TAKADAKIKO(Steel Construction)CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.38B
• Operating Income: ¥-274M
• Net Income: ¥-413M
• EPS: ¥-71.56

Income Statement

Balance Sheet

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

For FY2026 Q2 (JGAAP, non-consolidated), Takada Kiko reported revenue of ¥7,382m, down 20.5% YoY, indicating a material slowdown in topline activity during the first half. Operating income was a loss of ¥274m (−77.4% YoY), pointing to a deterioration in cost absorption and/or project profitability as volumes fell. Ordinary income was a loss of ¥203m, suggesting limited non-operating support and modest interest burden. Net income was a loss of ¥413m (EPS −¥71.56), with a reported net margin of −5.59%, underscoring weak profitability in the period. The DuPont-based ROE was −2.03%, driven mainly by the negative net margin, while asset turnover was 0.274 and financial leverage 1.32x. Liquidity appears strong: the current ratio is 247.1% and working capital totals approximately ¥10.4bn, implying ample near-term funding capacity. Balance sheet leverage looks modest with financial leverage of 1.32x, and the provided debt-to-equity ratio is 0.52x; interest expense was ¥13.5m, consistent with low financial risk. Based on total assets of ¥26.9bn and total equity of ¥20.4bn, the implied equity ratio is roughly the mid‑70% range, though the disclosed equity ratio line item was not reported. Cash flow statements were not disclosed this quarter (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and free cash flow generation. The interest coverage ratio is negative (−20.3x) due to operating losses, highlighting sensitivity if losses persist. Tax expense of ¥114m despite a net loss suggests discrete tax items or timing differences under JGAAP. With DPS at zero and losses in 1H, dividend capacity is currently constrained, although a strong equity base and liquidity provide operational flexibility. The revenue contraction and negative operating margin point to fixed-cost leverage and/or project mix pressures; cost controls and order intake recovery will be key for 2H normalization. Given the single-entity basis and several unreported line items (gross profit, cash flows, inventories), conclusions focus on available metrics and may not capture full dynamics such as backlog and project progress. Overall, the company retains a solid balance sheet and liquidity buffer, but H1 profitability softness and limited cash flow visibility temper near-term confidence.

Profitability Analysis

roe_decomposition: ROE −2.03% = Net margin (−5.59%) × Asset turnover (0.274x) × Financial leverage (1.32x). The negative ROE is primarily margin-driven; asset turnover is modest (typical for a project or capital goods business in 1H), and leverage is low-to-moderate, offering limited amplification. margin_quality: Operating income of −¥274m on revenue of ¥7,382m implies an operating margin around −3.7% for the period; ordinary margin is roughly −2.8%; net margin −5.59%. Gross profit was unreported, so the contribution of direct costs vs SG&A cannot be parsed. Tax expense presence despite a loss suggests non-recurring/timing items; core margin signals remain negative. operating_leverage: Revenue fell 20.5% YoY while operating losses widened, indicating unfavorable operating leverage (fixed-cost under-absorption and/or project margin pressure). A return to break-even likely requires volume recovery and/or mix improvement and cost containment.

Growth Assessment

revenue_sustainability: Topline contracted by 20.5% YoY to ¥7.38bn, indicating weaker order execution or delays in 1H. Without order backlog disclosures, sustainability into 2H is uncertain. profit_quality: Losses at operating, ordinary, and net levels reflect strained profitability; absence of gross profit reporting obscures whether pressure stems from direct costs, SG&A, or one-offs. Interest expense is modest and not a driver of net loss. outlook: Recovery depends on order intake, project mix, and cost discipline. A seasonal second-half pickup is possible in project-based businesses, but visibility is limited without backlog and cash flow data. Monitoring revenue trajectory, operating margin normalization, and tax effects will be critical.

Financial Health

liquidity: Current ratio 247.1%, quick ratio 247.1%, and working capital of ~¥10.4bn indicate strong short-term liquidity. Current assets of ¥17.47bn comfortably cover current liabilities of ¥7.07bn. solvency: Financial leverage is 1.32x (Assets/Equity), implying an equity buffer of roughly mid‑70% of assets. Debt-to-equity ratio is reported at 0.52x, and interest expense of ¥13.5m suggests manageable debt service. capital_structure: Total assets ¥26.95bn and total equity ¥20.36bn imply liabilities around ¥6.6bn on an assets-minus-equity basis; leverage remains conservative. Negative interest coverage (−20.3x) reflects the interim operating loss rather than high indebtedness.

Cash Flow Quality

earnings_quality: Operating CF and investing/financing CF were not disclosed this quarter; OCF/NI is shown as 0.00 due to non-disclosure. As such, accruals and cash conversion cannot be assessed. fcf_analysis: Free cash flow was not reported. With an operating loss in 1H, underlying FCF risk tilts negative unless working capital releases or progress billings offset cash burn; evidence is unavailable. working_capital: Working capital is robust at ~¥10.4bn. Inventories were not disclosed; with quick ratio equaling current ratio, analysis assumes inventories are either minimal or unreported. Attention to receivables collection and advances on projects is warranted given project-based cash swings.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is zero with a reported payout ratio of 0.0%. Given a 1H net loss, distributable capacity from earnings is limited. fcf_coverage: FCF coverage is unreported (0.00x placeholder). Without OCF/FCF disclosure, coverage cannot be validated; prudence implies dividends would hinge on future profitability restoration. policy_outlook: Ample equity and liquidity provide flexibility, but near-term dividends likely remain constrained until margins normalize and cash generation is evident.

Risk Assessment

Business Risks:

• Topline volatility and order timing risk, evidenced by a 20.5% YoY revenue decline.
• Fixed-cost under-absorption leading to operating losses during volume downturns.
• Project execution and cost overrun risk inherent in engineered/project businesses.
• Pricing pressure and mix shifts that can compress margins.
• Limited disclosure (e.g., gross profit, cash flows, backlog) reduces visibility.

Financial Risks:

• Negative interest coverage (−20.3x) during loss-making periods.
• Potential working capital swings affecting cash needs in execution phases.
• Tax expense in a loss period suggests non-recurring/timing items that can add volatility.
• Uncertainty around true debt load and liabilities composition given partial disclosures.

Key Concerns:

• Sustained revenue contraction without confirmed backlog recovery.
• Negative operating margin and ROE (−2.03%) in 1H.
• Absence of cash flow data limits assessment of earnings quality and FCF.
• Requirement to improve project margins and cost control to restore profitability.

Investment Implications

Key Takeaways:

• Revenue down 20.5% YoY to ¥7.38bn with operating loss of ¥274m signals soft demand/execution in 1H.
• ROE −2.03% driven by −5.59% net margin; leverage low at 1.32x, limiting downside amplification.
• Liquidity is strong (current ratio 247.1%, working capital ~¥10.4bn), providing buffer.
• Interest burden modest (¥13.5m) but coverage negative due to losses.
• Disclosure gaps (gross profit, cash flows, inventories) constrain analysis of margin drivers and cash conversion.

Metrics to Watch:

• Order intake/backlog and revenue run-rate into 2H.
• Operating margin trajectory and gross margin (when disclosed).
• Operating cash flow and free cash flow resumption.
• Asset turnover recovery and working capital turns (AR collection, advances).
• Interest coverage and tax effects normalization.
• Equity ratio/Leverage to confirm balance sheet strength.

Relative Positioning: Versus typical small/mid-cap industrials on the TSE, liquidity appears above average and leverage below average, but profitability is currently below peers given negative margins and ROE; disclosure depth is also below typical levels this quarter, limiting visibility.

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
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