FUJISASH CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥48.27B
• Operating Income: ¥362M
• Net Income: ¥-106M
• EPS: ¥34.84

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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

Fujisash Co., Ltd. (TSE: 59400) delivered modest topline growth in FY2026 Q2 with revenue up 1.3% YoY to ¥48.27bn, but profitability remains thin and cash conversion weak. Gross profit margin was 13.8%, and operating income of ¥0.36bn implies an operating margin of roughly 0.75%, highlighting limited pricing power and/or cost pressures in construction-related projects. Ordinary income of ¥0.42bn and net income of ¥0.44bn indicate small non-operating/extraordinary tailwinds, but net profit still declined 3.4% YoY, underscoring earnings fragility. DuPont metrics show a net margin of 0.91%, asset turnover of 0.562x, and financial leverage of 3.60x, resulting in a low ROE of 1.84%. The equity multiplier implies an equity ratio around 28% (despite the reported 0.0% item, which is undisclosed), suggesting a moderate capital buffer but meaningful leverage. Liquidity indicators are reasonable with a current ratio of 133% and quick ratio of 128%, supported by positive working capital of ¥11.85bn. Interest coverage is 2.6x (EBIT/interest), tight but serviceable, leaving limited cushion if earnings soften. Operating cash flow was negative at -¥3.20bn, pointing to poor cash conversion in the period; this likely reflects working capital outflows given the project-based nature of the business. Investing and cash balances are unreported in this dataset (zeros indicate undisclosed), so free cash flow cannot be reliably assessed despite the provided FCF figure. Financing inflows of ¥1.66bn helped bridge the OCF shortfall, indicating reliance on external funding in the period. EBITDA of ¥1.44bn (3.0% margin) suggests modest operating leverage, with limited ability to absorb cost shocks. The effective tax line in the provided metrics appears distorted by period-specific items; reported income tax expense is ¥0.10bn but the calculated effective tax rate is given as 0.0%, pointing to data definition differences rather than a true zero tax rate. Dividend payments are absent (DPS ¥0), consistent with low profitability and negative OCF in the half. Overall, the profile shows a low-margin contractor/manufacturer with cyclical exposure, modest leverage capacity, and near-term cash flow pressure. Continued focus on order discipline, cost pass-through, and working capital management will be crucial to sustain profitability and reduce financing reliance. Data limitations around cash, capex, and detailed working capital schedule constrain full assessment, but the available figures indicate cautious fundamentals.

From Earnings Presentation: Fujisash achieved an operating profit of 362 million yen in the first half of fiscal 2025 (announced November 5, 2025), marking its first profit in nine periods. Net sales reached 48,273 million yen (up 1.3% year-on-year), with operating profit improving by 449 million yen from -87 million yen in the same period last year. The Building Materials segment achieved significant profit growth with operating profit of 1,054 million yen (up 539 million yen) through thorough high-value-added activities, VE/CD proposals, and price revision effects. The Extruded Products segment saw weakening demand with decreased sales volume and profitability (operating loss of 7 million yen). The Environmental segment posted increased revenue and profit due to strong fundamental improvement construction (operating profit of 58 million yen). The Logistics segment achieved increased revenue and profit through improved dispatch efficiency and new contract acquisitions (operating profit of 227 million yen). Production efficiency and profitability improvement measures contributed to total improvement of 440 million yen year-on-year: +610 million yen from improved profit margins (mainly Building Materials), +200 million yen from sales increase, +50 million yen from production efficiency. Offsetting factors included -360 million yen from decreased extruded products volume, -110 million yen from increased personnel and expenses, and -10 million yen from aluminum and material prices. Full-year forecast remains unchanged at sales of 107,000 million yen (up 2.1%), operating profit of 2,500 million yen (up 1.0%). Highlighted topics include establishment of a dedicated construction skill training company, development of aluminum-clad wooden sashes, acquisition of Environmental Product Declaration (SuMPO EPD), and launch of Re-Sash R100 and Green, emphasizing sustainability and profitability improvement measures. Management assessed that the shift toward high-profitability projects and a profit-focused order structure is progressing, and stated commitment to continued execution of the medium-term plan (FY25-27).

