OHMORI CO.,LTD. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.74B
• Operating Income: ¥144M
• Net Income: ¥122M
• EPS: ¥5.34

Income Statement

Balance Sheet

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

Oomori Kogyo (18440) reported FY2026 Q1 consolidated results under JGAAP showing resilient top-line growth but weaker profitability. Revenue was 17.37 (100M JPY), up 7.4% YoY, indicating solid order execution early in the fiscal year. Despite higher sales, operating income declined 25.1% YoY to 1.44, reflecting negative operating leverage from margin pressure and/or cost timing. Gross profit was 3.25, translating to a gross margin of 18.7%, which appears compressed for the quarter versus the YoY revenue growth. SG&A was 1.32, implying an operating margin of 8.3% (1.44/17.37), down YoY. Ordinary income fell 28.8% YoY to 1.33; non-operating items were small (income 0.03, expenses 0.08) and primarily interest. Profit before tax was 1.88, notably above ordinary income, suggesting the presence of net extraordinary gains in Q1 (details unreported). Net income came in at 0.99, down 18.5% YoY, with an effective tax rate of 35.0% and likely non-controlling interests affecting the gap between PBT and reported net profit (specifics unreported). The DuPont ROE for the quarter was 1.7%, decomposed as a 5.7% net margin, 0.141x asset turnover, and 2.11x financial leverage. Liquidity is strong: current assets of 107.69 against current liabilities of 20.13 yield a current ratio of 535%. The balance sheet shows moderate leverage with total liabilities/equity at 1.04x and substantial long-term loans (40.19). Cash and deposits of 25.06 provide high coverage of short-term loans (2.91), supporting financial flexibility. Interest coverage is comfortable at 17.55x, indicating manageable debt service capacity. Asset quality appears conservative with minimal intangibles (0.01) and a largely current-asset-based profile typical of construction contractors, though receivables and inventories were unreported. Dividend disclosure is limited; a calculated payout ratio of 216.9% suggests that the currently implied dividend level (basis unreported) exceeds Q1 earnings capacity if extrapolated. Cash flow data were not disclosed, limiting earnings quality and FCF assessment. Overall, the quarter reflects decent revenue momentum but weaker profitability, with strong liquidity and manageable leverage mitigating risk, while margin recovery and cash conversion are the key variables for the rest of the fiscal year.

Profitability Analysis

ROE (DuPont) = 1.7% = Net margin (5.7%) × Asset turnover (0.141x) × Leverage (2.11x). Net margin: 0.99/17.37 = 5.7%, pressured relative to revenue growth and down YoY alongside operating income. Operating margin: 1.44/17.37 = 8.3%, indicating negative operating leverage as operating profit declined 25.1% YoY vs revenue growth of 7.4%. Ordinary margin: 1.33/17.37 = 7.6%, with small non-operating drag (net -0.05). Gross margin: 3.25/17.37 = 18.7%, implying cost pressure in project execution and/or unfavorable mix/timing. Effective tax rate is 35.0%, broadly in a normal band for domestic operations. Interest burden is light with interest expense of 0.08 against operating income of 1.44 (coverage ~18x), so financing cost is not a primary driver of margin erosion. PBT exceeded ordinary income by ~0.55 (1.88 vs 1.33), implying extraordinary gains in the quarter; this boosts bottom line but does not reflect recurring operating strength. Overall profitability quality skews weaker this quarter due to gross margin compression and the reliance on non-recurring items to bridge ordinary to pre-tax profit.

Growth Assessment

Revenue grew 7.4% YoY to 17.37, indicating healthy execution and likely solid order intake/backlog carried into the period (backlog data unreported). However, operating income fell 25.1% YoY, reflecting cost pressures and/or less favorable project milestones, an unfavorable mix, and limited ability to pass through input inflation within the quarter. Ordinary income declined 28.8% YoY, reinforcing that core earnings momentum lags revenue growth. Net income decreased 18.5% YoY to 0.99, cushioned by extraordinary gains implied by PBT being above ordinary income. The divergence between revenue growth and profit contraction suggests near-term profit quality headwinds, likely tied to construction project timing and cost recognition. Without OCF data, it is unclear if the revenue growth is translating into cash; construction seasonality can skew early-year margins and cash. Outlook hinges on margin normalization in subsequent quarters, execution on higher-margin projects, and cost containment; if gross margin recovers towards historical levels while revenue growth persists, earnings could re-accelerate. Absent evidence of backlog expansion and pricing power, we assume mid-single-digit revenue growth with cautious profit outlook near term.

