| Indicator | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥53.6B | ¥52.7B | +1.6% |
| Operating Income | ¥2.8B | ¥3.1B | -11.3% |
| Ordinary Income | ¥3.1B | ¥3.4B | -6.4% |
| Net Income | ¥2.1B | ¥2.3B | -5.6% |
| ROE | 2.0% | 2.2% | - |
FY2026 Q2 results delivered revenue of ¥53.6B (YoY +¥0.9B +1.6%), achieving modest top-line growth; however, operating income was ¥2.8B (YoY ▲¥0.4B ▲11.3%), ordinary income ¥3.1B (YoY ▲¥0.2B ▲6.4%), and net income ¥2.1B (YoY ▲¥0.1B ▲5.6%), showing a declining profit trend. Gross margin held at 26.0%, but increased selling, general and administrative expenses drove operating margin down to 5.2%. Non-operating income contributed ¥0.4B, narrowing the decline at the ordinary income level.
[Profitability] ROE 2.0% (down YoY), operating margin 5.2% (YoY ▲0.7pt), net margin 4.0%. DuPont decomposition of ROE: net margin 4.0% × total asset turnover 0.45x × financial leverage 1.12x, with the decline in net margin as the main driver. ROIC at 2.6% indicates limited capital productivity. [Cash Quality] Cash and deposits ¥33.3B; Operating Cash Flow (OCF) ¥1.8B is 0.82x of net income, indicating somewhat weak cash backing. Cash coverage of short-term liabilities is 3.9x, ample. [Investment Efficiency] Total asset turnover 0.45x; capital expenditures ¥0.7B, at 0.63x of depreciation ¥1.2B, reflecting restrained renewal investment. [Financial Soundness] Equity Ratio 89.7% (prior year 89.8%), Current Ratio 656.5%, Quick Ratio 610.4%, Debt-to-Equity Ratio 0.12x, indicating an extremely conservative financial structure.
OCF was ¥1.8B, at 0.82x of net income of ¥2.1B, falling short of full cash conversion of profit. A decrease in accounts receivable supported OCF, while the cash conversion rate from income before income taxes of ¥3.2B was a limited 0.55x. Investing CF was ▲¥6.1B, mainly due to purchases of marketable securities of ¥2.0B and a net increase in time deposits of ¥3.0B, with CapEx limited to ¥0.7B. Financing CF was ▲¥0.5B, primarily dividend payments. Free cash flow was ▲¥4.3B, resulting in net cash outflows due to investing activities; however, the cash and deposits balance remained sufficient at ¥33.3B. Reallocation of cash weighed on investing CF, while growth-oriented CapEx continues below depreciation.
Against ordinary income of ¥3.1B, operating income was ¥2.8B, with net non-operating income contributing ¥0.4B. The main components of non-operating income were financial income such as dividends received and interest income, with non-operating income accounting for approximately 0.7% of revenue, a limited level. The compression from income before income taxes of ¥3.2B to net income of ¥2.1B was about 33%, with income taxes of ¥1.0B recognized. OCF of ¥1.8B was slightly below net income of ¥2.1B, and cash generation at the operating level left room for improvement, with OCF at 0.44x of EBITDA (operating income + depreciation) of ¥4.0B. Cash backing of profit remains moderate, making working capital management and improvements in operating efficiency future priorities.
[Position within the Industry] (Reference information - our survey) The company is a wholesaler handling construction-related materials and equipment, where capital efficiency and inventory turnover are key competitive indicators. Profitability: Operating margin of 5.2% trails the industry median of 68%, leaving room for improvement. Net margin of 4.0% is also low versus mid-tier peers. Efficiency: Total asset turnover of 0.45x is somewhat low for wholesale, suggesting room to enhance asset efficiency. Soundness: Equity Ratio of 89.7% far exceeds the industry median of 5060%, indicating an extremely conservative stance. Capital efficiency: ROE 2.0% is well below the industry median of 8~10%, with an excessive equity ratio suppressing capital productivity. ※Industry: Construction-related wholesale (approximately 20 listed peers), comparison base: FY2025 full-year results, source: our compilation
This report is an earnings analysis document automatically generated by AI based on XBRL earnings report data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as necessary before investing.