Financial Analysis

Profitability

ROE of 1.84% decomposes into a 0.91% net margin, 0.562x asset turnover, and 3.60x equity multiplier, reflecting profitability driven more by balance sheet leverage than by operating returns. Operating margin stands at ~0.75% (¥362m/¥48,273m), pointing to thin contribution from core operations and limited operating leverage. Gross margin of 13.8% versus EBITDA margin of 3.0% implies a heavy SG&A/overhead and/or project execution costs absorbing most of the gross profit. Interest coverage at 2.6x (EBIT/interest) remains adequate but leaves little buffer for shocks; ordinary income margin is ~0.86% (¥415m/¥48,273m). The decline in net income (-3.4% YoY) despite slight revenue growth signals margin compression and/or higher below-OP items. Margin quality appears sensitive to cost inflation and mix, consistent with construction and façade/curtain wall project risk profiles. With EBITDA at ¥1.44bn, conversion from gross profit to EBITDA (~22%) is modest, suggesting limited fixed-cost absorption benefits at current scale.

Growth

Revenue growth of +1.3% YoY is modest and likely volume-driven rather than price-led, given the subdued margins. Sustainability hinges on construction activity levels, order backlog quality, and ability to pass through input costs (notably aluminum and labor). Profit quality is weak this period: operating income growth (+1.0% YoY) lags revenue and cash conversion is negative, highlighting execution and working capital timing risks. The net income decline (-3.4% YoY) despite stable ordinary income suggests adverse tax/extraordinary mix or higher minority/non-operating costs. Outlook will depend on backlog visibility, pricing discipline on fixed-price contracts, and stabilization of material costs; absent stronger margin capture, incremental revenue may not translate to earnings. Given limited data on orders and segment mix, we assume growth to be low single-digit near term with earnings leverage constrained by costs and interest burden.

Financial Health

Total assets are ¥85.86bn and total equity ¥23.85bn, implying an equity ratio around 27.8% (equity/asset), despite the reported 0.0% equity ratio field being undisclosed. Debt-to-equity is 2.54x per provided metric, indicative of a leveraged balance sheet versus low-margin operations. Liquidity is acceptable with current ratio 132.9% and quick ratio 127.5%, and working capital of ¥11.85bn supports project execution needs. Interest coverage at 2.6x is serviceable but vulnerable to earnings volatility or rate increases. Financing CF of +¥1.66bn suggests reliance on debt/other financing to offset negative OCF this period. Without disclosed cash and detailed debt maturities, short-term refinancing risk cannot be fully assessed, but the combination of positive working capital and moderate equity base provides some resilience.

Cash Flow

Operating CF is -¥3.20bn, versus net income of ¥0.44bn, yielding an OCF/NI ratio of -7.30, signaling poor cash earnings quality this period. The gap likely reflects working capital outflows (e.g., receivables build or milestone billing timing) typical in project businesses; depreciation of ¥1.08bn indicates non-cash add-backs exist, so the shortfall is likely WC-driven rather than accrual anomalies. Investing CF is undisclosed (reported as 0), and thus true free cash flow cannot be determined reliably despite a provided FCF figure; capex and project-related investments may be understated in this snapshot. Financing inflows of ¥1.66bn funded operations, indicating external funding dependence in the half. Sustained negative OCF would pressure liquidity and could necessitate further financing or stricter working capital discipline. Key to watch are collection cycles, change in contract assets/liabilities, and inventory turnover (inventories are relatively small at ¥1.96bn, so receivables and unbilled revenue are likely the drivers).

Dividend Sustainability

DPS is ¥0 and payout ratio 0.0%, consistent with the company preserving cash amid weak profitability and negative OCF. With undisclosed investing CF and cash balances, we cannot assess true FCF coverage, but on available data the period’s cash generation would not comfortably support distributions. Resumption of dividends would require sustained improvement in operating margins, positive OCF, and lower reliance on financing inflows. Policy outlook likely remains conservative given leverage (D/E 2.54x) and tight interest coverage (2.6x).

