ITO YOGYO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.57B
• Operating Income: ¥104M
• Net Income: ¥55M
• EPS: ¥18.72

Income Statement

Balance Sheet

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

Ito Yogyo (5287) reported FY2026 Q2 single-entity results showing modest top-line growth and significant operating profit recovery, but a sharp decline in net income year over year. Revenue rose 1.1% YoY to ¥1,575 million, indicating stable demand amid a relatively flat market environment. Gross profit of ¥503 million implies a gross margin of 31.9%, which is healthy for building materials/industrial components and signals improved pricing or cost control. Operating income surged 110.9% YoY to ¥104 million, lifting operating margin to 6.6% from a low base, suggesting strong operating leverage as small revenue gains translated into large operating profit expansion. Ordinary income was ¥103 million, broadly in line with operating income, indicating limited non-operating distortions in the current period. Despite stronger operations, net income fell 65.9% YoY to ¥55 million (net margin 3.49%), implying material one-off items either in the prior year (e.g., gains) or current period (e.g., tax effects) that depressed bottom-line comparability. Interest expense remained modest at ¥4.0 million, and interest coverage was robust at 25.7x, underlining manageable financial risk. The balance sheet appears conservative: total assets are ¥5,411 million and total liabilities ¥2,163 million, implying an equity ratio around the high-60s by our calculation despite the reported equity ratio field showing 0.0% as unreported. Liquidity is solid with a current ratio of 166.9% and quick ratio of 136.5%, supported by ¥463 million of inventories and working capital of ¥1,017 million. Asset turnover is modest at 0.291x, consistent with a capital-intensive, low-velocity product mix and potentially subdued market throughput. DuPont analysis shows ROE of 1.48% driven by a 3.49% net margin, 0.291x asset turnover, and 1.46x financial leverage—collectively indicating subdued shareholder returns primarily due to low turnover and a small net margin. Cash flow statements, depreciation, and EBITDA were not disclosed in XBRL (showing as zeros), limiting cash conversion and capex assessment; thus, the OCF/NI and FCF figures provided are not meaningful. Dividend per share is reported as 0 with a 0% payout, consistent with a conservative stance and/or mid-year timing, but actual policy assessment requires full-year data. Overall, the quarter indicates improving underlying operations and strong liquidity with moderate leverage, but low ROE and uncertain cash flow visibility temper the quality of earnings assessment. Data limitations, especially around cash flows and depreciation, are material and should be addressed in subsequent disclosures.

Profitability Analysis

roe_decomposition:

• net_profit_margin: 3.49% (NI ¥55m / Revenue ¥1,575m)
• asset_turnover: 0.291x (Revenue ¥1,575m / Assets ¥5,411m)
• financial_leverage: 1.46x (Assets ¥5,411m / Equity ¥3,710m)
• calculated_roe: 1.48% (matches provided DuPont ROE) margin_quality:
• gross_margin: 31.9% (¥503m/¥1,575m) – healthy, suggests improved pricing/mix or input cost relief
• operating_margin: 6.6% (¥104m/¥1,575m) – up sharply YoY, indicating operating leverage from cost control
• ordinary_margin: 6.5% (¥103m/¥1,575m) – close to OPM, limited non-operating noise this period
• net_margin: 3.49% – significantly below operating margin, likely influenced by taxes/one-offs operating_leverage: High in the period: +1.1% revenue growth drove +110.9% operating income growth, implying substantial fixed-cost absorption and/or SG&A efficiencies. Sustainability depends on volume/pricing stability and input costs. interest_burden_and_coverage: Interest expense ¥4.0m with coverage ~25.7x indicates limited financial drag on profitability.

Growth Assessment

revenue_sustainability: Top-line grew 1.1% YoY to ¥1.575bn, pointing to stable demand but not strong momentum. Sustainability likely tied to public works, construction activity, and pricing discipline. profit_quality: Operating profit improvement appears operationally driven (margin expansion) rather than non-operating gains. However, bottom-line compression (-65.9% NI) suggests non-recurring items or tax impacts skew YoY comparability. outlook: If cost efficiencies and pricing hold, mid-single-digit operating margins could be sustained; further growth likely requires either volume recovery or higher asset turnover. Visibility is constrained without OCF and capex data.

