Fujikura Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥558.99B
• Operating Income: ¥90.17B
• Net Income: ¥30.24B
• EPS: ¥243.35

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

Fujikura (5803) delivered a strong FY2026 Q2 (cumulative) performance with clear operating leverage and margin expansion. Revenue reached ¥558.994 billion, up 24.9% YoY, while operating income rose 63.5% YoY to ¥90.171 billion, indicating robust efficiency gains. Net income was ¥67.147 billion, up 133.7% YoY, supported by lower financing drag and a favorable tax burden relative to profits. Gross profit of ¥110.175 billion implies a 19.7% gross margin, and the operating margin expanded to approximately 16.1%, reflecting tight SG&A discipline. Ordinary income of ¥91.701 billion surpassed operating income, suggesting some contribution from non-operating positives despite modest interest expense. The DuPont-calculated ROE is 13.57%, driven by a healthy 12.01% net margin, asset turnover of 0.654x, and moderate financial leverage of 1.73x. Liquidity appears solid with a current ratio of 199.7% and a quick ratio of 147.3%, underpinned by working capital of ¥280.241 billion. Solvency is comfortable with a debt-to-equity ratio of 0.80x and strong interest coverage of 43.5x. Operating cash flow was ¥32.064 billion, equating to an OCF/Net Income ratio of 0.48x, indicating weaker cash conversion due primarily to working capital needs. EBITDA totaled ¥100.946 billion (18.1% margin), and OCF/EBITDA was roughly 32%, consistent with temporary working capital absorption amid growth. Inventories of ¥147.206 billion represent about 26% of current assets, suggesting inventory build as a potential cash drag. Tax expense of ¥14.451 billion implies an effective tax rate around the mid-teens on ordinary income, despite the calculated metric placeholder showing 0.0%. Dividend and share data were not disclosed in the provided feed; therefore, payout and per-share metrics cannot be assessed. Overall, fundamentals show strong profitability, healthy balance sheet, and robust coverage metrics, with the key watchpoint being cash conversion. Data limitations exist where values are shown as zero (treated as undisclosed rather than actual zeros), especially for investing cash flows, cash balances, dividends, and share count.

Profitability Analysis

ROE_decomposition: DuPont ROE = 13.57% = Net Margin (12.01%) × Asset Turnover (0.654x) × Financial Leverage (1.73x). The uplift versus prior year is mainly from margin expansion and sustained turnover, with only moderate leverage. margin_quality: Gross margin: 19.7% (¥110.175b/¥558.994b). Operating margin: ~16.1% (¥90.171b/¥558.994b). The small gap between gross and operating margins implies low SG&A ratio (~3.6% of sales, ~¥20.0b), pointing to strong cost control and/or contribution from other operating income under JGAAP. Net margin at 12.01% reflects limited financing costs (interest expense ¥2.073b; ~0.37% of sales) and a manageable tax burden. operating_leverage: Revenue grew 24.9% YoY while operating income grew 63.5% YoY, indicating significant operating leverage from fixed cost dilution and improved mix/pricing. EBITDA margin at 18.1% versus operating margin ~16.1% suggests modest D&A intensity (~1.9% of sales), reinforcing leverage from the operating base.

Growth Assessment

revenue_sustainability: Top-line growth of 24.9% YoY is strong; sustainability will hinge on end-market demand and order momentum (not disclosed here). Asset turnover of 0.654x indicates efficient asset use for a manufacturing business, consistent with scaling operations. profit_quality: Margin expansion across the P&L, strong interest coverage (43.5x), and modest D&A (¥10.775b) indicate quality earnings. However, OCF/Net Income at 0.48x suggests earnings outpaced cash due to working capital build, which warrants monitoring if growth persists. outlook: Given the current trajectory, profitability should remain resilient if demand holds and inventory normalizes. Sustained cost discipline and pricing power will be key to maintaining mid-to-high teens operating margins. The absence of investing cash flow disclosure limits visibility on growth capex and capacity additions.

