ASAHI BROADCASTING GROUP HOLDINGS CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥46.69B
• Operating Income: ¥1.28B
• Net Income: ¥2.41B
• EPS: ¥57.54

Income Statement

Balance Sheet

Cash Flow Statement

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 solid top-line and operating recovery this quarter, but bottom-line strength was amplified by one-time gains, and cash conversion lagged earnings. Revenue rose 12.1% YoY to 466.9, outpacing cost growth and lifting operating income 38.9% YoY to 12.8. Gross profit reached 148.0 with a gross margin of 31.7%, while SG&A was 135.2, keeping operating leverage positive but margins still thin. Operating margin improved to 2.7%, up roughly 53 bps YoY by our estimate based on growth rates. Ordinary income increased 47.6% YoY to 13.0, aided by non-operating income of 2.3 (notably 1.28 in dividends and 0.22 in interest). Profit before tax surged to 37.8, implying roughly 24.8 in extraordinary gains not captured in ordinary income. Net income rose 63.8% YoY to 24.0, with net margin at approximately 5.1%, up about 163 bps YoY on our calculations. Earnings quality is mixed: OCF was 19.0 (OCF/NI 0.79), flagging weaker cash conversion relative to profit this half. EBITDA was 30.5 (6.5% margin), and interest coverage is strong at 22.5x, reflecting low financial risk. Balance sheet liquidity is robust (current ratio 259%, quick ratio 250%), and leverage is conservative (D/E 0.61x; loans ~35). However, capital efficiency remains a key issue: ROE is 3.0% and ROIC just 1.3%, well below typical cost of capital thresholds. Working capital remains a swing factor, with accounts receivable at 172 and inventories low at 18.1, implying some seasonality in collections. We estimate FCF around 5.4 (OCF 19.0 minus capex 13.6), roughly in line with an implied dividend outflow (payout ratio 22.6% on NI), leaving little buffer. The quarter’s improved operating metrics are encouraging, but sustainability depends on maintaining ad revenue momentum and controlling SG&A amid content cost inflation. Forward-looking, we see modest operating margin expansion potential, but bottom-line volatility may remain elevated if extraordinary gains are not repeatable and cash conversion does not improve.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (≈5.1%) × Asset Turnover (0.356) × Financial Leverage (1.61x) = ROE ~3.0% (aligned with reported). The largest driver of YoY improvement is the net margin, aided by extraordinary gains boosting PBT and NI beyond operating trends. Asset turnover remains low (media/content and investments keep assets high), limiting ROE despite revenue growth. Business reason: operating leverage from revenue growth improved operating margin, but the outsized jump from ordinary income (13.0) to PBT (37.8) indicates non-recurring gains (e.g., asset/security disposals), temporarily elevating net margin. Sustainability: operating margin gains from revenue growth and cost control are partly sustainable; extraordinary gains are one-off. Watch for SG&A growth (current SG&A is 28.9% of sales); if SG&A growth re-accelerates faster than revenue, operating leverage will reverse.

Growth Assessment

Revenue growth of 12.1% YoY signals a cyclical rebound in advertising/content-linked revenues and possibly stronger event/content monetization. Operating income growth of 38.9% outpaced revenue due to positive operating leverage and disciplined cost base. Ordinary income rose 47.6% with tailwinds from dividends/interest; however, the jump from ordinary to pre-tax income points to one-time gains underpinning net income growth of 63.8%. EBITDA growth and interest coverage underscore a healthy core, but the EBITDA margin (6.5%) still reflects a thin-margin profile for a broadcaster/content group. Outlook: mid-single-digit revenue growth is plausible if ad demand holds, with incremental operating margin expansion from cost discipline. However, year-ago comps, audience ratings volatility, content cost inflation, and a tougher macro ad environment could moderate the trajectory. Growth quality is moderate: core operations are improving, but bottom-line growth is not fully repeatable without recurring drivers.

