IMURA & Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥16.48B
• Operating Income: ¥1.12B
• Net Income: ¥773M
• EPS: ¥99.00

Income Statement

Balance Sheet

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

Imura (TSE: 3955) reported FY2026 Q3 (cumulative) revenue of 164.83 billion JPY-equivalent units in the provided scale (164.83 in 100M JPY), up 4.1% YoY, indicating modest topline growth. Gross profit was 43.97, translating to a gross margin of 26.7%, while SG&A expenses were 31.80 (19.3% of sales), resulting in operating income of 11.20 and an operating margin of 6.8%. Despite revenue expansion, operating income declined 8.0% YoY, evidencing negative operating leverage and/or some margin pressure. Ordinary income was 11.52 (-9.9% YoY) as non-operating gains netted to +0.61 (0.94 income, 0.33 expenses), partially offset by interest expense of 0.10. Net income rose 29.8% YoY to 9.88, lifting net margin to 6.0%; the step-up at the bottom line versus ordinary income suggests below-line or tax effects versus the prior year, despite the current effective tax rate of 35.3%. The DuPont bridge yields ROE of 5.6%, based on net margin 6.0%, asset turnover 0.642x, and financial leverage 1.46x; leverage is conservative and returns are primarily margin/turnover driven. The balance sheet is solid: equity of 175.53 against total assets of 256.66 implies an equity ratio around 68.4%, and total liabilities of 65.93 (debt-to-equity 0.38x on a total liabilities basis) point to low balance sheet risk. Liquidity is healthy with a current ratio of 147% and quick ratio of 134%; cash and deposits of 28.17 exceed short-term loans of 20.90. Intangibles are moderate with goodwill 8.43 and total intangibles 9.46, manageable relative to equity. Interest coverage is very strong at 112x (operating income/interest expense), indicating substantial cushion against rate or earnings volatility. Dividend payout ratio is indicated at 32.6%, suggesting ample headroom, though DPS and cash flow data are not disclosed for confirmation of FCF coverage. Cash flow statements, capex, and detailed SG&A or segment disclosures were not reported, constraining assessment of earnings quality and reinvestment intensity. Overall, results show steady sales growth but softer operating profitability, offset by a sturdy capital structure and high interest coverage. The outlook hinges on stabilizing gross margin, controlling SG&A, and sustaining operating cash flow conversion, all of which cannot be fully verified absent cash flow data. We acknowledge data limitations, especially around OCF/FCF, segment mix, and depreciation, and base conclusions on the disclosed financials.

Profitability Analysis

ROE is 5.6% via DuPont: net margin 6.0% × asset turnover 0.642 × financial leverage 1.46x. Net margin (9.88 / 164.83) is 5.99% and is the primary contributor to ROE given modest leverage. Operating margin is 6.8% (11.20 / 164.83), down YoY as operating income declined 8% despite a 4.1% revenue increase, implying negative operating leverage this period. Gross margin is 26.7% (43.97 / 164.83); the COGS ratio is 69.4% and SG&A ratio is 19.3%, leaving limited room for error on pricing or input costs. Ordinary income margin is 7.0% (11.52 / 164.83); non-operating items added net 0.61, modestly boosting profit above operating levels. Interest expense is de minimis (0.10), producing an interest coverage ratio of 112x, underscoring strong resilience. The effective tax rate is 35.3% (4.21 / 11.94). Margin quality: the gap between gross and operating margins (26.7% vs. 6.8%) reflects a sizable fixed/overhead load, so cost control and mix are key. The YoY divergence (sales up, OP down) suggests cost inflation (materials, energy, labor) or unfavorable mix/pricing in the period; without SG&A detail, we cannot isolate drivers. Operating leverage appears unfavorable near term; restoring OP growth will require either higher gross margin (pricing/product mix) or tighter SG&A.

Growth Assessment

Revenue growth of 4.1% YoY indicates steady demand, likely supported by existing customer relationships and potentially value-added services. However, operating income fell 8.0% YoY, and ordinary income fell 9.9% YoY, indicating that growth is not currently translating into higher operating profits. Net income rose 29.8% YoY despite weaker operating/ordinary results; this implies below-line support (e.g., non-operating items or prior-year one-offs), though current taxes appear standard at 35.3%. Profit quality is mixed: core profitability softened, while bottom-line growth benefited from items outside core operations and/or non-recurring comparisons. Sustainability of revenue growth depends on pricing power and the demand trajectory in core end-markets; with limited segment disclosure, visibility is modest. Outlook hinges on stabilizing input costs and passing through pricing, as well as managing SG&A to re-establish positive operating leverage. With financial leverage low, earnings growth will predominantly come from margin recovery and asset turns rather than balance sheet risk-taking. Given missing data on depreciation and capex, we cannot assess whether growth is capex-heavy or asset-light; asset turnover of 0.642x suggests moderate capital intensity.