Financial Health

liquidity: Current ratio 199.7% (¥561.343b/¥281.102b) and quick ratio 147.3% indicate ample near-term coverage. Working capital stands at ¥280.241b, with inventories comprising ~26% of current assets. solvency: Debt-to-equity ratio is 0.80x (total liabilities ¥394.978b/equity ¥494.816b), a moderate leverage position. Interest coverage of 43.5x underscores ample buffer against rate or earnings shocks. capital_structure: Financial leverage (Assets/Equity) is 1.73x. Equity accounts for the majority of capital (total assets ¥854.556b vs. equity ¥494.816b). No details provided on the mix of interest-bearing vs. non-interest-bearing liabilities in this dataset.

Cash Flow Quality

earnings_quality: Operating CF of ¥32.064b vs. net income of ¥67.147b yields OCF/NI of 0.48x, indicating weaker cash conversion in the period, likely from higher receivables and inventory tied to growth. OCF/EBITDA is ~32%, also pointing to working capital absorption. FCF_analysis: Free cash flow cannot be determined reliably because investing cash flow is undisclosed (reported as 0 = not reported). As such, FCF coverage of dividends cannot be assessed from the provided data. working_capital: Inventories at ¥147.206b and the large working capital position (¥280.241b) suggest significant capital tied in operations. Monitoring days inventory/receivables (not disclosed) will be important to judge cash conversion normalization.

Dividend Sustainability

payout_ratio_assessment: Annual DPS, payout ratio, and share count were not disclosed (zeros indicate undisclosed). Therefore, payout metrics cannot be calculated from this dataset. FCF_coverage: Not assessable due to undisclosed investing cash flows and DPS. While earnings capacity appears strong, cash coverage cannot be confirmed without capex and dividend data. policy_outlook: With ROE at 13.6% and moderate leverage, capacity for distribution exists in principle; however, actual policy depends on capital allocation priorities (growth capex vs. shareholder returns), which are not disclosed here.

Risk Assessment

Business Risks:

• End-market cyclicality in communications, power infrastructure, and industrial equipment
• Commodity price volatility (e.g., copper, aluminum) affecting input costs and inventory valuations
• Project execution risk on large infrastructure contracts and potential cost overruns
• Supply chain and logistics constraints impacting delivery and working capital
• Technological substitution and pricing pressure in optical and cable products
• Geopolitical and trade policy risks affecting overseas demand and procurement

Financial Risks:

• Working capital expansion reducing cash conversion during growth periods
• Foreign exchange exposure on revenues, costs, and balance sheet items
• Interest rate volatility, albeit partially mitigated by strong coverage
• Potential pension/retirement obligation volatility (not disclosed in this dataset)
• Counterparty credit risk on receivables during rapid growth

Key Concerns:

• OCF/Net Income at 0.48x indicates weak cash conversion this period
• Inventories at ¥147.206b may continue to absorb cash if demand slows
• Lack of disclosed investing cash flows obscures capex and FCF visibility
• Dividend policy and share metrics undisclosed, limiting return analysis

Investment Implications

Key Takeaways:

• Strong growth with clear operating leverage: revenue +24.9% YoY, operating income +63.5% YoY
• Margin strength: gross margin 19.7%, operating margin ~16.1%, EBITDA margin 18.1%
• Healthy ROE at 13.57% driven by high net margin and moderate leverage
• Robust liquidity and solvency: current ratio 199.7%, quick ratio 147.3%, interest coverage 43.5x, D/E 0.80x
• Cash conversion is the primary near-term watchpoint: OCF/NI 0.48x amid working capital build
• Visibility on FCF and shareholder returns is limited due to undisclosed investing CF and dividends

Metrics to Watch:

• OCF/Net Income and OCF/EBITDA recovery as growth normalizes
• Inventory and receivables turnover (days) to gauge working capital efficiency
• Order backlog and price/mix trends to sustain margins (if disclosed later)
• Capex intensity and investing cash flows to assess FCF and ROIC
• Net debt and interest-bearing debt composition to track leverage
• Tax rate normalization versus the ~16% implied on ordinary income

Relative Positioning: Within Japanese industrial/component peers, Fujikura’s current profitability profile (mid-teens operating margin, high-teens EBITDA margin) and ROE in the mid-teens place it in a strong cohort, with balance sheet prudence and coverage better than average; the main differentiator to monitor is working capital discipline and cash conversion versus peers.

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