ASHIMORI INDUSTRY CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥33.74B
• Operating Income: ¥1.20B
• Net Income: ¥275M
• EPS: ¥133.60

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

Ashimori Industry Co., Ltd. (TSE:3526) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line softness but a notable contraction in operating profitability, offset by stronger non-operating items and clean cash conversion. Revenue declined 2.3% YoY to ¥33.7bn, while operating income fell 43.5% YoY to ¥1.20bn, compressing the operating margin to roughly 3.6%. Despite weaker operations, net income rose 192.3% YoY to ¥0.80bn, implying support from non-operating gains and/or reduced below-the-line burdens. Gross margin was 16.9% and EBITDA margin 6.1%, indicating cost pressures relative to last year. Ordinary income of ¥1.40bn exceeded operating income by ~¥0.20bn, suggesting solid non-operating balance (FX, equity-method, or financial income) partly cushioning the operating shortfall. Liquidity remains sound with a current ratio of 156% and a quick ratio of 144%, supported by sizeable working capital of ¥12.6bn. The capital structure is moderate: total liabilities/ equity stands at 1.18x and our calculated equity ratio is approximately 45.9% (equity ¥24.9bn over assets ¥54.1bn). DuPont decomposition yields a 3.23% ROE, driven by a 2.38% net margin, 0.623x asset turnover, and 2.18x leverage; this is a modest return profile for a mid-cycle half-year print. Cash flow quality is a relative bright spot: operating cash flow of ¥1.63bn is ~2.0x net income, indicating earnings are backed by cash. Interest coverage is comfortable at 15.4x (EBIT/interest), reducing near-term solvency risk. Net profit tax burden appears normal; based on income tax expense of ¥0.43bn and net income, implied pre-tax income is about ¥1.23bn, suggesting an effective tax rate in the mid-30% range, though exact below-the-line items are not fully disclosed. Inventory is modest at ¥2.59bn relative to current assets, supporting the strong quick ratio. Reported zeros (equity ratio, investing cash flows, cash and equivalents, and FCF) reflect nondisclosure in this snapshot rather than true zero balances and are treated accordingly in this analysis. Dividend is shown as zero for the period, and payout metrics are not meaningful without full-year policy context. Overall, results point to softer operating momentum but adequate balance sheet resilience and healthy cash conversion, with the outlook hinging on cost normalization and demand recovery in auto-related safety products.

Profitability Analysis

ROE_decomposition: Reported ROE 3.23% = Net Margin 2.38% × Asset Turnover 0.623 × Financial Leverage 2.18. The low net margin is the principal drag, while leverage is moderate and asset efficiency is middling for a manufacturing supplier. margin_quality: Gross margin 16.9% and EBITDA margin 6.1% indicate limited pricing power and/or elevated input costs; operating margin is 3.6% (¥1.201bn/¥33.741bn). The gap between ordinary and operating income (¥0.2bn) implies non-operating support, so core operating margin quality has weakened YoY. operating_leverage: Revenue declined 2.3% YoY while operating income contracted 43.5% YoY, indicating negative operating leverage—fixed cost absorption and/or adverse mix amplified the profit decline. Depreciation (¥0.864bn) at ~2.6% of sales suggests a moderately capital-intensive base that can pressure margins when volumes soften.

Growth Assessment

revenue_sustainability: Top line decreased 2.3% YoY to ¥33.7bn, consistent with a cautious auto production environment and potential normalization after prior rebounds. Absent disclosure by segment/region, sustainability rests on OEM production schedules, content-per-vehicle trends, and FX tailwinds. profit_quality: Net income rose 192.3% YoY despite weaker operations, indicating material contributions from non-operating items and/or lower below-the-line charges. Core profit quality is weaker: operating margin compressed to ~3.6% and EBITDA margin to 6.1%. outlook: Near-term growth hinges on stabilization of input costs (resins, chemicals, textiles), continued recovery in auto builds, and price pass-through to OEMs. If volumes firm and cost pass-through improves, operating leverage could normalize margins; conversely, renewed production cuts would prolong margin pressure.

