OHMOTO GUMI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥35.14B
• Operating Income: ¥831M
• Net Income: ¥621M
• EPS: ¥24.45

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

Ohmoto Gumi (17930, standalone, JGAAP) delivered FY2026 Q2 results showing resilient top-line growth but compressed earnings quality and a sharp decline in bottom line. Revenue rose 7.2% YoY to ¥35.14bn, supported by steady construction activity. Gross profit was reported at ¥3.75bn (gross margin 10.7%), and operating income was ¥0.83bn, down 1.0% YoY, implying some cost pressure and/or less favorable project mix. Ordinary income reached ¥1.02bn, exceeding operating income by about ¥0.19bn on non-operating gains, but net income fell 43.3% YoY to ¥0.62bn, indicating heavier tax/extraordinary impacts or timing differences. Net margin compressed to 1.77%, dampening ROE despite a solid balance sheet. DuPont analysis shows net margin 1.77%, asset turnover 0.387x, and financial leverage 1.37x, resulting in a low but positive ROE of 0.93%. Liquidity remains very strong, with current assets of ¥67.34bn against current liabilities of ¥19.02bn, yielding a current ratio of 354% and working capital of ¥48.33bn. The capital structure is conservative, with total liabilities of ¥25.28bn against equity of ¥66.44bn; the implied equity ratio is approximately 73% (calculated), despite the reported equity ratio field showing 0.0%, which appears to be undisclosed rather than zero. Cash flow from operations was robust at ¥8.89bn, far exceeding net income (OCF/NI 14.3x), pointing to strong cash conversion likely driven by collection of receivables or favorable advances. Financing cash flow was a sizable outflow at ¥9.03bn, suggesting repayments or other shareholder/distribution-related flows, though dividends are not disclosed for the period. Free cash flow is shown as zero due to unreported investing cash flows; therefore, true FCF cannot be assessed from the provided data. Profitability remains modest for a construction-focused company, with operating margin of roughly 2.37% and EBITDA margin of 3.1%, leaving limited buffer against cost overruns. Interest coverage is very strong at about 59x, reflecting low financial risk from interest-bearing debt. The large YoY decline in net income despite stable operating profit indicates non-operating, tax, or extraordinary factors are the primary drivers of earnings volatility this period. There is an internal inconsistency between cost of sales (¥29.03bn) and reported gross profit (¥3.75bn), as the arithmetic would otherwise imply higher gross profit; analysis below relies on the reported gross profit and margin figures. Several items, notably cash and equivalents, inventories, investing cash flows, and share data, are undisclosed; zeros in these fields should not be interpreted as actual zeros. Overall, operating performance appears stable but margin-sensitive, financial health is strong, earnings quality (cash conversion) is favorable, and the primary uncertainties stem from tax/extraordinary items and unreported line items that limit a full assessment.

Profitability Analysis

ROE decomposition (DuPont): Net margin 1.77% × Asset turnover 0.387 × Financial leverage 1.37 = ROE ~0.93% (aligned with reported). Operating margin is approximately 2.37% (¥0.831bn/¥35.138bn), indicating thin project-level profitability typical in general contracting. Reported gross margin is 10.7% (¥3.75bn/¥35.138bn), but note the mismatch with cost of sales; analysis assumes the reported gross profit is correct. EBITDA is ¥1.087bn (EBITDA margin 3.1%), implying limited operating leverage headroom; small cost swings can materially impact operating profit. Ordinary income exceeds operating income by ~¥0.19bn, suggesting supportive non-operating income (e.g., financial income, JV/affiliates, or other items). Net margin declined YoY to 1.77% due to heavier below-the-line impacts (tax or extraordinary), not core operations. Effective tax dynamics appear elevated versus ordinary income (income tax expense ¥0.531bn vs. ordinary income ¥1.021bn), which contributed to net profit compression; the “0.0%” effective tax rate shown is clearly a placeholder and not reflective of reality. Overall profitability is modest but consistent with sector norms; sustaining margins will require tight cost control on materials and subcontracting and disciplined bidding.

Growth Assessment

Revenue growth of 7.2% YoY to ¥35.14bn indicates steady order execution and likely healthy backlog conversion. Operating income decreased 1.0% YoY to ¥0.83bn despite higher sales, implying adverse mix or cost inflation offsetting volume gains. Ordinary income growth versus operating income points to supportive non-operating factors this period. Net income declined sharply by 43.3% YoY to ¥0.62bn, driven more by tax/extraordinary items than deterioration in core operations. Sustainability of revenue growth depends on order intake from public works and private sector capex, as well as the timing of large projects. Profit quality is mixed: OCF strength suggests strong cash realization from projects, but accounting profit is vulnerable to below-the-line items. Near-term outlook hinges on margin discipline, materials and labor cost trends, and the cadence of project handovers in 2H. Without backlog, order intake, or segment disclosure, forward visibility is limited; however, conservative leverage and strong liquidity provide capacity to pursue projects while withstanding cost variability.

