Quick View
| Indicator | Current Period | Prior-year Period | YoY |
|---|---|---|---|
| Revenue | ¥459.9B | ¥433.1B | +6.2% |
| Operating Income | ¥41.7B | ¥34.3B | +21.7% |
| Ordinary Income | ¥39.9B | ¥33.7B | +18.4% |
| Net Income | ¥27.5B | ¥26.1B | +3.1% |
| ROE | 7.2% | 7.4% | - |
Executive Summary
For Ishizuka Glass’s cumulative results for FY2026 Q3 (nine months), Revenue was ¥459.9B (YoY +¥26.8B +6.2%), Operating Income was ¥41.7B (YoY +¥7.4B +21.7%), Ordinary Income was ¥39.9B (YoY +¥6.2B +18.4%), and Net Income attributable to owners of the parent was ¥27.5B (YoY +¥1.4B +5.4%). The Operating Margin improved to 9.1%, supported by sales growth and SG&A efficiencies. Total assets were ¥1001.1B, roughly flat, while equity increased to ¥383.4B, lifting the Equity Ratio to 38.3%. By segment, the Plastic Container Business was the largest earnings driver with Revenue of ¥129.2B and Operating Income of ¥16.5B, while the Glass Bottle Business secured stable earnings with Operating Income of ¥7.5B. Full-year guidance calls for Revenue of ¥600B, Operating Income of ¥40B, Ordinary Income of ¥36.5B, and Net Income of ¥24.5B. Cumulative Q3 progress is 104% on an Operating Income basis and 109% for Ordinary Income, indicating upside; however, non-operating gains/losses in H2 are expected to be a swing factor.
Key Financial Metrics
[Profitability] ROE 6.8% (on an improving trend relative to the company’s historical trajectory and 1.9pt above the industry median of 4.9%), Operating Margin 9.1% (up +1.2pt from 7.9% in the prior year and 1.8pt above the industry median of 7.3%), Net Margin 6.0% (flat vs. 6.0% in the prior year and 0.6pt above the industry median of 5.4%), ROA 2.6% (Return on Assets, 0.7pt below the industry median of 3.3%). Revenue grew +6.2% YoY, outpacing the industry median of +2.8% by 3.4pt. A DuPont breakdown shows ROE 6.8% is composed of Net Margin 5.7% × Total Asset Turnover 0.459x × Financial Leverage 2.61x, with margin expansion the main driver of improvement. [Cash Quality] Cash and Deposits ¥36.9B; cash coverage versus Current Liabilities of ¥258.9B is a limited 0.14x, but coverage versus Current Assets of ¥471.9B yields 1.82x, which is solid. [Investment Efficiency] Total Asset Turnover 0.459x; Accounts Receivable ¥189.1B (18.9% of total assets); Inventories ¥102.3B (10.2% of total assets), indicating room to improve working capital efficiency. [Financial Soundness] Equity Ratio 38.3% (up +3.1pt from 35.2% in the prior year, but 25.6pt below the industry median of 63.9%); Current Ratio 182.2% (84.8pt below the industry median of 267% but at a healthy level); Quick Ratio 142.7%; Debt-to-Equity Ratio 1.61x, indicating a conservative capital structure. Interest-bearing Debt ¥172.6B; Interest Coverage 13.3x suggests ample debt service capacity; Debt/Capital ratio 31.0%.
