AHRESTY CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥82.09B
• Operating Income: ¥1.80B
• Net Income: ¥-2.70B
• EPS: ¥83.86

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

Aresty (TSE:5852) reported FY2026 Q2 consolidated results under JGAAP with steady top-line growth and modest profitability improvement. Revenue rose 5.0% YoY to ¥82.09bn, indicating resilient demand amid a mixed automotive supply environment. Gross profit was ¥5.68bn, implying a thin gross margin of 6.9%, consistent with die-casting industry economics but leaving limited buffer for cost volatility. Operating income increased to ¥1.80bn (+6.8% YoY), yielding an operating margin of 2.2%, supported by operating leverage but still sensitive to input costs and utilization. Ordinary income of ¥1.04bn fell below operating income, suggesting net non-operating losses (e.g., FX, financial costs) during the period. Net income was ¥2.08bn (flat YoY), which is notably higher than ordinary income, implying the presence of extraordinary gains or tax/one-off effects not detailed in the dataset. DuPont analysis shows ROE at 4.14%, with a 2.53% net margin, asset turnover of 0.627x, and financial leverage of 2.60x, indicating that leverage is compensating for weak margins but overall ROE remains subdued. Cash conversion appears strong: operating cash flow of ¥5.60bn equates to 2.69x net income, aided by significant non-cash charges (D&A of ¥5.72bn). Liquidity is tight with a current ratio of 100.7% and working capital of only ¥0.45bn, but the quick ratio of 92.2% suggests manageable near-term coverage assuming stable collections and payables. Balance sheet leverage is moderate with debt-to-equity at 1.63x and an implied equity ratio around 38% (computed from the balance sheet, as the reported equity ratio field is undisclosed). Interest coverage of 5.6x (operating income/interest) indicates adequate buffer at current earnings levels. EBITDA of ¥7.52bn (9.2% margin) highlights meaningful depreciation intensity and the importance of maintaining high plant utilization to sustain returns. Investing cash flow, cash balance, dividend data, and share count were not disclosed in the provided XBRL mapping (zeros indicate undisclosed, not actual zero), limiting precision on free cash flow and shareholder return assessment. Overall, Aresty shows stable growth and improving operations, but profitability remains thin, liquidity headroom is limited, and bottom-line reliance on non-operating/extraordinary items increases earnings volatility. Outlook hinges on cost pass-through, energy and aluminum price trends, FX, and utilization improvements across major plants.

Profitability Analysis

roe_decomposition: ROE 4.14% = Net margin 2.53% × Asset turnover 0.627 × Financial leverage 2.60. The primary drag is low net margin, partially offset by moderate asset efficiency and leverage. margin_quality: Gross margin 6.9% and operating margin ~2.2% (¥1.804bn/¥82.09bn) suggest tight spreads typical for die-casting. Ordinary income (¥1.04bn) below operating income indicates non-operating headwinds (FX or financial costs), while net income (¥2.08bn) above ordinary points to one-off gains or tax effects. EBITDA margin of 9.2% shows underlying earnings capacity before heavy depreciation. operating_leverage: Revenue +5.0% YoY vs operating income +6.8% indicates modest positive operating leverage, likely from better utilization and cost control. However, the small absolute margin buffer makes leverage effects sensitive to volume and price/mix.

Growth Assessment

revenue_sustainability: 5.0% YoY revenue growth suggests steady OEM demand and improved supply normalization. Sustainability will depend on order intake, model cycles, and pass-through of material and energy costs. profit_quality: Net income’s divergence from ordinary income implies non-recurring support; core profit (operating/ordinary) remains modest. OCF/NI at 2.69x indicates healthy cash conversion, supported by D&A, but reliance on non-cash items underscores the need for sustained operating margin improvement. outlook: Key drivers are aluminum and energy costs, FX (particularly USD/JPY and MXN/JPY for overseas operations), and plant utilization. Margin recovery is possible through mix and cost pass-through, but competitive pricing and customer terms may cap upside.