Financial Health

Total assets were 123.11 with equity of 58.34, implying financial leverage of 2.11x and debt-to-equity of 1.04x (total liabilities/equity). Liquidity is strong: current assets 107.69 vs current liabilities 20.13 yield a current ratio of 5.35x (535%) and reported quick ratio of 535% (inventories/receivables unreported). Cash and deposits of 25.06 provide a substantial buffer over short-term loans of 2.91 (cash-to-ST debt ~8.6x). Long-term loans are 40.19, concentrating liabilities in noncurrent debt (noncurrent liabilities 40.75), which moderates refinancing risk. Net interest-bearing debt (sum of short- and long-term loans less cash) is approximately 18.04, implying net debt/equity of ~0.31x, a conservative position for the sector. Working capital stands at 87.57, supporting project execution capacity. Intangible assets are negligible (0.01), suggesting limited impairment risk from goodwill; however, the lack of receivables/inventories disclosure limits assessment of collection risk and WIP quality. Interest coverage at 17.55x indicates ample headroom on covenants and debt service. Overall solvency is sound with moderate leverage and strong liquidity, though asset-liability composition typical of construction introduces execution and collection risks that are not fully observable here.

Cash Flow Quality

Operating cash flow and free cash flow were unreported, preventing direct assessment of earnings-to-cash conversion this quarter. The OCF/Net income ratio is not calculable, and we cannot corroborate whether revenue growth is accompanied by favorable working capital movements (receivables, unbilled WIP, advance receipts all unreported). Construction businesses often experience significant intra-year swings in OCF due to milestone billing and progress payments; given the profit contraction amid revenue growth, there is a risk that working capital absorbed cash in Q1 (assumption, not evidenced). Capex and investing CF are unreported; with noncurrent assets of 12.68 and minimal intangibles, structural capex needs may be modest, but maintenance and equipment renewal requirements are unknown. Financing CF is unreported, though the balance sheet suggests stability with no evident short-term funding stress. In the absence of CF data, we place greater weight on interest coverage (17.55x) and cash-to-ST debt coverage (~8.6x) as indirect indicators of near-term cash adequacy. Overall earnings quality is uncertain this quarter due to margin compression and reliance on extraordinary items, with CF validation pending subsequent disclosures.

Dividend Sustainability

Dividend details are largely unreported, but a calculated payout ratio of 216.9% indicates that the implied dividend exceeds Q1 earnings capacity if that payout rate pertains to the current period. Without DPS or FCF, we cannot assess cash coverage; FCF coverage is not calculable. Given net income of 0.99 in Q1 and lack of OCF data, sustainability should be judged against full-year earnings rather than a single quarter due to seasonality. The balance sheet could temporarily support distributions (cash 25.06; net debt/equity ~0.31x), but long-term sustainability depends on restoring operating margins and converting earnings to cash. Corporate policy signals (DOE, payout target) are unreported; therefore, we assume a stable-to-prudent policy linked to full-year profitability typical of small/mid contractors. The headline payout ratio likely reflects timing (e.g., annual dividend compared against partial-year earnings or prior-year base), not necessarily a structural overdistribution, but it warrants monitoring until full-year guidance and cash flows are available.

Risk Assessment

Business Risks:

• Project execution risk leading to cost overruns and gross margin compression
• Input cost inflation (materials/labor) not fully passed through to contract prices
• Timing of revenue recognition and milestone billing causing earnings volatility
• Concentration risk in specific project types/clients or geographies (not disclosed)
• Competitive bidding pressure compressing margins in public/private works
• Regulatory and permitting delays affecting project start/recognition

Financial Risks:

• Working capital swings impacting operating cash flow (receivables/WIP unreported)
• Reliance on long-term debt (40.19) amid rising interest rate risk
• Earnings dependence on non-recurring/extraordinary gains observed in Q1
• Potential mismatch between dividend outflow and quarterly earnings (payout 216.9%)
• Counterparty credit risk in collections (AR details unreported)

Key Concerns:

• Operating income down 25.1% YoY despite 7.4% revenue growth, signaling negative operating leverage
• Gross margin at 18.7% suggests cost pressure and/or unfavorable project mix
• Ordinary income below PBT implies non-recurring gains supporting profits
• Cash flow disclosure absent, limiting validation of earnings quality and dividend capacity
• High payout ratio indication vs Q1 earnings until full-year context is provided

Investment Implications

Key Takeaways:

• Top-line growth of 7.4% YoY contrasted with a 25.1% YoY drop in operating profit, highlighting margin pressure
• ROE of 1.7% (DuPont) reflects modest profitability driven by low asset turnover and margin compression
• Balance sheet is liquid and conservatively leveraged (net debt/equity ~0.31x; current ratio ~5.35x)
• Interest coverage is robust at 17.55x, indicating manageable debt service
• Extraordinary gains likely supported PBT; core profitability weaker than headline PBT suggests
• Dividend sustainability unclear; calculated payout ratio of 216.9% appears elevated versus Q1 earnings

Metrics to Watch:

• Order backlog and new orders (volume and pricing)
• Gross margin trajectory and cost pass-through on projects
• SG&A control and operating margin recovery
• Operating cash flow and working capital (receivables, unbilled WIP, advances)
• Interest rate trends and debt refinancing profile
• Extraordinary items vs recurring earnings contribution
• Dividend policy updates and DPS guidance

Relative Positioning: Within Japanese small/mid-cap construction peers, Oomori Kogyo shows strong liquidity and moderate leverage but currently weaker profitability momentum due to margin compression; sustained recovery in gross margins and evidence of cash conversion are needed to close the gap with more consistently profitable peers.

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