Cash Flow Analysis
Cash and Deposits rose slightly from ¥36.5B in the prior-year period to ¥36.9B (+¥0.4B), while Total Assets decreased from ¥1004.2B to ¥1001.1B (-¥3.1B), keeping the cash balance steady. In working capital efficiency, Accounts Receivable fell from ¥194.1B to ¥189.1B (-¥5.0B), indicating improved collections, whereas Inventories increased from ¥98.5B to ¥102.3B (+¥3.8B), suggesting some inventory build. Accounts Payable increased from ¥80.8B to ¥91.7B (+¥10.9B), improving funding efficiency through supplier credit. Short-term Borrowings were ¥39.5B, roughly flat; Long-term Borrowings decreased from ¥136.6B to ¥133.1B (-¥3.5B), reflecting ongoing reduction of interest-bearing debt. Current Liabilities declined from ¥262.5B to ¥258.9B, and with Current Assets of ¥471.9B, the Current Ratio stands at 182.2%, indicating ample short-term liquidity. Net Assets increased from ¥353.3B to ¥383.4B (+¥30.1B), presumably supported by retained earnings accumulation, strengthening equity. While cash coverage versus Current Liabilities of ¥258.9B is a low 0.14x, overall coverage through Current Assets is 1.82x, indicating payment capacity is secured assuming monetization of receivables and inventories.
Quality of Earnings
With Ordinary Income of ¥39.9B and Operating Income of ¥41.7B, non-operating income and expenses posted a net negative contribution of -¥1.8B. Non-operating Income was ¥5.9B, including interest and dividend income and equity-method investment gains; Non-operating Expenses were ¥7.7B, with ¥3.1B of interest expense as a key item. The impact of non-operating gains/losses is limited to -0.4% of Revenue, with core operations underpinning profitability. Between Ordinary Income and Profit Before Tax for the quarter, Extraordinary Income of ¥0.4B and Extraordinary Loss of ¥1.8B occurred, for a net negative impact of -¥1.4B, though the amounts are limited. Gross Profit was ¥127.0B with a Gross Margin of 27.6%; SG&A was ¥85.3B with an SG&A-to-Revenue Ratio of 18.5%, indicating good conversion to Operating Income. The Operating Margin improved from 7.9% to 9.1% (+1.2pt), likely driven by fixed-cost absorption and pricing power. As Operating Cash Flow (OCF) data are not disclosed, we cannot directly assess the cash backing for Net Income of ¥27.5B, but the decline in Accounts Receivable and stable cash balance suggest operating cash generation is functioning to a certain extent. The quality of earnings is favorable, with recurring elements centered on core operations and limited impact from non-operating and extraordinary items.
Risk Factors
Raw material price volatility risk: Procurement costs for raw materials such as glass, resin, and paper depend on market conditions; increases in raw material prices are a headwind to the 27.6% Gross Margin. Historical cases suggest that a 10% rise in crude oil/resin prices could reduce the Gross Margin by about 1pt, implying an approximate ¥4.6B profit impact on a Revenue scale of ¥460B. Foreign exchange risk: If there are import/export transactions and foreign currency-denominated assets/liabilities, JPY depreciation raises raw material costs, while JPY appreciation reduces export competitiveness. Foreign exchange gains/losses may be included in non-operating results; assuming part of the historical ¥7.7B in non-operating expenses was FX-related, there is scope for annual fluctuations on the order of ¥10B. Short-term liquidity risk: Cash of ¥36.9B is roughly on par with Short-term Borrowings of ¥39.5B, with cash coverage at 0.94x. Sudden shifts in working capital or concentrated capital expenditures could strain short-term funding. While the Current Ratio of 182.2% is healthy, the absolute cash balance is thin and a vulnerability.