Financial Health

liquidity: Current ratio 100.7%, quick ratio 92.2%, and working capital of ¥0.45bn indicate tight but manageable liquidity pending stable receivables and payables. Inventories at ¥5.43bn are modest relative to current assets (¥64.11bn). solvency: Total assets ¥130.91bn, total equity ¥50.28bn implies an equity ratio of ~38.4% (computed), suggesting a balanced capital structure. Debt-to-equity of 1.63x indicates moderate leverage. capital_structure: Interest expense ¥0.323bn vs operating income ¥1.804bn yields 5.6x coverage; servicing costs are manageable at current earnings. Positive financing CF (¥0.858bn) implies net borrowing or similar inflows; details not disclosed.

Cash Flow Quality

earnings_quality: OCF ¥5.60bn vs net income ¥2.08bn (OCF/NI 2.69x) signals strong cash conversion, aided by substantial D&A (¥5.72bn). The gap between operating and ordinary income suggests some non-operating drag not reflected in OCF. fcf_analysis: Investing CF is undisclosed (reported as zero), so FCF cannot be reliably determined. EBITDA of ¥7.52bn provides capacity to fund maintenance capex, but actual capex intensity is unknown for the period. working_capital: Working capital is slim at ¥0.45bn. With quick ratio at 92.2%, small shifts in receivables or payables could swing OCF; continued discipline in inventory and receivable turns is essential.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are undisclosed in the dataset (zeros indicate unreported). EPS is ¥83.86 for the period, but without declared dividends we cannot compute a payout rate. fcf_coverage: FCF not determinable due to undisclosed investing CF. Consequently, dividend coverage by FCF cannot be assessed for this period. policy_outlook: Given modest ROE (4.14%) and tight liquidity, the company may prioritize balance sheet resilience and capex; actual dividend policy for the period is not disclosed in the provided data.

Risk Assessment

Business Risks:

• Automotive production cycles and model mix volatility affecting die-casting volumes
• Raw material (aluminum) and energy price fluctuations impacting margins
• Customer concentration risk with major OEMs and Tier-1 suppliers
• FX exposure, especially USD/JPY and MXN/JPY given overseas footprint
• Capacity utilization and fixed-cost absorption sensitivity
• Quality control and recall risks inherent to precision cast components
• Environmental and regulatory compliance costs (emissions, recycling, energy)

Financial Risks:

• Tight liquidity (current ratio ~1.01 and low working capital buffer)
• Moderate leverage (D/E 1.63x) and exposure to interest rate movements
• Non-operating losses affecting ordinary income (FX, hedging, or financial items)
• Potential capex needs vs. operating cash generation if growth projects proceed
• Earnings volatility from extraordinary items influencing bottom line

Key Concerns:

• Thin operating margin (~2.2%) leaves little room for cost shocks
• Ordinary income below operating income signals recurring non-operating headwinds
• Limited disclosure on investing cash flows and cash balance constrains FCF visibility

Investment Implications

Key Takeaways:

• Top-line growth of 5.0% YoY with modest operating leverage
• Subdued ROE of 4.14% driven by low net margin despite reasonable asset efficiency
• Strong cash conversion (OCF/NI 2.69x) aided by high D&A
• Liquidity headroom is narrow with current ratio ~1.01 and working capital of ¥0.45bn
• Non-operating items weighed on ordinary income; net benefited from one-offs
• Leverage moderate with D/E 1.63x and interest coverage 5.6x

Metrics to Watch:

• Gross and operating margin trajectory and SG&A ratio
• Ordinary income vs operating income gap (FX and financial items)
• OCF sustainability and working capital turns
• Capex and investing cash flows (to assess FCF)
• Interest coverage and net debt trend
• Aluminum and energy cost indices; FX rates (USD/JPY, MXN/JPY)
• Plant utilization and yield/quality KPIs

Relative Positioning: Within Japanese nonferrous/auto casting peers, Aresty shows typical thin margins and heavy depreciation, moderate leverage, and decent cash conversion, but currently operates with tighter liquidity and ROE below many domestic and global peers that have higher value-add or more favorable customer terms.

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