FUJI P.S CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥16.29B
• Operating Income: ¥907M
• Net Income: ¥-76M
• EPS: ¥31.64

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

Fuji P.S. (1848) delivered solid topline and operating improvements in FY2026 Q2, with revenue up 5.4% year over year to ¥16.29bn and operating income up 56.9% to ¥0.91bn, indicating strong operating leverage. Gross profit of ¥1.60bn implies a gross margin of 9.8%, a respectable level for a civil engineering/precast concrete business focused on bridge and infrastructure projects. EBITDA reached ¥1.26bn with a 7.7% margin, supported by depreciation and amortization of ¥0.35bn. Ordinary income was ¥0.86bn, slightly below operating income due to modest net non-operating costs, largely interest expense of ¥36m. Despite stronger operations, net income declined 64.3% YoY to ¥0.56bn, suggesting a distortion from non-recurring items or prior-year one-offs; the very low reported tax expense (¥2m; near-0% effective tax rate) also points to unusual items or deferred tax effects. The DuPont profile shows a net margin of 3.43%, asset turnover of 0.454x, and financial leverage of 2.84x, yielding an ROE of 4.42% for the period. On a full-year basis, ROE could normalize higher if current operating momentum persists and if non-recurring impacts abate. Liquidity is adequate but tight, with a current ratio of 116% and working capital of ¥3.94bn. Operating cash flow was negative at -¥0.85bn, likely reflecting seasonal working capital build typical in construction (receivables/unbilled costs), and was funded by ¥0.76bn of financing inflows, probably short-term borrowings. Capital structure shows debt-to-equity of 2.02x, but interest coverage remains comfortable at 25.2x, indicating manageable near-term financial risk. Using reported totals, the computed equity ratio is approximately 35% (¥12.62bn equity / ¥35.87bn assets), although the disclosed equity ratio line item shows 0.0% (likely undisclosed rather than zero). Dividend data are not disclosed (annual DPS shown as 0.00 should be treated as unreported), so payout assessment relies on earnings and free cash flow capacity rather than stated policy. Free cash flow is not derivable from the incomplete investing cash flow disclosure (shown as 0), limiting coverage analysis. Overall, the quarter indicates improving core profitability and disciplined cost control, offset by negative operating cash flow due to working capital needs and an opaque drop in net income versus prior year. The business appears to be executing well operationally amid a steady demand environment for infrastructure work, with leverage and liquidity within acceptable bounds for the sector. Data limitations (notably inventories, cash, investing cash flows, dividends, and share data) constrain the precision of our assessment, but the available metrics signal healthier operations and manageable financial risk. Key watchpoints include cash conversion through the second half, the persistence of margin gains, and the resolution of any non-recurring factors affecting net income. The medium-term outlook will hinge on order intake, pricing discipline against input cost inflation, and project execution quality. Absent unforeseen extraordinary items, operating trends suggest scope for improved full-year earnings and ROE relative to the interim run-rate.

Profitability Analysis

ROE decomposes as follows: net profit margin 3.43% × asset turnover 0.454 × financial leverage 2.84 = approximately 4.42% (reported). Margin quality improved at the operating level: revenue rose 5.4% YoY while operating income rose 56.9% YoY, evidencing strong operating leverage and good cost control (SG&A inferred at ~¥0.70bn, about 4.3% of sales). Gross margin of 9.8% and EBITDA margin of 7.7% are reasonable for a construction/PC products firm; the modest gap between gross and EBITDA margins indicates a relatively lean overhead structure. Ordinary income of ¥0.86bn vs operating income of ¥0.91bn reflects limited non-operating drag (interest expense ¥36m; other net -¥13m). The near-zero effective tax rate (¥2m tax) is atypical and likely reflects temporary factors (e.g., NOLs, deferred tax adjustments, or non-recurring items). The YoY decline in net income despite strong operating results implies prior-year extraordinary gains or this year’s below-the-line losses; absent detail, we treat it as a transient distortion rather than a deterioration in core profitability. Asset turnover at 0.454x suggests moderate capital intensity consistent with project-based businesses; any improvement would lift ROE meaningfully given the current leverage. Overall, profitability trends are favorable at the operating level, with the main caveat being unusual below-the-line and tax effects impacting net income.

Growth Assessment

Revenue growth of 5.4% YoY appears sustainable within Japan’s infrastructure market, likely supported by steady public investment and maintenance demand for bridges and prestressed concrete structures. The outsized 56.9% YoY increase in operating income versus modest sales growth indicates mix improvement, better project pricing, or execution gains. Net income contracted 64.3% YoY due to non-operating/extraordinary items or tax effects; absent recurrence, profit growth should better align with operating trends. Order intake and backlog (not disclosed) will be critical to validate sustainability of H2 revenue. Gross margin at 9.8% suggests acceptable pricing discipline despite input cost pressures; continued procurement management should support margins. With EBITDA margin at 7.7%, incremental volume should drop-through favorably if overhead remains contained. The negative OCF likely reflects timing of collections and unbilled work; normalization in H2 would support growth conversion into cash. Outlook: cautiously positive for operating profit given leverage on modest sales growth, contingent on stable project execution, timely collections, and no adverse extraordinary items. Key growth dependencies include public works budget execution, competitive bidding intensity, and raw material cost trends.