Industry Benchmark (Reference; Our Survey)
[Position within Industry] (Reference information; our survey) Profitability: Operating Margin of 9.1% is 1.8pt above the industry median of 7.3%, placing the company in the mid-to-upper tier within manufacturing. Net Margin of 6.0% is 0.6pt above the industry median of 5.4%, above average. ROE of 6.8% is 1.9pt above the industry median of 4.9%, relatively favorable but still short of the upper-quartile (IQR) level of 8.2%, leaving room for improvement. Growth: Revenue growth of +6.2% outpaces the industry median of +2.8% by 3.4pt, placing the company among the faster growers within manufacturing. It is near the upper-quartile (IQR) 7.9% and in the leading group. Soundness: Equity Ratio of 38.3% is 25.6pt below the industry median of 63.9%, indicating a more leveraged capital structure within manufacturing. The Current Ratio of 182.2% is 84.8pt below the industry median of 267%, but near the lower IQR around 200%, placing short-term liquidity in the mid-to-lower tier in the industry. While Net Debt/EBITDA cannot be calculated due to insufficient data, based on Interest-bearing Debt of ¥172.6B and Operating Income of ¥41.7B, it is estimated at roughly 4.1x, indicating higher reliance on debt versus the industry median of -1.11x (many net cash companies). Efficiency: ROA of 2.6% is 0.7pt below the industry median of 3.3%, leaving room for improvement in asset efficiency. Total Asset Turnover of 0.459x is standard for manufacturing but low versus top-tier peers. Industry: Manufacturing (N=65 companies); Comparison period: 2025 Q3; Source: Our compilation.
Key Takeaways from Results
Improving Operating Margin trend: Improved from 7.9% to 9.1% (+1.2pt), driven by both +6.2% sales growth and SG&A efficiencies. Against full-year forecast Operating Income of ¥40B, cumulative Q3 stands at ¥41.7B, or 104% progress, implying a conservative outlook that factors in an operating profit decline in H2. Raw material cost control and pricing power will be key to H2 performance. Balance between leverage and capital efficiency: While the Equity Ratio of 38.3% is low within the industry, the Debt-to-Equity Ratio of 1.61x is within investment-grade norms and sound. ROE of 6.8% exceeds the industry median of 4.9%, but with Total Asset Turnover at 0.459x remaining low, improving working capital efficiency (receivables and inventory management) to lift Total Asset Turnover above 0.5x could put ROE in the 8% range in sight. Dividend capacity and shareholder returns: Payout Ratio is 10.5% and extremely conservative. Against the full-year dividend outlook of ¥70, and the Net Income forecast of ¥24.5B, total dividends are estimated at approximately ¥2.9B, indicating a light dividend burden. Given Cash of ¥36.9B and the level of Operating Income, there is ample room for dividend increases; however, capital allocation between capex and growth investments will be a factor in decisions to expand shareholder returns.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility. Please consult a professional as needed before making any decisions.
AI Financial Analysis
Executive Summary
FY2026 Q3 performance was operationally strong, with revenue growth translating into materially faster operating-income growth, although the full-year forecast implies a sharply weaker Q4. Cumulative Q3 revenue increased 6.2% YoY to ¥45.99bn. Operating income rose 21.7% to ¥4.17bn, outperforming sales growth by 15.5 percentage points. Ordinary income increased 18.4% to ¥3.99bn. Profit attributable to owners of parent increased only 3.1% to ¥2.62bn, reflecting a higher tax charge and a ¥0.14bn extraordinary loss on disposal of fixed assets. Gross profit rose to ¥12.70bn, and gross margin expanded by approximately 60bp YoY to 27.6% from 27.0%. Operating margin expanded by approximately 115bp YoY to 9.1% from 7.9%, placing profitability within the stated good-range benchmark. Net margin was 5.7%, down approximately 20bp YoY from 5.9%, so the improvement in operating performance did not fully reach earnings attributable to owners. The effective tax rate was 28.4%, with the tax burden factor at 0.682. Interest coverage remained robust at 13.31x despite ¥0.31bn of interest expense. Dividend income of ¥0.22bn and rent income of ¥0.24bn supported non-operating income, while interest expense remained the largest identified financing cost. Comprehensive income rose 28.1% YoY to ¥3.22bn, aided by positive valuation differences on securities. The balance sheet remains liquid, with a 182.2% current ratio and a 142.7% quick ratio. However, the manufacturing working-capital cycle is long, with the supplied alerts showing elevated receivable and inventory days and a 131-day cash conversion cycle. The full-year sales forecast of ¥60.0bn requires a broadly normal Q4 revenue contribution, but the operating-income forecast of ¥4.0bn is already below cumulative Q3 operating income. Accordingly, the principal near-term analytical issue is whether management will revise guidance or whether Q4 will contain substantial seasonality, costs, or other offsets sufficient to produce the implied loss-making quarter.
