ASAHI CONCRETE WORKS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.97B
• Operating Income: ¥70M
• Net Income: ¥80M
• EPS: ¥6.15

Income Statement

Balance Sheet

Cash Flow Statement

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

Asahi Concrete Industry Co., Ltd. (52680) reported FY2026 Q2 standalone results marked by a notable top-line contraction and sharp operating profit compression, offset by solid cash generation and a very conservative balance sheet. Revenue declined 9.7% year over year to ¥2,969 million, reflecting demand softness and/or project timing in the precast concrete market. Gross profit was ¥805 million with a gross margin of 27.1%, indicating relatively resilient product-level economics despite weaker volumes. Operating income fell 79.8% YoY to ¥70 million, compressing the operating margin to roughly 2.4%, implying significant deleveraging of fixed costs and likely cost inflation that was not fully passed through in the period. Ordinary income of ¥119 million benefited from low financial costs, and net income of ¥80 million translated to a 2.69% net margin. DuPont analysis shows a very low ROE of 0.57%, driven primarily by thin net margin and low asset turnover (0.162), with only modest financial leverage (1.30x). EBITDA was ¥175 million and the EBITDA margin was 5.9%, underscoring tight operating profitability relative to gross margin, likely due to SG&A rigidity and cost pass-through lag. Liquidity is strong with a current ratio of 376% and working capital of approximately ¥6.6 billion, providing ample buffer against project timing and receivable collection cycles. The capital structure remains conservative, with total liabilities of ¥3.78 billion versus equity of ¥14.04 billion; by our calculation, the equity ratio is approximately 76.8% despite the reported metric showing 0.0% (unreported). Operating cash flow was robust at ¥316 million, roughly 4.0x net income, indicating favorable earnings quality in the period despite weak profits. Financing cash flow was an outflow of ¥269 million, likely reflecting debt repayment and/or other financing activities given no dividends reported; investing cash flow was undisclosed. Dividend per share is reported as zero, consistent with the low earnings level and a conservative capital allocation stance, though data limitations prevent definitive conclusions on payout policy this quarter. Interest coverage is very strong at 43.7x, reflecting minimal financial risk from debt. The effective tax rate metric is shown as 0.0%; given the presence of income tax expense, this should be treated as a data limitation rather than an actual zero tax burden. Overall, results depict cyclical pressure on profitability, good cash conversion, and very strong solvency, positioning the company to navigate near-term headwinds. Data gaps (e.g., inventories, cash, investing CF, share data) constrain precision in certain analyses; conclusions are based on the disclosed non-zero items and reasonable derivations.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.69%
• asset_turnover: 0.162x
• financial_leverage: 1.30x
• calculated_ROE: 0.57%
• drivers_commentary: ROE is primarily depressed by a low net margin stemming from steep operating margin compression (operating margin ~2.4%). Asset turnover at 0.162x suggests a capital-intensive, low-velocity asset base typical of precast concrete manufacturing. Leverage is modest, so financial gearing provides limited ROE lift. margin_quality: Gross margin at 27.1% indicates product-level pricing and mix remain acceptable, but the large gap to EBITDA margin (5.9%) and operating margin (~2.4%) reflects elevated SG&A and fixed-cost absorption headwinds. This points to pass-through lag of cost inflation and/or suboptimal capacity utilization during the period. operating_leverage: Revenue declined 9.7% YoY while operating income fell 79.8% YoY, evidencing high negative operating leverage. Fixed manufacturing overhead and SG&A rigidity likely amplified profit contraction when volumes softened.

Growth Assessment

revenue_sustainability: The 9.7% YoY revenue decline suggests softer demand or project delays in public works and private construction. Without order backlog data, visibility is limited; however, the scale of decline is consistent with cyclical swings in precast shipments and site starts. profit_quality: Despite weak earnings, OCF/Net Income of 3.96x indicates strong cash realization, suggesting that accruals, working capital movements, and non-cash charges (e.g., D&A of ¥105 million) supported cash generation. This mitigates concerns about earnings quality in the quarter. outlook: Near-term recovery depends on pricing negotiations, pass-through of material and energy costs, and utilization normalization. A rebound in public infrastructure tenders or large private projects would be supportive; conversely, continued cost inflation or execution delays would pressure margins.