Business Outlook

Full-year performance forecast unchanged at sales of 107,000 million yen (up 2.1% year-on-year), operating profit of 2,500 million yen (up 1.0%), ordinary profit of 2,600 million yen (down 5.2%), and net income of 2,000 million yen (down 8.9%). While construction material price increases and labor shortages remain challenging, the company aims to improve profit margins through continued medium-term plan initiatives (high-value-added activities, thorough VE/CD proposals, transition to profitability-focused order structure). Second half typically concentrates sales and profits, positioning first-half profitability achievement as foundation for full-year results. Logistics segment will strengthen earnings base with full operation of newly established commercial warehouse in second half. Building Materials segment shows declining orders and backlog from prior period, but qualitative improvement is prioritized as focus on high-profitability projects progresses. Extruded Products segment faces continuing impact of demand slowdown and volume decline, but seeks profitability improvement through freight cost pass-through, material price controls, and product mix enhancement. Environmental segment expects stable growth with continuing fundamental improvement construction and steady chemical business. Strong construction project values in Tokyo and Osaka support sales security strategy through focus on urban large-scale projects. Regarding 'operating CF of -3,204 million yen' and 'cash generation failure' pointed out by GPT analysis, while PDF does not directly address CF analysis, the background of increased interest-bearing debt (+3,377 million yen) and increased cash (+4,178 million yen) suggests advance preparation of working capital and capital expenditure funding premised on second-half sales concentration. Recovery of operating CF and improvement in accounts receivable turnover for full year will be key.

Management Guidance

Management evaluated first-half profitability achievement (first in nine periods) as 'results of various initiatives despite challenging environment' and emphasized continued execution of medium-term management plan (FY25-27). While prefacing at beginning of materials that 'not intended as commitment to achievement,' management explicitly acknowledged risk recognition that 'actual performance may differ significantly due to various factors.' Regarding Building Materials segment, stated shift from volume pursuit to qualitative improvement by declaring 'transition to profitability-focused order structure is progressing.' For Logistics segment, presented specific growth plan stating 'newly established commercial warehouse will begin full operation from second half, aiming for further strengthening of earnings base.' While frankly acknowledging decreased profit in Extruded Products segment as 'significantly affected by sales volume decline due to demand slowdown' and 'profitability declined,' showed recovery stance by 'promoting sales expansion of other products.' In environment and sustainability areas, successively announced initiatives based on 'Fujisash Group Sustainability Vision 2050' (construction skill training, wooden sash development, EPD acquisition, Re-Sash launch), clearly demonstrating commitment to ESG response and enhancement of medium to long-term competitiveness. While no mention of dividends, continued no-dividend policy is presumed, suggesting continued policy prioritizing financial improvement and growth investment through retained earnings. Overall, stance of focusing on structural improvement and profitability enhancement in medium term while recognizing challenging environment in short term is evident.

Strategic Initiatives

• Continued execution of medium-term management plan (FY25-27) initiatives: thorough high-value-added activities, thorough VE/CD proposals, transition to profitability-focused order structure
• Launch of Fujisash Construction Skill Training Project (establishment of dedicated company 'Fujisash S・C Corporation'): employment and training of young skilled workers, shortening skill acquisition period from 10 years to approximately 4 years, building sustainable construction framework
• Joint development of aluminum-clad wooden sashes (with Woodfriends Corporation): utilization of domestic timber, low-carbon and high-design, provision at price range accessible to general market, planned development of sliding and casement windows in fiscal 2025, considering use in multi-unit residential buildings
• Acquisition of Environmental Product Declaration (SuMPO EPD): third-party certification of CO2 emissions based on LCA for building material aluminum extrusions, planned acquisition for Re-Sash R100 and Re-Sash Green in fiscal 2025, visualization of environmental impact
• Launch of Re-Sash R100 and Re-Sash Green: start of sales for 100% aluminum recycling rate (R100) and renewable energy smelting (Green, Rio Tinto RenewAl™), balance of environmental and cost considerations, reduction of CO2 emissions from raw materials to manufacturing stage (R100: 81% reduction vs. new products, Green: 66% reduction vs. global average)
• Establishment of new commercial warehouse in Logistics segment: full operation from second half, new contract acquisition and earnings base strengthening, continued cost reduction through dispatch efficiency improvement
• Production efficiency and cost reduction activities: 500 million yen profit improvement (year-on-year), process shortening, yield improvement, purchasing condition reviews, etc.
• Acceleration of capital expenditure: doubled to 2.16 billion yen in first half (vs. 1.01 billion yen prior year), investment in growth and efficiency, capital allocation to production facilities, commercial warehouses, IT, etc.

