KONICA MINOLTA,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥513.16B
• Operating Income: ¥22.98B
• Net Income: ¥23.43B
• EPS: ¥45.76

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Konica Minolta (4902) reported FY2026 Q2 consolidated results under IFRS with revenue of 5,131.6, down 8.0% year on year, reflecting ongoing top-line pressure likely tied to hardware demand softness and disciplined portfolio pruning. Despite the revenue decline, gross profit reached 2,435.0 with a robust gross margin of 47.5%, indicating improved mix and/or pricing discipline and cost control in direct costs. SG&A was 2,271.6, leaving an apparent gap versus operating income that implies meaningful other operating income or cost reversals within IFRS operating items. Operating income was 229.8, translating to an operating margin of roughly 4.5%, while EBITDA was 602.4 (11.7% margin), evidencing positive operating leverage below the gross line. Profit before tax was 200.5, but net income totaled 226.2, higher than PBT, pointing to non-recurring items below the tax line (e.g., discontinued operations gain) or tax credits; the effective tax rate based on the provided tax expense of 13.3 and PBT is low at 6.6%. DuPont analysis shows a net margin of 4.4%, asset turnover of 0.431, and financial leverage of 2.35x, resulting in a calculated and reported ROE of 4.5%. This ROE indicates gradual recovery but remains modest versus the company’s cost of equity. Operating cash flow was 277.7, exceeding net income (OCF/NI: 1.23x), signaling acceptable earnings quality. Free cash flow, defined here as OCF plus investing cash flows, was 167.3, positive after 110.4 in net investing outflows and capital expenditures of 124.7. The balance sheet shows total assets of 11,916.1 and total equity of 5,069.1, with an equity ratio of 41.6% (note: this is slightly lower than a simple total-equity-to-total-assets calculation, likely due to the use of owners’ equity for the reported ratio). Total liabilities were 7,435.6 and the reported debt-to-equity ratio is 1.47x, but interest-bearing debt details are unreported, limiting visibility on financial risk. Liquidity assessment is constrained by missing current liability and cash disclosure, though accounts receivable of 2,896.4 and inventories of 2,076.4 suggest a working capital–intensive model. Dividend disclosures are limited; however, dividends paid in cash flow were 23.5, implying a modest payout relative to earnings and strong coverage by free cash flow. Overall, profitability improved at the operating level despite revenue pressure, cash generation was solid, and the capital structure appears balanced, albeit with incomplete debt granularity. The quality of earnings is supported by cash conversion, but the unusual relationship between PBT and net income warrants attention to one-off items. Execution on cost discipline and structural shift toward higher-margin recurring and healthcare/measurement segments remains critical to sustain margin gains. Given the data limitations (notably non-operating items, current liabilities, and interest expense), assessments rely on available metrics and may understate or overstate certain risks.

Profitability Analysis

ROE_decomposition: ROE 4.5% = Net margin 4.4% x Asset turnover 0.431 x Financial leverage 2.35x. The low asset turnover reflects a relatively heavy balance sheet versus current revenue scale, while leverage is moderate and contributes meaningfully to ROE uplift. Margin improvement is the main near-term lever for ROE expansion. margin_quality: Gross margin at 47.5% is solid for the portfolio and suggests favorable mix or pricing and input cost control. Operating margin approximates 4.5%; the delta between gross profit minus SG&A and reported operating income implies positive other operating items under IFRS (e.g., subsidies, gains, or provision reversals), which may not be recurring. EBITDA margin of 11.7% indicates underlying profitability, but the gap to operating margin highlights depreciation amortization drag and potential non-recurring operating income effects. operating_leverage: Despite an 8.0% YoY revenue decline, operating income is positive at 229.8, implying cost flexibility and some operating leverage preservation. Further scalability depends on sustaining gross margin and controlling SG&A; incremental revenue recovery could translate into outsized operating profit gains if SG&A remains contained.

Growth Assessment

revenue_sustainability: Revenue of 5,131.6 declined 8.0% YoY, indicating demand softness in core markets and/or strategic pruning. Sustainability hinges on stabilizing office print volumes, expanding recurring service streams, and growth in healthcare imaging and sensing/measurement solutions. profit_quality: Net income of 226.2 exceeds PBT of 200.5 with a low reported tax expense (13.3), implying non-recurring below-PBT items (e.g., discontinued operations or valuation allowance releases). EBITDA of 602.4 and OCF of 277.7 support the quality of operating earnings; however, reliance on other operating income should be monitored. outlook: If mix shift toward higher-margin businesses persists and cost controls hold, margins can improve even under flat revenue. Recovery in capex-driven businesses and easing supply constraints would aid top-line stabilization. FX and component cost normalization could be incremental tailwinds; structural headwinds in office print remain a risk.

Financial Health

liquidity: Current ratio and quick ratio are not calculable due to unreported current liabilities and cash. Current assets are 6,878.1, with significant receivables (2,896.4) and inventories (2,076.4), implying working capital intensity and sensitivity to collection and inventory management. solvency: Total liabilities are 7,435.6 against total equity of 5,069.1; the reported equity ratio is 41.6%, indicating a moderate cushion. Debt-to-equity is reported at 1.47x, but interest-bearing debt amounts are unreported, constraining precise leverage assessment. capital_structure: Assets total 11,916.1. Capital surplus is 2,039.0 and retained earnings 1,164.0, reflecting rebuilt equity. The small discrepancy between a naive equity ratio (~42.5%) and the reported 41.6% likely reflects the use of owners’ equity versus total equity and/or inclusion of non-controlling interests under IFRS.

Cash Flow Quality

earnings_quality: OCF/Net income is 1.23x (277.7 / 226.2), indicating decent cash conversion of earnings. The low effective tax rate (6.6%) and net income exceeding PBT suggest one-off items; cash generation provides a counterbalance. FCF_analysis: Free cash flow is 167.3 using OCF + investing CF (-110.4). Capex was 124.7, implying maintenance plus selective growth investment levels. Positive FCF alongside revenue decline underscores disciplined capex and working capital management. working_capital: Receivables at 2,896.4 and inventories at 2,076.4 are sizable; without current liabilities detail, we cannot compute days metrics. Focus remains on collections and inventory turn to sustain OCF amid softer sales.

Dividend Sustainability

payout_ratio_assessment: EPS was 45.76 JPY; DPS is unreported for the period, but cash flow shows dividends paid of 23.5 in aggregate. With net income at 226.2 (i.e., ~22.62 billion yen), the implied payout against earnings appears modest, suggesting room for maintenance. FCF_coverage: With FCF at 167.3 and dividends paid at 23.5, dividend coverage by FCF is strong for the period. This provides flexibility for continued shareholder returns if operating performance holds. policy_outlook: Given earnings normalization and positive FCF, a stable-to-cautious dividend stance is plausible; however, absent explicit DPS and policy disclosures, conclusions are tentative and contingent on sustaining cash generation and managing leverage.

Risk Assessment

Business Risks:

• Structural decline and digitization pressure in the office printing market impacting hardware volumes and click charges
• Execution risk in portfolio shift toward healthcare imaging, sensing, and services
• Price competition and customer consolidation in core markets
• Supply chain volatility for components and logistics
• FX fluctuations (JPY) affecting overseas revenue translation and input costs
• Potential delays in capital spending by customers for measurement/industrial businesses

Financial Risks:

• Limited visibility on interest-bearing debt and interest expense; true leverage and coverage unknown
• Working capital intensity elevates cash flow volatility if collections slow or inventories rise
• Unusual relation between PBT and net income suggests dependence on one-off items or tax effects
• Potential impairment risk on intangible assets/goodwill (balances not disclosed here)

Key Concerns:

• Sustaining operating margin improvement in a declining top-line environment
• Dependence on other operating income to bridge profitability
• Data gaps on current liabilities and debt could mask liquidity or refinancing risks

Investment Implications

Key Takeaways:

• Revenue declined 8.0% YoY to 5,131.6, but gross margin remained strong at 47.5%
• Operating margin around 4.5% and EBITDA margin 11.7% indicate improving operating efficiency
• Net income (226.2) exceeded PBT (200.5), implying non-recurring below-the-line items or tax credits
• OCF of 277.7 and FCF of 167.3 demonstrate solid cash generation despite softer sales
• Equity ratio at 41.6% suggests moderate balance sheet strength; precise debt levels unreported
• Dividend outflow (23.5) appears well covered by FCF in the period

Metrics to Watch:

• Revenue trajectory by segment and mix between hardware and recurring services
• Operating margin sustainability excluding other operating income
• OCF/Net income ratio and working capital movements (AR and inventory levels)
• Capex discipline and FCF generation
• Interest-bearing debt, interest expense, and coverage once disclosed
• FX impacts and pricing actions on gross margin

Relative Positioning: Within Japan-listed imaging and office solutions peers, Konica Minolta shows improving margins and positive FCF but lags on growth, with ROE at 4.5% remaining below typical cost of equity; balance sheet appears reasonable though leverage transparency is limited versus peers with fuller disclosure.

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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