Financial Health

liquidity: Current ratio 155.9%, quick ratio 144.4%, working capital ¥12.63bn—ample buffers for near-term obligations. Inventories of ¥2.59bn are modest relative to current assets, supporting liquidity quality. solvency: Total liabilities/ equity 1.18x; calculated equity ratio ~45.9% (¥24.856bn/¥54.123bn). Interest coverage 15.4x (EBIT/interest), indicating low refinancing risk under current rates. capital_structure: Leverage is moderate with financial flexibility to support maintenance capex. Asset base of ¥54.1bn and leverage 2.18x (assets/equity) align with an industrial supplier’s profile.

Cash Flow Quality

earnings_quality: OCF ¥1.627bn versus net income ¥0.804bn yields OCF/NI of 2.02x, indicating conservative accruals and robust cash realization this half. FCF_analysis: Investing CF is not disclosed in this snapshot (reported as zero). Without capex data, FCF cannot be reliably determined; EBITDA less working capital movements implies capacity for positive FCF if maintenance capex approximates depreciation, but this is not confirmed. working_capital: Strong quick ratio implies receivables/cash generation supported liquidity; specifics of receivables and payables are undisclosed, but the positive OCF suggests working capital was a contributor or at least not a drag in the period.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as zero for the period, likely reflecting nondisclosure or timing rather than a definitive policy stance. With net income of ¥0.804bn, a sustainable payout would depend on full-year earnings and capex requirements. FCF_coverage: FCF coverage cannot be assessed as investing cash flows are not disclosed; OCF is positive (¥1.627bn), indicating capacity, but capex needs for safety-related manufacturing can be material. policy_outlook: Given moderate leverage and solid liquidity, there is room for distributions contingent on full-year profitability and cash generation. However, visibility is low without guidance and full-year capex/dividend policy disclosure.

Risk Assessment

Business Risks:

• Automotive production volatility impacting volumes and fixed cost absorption
• Raw material cost inflation (synthetic fibers, resins, chemicals) and pass-through timing
• Product mix and pricing pressure from OEMs
• FX fluctuations influencing both costs and non-operating items
• Quality and recall risks inherent in safety components
• Customer concentration with major OEMs and Tier-1 suppliers

Financial Risks:

• Margin compression from negative operating leverage if volumes soften further
• Potential working capital swings affecting OCF in seasonally weak quarters
• Capex requirements for tooling and safety compliance potentially diluting FCF
• Interest rate normalization raising financing costs from current low base (though coverage is currently strong)

Key Concerns:

• Sharp YoY decline in operating income (-43.5%) despite only a small revenue decline
• Dependence on non-operating gains to support net income growth
• Limited disclosure on investing cash flows and dividend policy within the period

Investment Implications

Key Takeaways:

• Core operating profitability softened materially; operating margin ~3.6%
• OCF strength (¥1.63bn; OCF/NI ~2.0x) supports earnings quality despite weaker OPM
• Balance sheet resilience with ~46% equity ratio (calculated) and 15.4x interest cover
• Non-operating items bolstered ordinary income above operating income
• Revenue down 2.3% YoY, suggesting macro/industry normalization rather than severe demand shock

Metrics to Watch:

• Operating margin and EBITDA margin trajectory over H2
• Price pass-through and raw material spread (gross margin recovery)
• Capex and investing cash flows to gauge FCF and dividend headroom
• Working capital turns (receivables and inventory days) and OCF sustainability
• Order trends and OEM production schedules influencing volume leverage

Relative Positioning: Within Japanese auto-related component suppliers, Ashimori shows weaker current operating margins but comparatively solid liquidity and leverage, with cash conversion this half better than peers experiencing working-capital drag; recovery potential hinges on cost pass-through and production normalization.

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