AGC Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.51T
• Operating Income: ¥94.84B
• Net Income: ¥47.70B
• EPS: ¥186.25

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

AGC (5201) reported FY2025 Q3 (IFRS, consolidated) results with revenue of 15,121.41 (100M JPY), down 1.4% YoY, indicating a soft top line amid mixed end-market demand in glass and chemicals. Despite the revenue dip, operating income rose 0.9% YoY to 948.38, evidencing cost control and some margin resilience. Gross profit of 3,717.68 translates to a gross margin of 24.6%, while the implied operating margin is about 6.3%, consistent with a capital-intensive materials portfolio facing cost headwinds but offset by efficiency measures. EBITDA reached 2,316.25, yielding a 15.3% margin, and depreciation and amortization of 1,367.87 remains sizable, underscoring heavy asset intensity and high maintenance and strategic capex needs. Net income was 394.88, implying a net margin of roughly 2.6%; this gap versus operating income reflects financing costs, other non-operating items, and potentially the impact of non-controlling interests under IFRS. Profit before tax was 731.90 with a 27.4% effective tax rate, and total comprehensive income was materially lower at 181.43, suggesting negative other comprehensive income effects (e.g., FX or valuation changes). DuPont analysis yields ROE of 2.4% (net margin 2.6%, asset turnover 0.526x, leverage 1.75x), indicating subdued profitability relative to equity. The balance sheet remains robust with total assets of 28,741.61 and equity of 16,386.81, implying an equity ratio of 49.1% and a moderate reported debt-to-equity of 0.74x. Liquidity appears adequate with cash and equivalents of 1,079.88 and operating cash flow of 1,944.27, while investing outflows of -1,243.59 yielded positive free cash flow of 700.68. Cash flow quality is strong: OCF/Net income is 4.92x, indicating substantial cash conversion despite modest accounting profit. Dividends paid were 445.67, covered 1.53x by FCF, though the calculated payout ratio on net income is 115.6%, highlighting the divergence between cash flow strength and IFRS earnings (likely due to non-cash D&A and other items). Working capital reporting is limited; inventories of 4,541.43 are significant, consistent with the scale and cycle of operations. Overall, AGC shows resilient operating execution in a soft demand environment, solid cash generation, and a sound capital structure, but with low ROE and sensitivity to cyclical and cost factors. Data gaps (e.g., interest expense, capex, current liabilities) limit certain ratio assessments; zeros indicate unreported items rather than actual zero values. The outlook hinges on price-cost dynamics in glass/chemicals, energy costs, FX, and progress in higher-margin specialty materials.

Profitability Analysis

roe_decomposition: Calculated ROE is 2.4% driven by net profit margin of 2.6%, asset turnover of 0.526x, and financial leverage of 1.75x. The primary drag is the thin net margin; asset utilization is typical for capital-intensive materials, and leverage is moderate. margin_quality: Gross margin is 24.6% and implied operating margin ~6.3% (948.38 / 15,121.41). EBITDA margin is 15.3%, indicating substantial non-cash D&A (1,367.87), which depresses EBIT and net income under IFRS. The gap between operating income and net income reflects financing/other items and possibly non-controlling interest effects. operating_leverage: Despite a 1.4% YoY revenue decline, operating income grew 0.9% YoY, suggesting positive operating leverage from cost control and mix. However, high fixed costs tied to large asset base keep margins sensitive to volume and price. other_comments: Total comprehensive income of 181.43 is well below net income (394.88), implying adverse OCI (FX/securities), which can introduce volatility to equity and reported ROE.

Growth Assessment

revenue_sustainability: Top-line declined 1.4% YoY to 15,121.41, indicating soft demand/pricing in certain segments (flat glass, chemicals) offset by relative resilience elsewhere (specialty/electronics). Sustainability hinges on price-cost pass-through and end-market recovery. profit_quality: Operating income grew 0.9% YoY with stable-to-improving operating margin despite lower sales, underscoring cost discipline. EBITDA at 2,316.25 provides healthy operating cash generation, though net profit remains constrained by depreciation and non-operating items. outlook: Key drivers will be energy cost trends, pricing in architectural glass, demand in automotive/electronics, and FX. A mix shift to higher-value materials could support medium-term margin expansion, but near-term growth likely remains modest given macro headwinds.