Profitability Analysis
The annualized DuPont ROE is 9.1%, decomposed into a 5.7% net profit margin, 0.613x asset turnover, and 2.61x financial leverage. The largest favorable earnings change was margin expansion: operating margin increased to 9.1% from approximately 7.9% in the prior-year period. Gross margin also improved to 27.6% from approximately 27.0%, indicating that the operating-income improvement began above the SG&A line rather than relying solely on fixed-cost absorption. Revenue increased ¥2.68bn while operating income increased ¥0.74bn, demonstrating positive operating leverage. SG&A rose 3.2% YoY to ¥8.53bn, materially slower than 6.2% revenue growth, which further supported margin expansion. The net-margin outcome was less favorable than the operating-margin trend, as the effective tax rate increased to 28.4% from approximately 22.4% in the prior period and fixed-asset disposal losses totaled ¥0.14bn. The five-factor analysis shows a 0.922 interest burden, indicating that financing costs reduce pre-tax earnings but are not currently excessive. Interest coverage of 13.31x corroborates a manageable debt-service burden. Financial leverage of 2.61x is a meaningful contributor to ROE, so equity returns remain partly dependent on maintaining stable operating margins and asset values. The annualized 0.613x asset turnover is consistent with the company's capital-intensive manufacturing asset base, including ¥44.15bn of PPE, equal to 44.1% of total assets. The ¥0.14bn disposal loss, equivalent to about 5.3% of profit attributable to owners, is modest and does not materially impair the recurring earnings profile. Overall, operating profitability improved meaningfully, but the annualized 9.1% ROE remains below the 10-15% benchmark range and is supported by leverage rather than exceptionally high asset efficiency.
Growth Assessment
Revenue growth of 6.2% YoY to ¥45.99bn was accompanied by a 21.7% increase in operating income, showing improved profit conversion. Gross profit increased ¥1.01bn YoY, while SG&A increased only ¥0.27bn, producing strong incremental operating leverage. Raw-material inventory declined 10.3% YoY to ¥4.00bn and work in process declined 16.5% to ¥0.68bn, while finished goods increased 4.1% to ¥10.23bn. This inventory composition suggests that the key working-capital issue is concentrated in finished products rather than an accumulation of work in process. The full-year revenue forecast is ¥60.0bn, and Q3 cumulative revenue represents 76.6% of that target, 1.6 percentage points above the standard 75% Q3 progress rate. In contrast, cumulative operating income of ¥4.17bn equals 104.2% of the ¥4.0bn full-year forecast. Cumulative ordinary income of ¥3.99bn equals 109.2% of the ¥3.65bn forecast. Profit attributable to owners of ¥2.62bn equals 107.0% of the ¥2.45bn full-year forecast. The guidance therefore implies Q4 revenue of approximately ¥14.01bn, operating income of negative ¥0.17bn, ordinary income of negative ¥0.34bn, and profit attributable to owners of negative ¥0.17bn. This implied Q4 reversal is the central outlook uncertainty. The forecast calls for full-year revenue growth of 7.2% and operating-income growth of 3.9%, substantially below the Q3 cumulative operating-income growth rate. The outlook is therefore dependent on either substantial Q4 cost pressure, seasonal production and shipment patterns, or prudently conservative guidance that may require revision.