Financial Health

Liquidity is strong with a current ratio of 259% and quick ratio of 250%; no warning triggers (CR < 1.0) are present. Cash and deposits of 222 provide ample coverage against current liabilities of 205; short-term loans are minimal at 0.8, indicating low near-term refinancing risk. Debt is conservative: long-term loans of 34.1 and D/E of 0.61x, with interest coverage at 22.5x. Maturity mismatch risk is low given sizable current assets vs current liabilities. Total equity of 814.8 supports resilience; however, capital intensity keeps ROIC depressed at 1.3%. No explicit off-balance sheet obligations were disclosed in the provided data; contingent liabilities and lease commitments are not available and could affect leverage assessments.

Cash Flow Quality

OCF/Net Income is 0.79, below the 0.8 threshold, indicating weaker cash realization of earnings this half—likely tied to working-capital timing (AR at 172) and the non-cash nature of extraordinary gains. Using available data, estimated FCF is about 5.4 (OCF 19.0 less capex 13.6), positive but thin relative to shareholder returns. Financing CF was -5.4, driven by modest buybacks (-0.66) and likely dividends (not disclosed), suggesting distributions were broadly matched by internally generated cash. No overt signs of working capital manipulation are evident, but the OCF shortfall vs NI and elevated receivables warrant monitoring of collections and seasonal inflows in 2H. Sustainability: FCF should improve if OCF normalizes toward NI and capex remains disciplined; otherwise, excess distributions may rely on cash on hand.

Dividend Sustainability

The calculated payout ratio is 22.6%, appearing conservative against NI, but OCF/NI below 1.0 tempers comfort. With estimated FCF of ~5.4 and implied dividends of roughly 5.4 (payout on NI), coverage looks about 1.0x this half, leaving little headroom for incremental buybacks or growth capex. Balance sheet liquidity (cash 222) provides a buffer, implying near-term dividends are defendable even if FCF tightens. Policy outlook: absent a step-up in OCF conversion, any increase in base DPS may be incremental; variable or special distributions would likely require realized gains or asset monetization, which are non-recurring.

Risk Assessment

Business Risks:

• Advertising demand volatility tied to macro conditions and audience ratings
• Content cost inflation (sports rights, talent, production) compressing margins
• Shift to digital/streaming reducing linear TV ad yields
• Execution risk in events and content monetization
• Dependence on one-time gains to support PBT/NI variability

Financial Risks:

• Weak cash conversion (OCF/NI 0.79) raising payout and capex coverage risk
• Low ROIC (1.3%) indicating capital inefficiency and potential value drag
• Potential valuation swings in investment securities (188.5) impacting non-operating results
• Receivables concentration and timing risk (AR 172) affecting OCF

Key Concerns:

• Extraordinary gains (~24.8 uplift from ordinary income to PBT) not repeatable
• Thin operating margin (2.7%) vulnerable to cost shocks
• Reliance on 2H seasonality to normalize OCF

Investment Implications

Key Takeaways:

• Core operations improved with operating margin expansion (~+53 bps YoY) on 12.1% revenue growth
• Bottom-line outperformance driven in part by one-off gains (PBT >> ordinary income)
• Cash conversion lagged earnings (OCF/NI 0.79), constraining FCF headroom
• Balance sheet is liquid and conservatively leveraged, limiting downside financial risk
• Structural capital efficiency remains weak (ROE 3.0%, ROIC 1.3%), capping valuation re-rating without sharper margin and turnover gains

Metrics to Watch:

• OCF/Net income trend and receivables turnover in 2H
• Operating margin trajectory vs SG&A intensity
• Extraordinary gains/losses and securities-related income volatility
• Ad revenue mix (TV vs digital) and pricing/yield trends
• Capex discipline and ROIC improvement initiatives

Relative Positioning: Within Japan’s broadcast/content peers, liquidity and leverage are favorable, but profitability and capital efficiency are on the low side, with earnings more sensitive to non-recurring items than best-in-class operators focused on scalable digital monetization.

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