Financial Health

liquidity: Current ratio 376.2% and working capital of ¥6,611,738,000 indicate very strong short‑term liquidity. Quick ratio equals the current ratio due to undisclosed inventories; actual quick liquidity may be lower, but still likely robust given the sizeable current asset base of ¥9,005,629,000. solvency: Total liabilities of ¥3,781,571,000 versus equity of ¥14,042,000,000 imply a high equity buffer. We estimate an equity ratio around 76.8% (equity/total assets), consistent with low solvency risk. capital_structure: Debt-to-equity of 0.27x and interest expense of only ¥1.6 million yield interest coverage of 43.7x, underscoring minimal financial burden. The company appears conservatively financed with capacity to absorb volatility.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥316,412,000 versus net income of ¥80,000,000 (OCF/NI 3.96x) indicates strong earnings cash conversion, aided by non-cash D&A of ¥105,269,000 and likely favorable working capital movements. FCF_analysis: Free cash flow is not computable given investing cash flow is undisclosed (reported as 0 indicates unreported). On available data, OCF was positive and financing outflows were ¥269,485,000, suggesting internal funds supported financing needs. working_capital: High working capital reflects a conservative liquidity posture. Absent inventory and receivables details, the exact drivers are unclear, but the scale provides cushion against collection cycles and project timing.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are reported as 0; given data limitations and volatile earnings, we cannot conclude on full-year policy. With net income at ¥80 million and strong liquidity, the capacity exists, but prudence amid weak profitability is understandable. FCF_coverage: FCF coverage cannot be assessed because investing cash flow is undisclosed. On OCF alone, coverage of a modest dividend would be feasible, but sustainability should be tied to normalized earnings and capex needs. policy_outlook: Given low ROE and profit compression, management is likely to prioritize balance sheet strength and reinvestment/maintenance capex over distributions in the near term unless profitability recovers.

Risk Assessment

Business Risks:

• Cyclical demand in construction and public works leading to volume volatility
• Raw material and energy cost inflation with pass‑through timing risk
• Capacity utilization shortfalls causing negative operating leverage
• Project timing and weather disruptions affecting shipments and margins
• Pricing pressure in tenders and competitive intensity in precast products
• Labor constraints and subcontractor availability impacting delivery
• Geographic and customer concentration risk typical of regional infrastructure suppliers

Financial Risks:

• Working capital swings in receivables and contract assets
• Potential capex requirements to maintain plant competitiveness
• Limited earnings buffer given low operating margin in downcycles
• Accounting presentation gaps (e.g., undisclosed items) that reduce transparency
• Interest rate normalization risk is low but non-zero; leverage currently modest

Key Concerns:

• Severe operating margin compression despite acceptable gross margin
• Very low ROE (0.57%) driven by weak profitability and low asset turnover
• Visibility constraints due to limited disclosures (inventories, investing CF, share data)

Investment Implications

Key Takeaways:

• Revenue down 9.7% YoY; profitability disproportionately impacted by negative operating leverage
• Gross margin 27.1% vs operating margin ~2.4% highlights cost pass‑through and utilization challenges
• ROE 0.57% with low asset turnover (0.162x) indicates inefficient capital use in current environment
• Strong liquidity (current ratio 376%) and high equity buffer (~77% equity ratio est.) mitigate solvency risk
• OCF strong at ¥316 million (3.96x net income), signaling solid cash conversion despite weak earnings
• Financing outflow of ¥269 million suggests de‑risking (debt repayment) or other financing uses
• Dividend currently undisclosed/zero; conservatism likely until earnings recover

Metrics to Watch:

• Order backlog and booking trends for public and private projects
• Selling price realization and material/energy cost pass‑through rates
• Capacity utilization and fixed‑cost absorption
• Operating margin recovery toward high single digits
• Asset turnover improvement via inventory and asset efficiency
• OCF sustainability and forthcoming capex plans (investing CF disclosure)
• Equity ratio and debt levels post financing outflows

Relative Positioning: Within Japan’s precast concrete and building materials peers, the company appears more conservatively capitalized with excellent liquidity but currently exhibits below-peer profitability and ROE, reflecting cyclical and operational headwinds that could normalize with improved utilization and pricing.

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