Br.Holdings Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.18B
• Operating Income: ¥459M
• Net Income: ¥365M
• EPS: ¥5.30

Income Statement

Balance Sheet

Cash Flow Statement

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

BR Holdings (1726) reported FY2026 Q2 consolidated results under JGAAP showing revenue of ¥18.18bn, down 9.0% YoY, indicating a softer order execution environment and/or timing effects common to construction and civil engineering businesses. Gross profit was ¥2.21bn, with a gross margin of 12.2%, suggesting tight project margins likely affected by input cost pressure and mix. Operating income fell 26.6% YoY to ¥0.46bn, with operating margin at 2.5%, evidencing negative operating leverage as profits declined faster than sales. Ordinary income of ¥0.37bn implies a ¥0.09bn net non-operating loss, largely reflecting interest expense (¥0.06bn) and possibly other non-operating items. Net income was ¥0.24bn (-34.6% YoY), with EPS of ¥5.30 and a net margin of 1.31%. DuPont decomposition yields ROE of 1.57%, driven by modest net margin (1.31%), low asset turnover (0.471x), and moderate financial leverage (2.54x). Liquidity appears sound with a current ratio of 151% and quick ratio of 143%, supported by sizeable working capital of ¥11.63bn. Capital structure is moderate: debt-to-equity is 1.77x, and the equity ratio can be approximated at about 39% (computed from reported totals), despite the reported 0% placeholder. Operating cash flow was positive at ¥0.27bn, exceeding net income (OCF/NI 1.11x), but below EBITDA, indicating working capital absorption. Financing cash inflow of ¥1.34bn suggests increased borrowings or other financing to support seasonal funding needs; cash and equivalents were not disclosed in this dataset. EBITDA of ¥0.65bn implies an EBITDA margin of 3.6%, highlighting thin profitability relative to peers with higher-margin portfolios. Interest coverage at 7.9x (EBIT/interest) is adequate, though sensitivity to further margin compression should be monitored. The effective tax rate figure is not disclosed in the provided metrics; based on income tax and net income, taxes appear meaningful this period, but precise ETR is uncertain under JGAAP classifications. Dividend data (DPS and payout) was not disclosed for the period; therefore, dividend sustainability cannot be assessed from this dataset alone. Overall, results reflect margin pressure and negative operating leverage in the half, with adequate liquidity and manageable leverage, but with execution risks linked to project mix and working capital dynamics. Data limitations (zeros indicating undisclosed items) constrain full assessment of cash balances, investing cash flows, and per-share book metrics.

Profitability Analysis

ROE_decomposition: ROE 1.57% = Net margin 1.31% × Asset turnover 0.471× × Financial leverage 2.54×. The low net margin is the primary drag; asset intensity typical for contractors keeps turnover subdued; leverage is moderate and not excessively inflating ROE. margin_quality: Gross margin 12.2% and operating margin 2.5% indicate limited cost pass-through and/or unfavorable project mix. Ordinary income margin of ~2.0% reflects additional non-operating costs, including interest expense (¥58m). Net margin at 1.31% points to thin bottom-line profitability. operating_leverage: Revenue declined 9.0% YoY while operating income fell 26.6% YoY, indicating negative operating leverage and fixed-cost absorption effects. EBITDA margin at 3.6% underscores limited buffer against further volume or cost shocks.

Growth Assessment

revenue_sustainability: Top-line contraction to ¥18.18bn (-9.0% YoY) suggests softer backlog conversion or timing delays common in public works and infrastructure projects. Sustainability hinges on new orders and backlog replenishment, which were not disclosed. profit_quality: Operating margin compressed to 2.5%, and ordinary income trailed EBIT due to non-operating costs, suggesting limited cushion. Net income decline (-34.6% YoY) exceeded the sales drop, evidencing deteriorating operating leverage. outlook: Absent order backlog and pipeline visibility in this dataset, near-term growth will depend on public-sector demand, input cost stabilization, and execution on higher-margin projects. Margin recovery requires mix improvements and tighter cost control.