Financial Health

Liquidity is robust: current assets ¥67.34bn vs. current liabilities ¥19.02bn yields a current ratio of 354% and ample working capital of ¥48.33bn. Quick ratio equals current ratio due to undisclosed inventories; actual quick ratio may be lower but likely remains strong. Solvency is solid: total liabilities ¥25.28bn vs. equity ¥66.44bn implies an equity ratio near 73% (calculated), notwithstanding the reported 0.0% placeholder. Debt-to-equity of 0.38x suggests moderate leverage at most; true interest-bearing debt levels are not disclosed but interest expense is low at ¥14m. Interest coverage is very strong at ~59x (operating income/interest), indicating low refinancing risk. The balance sheet appears conservative, with substantial current asset buffers typical for a contractor handling advances and receivables.

Cash Flow Quality

Earnings quality is strong on cash conversion metrics: OCF of ¥8.89bn vs. net income of ¥0.62bn (OCF/NI 14.3x) suggests favorable working capital movements (collections, advances) and conservative revenue recognition. Free cash flow cannot be determined because investing cash flows are undisclosed; the displayed FCF of zero reflects missing data, not true zero. Financing cash flow was a large outflow of ¥9.03bn, consistent with debt repayment, return of capital, or settlement of other financing items; absent dividend disclosure and given DPS of 0.00, repayments are the more plausible driver. Cash & equivalents are undisclosed, so end-period liquidity coverage from cash-on-hand cannot be assessed, though current assets are substantial. Working capital remains a key swing factor; monitoring receivables aging, contract assets/liabilities, and advances from customers will be important to gauge sustainability of the strong OCF.

Dividend Sustainability

The company reports annual DPS of 0.00 and a payout ratio of 0.0%, which likely reflects non-disclosure at Q2 rather than a definitive full-year policy. With OCF strong and leverage low, capacity for distributions exists, but FCF is unassessable given missing investing cash flows. Coverage analysis is therefore inconclusive: payout ratio signals no cash dividends recognized for the period, while FCF coverage (0.00x) is a placeholder due to unreported investing CF. Historically, construction firms often prioritize balance sheet strength and bonding capacity over high payouts when margins are thin; absent explicit guidance, assume a conservative stance. Dividend outlook will depend on 2H earnings, capex needs, and working capital requirements tied to project pipeline.

Risk Assessment

Business Risks:

• Order intake volatility tied to public works budgets and private sector capex cycles
• Fixed-price contract risk: cost overruns on materials, labor, and subcontracting
• Project execution risks (delays, penalties, change orders) impacting margins
• Competitive bidding pressure compressing gross margins
• Concentration risk if reliant on specific regions or customers (not disclosed)
• Supply chain and materials price fluctuations (steel, cement, asphalt, fuel)
• Labor availability and wage inflation in construction trades
• Weather and disaster-related disruptions affecting site productivity
• Regulatory and safety compliance risks on job sites

Financial Risks:

• Earnings volatility from non-operating and tax/extraordinary items
• Working capital swings affecting cash flows despite reported strength
• Potential hidden leverage in guarantees, POs, or off-balance commitments (not disclosed)
• Interest rate sensitivity limited but present if refinancing occurs
• Data gaps: cash balances, investing CF, inventory details hinder full risk quantification

Key Concerns:

• Sharp YoY decline in net income (-43.3%) despite stable operating profit
• Thin operating margin (2.37%) and EBITDA margin (3.1%) leave limited buffer
• Data inconsistency between reported cost of sales and gross profit
• Undisclosed investing cash flows and cash balances obscure FCF and liquidity granularity

Investment Implications

Key Takeaways:

• Top-line growth (+7.2% YoY) but margin compression at the net level
• Core operations stable; below-the-line items (tax/extraordinary) drove net decline
• Liquidity and solvency are strong, supporting operational resilience
• OCF is robust relative to earnings, implying strong cash conversion from projects
• Large financing outflows likely reflect debt repayment or other financing uses

Metrics to Watch:

• Order intake/backlog and book-to-bill to assess revenue sustainability
• Gross margin and operating margin trends by project mix
• Working capital components (receivables, contract assets/liabilities, advances)
• Tax rate normalization and any extraordinary gains/losses in 2H
• Investing cash flows and capex to derive true FCF
• Interest-bearing debt levels and covenant headroom (if any)

Relative Positioning: Within Japanese general contractors, the company exhibits stronger-than-average liquidity and low financial leverage, but profitability metrics are on the low side and more exposed to project cost volatility; earnings quality via cash conversion is favorable, yet bottom-line stability lags due to non-operating and tax effects.

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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