Financial Health
Liquidity is sound on reported balance-sheet measures, with current assets of ¥47.19bn against current liabilities of ¥25.89bn, resulting in a 182.2% current ratio. The 142.7% quick ratio indicates that liquidity is not solely dependent on inventory liquidation. Working capital totaled ¥21.29bn. Cash and deposits of ¥3.69bn covered 0.94x short-term loans of ¥3.95bn, leaving limited cash headroom against short-term borrowings alone. In addition, current liabilities include ¥0.73bn of the current portion of bonds payable, so near-term refinancing and operating cash discipline remain relevant. Long-term loans were ¥13.31bn and interest-bearing debt was reported at ¥17.26bn. The reported debt-to-equity ratio was 1.61x, below the 2.0x aggressive-financing warning threshold but above a conservative capital-structure profile. Debt/capital was 31.0%, within the stated sub-40% investment-grade benchmark. Interest coverage of 13.31x provides a strong current buffer for interest obligations. Total liabilities declined ¥3.31bn YoY while total equity increased ¥3.01bn to ¥38.34bn, raising the capital adequacy ratio to 36.7% from 33.8%. Retained earnings increased ¥2.42bn YoY to ¥16.54bn, supporting internal capital formation. Net defined benefit liability was ¥4.70bn, representing a material long-term obligation relative to owners' equity. Investment securities were ¥7.43bn, or 7.4% of total assets, and accumulated valuation and translation adjustments were ¥9.25bn; equity therefore retains sensitivity to market-value movements in securities and land-related reserves. Intangible assets increased ¥0.07bn, or 79.3% YoY, to ¥0.15bn, but remain immaterial at 0.1% of assets and do not create a meaningful goodwill or intangible-asset impairment concentration. Treasury stock decreased in absolute magnitude by ¥0.06bn to negative ¥0.03bn, consistent with a modest reduction in treasury shares rather than a material capital-allocation change.
Notable B/S Changes
Intangible assets: +¥0.07bn (+79.3%) to ¥0.15bn. The percentage increase is large from a low base, but intangibles remain only 0.1% of total assets and do not represent a material impairment or acquisition-accounting risk. Treasury stock: improved by ¥0.06bn (+62.5% toward zero) to negative ¥0.03bn. The movement is immaterial to overall capital structure but is consistent with a modest reduction in treasury-share holdings. Retained earnings: +¥2.42bn (+17.1%) to ¥16.54bn. The increase reflects continued profit retention and supports the improvement in total equity and capital adequacy.
Cash Flow Quality
Dividend Sustainability
The full-year dividend forecast is ¥70 per share. Based on forecast EPS of ¥584.60, the implied dividend payout ratio is approximately 12.0%, which is conservative and well below the 60% sustainability benchmark. The forecast DPS is ¥5 higher than the prior-period ¥65 per share. Cumulative Q3 EPS of ¥625.11 already exceeds full-year forecast EPS, consistent with the unusually conservative or back-end-loaded earnings forecast. Retained earnings of ¥16.54bn provide a substantial accounting capital base relative to the indicated dividend commitment. The low forecast payout ratio provides considerable earnings coverage for the stated dividend policy. The key determinant of the FY2026 dividend outcome is the credibility of the full-year earnings forecast and any potential Q4 earnings reversal implied by that forecast.
