Takamiya Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.28B
• Operating Income: ¥1.11B
• Net Income: ¥460M
• EPS: ¥12.62

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

Takamiya Co., Ltd. delivered solid profit improvement in FY2026 Q2 despite flat topline growth, highlighting operating leverage and cost discipline. Revenue was 21.283 billion yen (+0.2% YoY), while operating income rose 38.3% to 1.109 billion yen, lifting operating margin to roughly 5.2%. Gross profit of 6.834 billion yen implies a 32.1% gross margin, indicating favorable mix and pricing/cost control in the core scaffolding-related businesses. Ordinary income of 955 million yen trails operating income, reflecting non-operating headwinds, primarily interest expense of 174 million yen. Net income increased 16.0% YoY to 577 million yen, with EPS of 12.62. DuPont analysis shows ROE of 2.57% driven by a modest net margin (2.71%), low asset turnover (0.29x), and relatively high financial leverage (3.27x). EBITDA was 3.911 billion yen (18.4% margin), supported by large non-cash D&A of 2.802 billion yen, consistent with a capital-intensive rental/equipment model. Liquidity is adequate but not ample, with a current ratio of 114.6% and quick ratio of 86.8%, and working capital of 3.678 billion yen. The balance sheet remains leveraged with a debt-to-equity ratio of 2.34x, aligning with the DuPont leverage factor. Operating cash flow was negative at -310 million yen despite positive earnings, suggesting working capital absorption (likely receivables and/or inventory build) in the period. Financing inflows of 3.327 billion yen supported liquidity amid negative OCF and capex needs; investing cash flow was not disclosed in the dataset. Interest coverage is 6.4x on an operating income basis, indicating manageable debt service capacity at current earnings. The effective tax rate printed as 0.0% in the dataset, but the presence of 173 million yen of income tax suggests a normalized tax burden nearer to the high teens relative to ordinary income for this half-year. Dividend data were not disclosed for the period (DPS and payout show as zero placeholders), so distribution policy assessment at interim is limited. Overall, the quarter demonstrates resilient profitability with clear cost execution, but cash conversion lags earnings and leverage is meaningful, warranting close monitoring of working capital, capex, and funding dependence.

Profitability Analysis

ROE is 2.57% per DuPont (Net margin 2.71% x Asset turnover 0.290 x Leverage 3.27). Net margin improved alongside operating margin (operating income 1.109 billion yen on 21.283 billion yen revenue = ~5.2%), indicating better operating efficiency and/or mix despite flat sales. Gross margin of 32.1% is healthy and supports the improved operating margin; it points to pricing power and/or cost control in scaffold rentals/sales and related services. Ordinary income of 955 million yen below operating income reflects non-operating drag, chiefly 174 million yen interest expense; this partially offsets operating gains. EBITDA margin at 18.4% indicates substantial non-cash D&A intensity (2.802 billion yen), consistent with asset-heavy rental fleets. Operating leverage is evident: +0.2% revenue growth vs +38.3% operating income suggests cost base rigidity has been managed and utilization/mix improved. However, asset turnover at 0.29x remains low, reflecting high asset intensity and possibly inventory/receivables accumulation; further asset efficiency improvements would materially lift ROE. Interest coverage at 6.4x (operating income/interest) is acceptable, but rising rates or earnings volatility could pressure this buffer.

Growth Assessment

Topline growth was essentially flat (+0.2% YoY), implying that the earnings improvement came predominantly from margin gains rather than volume. Operating income growth of +38.3% indicates better utilization, pricing/mix, or cost rationalization. Net income grew +16.0% YoY, moderated by non-operating costs. Given the capital-intensive model and relatively low asset turnover, sustainable growth will hinge on maintaining utilization and pricing while controlling capex and working capital. The gross and EBITDA margins suggest the core business remains competitive; scaling revenue on this base could produce outsized operating profit gains if fixed costs remain contained. However, negative OCF during the period points to growth consuming cash (working capital build), which can limit self-funded expansion. Outlook hinges on construction activity, rental demand, and steel/material costs; continued cost discipline and asset rotation could sustain margin gains even if demand is stable rather than expanding.

