| Metric | Current Period | YoY Comparison Period | YoY |
|---|---|---|---|
| Revenue | ¥344.0B | ¥331.0B | +3.9% |
| Operating Income | ¥24.6B | ¥28.6B | -14.1% |
| Ordinary Income | ¥25.1B | ¥28.9B | -13.1% |
| Net Income | ¥17.3B | ¥19.8B | -12.6% |
| ROE | 6.5% | 7.3% | - |
Sankometal Industry (1972) reported 2026 FY Q3 results of Revenue ¥344.0B (YoY +¥13.0B +3.9%), Operating Income ¥24.6B (YoY -¥4.0B -14.1%), Ordinary Income ¥25.1B (YoY -¥3.8B -13.1%), and Net Income ¥17.3B (YoY -¥2.5B -12.6%). Despite continued top-line growth, profitability deteriorated, with double-digit declines from Operating Income downward, indicating a notable deterioration in margins.
[Profitability] ROE 6.5% (down YoY), Operating Margin 7.2% (equivalent to 7.1% for FY2026 in the company’s historical series), Net Margin 5.0%, Effective Tax Rate 31.0%. A DuPont breakdown of Net Margin 5.0% × Total Asset Turnover 0.852 × Financial Leverage 1.51 explains ROE of 6.5%. EPS ¥89.72. [Cash Quality] Cash and deposits ¥126.0B; Current Ratio 302.8%; short-term liability coverage by cash and deposits alone is over 1.2x, indicating sound short-term liquidity. [Investment Efficiency] Total Asset Turnover at 0.852x remains below 1x, suggesting room for improvement in asset efficiency. [Financial Soundness] Equity Ratio 66.1%; Debt-to-Equity Ratio 0.51x, reflecting a conservative capital structure. Working capital (current assets - current liabilities) is approximately ¥210.9B, indicating ample on-hand liquidity.
Cash and deposits stood at ¥126.0B, roughly flat versus the prior period, evidencing a degree of cash accumulation even in a higher-revenue, lower-profit environment. Within working capital, electronically recorded monetary claims (trade ¥41.7B) and electronically recorded obligations (trade ¥51.3B) are the main items; with payables exceeding receivables, the company is benefiting from supplier credit. Contract liabilities increased from ¥1.9B in the prior period to ¥4.6B in the current period, up +¥2.7B (+143%), reflecting advances on orders for projects and providing a short-term cash inflow effect. Provision for warranties also rose from ¥0.7B to ¥1.7B, up +¥1.0B (+150%), suggesting expanded provisioning associated with completed construction warranty obligations. With a Current Ratio of 302.8% and cash coverage of short-term liabilities over 1.2x, near-term funding risk appears limited. However, as detailed Operating Cash Flow data are unavailable, additional information is required to evaluate cash conversion of earnings and capacity to fund dividends.
Ordinary Income was ¥25.1B versus Operating Income of ¥24.6B, implying a net non-operating income contribution of +¥0.5B. Gross Profit was ¥68.9B (gross margin 20.0%) against SG&A of ¥44.3B, resulting in an Operating Margin of 7.2%; the increase in SG&A relative to sales growth compressed profits. While detailed breakdowns of non-operating income are not disclosed, financial income/expense and FX effects at the Ordinary Income level appear limited. With Net Income at ¥17.3B and income taxes of ¥7.8B, the Effective Tax Rate of 31.0% is within a standard range. Although Operating Cash Flow data are not available to directly validate cash backing of earnings, the stable cash balance and higher contract liabilities suggest some cash generation. That said, if profit declines persist, the durability of cash generation bears monitoring.
[Position within the Industry] (Reference information • In-house research) The company’s profitability and financial soundness are relatively strong within the construction sector; however, this term’s margin compression diverges from sector trends. Profitability: Operating Margin 7.2% (above the sector median 4.1% by +3.1pt), Net Margin 5.0% (above the sector median 2.8% by +2.2pt). ROE 6.5% exceeds the sector median 3.7% by +2.8pt, indicating relatively efficient performance, though on a declining trend versus the company’s own history. Soundness: Equity Ratio 66.1% (above the sector median 60.5% by +5.6pt), Current Ratio 302.8% (well above the sector median 207%, indicating high liquidity). Efficiency: Revenue growth of +3.9% is favorable versus the sector median -3.5%, supporting an ongoing growth trajectory. Meanwhile, Return on Assets (ROA) at approximately 4.3% exceeds the sector median 2.2%, but the decline in Operating Income may affect the sustainability of asset efficiency. Industry: Construction (N=4 companies), Comparison Period: 2025 FY Q3, Source: In-house aggregation.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information aggregated by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before investing.