Risk Assessment
Business risks include Working-capital efficiency is the highest operational concern. The supplied HIGH_RECEIVABLE_DAYS alert cites DSO of 113 days, above the 60-day warning threshold; this indicates slower cash collection or a customer and transaction mix with extended credit. For a capital-intensive manufacturer, prolonged collections increase funding needs and reduce flexibility during demand downturns., The supplied HIGH_INVENTORY_DAYS alert of 123 days, above the 90-day warning threshold, indicates elevated inventory when raw materials, work in process, and finished goods are considered. The 123-day measure is consistent with total disclosed manufacturing inventory of ¥14.91bn, and its impact is greater capital tied up in the production cycle and potentially higher obsolescence or markdown risk if demand softens., A separate supplied HIGH_INVENTORY_DAYS alert of 84 days, above the 60-day benchmark, also requires attention. This lower measure is consistent with finished-goods inventory of ¥10.23bn considered against annualized cost of sales, indicating that even the narrower finished-goods view remains elevated. Finished goods rose 4.1% YoY while revenue grew 6.2%, so this is not evidence of outright stock build-out relative to sales, but the absolute holding period remains long., The supplied LONG_CCC alert of 131 days, above the 120-day warning threshold, combines elevated collection and inventory periods into a prolonged cash conversion cycle. This is a material manufacturing-sector risk because glass production is capital and energy intensive, and a long cycle can amplify the effect of demand changes, raw-material inflation, or customer-payment delays., The company has substantial fixed assets, with PPE of ¥44.15bn or 44.1% of total assets. This manufacturing capital intensity makes earnings sensitive to plant utilization, energy costs, raw-material prices, maintenance needs, and production disruptions., Fixed-asset disposal losses of ¥0.14bn demonstrate ongoing asset replacement or rationalization activity. The amount is modest, but recurring asset-retirement costs would reduce the quality of future operating-profit conversion..
Financial risks include The reported 1.61x debt-to-equity ratio indicates meaningful leverage, although it remains below the 2.0x explicit warning threshold. Leverage enhances the annualized 9.1% ROE but also increases sensitivity to a reversal in operating profitability., Cash and deposits cover only 0.94x short-term loans. Although broader current and quick ratios are healthy, the company remains dependent on receivable collections, inventory conversion, and access to refinancing for short-term debt management., Net defined benefit liability of ¥4.70bn is a significant long-term obligation and may create sensitivity to discount rates and asset returns., Investment securities of ¥7.43bn and accumulated valuation and translation adjustments of ¥9.25bn create equity volatility risk from market-price movements..
Key concerns include Cumulative Q3 operating income already exceeds the full-year forecast by 4.2%, while the full-year forecast implies negative Q4 operating income of approximately ¥0.17bn. The rationale for this implied reversal is the most important item to monitor., Net income attributable to owners grew only 3.1% despite 21.7% operating-income growth, principally because of a higher tax burden and extraordinary fixed-asset disposal loss. Sustained conversion of operating profit into bottom-line earnings should be monitored., Receivable, inventory, and cash-conversion-cycle alerts together indicate that growth is consuming substantial working capital. This may constrain cash generation even if reported earnings continue to improve., Industry-specific exposure includes energy and raw-material cost volatility, plant-utilization risk, and potential inventory valuation pressure in the glass manufacturing cycle..
Investment Implications
Key takeaways include Revenue growth of 6.2% and operating-income growth of 21.7% produced a 115bp improvement in operating margin to 9.1%., SG&A growth of 3.2% was below revenue growth, demonstrating favorable operating leverage., The annualized 9.1% ROE is adequate but remains below the stated 10% benchmark for a good ROE profile and is supported by 2.61x financial leverage., Liquidity ratios are healthy, but near-term liquidity management depends on working-capital conversion because cash covers only 0.94x short-term loans., Full-year guidance is internally conservative relative to cumulative Q3 earnings, implying a negative Q4 operating result unless revised..
Metrics to watch include Q4 operating-income trajectory versus the implied negative ¥0.17bn, Receivable days, including the 113-day supplied DSO alert, Inventory days under both the 123-day total-inventory and 84-day finished-goods measures, Cash conversion cycle versus the 131-day supplied alert, Finished-goods inventory relative to sales and demand conditions, Interest coverage, short-term debt coverage, and refinancing conditions, Net defined benefit liability and valuation movements in investment securities.
Regarding relative positioning, The company displays good operating-margin performance for the stated benchmark, strong interest coverage, and healthy reported current and quick ratios. Relative positioning is tempered by a capital-intensive asset base, meaningful leverage, and materially weaker working-capital efficiency than manufacturing benchmarks. The earnings trajectory is operationally favorable through Q3, but the full-year forecast embeds an unusually weak Q4 and therefore limits visibility on the durability of the reported margin expansion.