Financial Health

liquidity:

• current_ratio: 166.9%
• quick_ratio: 136.5%
• working_capital: ¥1,016,703,000
• commentary: Ample short-term liquidity cushion; inventory at ¥463m appears manageable relative to current assets. solvency:
• debt_to_equity: 0.58x (Liabilities ¥2,163m / Equity ¥3,710m)
• interest_coverage: 25.7x (Operating income / Interest expense)
• equity_ratio: Implied ~68.6% (Equity ¥3,710m / Assets ¥5,411m); the reported 0.0% figure is an undisclosed placeholder. capital_structure: Balance sheet is equity-heavy with moderate leverage, providing resilience. Low interest burden limits financial risk.

Cash Flow Quality

earnings_quality: Cash flow statements are undisclosed (OCF, ICF, FCF show as zero placeholders), preventing assessment of cash conversion and accrual intensity. fcf_analysis: Free cash flow cannot be determined without OCF and capex. EBITDA and depreciation are also undisclosed, limiting visibility on non-cash charges. working_capital: Working capital position is strong; however, trends in receivables, payables, and inventory turnover cannot be evaluated from the provided snapshot.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported as 0 with a 0% payout; this may reflect timing or policy conservatism. Without full-year earnings and cash flows, payout capacity cannot be robustly assessed. fcf_coverage: Not assessable given undisclosed OCF/FCF. EPS is ¥18.72 but shares outstanding are undisclosed, limiting per-share policy analysis. policy_outlook: Given modest ROE (1.48%) and a strong balance sheet, the company has capacity for stable dividends over a cycle, but current disclosure suggests a cautious stance pending clearer profitability and cash data.

Risk Assessment

Business Risks:

• End-market cyclicality in construction and public infrastructure demand
• Input cost volatility (energy, cement/ceramic raw materials) impacting margins
• Low asset turnover (0.291x) indicating potential underutilization and demand sensitivity
• Product mix and pricing pressure from competitors in building materials
• Potential concentration in specific regions/projects

Financial Risks:

• Cash flow visibility is limited due to undisclosed OCF/FCF and depreciation
• Tax volatility: NI declined despite stronger OI, suggesting non-recurring/tax effects
• Working capital swings could impact cash generation given inventory-based model
• Exposure to interest rates is modest but present (interest expense ¥4.0m)

Key Concerns:

• Sustainability of recent margin gains with only +1.1% revenue growth
• Low ROE (1.48%) relative to cost of equity
• Lack of cash flow and capex disclosure impeding assessment of earnings quality

Investment Implications

Key Takeaways:

• Top-line grew slightly (+1.1%), but operating profit more than doubled on improved margins
• Net income fell sharply (-65.9% YoY), likely due to non-operating/tax items, clouding comparability
• Healthy gross margin (31.9%) and operating margin (6.6%) indicate operational improvements
• Strong liquidity (CR 166.9%, QR 136.5%) and moderate leverage (D/E 0.58x) support resilience
• ROE is subdued at 1.48%, constrained by low asset turnover and modest net margin
• Interest burden is light with 25.7x coverage
• Cash flows, depreciation, and EBITDA are undisclosed, limiting cash conversion analysis
• Dividend currently reported as zero; policy clarity likely at full-year results
• Implied equity ratio ~68.6% signals a conservative balance sheet despite unreported field

Metrics to Watch:

• Order backlog and book-to-bill for visibility on revenue trajectory
• Input cost trends (energy, raw materials) and pricing actions
• Operating margin sustainability and SG&A ratio
• OCF and FCF once disclosed; OCF/NI conversion
• Capex and depreciation to gauge maintenance vs. growth investment
• Inventory and receivables turnover for working capital discipline
• Tax rate normalization and any extraordinary items
• Asset turnover improvement initiatives (utilization, mix)

Relative Positioning: Versus domestic building materials peers, Ito Yogyo exhibits stronger balance sheet conservatism and liquidity with moderate leverage, mid-30% gross margins and mid-single-digit operating margins, but lags on ROE and asset turnover, reflecting a more capital-intensive, lower-velocity profile.

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