Financial Health

liquidity: Current ratio 150.6% and quick ratio 142.7% indicate comfortable short-term liquidity. Working capital totals ¥11.63bn, consistent with the sector’s high receivables and unbilled positions. solvency: Debt-to-equity is 1.77x (total liabilities/equity), implying moderate leverage for a contractor with seasonal funding needs. Interest coverage at 7.9x (EBIT basis) is adequate. capital_structure: Total assets ¥38.57bn and equity ¥15.17bn imply an equity ratio around 39% (calculated), reflecting balanced capitalization despite the reported placeholder of 0%. Financing CF inflow (¥1.34bn) points to incremental borrowings or refinancing.

Cash Flow Quality

earnings_quality: OCF of ¥0.27bn exceeds net income of ¥0.24bn (OCF/NI 1.11x), a modestly positive sign. However, OCF is materially below EBITDA (¥0.65bn), indicating working capital outflows or timing effects. FCF_analysis: Investing CF and capex were not disclosed; reported FCF is 0 as a placeholder. As such, true FCF cannot be assessed from the provided data. Positive OCF suggests partial self-funding capacity, but reliance on financing CF indicates seasonal funding needs. working_capital: Large current asset base (¥34.63bn) vs. current liabilities (¥22.99bn) supports liquidity but can create volatility in OCF. Close monitoring of receivables collection, unbilled construction balances, and payables timing is warranted.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are not disclosed in this dataset (zeros are placeholders). EPS is ¥5.30, but without a stated dividend, a payout ratio cannot be derived. FCF_coverage: FCF is unreported; therefore, dividend coverage by FCF cannot be evaluated. policy_outlook: No dividend policy guidance is provided here. Sustainability would depend on consistent OCF generation, backlog visibility, and leverage headroom; additional disclosures are needed.

Risk Assessment

Business Risks:

• Order timing and backlog conversion risk inherent in construction cycles
• Input cost inflation (materials, subcontracting) compressing margins
• Labor availability and productivity constraints impacting execution
• Project mix and pricing discipline affecting gross margin variability
• Dependence on public works budgets and tender outcomes
• Change orders and claims risk affecting revenue recognition and cash timing

Financial Risks:

• Working capital volatility hindering OCF conversion vs. EBITDA
• Reliance on short-term financing to bridge project cash cycles
• Interest rate risk affecting financing costs and coverage
• Potential covenant headroom tightening if margins weaken further
• Counterparty credit risk from receivables concentration

Key Concerns:

• Negative operating leverage with profits falling faster than sales
• Thin EBITDA and operating margins limiting shock absorption
• Non-operating drag (interest and other items) reducing ordinary income
• Limited disclosure on cash balances, capex, and investing CF
• Unclear dividend trajectory due to missing payout information

Investment Implications

Key Takeaways:

• Revenue down 9.0% YoY with operating income down 26.6% YoY indicates margin pressure and negative operating leverage
• ROE of 1.57% is constrained by low net margin and modest asset turnover despite moderate leverage
• Liquidity is solid (current ratio 151%, quick ratio 143%), and leverage is moderate (D/E 1.77x)
• OCF positive and slightly above net income, but below EBITDA, pointing to working capital absorption
• Financing inflows (¥1.34bn) likely supported seasonal funding needs
• Data gaps on cash, capex, and dividends limit full assessment of FCF and shareholder returns

Metrics to Watch:

• Order intake and backlog level/mix
• Gross margin trajectory and cost pass-through
• SG&A control and operating margin recovery
• OCF-to-EBITDA conversion and working capital days
• Leverage (net debt/EBITDA) and interest coverage
• Non-operating items affecting ordinary income

Relative Positioning: Within Japan’s mid-cap civil engineering and construction peers, BR Holdings exhibits moderate leverage and solid liquidity but thinner margins and lower ROE; improvement depends on backlog quality and execution restoring gross margins.

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
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