Financial Health

Liquidity: current ratio 114.6% and quick ratio 86.8% indicate adequate short-term coverage but not a large cushion. Working capital is 3.678 billion yen. Solvency: debt-to-equity is 2.34x, consistent with a leveraged posture; DuPont leverage of 3.27 underscores reliance on debt-funded assets. Interest coverage of 6.4x supports debt service currently, but sensitivity to operating fluctuations exists. Total assets are 73.496 billion yen with total equity of 22.474 billion yen; the reported equity ratio of 0.0% appears undisclosed rather than zero. Capital structure is typical of an asset-heavy rental model but leaves less room for error if cash generation weakens.

Cash Flow Quality

Earnings quality is mixed: accounting profit improved, but OCF was -310 million yen, yielding an OCF/Net income ratio of -0.54, pointing to working capital outflows (receivables and/or inventory) or timing effects. Large D&A (2.802 billion yen) supports EBITDA but does not translate to cash without disciplined capex and working capital management. Free cash flow is not derivable from the dataset (investing CF not disclosed); the reported FCF and cash/equivalents of zero should be treated as placeholders. Financing CF inflow of 3.327 billion yen indicates reliance on external funding in the period, likely to support asset investments and/or working capital. Monitoring cash conversion cycles (DSO, DIO, DPO) is critical given inventories of 7.003 billion yen and negative OCF despite profit.

Dividend Sustainability

Dividend data for the period appear undisclosed (DPS and payout shown as zero placeholders). With net income of 577 million yen and negative operating cash flow, cash coverage of distributions would have been constrained in the half, absent financing or cash balances. Given leverage (D/E 2.34x) and capital intensity, sustainable dividends depend on consistent positive OCF and moderated capex. Policy outlook cannot be inferred from this dataset; assess full-year guidance and historical payout trends once available.

Risk Assessment

Business Risks:

• Cyclical exposure to construction and infrastructure activity affecting rental utilization and product demand
• Pricing pressure and competitive intensity in scaffolding and related services
• Input cost volatility (steel/materials) impacting gross margins
• Project timing and seasonality driving working capital swings
• Asset utilization risk in a capital-intensive rental fleet

Financial Risks:

• Leverage is significant (D/E 2.34x) increasing sensitivity to earnings volatility
• Negative operating cash flow in the period, indicating cash conversion risk
• Interest rate and refinancing risk with 174 million yen of interest expense and reliance on financing inflows
• Potential covenant pressure if margins compress or cash flow remains weak
• Low asset turnover (0.29x) dampens ROE and increases capital efficiency risk

Key Concerns:

• Cash generation lagging profit (OCF/NI -0.54) due to working capital absorption
• Non-operating headwinds reducing profit below operating levels (ordinary income < operating income)
• Dependence on financing inflows (3.327 billion yen) during a period of negative OCF
• Sensitivity to end-market demand given flat revenue and operating leverage

Investment Implications

Key Takeaways:

• Profitability improved meaningfully on flat sales, with operating income +38.3% and operating margin ~5.2%
• ROE at 2.57% is constrained by low asset turnover and high leverage despite better margins
• OCF was negative (-310 million yen), highlighting execution risk in working capital and cash conversion
• Debt reliance is material (D/E 2.34x), though interest coverage at 6.4x is currently adequate
• Large D&A (2.802 billion yen) underscores the need for disciplined capex to translate EBITDA into cash

Metrics to Watch:

• Working capital metrics (DSO, DIO, DPO) and OCF/NI trajectory
• Utilization rates and pricing/mix trends sustaining gross and operating margins
• Capex vs. D&A and resulting free cash flow
• Leverage ratios (Net debt/EBITDA, not disclosed here) and interest coverage
• Order backlog and construction activity indicators affecting revenue visibility

Relative Positioning: Within asset-intensive construction equipment and scaffolding peers, Takamiya shows solid margin execution but lags on cash conversion and asset turnover; leverage is on the higher side, making sustained OCF improvement and disciplined capex pivotal for competitive positioning.

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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