UNIPRES CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥150.70B
• Operating Income: ¥6.33B
• Net Income: ¥3.15B
• EPS: ¥69.47

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

Unipres Co., Ltd. (TSE: 5949) reported FY2026 Q2 consolidated results under JGAAP showing a mixed but improving earnings profile. Revenue declined 7.3% YoY to ