FUJIKURA COMPOSITES Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥20.23B
• Operating Income: ¥2.68B
• Net Income: ¥2.14B
• EPS: ¥114.77

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

Fujikura Composite (51210) delivered resilient FY2026 Q2 results under JGAAP consolidation, with steady top-line growth and notable operating leverage. Revenue rose 2.9% year over year to ¥20.23bn, while operating income increased 19.3% to ¥2.684bn, expanding the operating margin to approximately 13.3%. Gross profit of ¥6.214bn implies a gross margin of 30.7%, supporting the improvement in profitability. Ordinary income reached ¥2.892bn, exceeding operating income, indicating a net positive contribution from non-operating items despite modest interest expense of ¥14.4m. Net income was ¥2.199bn, up 2.7% YoY, translating to a net margin of 10.87%. DuPont metrics show ROE at 6.15%, driven primarily by margin strength, with asset turnover of 0.429 and conservative financial leverage of 1.32x. Liquidity is strong, with a current ratio of 378% and quick ratio of 327%, backed by ¥29.97bn in current assets against ¥7.92bn in current liabilities. The balance sheet remains robust with total assets of ¥47.14bn and total equity of ¥35.76bn, yielding a low debt-to-equity ratio of 0.37x. Interest coverage is ample at 186.5x, reflecting limited financial risk from borrowing costs. Based on income tax expense of ¥701m and ordinary income of ¥2.892bn, the implied effective tax rate is roughly 24%, even though the standardized “calculated metric” shows 0.0% due to unreported tagging. Cash flow statements (operating, investing, financing) and depreciation were not disclosed in the dataset, so cash flow quality and EBITDA-based analyses cannot be validated from the provided figures. Dividend and share data (DPS, outstanding shares, BVPS) also appear unreported; thus, payout and per-share valuation metrics cannot be confirmed. Inventory is ¥4.08bn within current assets, but without prior-period comparatives, working-capital trends cannot be assessed; nonetheless, overall working capital is sizable at ¥22.05bn. The combination of margin expansion and low leverage produces a solid but not high ROE, leaving room for improvement via asset efficiency or further scale. Overall, results point to healthy profitability, disciplined cost control, and low financial risk, with the main analytical gaps in cash flow and capital allocation disclosures. These gaps limit assessment of earnings quality and dividend sustainability from this dataset alone. Monitoring whether the operating margin improvement is durable will be key to the outlook, as revenue growth remains modest.

Profitability Analysis

ROE of 6.15% decomposes into net margin 10.87%, asset turnover 0.429x, and financial leverage 1.32x, indicating that profitability is margin-led rather than efficiency- or leverage-driven. Gross margin stands at 30.7%, supporting an operating margin of about 13.3% (¥2.684bn/¥20.23bn). Ordinary income margin is approximately 14.3% and net income margin 10.9%, showing effective cost control and limited drag from below-the-line items. Operating income growth (+19.3% YoY) significantly outpaced revenue growth (+2.9% YoY), evidencing positive operating leverage from fixed-cost absorption and/or mix improvements. The spread between ordinary and operating income (~¥208m) suggests net non-operating gains (e.g., financial income or other non-operating profit) more than offset the modest interest expense of ¥14.4m. Interest coverage is strong at 186.5x, underscoring that financing costs are not a constraint on profitability. With depreciation unreported, EBITDA and EBITDA margin cannot be assessed, but the strong operating margin indicates healthy core earnings even without EBITDA confirmation. Overall, profitability quality appears solid, with room to enhance ROE primarily via improved asset turnover.

Growth Assessment

Revenue growth of 2.9% YoY indicates steady but modest top-line expansion. Profit growth is stronger: operating income rose 19.3% YoY, implying margin expansion as cost controls and/or product mix shifts supported operating leverage. Net income increased 2.7% YoY to ¥2.199bn, lagging operating income growth due to tax expense normalization and smaller non-operating uplift at the net level. The ordinary income margin (14.3%) above operating margin (13.3%) points to ancillary income contributions, which may not be structurally repeatable; sustainability depends on core margin persistence. Without segment data, it is difficult to attribute growth to specific end markets; however, the gross margin of 30.7% suggests pricing and cost discipline are supportive. Given limited revenue growth, future earnings trajectory will likely hinge on maintaining cost efficiencies and optimizing product mix. The implied tax rate (~24%) appears normalizing, which could keep net income growth more in line with operating trends going forward. Lack of cash flow disclosure prevents assessing whether earnings growth is backed by cash conversion, an important limitation for evaluating sustainability. Overall, the outlook appears stable with moderate revenue growth and a margin-led earnings profile, contingent on sustaining operational improvements.

Financial Health

The balance sheet shows strong solvency with total assets of ¥47.14bn and total equity of ¥35.76bn, implying leverage of 1.32x and a debt-to-equity ratio of 0.37x. Total liabilities are ¥13.39bn, indicating a conservative capital structure with ample equity buffer. Liquidity metrics are robust: current ratio 378% and quick ratio 327%, supported by ¥29.97bn in current assets and ¥7.92bn in current liabilities. Working capital is sizable at ¥22.05bn, providing operational flexibility. Interest expense is minimal at ¥14.4m, and interest coverage is very strong at 186.5x, indicating low refinancing or interest-rate risk from current debt levels. Equity ratio was unreported in the dataset (displayed as 0.0%); based on totals, the implied equity ratio is approximately 75.9% (¥35.76bn/¥47.14bn). Overall financial health is solid with low balance-sheet risk.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed in the dataset (shown as zero due to unreported items), so direct assessment of cash conversion and free cash flow is not possible here. Depreciation and amortization were also not reported, limiting analysis of accrual intensity and EBITDA. Earnings quality must therefore be inferred from the income statement and balance sheet: net income of ¥2.199bn is supported by strong operating margin (13.3%) and modest interest burden, which is encouraging, but without OCF we cannot confirm cash realization. Inventories are ¥4.08bn within current assets; lacking prior-period figures, we cannot gauge inventory build or release, which is typically a key driver of working-capital cash flows. Given the robust liquidity and low leverage, near-term cash strain appears unlikely, but verification awaits full cash flow disclosure. Until OCF and capex data are available, we treat FCF and OCF/NI ratios presented as uninformative placeholders.

Dividend Sustainability

Dividend per share and payout metrics appear unreported (displayed as 0.00), so we cannot assess actual distributions from this dataset. With net income at ¥2.199bn and a strong balance sheet, capacity for distributions could be adequate, but confirmation requires actual DPS, OCF, and capex data. Free cash flow coverage cannot be evaluated without operating cash flow and investment outlays. Policy outlook is therefore undeterminable from the provided data; we would look for management guidance, historical payout behavior, and capital allocation priorities when available. In summary, dividend sustainability cannot be concluded from this release due to missing cash flow and DPS disclosures.

Risk Assessment

Business Risks:

• Modest revenue growth (+2.9% YoY) increases reliance on ongoing margin expansion to drive earnings.
• Potential normalization of non-operating gains that currently lift ordinary income above operating income.
• Input cost volatility (e.g., petrochemicals, rubber, composites) that could pressure gross margin (30.7%).
• Customer and end-market concentration risks typical for industrial materials (not disclosed here).
• FX exposure if sourcing or sales are internationally diversified (not disclosed here).

Financial Risks:

• Limited visibility into cash generation given unreported operating, investing, and financing cash flows.
• Depreciation and capex not disclosed, obscuring maintenance capex requirements and FCF.
• Potential working-capital swings; inventory is ¥4.08bn but trend data is unavailable.
• Tax rate variability; implied effective tax rate ~24% may differ with special items or jurisdictional mix.

Key Concerns:

• Absence of cash flow disclosure prevents validating earnings quality and dividend capacity.
• Dependence on continued cost discipline to sustain expanded operating margin amid slow top-line growth.
• ROE at 6.15% is moderate, constrained by low asset turnover (0.429x) and conservative leverage.

Investment Implications

Key Takeaways:

• Solid margin performance: operating margin ~13.3% with gross margin 30.7% drove 19.3% YoY operating profit growth.
• Healthy balance sheet: low leverage (D/E 0.37x), strong liquidity (current ratio 378%), interest coverage 186.5x.
• ROE 6.15% is margin-led; scope to improve via asset efficiency rather than leverage.
• Ordinary income exceeds operating income by ~¥208m, implying non-operating support that may not be structural.
• Data gaps in cash flows and DPS limit conclusions on cash conversion and shareholder returns.

Metrics to Watch:

• Operating margin sustainability and cost mix (target: maintain ≥13%).
• Asset turnover improvement from 0.429x to drive ROE uplift.
• Cash flow from operations and capex once disclosed to gauge FCF and payout capacity.
• Working-capital trends, especially inventory levels relative to sales.
• Effective tax rate stability around ~24% versus reported anomalies from data tagging.

Relative Positioning: Within Japanese industrial materials/composite components peers, Fujikura Composite exhibits stronger-than-typical liquidity and conservative leverage, with competitive operating margins but moderate ROE due to low asset turnover and low financial leverage.

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