Financial Health

Liquidity: current ratio 116.4% and working capital ¥3.94bn indicate adequate but tight short-term coverage; the quick ratio equals the current ratio due to undisclosed inventories (not necessarily zero). Solvency: debt-to-equity 2.02x implies meaningful leverage, typical for working-capital-intensive contractors; interest coverage at 25.2x indicates comfortable debt service capacity. Capital structure: total assets ¥35.87bn, total equity ¥12.62bn, total liabilities ¥25.45bn. The computed equity ratio is approximately 35.2% despite the disclosed 0.0% figure (treated as undisclosed). Financing cash inflows of ¥0.76bn suggest reliance on short-term borrowings to bridge negative OCF; manageable if cash conversion improves in H2. Overall, balance sheet strength is moderate with acceptable solvency and adequate liquidity, but contingent on working capital discipline.

Cash Flow Quality

Earnings quality is mixed near term: OCF/Net income is -1.51, indicating profits have not converted into cash this half, likely due to receivable growth, unbilled construction, or advance payment timing. Free cash flow cannot be assessed due to undisclosed investing cash flows (reported as 0), though depreciation of ¥0.35bn implies ongoing capital intensity. Negative OCF funded by financing inflows indicates temporary reliance on debt; seasonality is common in this sector, so H2 improvement is key. Working capital: current assets ¥27.87bn vs current liabilities ¥23.93bn (WC ¥3.94bn); unspecified inventories and contract assets/liabilities are likely drivers of cash swings. Monitoring DSOs, unbilled balances, and retention receivables (not disclosed) will be critical to judge cash flow quality.

Dividend Sustainability

Dividend data are not disclosed (annual DPS and payout shown as 0.00 should be treated as unreported). With EPS at ¥31.64 in the period, theoretical payout capacity exists, but absence of FCF detail and negative OCF constrain assessment of near-term coverage. FCF coverage and payout ratio cannot be reliably computed due to missing investing cash flows and DPS. Sustainability will depend on H2 cash conversion, leverage tolerance, and any stated policy (historically many mid-cap contractors target stable or progressive dividends with payout in the ~20–30% range, but no company-specific policy is provided here). Until cash flow normalizes and disclosure improves, visibility on dividend sustainability remains limited.

Risk Assessment

Business Risks:

• Project execution risk leading to cost overruns or penalties
• Competitive bidding pressure compressing margins
• Input cost volatility (cement, steel) affecting gross margin
• Timing risk in public works budgets and order intake
• Customer concentration and collection timing (retentions, unbilled)
• Labor availability and subcontractor capacity constraints
• Regulatory and safety compliance in infrastructure projects

Financial Risks:

• Negative operating cash flow requiring short-term borrowing
• Moderate-to-high leverage (D/E ~2.0x) raising refinancing/timing risk
• Potential covenant constraints if profitability weakens
• Exposure to interest rate increases despite strong coverage
• Uncertainty around extraordinary items and tax effects impacting net income

Key Concerns:

• Large YoY decline in net income despite stronger operations suggests non-recurring volatility
• OCF/NI at -1.51 indicates weak cash conversion in H1
• Limited disclosure (inventories, cash, investing CF, dividend policy) constrains visibility

Investment Implications

Key Takeaways:

• Core operations improved materially with strong operating leverage (OP +56.9% vs sales +5.4%)
• Margins (gross 9.8%, EBITDA 7.7%) are healthy for the sector, supporting earnings resilience
• Net income volatility likely driven by non-recurring/tax factors rather than core weakness
• Cash conversion is the primary near-term watchpoint (OCF negative; financed by borrowings)
• Balance sheet is acceptable with computed equity ratio ~35% and interest coverage 25x

Metrics to Watch:

• Order backlog and new orders (pricing and mix)
• OCF and working capital (DSO, unbilled/retentions, advance receipts)
• Gross and operating margins by project cohort
• Net non-operating items and extraordinary gains/losses
• Leverage (net debt/EBITDA) and interest coverage trajectory
• Tax rate normalization in H2

Relative Positioning: Within Japan’s mid-cap infrastructure/precaste concrete peer set, Fuji P.S. demonstrates above-peer operating leverage and solid interest coverage, with leverage in the typical range and cash conversion currently weaker than best-in-class contractors; sustained margin improvement and normalization of OCF would strengthen its relative standing.

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