Financial Health

liquidity: Cash and equivalents of 1,079.88 and OCF of 1,944.27 support near-term liquidity. Current ratio and quick ratio are not calculable due to unreported current liabilities and cash breakdown; reported 'working capital' value equals current assets disclosure and should not be interpreted as CA−CL. solvency: Equity ratio is 49.1% (equity 16,386.81 / assets 28,741.61), a solid capital base. Reported debt-to-equity is 0.74x, indicating moderate leverage; interest coverage cannot be computed due to unreported interest expense. capital_structure: Total liabilities are 12,179.67 against equity of 16,386.81. Noncurrent and current liability splits are unreported, limiting tenor assessment; nonetheless, FCF and balance sheet capacity appear adequate for ongoing investments and dividends.

Cash Flow Quality

earnings_quality: OCF/Net income is 4.92x, indicating strong cash conversion relative to accounting profit, likely driven by sizable non-cash D&A and working capital management. This supports the view that underlying cash earnings exceed IFRS net income. fcf_analysis: Free cash flow is 700.68 (OCF 1,944.27 plus investing CF -1,243.59). Financing CF of -1,033.29 reflects dividends (-445.67), modest buybacks (-12.56), and net debt reduction or other financing outflows. Capex specifics are unreported; investing CF likely includes capex plus strategic investments/disposals. working_capital: Inventories are 4,541.43, sizable for the business model; receivables/payables are unreported, limiting assessment of the cash conversion cycle. The large OCF suggests working capital was either stable or a net source over the period.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 115.6% on IFRS net income, implying dividends exceed accounting earnings. However, this likely reflects heavy non-cash charges and other below-EBIT items; cash generation is stronger than net income. fcf_coverage: Dividends paid of 445.67 are covered 1.53x by FCF of 700.68, indicating adequate cash coverage in the period. policy_outlook: While DPS details are unreported, the company appears to prioritize stable shareholder returns. Sustainability hinges on maintaining positive FCF amid capex needs and cyclical conditions; if net income remains subdued, reliance on cash flow coverage and balance sheet strength increases.

Risk Assessment

Business Risks:

• Cyclicality in architectural and automotive glass demand
• Price competition and overcapacity in float glass markets
• Energy and raw material cost volatility (natgas, soda ash, resins)
• FX fluctuations impacting both earnings translation and competitiveness
• Electronics and semiconductor demand swings affecting specialty materials
• Execution risk in shifting mix toward higher-margin products

Financial Risks:

• Interest expense and debt tenor unknown due to unreported itemization
• Potential OCI volatility (FX, pension, securities) affecting equity and ROE
• High depreciation requirements implying ongoing capex to sustain assets
• Working capital intensity; inventory swings could impact OCF in downturns

Key Concerns:

• Low ROE at 2.4% despite solid equity base
• Net margin of 2.6% leaves limited buffer against shocks
• Calculated payout ratio >100% on net income, increasing dependence on cash flow for dividends

Investment Implications

Key Takeaways:

• Resilient operating performance: operating income +0.9% YoY despite -1.4% revenue
• Healthy cash generation with OCF of 1,944.27 and FCF of 700.68
• Solid balance sheet with 49.1% equity ratio and moderate leverage (D/E 0.74x)
• Low ROE (2.4%) driven by thin net margin and heavy D&A
• Dividend appears covered by FCF (1.53x) but exceeds accounting earnings (115.6% payout)

Metrics to Watch:

• Operating margin trend and price-cost spread
• Energy cost exposure and hedging efficacy
• Capex level and mix (growth vs. maintenance) and its impact on FCF
• Net debt and interest coverage once interest expense is disclosed
• Inventory levels and overall working capital intensity
• OCI components impacting comprehensive income and equity

Relative Positioning: Within the global glass and advanced materials peer set, AGC exhibits stronger balance sheet resilience and cash conversion than its modest net profitability would suggest, but ROE lags best-in-class specialty materials peers that sustain higher margins and asset turns.

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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