Financial Health

Total assets are 256.66 and total equity is 175.53; the implied equity ratio is approximately 68.4%, signaling strong capitalization. Total liabilities are 65.93 (debt-to-equity of roughly 0.38x on a total liabilities basis), with current liabilities 58.01 and noncurrent 7.92. Current assets 85.13 vs. current liabilities 58.01 yield a current ratio of 146.8%; quick ratio is 134.0% after excluding inventories of 7.39, reflecting solid short-term liquidity. Cash and deposits of 28.17 cover all long-term loans (1.00) and most short-term loans (20.90), providing a liquidity buffer. Interest-bearing debt disclosed (short-term 20.90, long-term 1.00) implies gross debt of about 21.90; net cash position cannot be fully determined due to potential other cash equivalents being unreported, but cash on hand is meaningful. Goodwill of 8.43 and total intangibles 9.46 are moderate relative to equity (~5–6%), lowering impairment risk. Working capital is positive at 27.12, indicating a comfortable operating cushion. Overall solvency risk appears low given high equity and minimal long-term borrowings.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, capex, and dividends paid were not reported, preventing quantitative assessment of earnings-to-cash conversion or free cash flow. OCF/Net income and FCF metrics are therefore not calculable. Working capital details are partial: inventories are 7.39, but receivables and payables beyond accounts payable (10.59) are not fully disclosed, limiting analysis of cash conversion cycle dynamics. Earnings quality inference must rely on accrual-based measures: interest coverage is very strong (112x), and leverage is low, which reduces financial risk even if cash conversion were temporarily weak. Without D&A disclosure, EBITDA and maintenance vs. growth capex requirements cannot be judged. We therefore treat FCF sustainability as indeterminate and would monitor upcoming cash flow statements for OCF trends, capex intensity, and changes in working capital.

Dividend Sustainability

The calculated payout ratio is 32.6%, implying a conservative distribution relative to earnings capacity. However, annual DPS, total dividends paid, and cash flow data are not disclosed, so FCF coverage of dividends cannot be assessed. Balance sheet strength (equity ratio ~68%, strong liquidity) and low interest burden provide flexibility to maintain dividends through moderate cycles. Sustainability thus appears supported by solvency and earnings coverage, but confirmation requires OCF and capex visibility to ensure cash-based coverage, especially if operating margins remain pressured. Policy direction (e.g., target payout or DOE) is not reported; absent explicit policy, we assume a stable or moderately progressive approach contingent on profit trends.

Risk Assessment

Business Risks:

• Input cost volatility (paper, pulp, energy) potentially pressuring gross margins
• Pricing power and pass-through risk in contracts with large customers
• Secular digitalization reducing traditional envelope/print volumes; mix shift execution risk
• Operational leverage: fixed cost base can amplify profit swings on modest revenue changes
• Project/service mix risk affecting SG&A efficiency and margin realization
• Potential goodwill/intangible impairment if acquired units underperform

Financial Risks:

• Refinancing risk on short-term borrowings (20.90) despite current cash coverage
• Interest rate increases raising financing costs, albeit low absolute interest today
• Working capital swings (receivables, inventories) impacting OCF in cyclical periods
• Limited visibility due to unreported cash flow and capex metrics

Key Concerns:

• Negative operating leverage in the period (OP -8% YoY vs. sales +4.1%)
• Insufficient disclosure on OCF/FCF and capex, constraining earnings quality assessment
• Sustainability of net income growth given weaker operating/ordinary results

Investment Implications

Key Takeaways:

• Topline grew 4.1% YoY, but operating income declined 8.0%, indicating margin pressure
• ROE at 5.6% is driven by margin/turnover with conservative leverage (1.46x)
• Liquidity and solvency are strong: current ratio 147%, equity ratio ~68%, interest coverage 112x
• Net income rose 29.8% YoY despite softer core profits; durability of this improvement needs verification
• Dividend payout ratio of 32.6% suggests capacity, but FCF coverage is unverified

Metrics to Watch:

• Gross margin and SG&A ratio (to gauge operating leverage reversal)
• Operating income margin and ordinary income margin sequential trends
• OCF/Net income and free cash flow once disclosed
• Capex and D&A to understand maintenance burden and EBITDA
• Paper/pulp cost indices and pricing pass-through
• Short-term debt rollovers vs. cash balance
• EPS trajectory and payout policy disclosures

Relative Positioning: Financially conservative with strong liquidity and low leverage compared to many small-cap manufacturing/printing peers; current profitability is moderate with recent negative operating leverage, placing emphasis on cost control and mix to sustain earnings.

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