4911 · Shiseido

Will it survive?

• Can it pay its interest? -4.6×
  Does not cover its interest
  Operating income (¥28.8B) ÷ interest expense ¥6.3B
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? ¥231.3B
  Net debt against an operating loss
  Cash ¥91.8B − debt ¥323.2B
  What this means

  Netting ¥91.8B of cash and short-term investments against ¥323.2B of debt leaves ¥231.3B owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? -151d
  Negative, funded by others
  DSO 61 + DIO 15 − DPO 228 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

• Return on invested capital 5%
  Below average through the cycle
  10-yr median, range -3%–20%; -3% latest = NOPAT (¥22.7B) ÷ invested capital ¥832.1B
  Industry peers: median 21%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran -3% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 9%
  Solid, recently turned positive
  latest ¥84.6B = operating cash ¥109.9B − maintenance capex ¥25.3B; positive each of the last 3 years, after an earlier loss stretch (10-yr median 2%)
  Industry peers: median 36%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 9% of revenue this year, a 2% median across 10 years.

• Are earnings backed by cash? ¥109.9B
  Loss, but cash-generative
  Net income (¥40.7B) · cash from operations ¥109.9B
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? 14%
  Reinvests most of it
  Dividends + buybacks ¥12.0B ÷ Owner Earnings ¥84.6B
  What this means

  Of ¥84.6B Owner Earnings, ¥12.0B (14%) went back to shareholders, ¥12.0B dividends, ¥2M buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 0.35×
  Harvesting
  Capex ¥25.3B ÷ depreciation ¥71.7B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 7 of 10
  What this means

  Lost money in 3 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 2 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 7% → 0% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 7% early to 0% lately, median 4% — competition or costs are biting in.

• Reinvestment, incremental ROIC −13%
  What this means

  Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.

• Owner earnings growth +2%/yr
  What this means

  Owner earnings grew about 2% a year over the record.

• Worst year 2025 · −3.0% op. margin
  What this means

  Operations went underwater in 2025, understand why before trusting the good years.

• Share count +0.0%/yr
  What this means

  Roughly flat share count, little dilution, little buyback.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.