Risk Assessment

Business Risks:

• Cyclical exposure to construction activity and public/private capex cycles
• Fixed-price project execution risk (cost overruns, delays, penalties)
• Input cost volatility (aluminum, glass, logistics, labor) and pricing pass-through risk
• Order backlog quality and customer credit risk affecting collections
• Capacity utilization and overhead absorption impacting margins
• Competitive bidding pressure compressing project margins
• Regulatory and building code changes affecting product specifications and costs

Financial Risks:

• Negative operating cash flow reliance on financing inflows
• Leverage (D/E 2.54x) with tight interest coverage (2.6x)
• Working capital volatility (receivables, unbilled revenue) stressing liquidity
• Interest rate risk on floating-rate debt
• Limited buffer for earnings shocks given low margins

Key Concerns:

• Weak cash conversion (OCF/NI -7.30) despite positive earnings
• Thin operating margin (~0.75%) limits resilience to cost inflation
• Dependence on financing (+¥1.66bn) to fund operations in the period

Risk Factors from Presentation:

• Continued pressure on gross profit margin due to persistently high construction materials (aluminum ingot, resin, auxiliary materials)
• Labor shortage, rising personnel costs and time lag in price pass-through, rising subcontracting costs
• Declining trend in non-wooden building construction floor area (projected -3.2% nationwide), decline in new housing starts (projected -10.3%)
• Decreased sales volume due to demand slowdown (prominent in Extruded Products segment), risk of profitability decline
• Profit volatility due to large project schedule delays and quality costs (smooth in first half but full-year risk remains)
• Rising freight costs and material prices, delayed or insufficient pass-through of cost increases to selling prices
• Decline in order intake and backlog (vs. prior period), impact on profit from changes in project mix
• Exchange rate fluctuations (impact on aluminum import prices), price fluctuation risk of overseas procurement items
• Continued inflation and energy cost increases, impact of chemical cost increases in Environmental segment

Investment Implications

Key Takeaways:

• Topline growth modest (+1.3% YoY) but margin capture limited; net income down -3.4% YoY
• ROE low at 1.84% driven by leverage rather than strong operating returns
• Liquidity acceptable (current 133%, quick 128%) but cash generation weak (OCF -¥3.20bn)
• Interest coverage tight at 2.6x; financing used to offset OCF shortfall
• Equity ratio implied ~28%, providing some cushion but not ample for a low-margin model

Metrics to Watch:

• Order backlog, book-to-bill, and pricing discipline on new wins
• Gross-to-EBITDA conversion and SG&A efficiency
• OCF trend, receivables days, contract assets/liabilities movements
• Interest coverage and net debt trajectory
• Material cost pass-through (aluminum, glass, labor) and project margin variance
• Capex and maintenance investment once disclosed

Relative Positioning: Within Japanese building materials/architectural components peers, Fujisash exhibits below-average margins, modest revenue growth, and higher reliance on leverage, offset by reasonable working capital liquidity but weaker cash conversion this period.

Supplementary Insights (Key Highlights)

• First-half operating profit of 362 million yen marks first profit in nine periods (vs. -87 million yen in prior year), achieving increased revenue and profit despite challenging environment
• Building Materials segment operating profit increased 204.7% (+539 million yen) driven by thorough high-value-added activities, VE/CD proposals, and price revision effects
• While order backlog declined from prior period, transition to high-profitability project-focused order structure is progressing (profitability emphasis)
• Production efficiency improvements delivered 500 million yen profit improvement (year-on-year), demonstrating successful company-wide cost reduction efforts
• Extruded Products segment posted decreased revenue and profit (-78 million yen) due to volume decline, strongly affected by demand slowdown
• Environmental segment achieved 144.4% revenue increase due to strong plant fundamental improvement construction, operating profit turned positive from -28 million yen to +58 million yen
• Logistics segment shows trend of increased revenue and profit with new contracts and scheduled full operation of commercial warehouse (second half), dispatch efficiency contributing to cost reduction
• Capital expenditure in first half reached 2.16 billion yen (vs. 1.01 billion yen prior year), doubling to accelerate investment in growth and efficiency
• Construction skill training project (establishment of Fujisash S・C) promotes skill succession and strengthens construction framework
• Re-Sash R100 (100% recycling rate) offered at same price range as conventional products, achieving balance of environmental and cost considerations
• SuMPO EPD acquisition visualizes environmental impact, third-party certification of CO2 emissions for building material aluminum extrusions
• Construction project values in Tokyo and Osaka areas maintain steady progress, with urban demand providing support despite headwinds from declining non-wooden construction starts

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