Marubeni Corp. :MARUF-US: Earnings Analysis: Q3, 2017 By the Numbers : March 29, 2017

Marubeni Corp. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Marubeni Corp. – Marubeni Corporation Unsponsored ADR (MARUY-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 16,040.62 million, Net Earnings of USD 238.94 million.
  • Gross margins narrowed from 10.14% to 9.52% compared to the same period last year, operating (EBITDA) margins now 3.71% from 3.85%.
  • Year-on-year change in operating cash flow of 44.20% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • One-time items weakened operating performance.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 16040.62 15465.15 17334.42 14705.4 14258.34
Revenue Growth (%YOY) 12.5 1.93 4.12 -5.89 -13.56
Earnings (mil) 238.94 308.77 448.59 -516.9 169.44
Earnings Growth (%YOY) 41.02 24.96 -23.32 -315.93 136.45
Net Margin (%) 1.49 2 2.59 -3.52 1.19
EPS 0.14 0.18 0.26 -0.3 0.1
Return on Equity (%) 7.44 9.77 14.27 -15.6 4.84
Return on Assets (%) 1.47 1.89 2.8 -3.24 1.07

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Market Share Versus Profits

Revenues History
Earnings History

MARUF-US‘s change in revenue this period compared to the same period last year of 12.50% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MARUF-US is holding onto its market share. Also, for comparison purposes, revenues changed by 3.72% and earnings by -22.62% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 9.52% to 10.14% for the same period last year, while operating margins (EBITDA margins) went from 3.71% to 3.85% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

MARUF-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 28.60 days from 30.50 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

MARUF-US‘s change in operating cash flow of 44.20% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The expansion in operating (EBIT) margins from 2.02% to 2.16% has also impacted the company’s earnings growth. However, one-time items have been a drag on the operating performance. As a result, the company’s pretax margins contracted from 3.03% to -0.15%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Marubeni Corp. engages in handling of products and provision of services in the areas of import and export. It also conducts business investment, development and management. It operates through the following segments: Food & Consumer Products; Chemical & Forest Products; Energy & Metals; Transportation & Industrial Machinery; and Power Projects & Plant. The Food & Consumer Products segment handles the domestic and overseas manufacture and trade of all food products that include feed grains, soybeans, wheat, sugar, processed foods, beverages, and their related materials, foodstuffs for professional use, and agricultural, seafood & livestock products. The Chemical & Forest products segment merchandises petrochemicals, electronic materials, specialty chemicals and agricultural chemicals. The Energy & Metals segment covers the trade of petroleum and gas, raw materials development and gas station retail. The Transportation & Industrial Machinery comprises of export, import, wholesale and retail of transportation related machinery. The Power Projects & Plant segment operates electricity and infrastructure related businesses. It also manages plants for oil, gas, chemical, environmental, steel, cement, and pulp and paper industries. It also handles infrastructure development such as railway, airport, port and industrial complex, textile machinery, alternative energy facilities, and other environmental and industrial machines. It was founded in May 1858 and is headquartered in Tokyo, Japan.

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