with cash and deposits of 985.55 and accounts receivable of 1,108.80 comfortably exceeding current liabilities of 1,161.09. No red flags: Current Ratio well above 1.0 and D/E at 0.24x far below the 2.0 warning threshold. Interest-bearing debt detail is unreported, but loans are minimal (short-term 22.85; long-term 7.94), and interest coverage stands at 301.9x. Maturity mismatch risk is low given substantial liquid assets versus short-term obligations. The balance sheet is equity-heavy (total equity 10,191.04 vs liabilities 2,426.33), providing ample solvency buffer. Off-balance sheet obligations are not disclosed in the provided data; typical industry exposures could include program/content commitments and rights contracts, but none are reported here.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow are unreported; thus OCF/Net Income and FCF coverage cannot be calculated. Earnings quality assessment is therefore constrained: we cannot validate accrual reversals or working capital drag/tailwinds. Working capital position is strong in levels (working capital 1,844.35), but changes versus prior periods are unknown. No signs of working capital manipulation can be inferred without cash flow statements. Given the sizable investment securities and dividend/interest income, cash inflows may be partially dependent on market-driven distributions; however, validation requires OCF disclosure.

Dividend Sustainability

The calculated payout ratio is 40.0%, comfortably below the 60% benchmark for sustainability. FCF and OCF are unreported, so cash coverage of dividends cannot be confirmed. Nonetheless, balance sheet capacity is strong: retained earnings of 7,844.66 and cash and deposits of 985.55 provide a buffer. Low leverage (D/E 0.24x) and minimal interest burden support distribution stability. Policy visibility is limited due to unreported DPS figures for the period; continuity with prior payout practices is assumed but not confirmed. Key watchpoints: confirmed OCF, capex needs for content/technology, and any strategic uses of cash that could compete with shareholder returns.

Risk Assessment

Business Risks:

• Advertising market cyclicality affecting core broadcasting and digital ad revenues
• Content cost inflation and rights fees (sports/events) compressing margins if monetization lags
• Programming ratings and IP pipeline risk impacting both ad pricing and affiliate revenues
• Competition from streaming platforms and shifts in media consumption
• Regulatory and industry structure changes in broadcasting/advertising markets

Financial Risks:

• Capital efficiency risk: ROIC 2.6% is below 5% warning threshold
• Earnings variability from non-operating income (dividends/interest) tied to market conditions
• Potential valuation swings in large investment securities portfolio (6,500.68)
• Impairment risk for goodwill/intangibles (94.46/283.99) if businesses underperform
• Interest rate and equity market sensitivity impacting securities income and valuations

Key Concerns:

• Sustaining the large YoY margin expansion amid volatile ad demand
• Structural low asset turnover (0.186) limiting ROE despite profit rebound
• Limited cash flow disclosure impedes assessment of earnings quality and dividend cover
• Non-operating income accounted for ~19.8% uplift to operating income, adding volatility
• Visibility on SG&A drivers is low due to unreported breakdowns

Investment Implications

Key Takeaways:

• Strong profit rebound: operating income +57.1% on revenue +8.1% implies material operating leverage
• Operating margin ~14.2% and net margin 11.3% mark an estimated 440 bps and 390 bps YoY expansion
• Balance sheet strength (current ratio 259%, D/E 0.24x, interest coverage 302x) reduces financial risk
• ROE 2.6% and ROIC 2.6% reflect low capital efficiency driven by low asset turnover and modest leverage
• Non-operating gains (dividends/interest) provided a meaningful tailwind; sustainability depends on markets

Metrics to Watch:

• Advertising revenue trajectory and pricing (TV and digital)
• Content cost trends and SG&A intensity (once disclosed)
• Operating cash flow and FCF to confirm earnings quality and dividend cover
• Ordinary income sensitivity to dividends/interest and any securities gains/losses
• Asset turnover and capital allocation plans for the large securities portfolio
• Effective tax rate stability and any extraordinary items

Relative Positioning: Within Japanese broadcasters, the company shows above-trend margin recovery and very conservative leverage, but trails best-in-class peers on capital efficiency given a large investment securities base suppressing asset turnover. Defensive balance sheet is a strength; sustained growth will depend on ad normalization, digital monetization, and potential portfolio optimization.

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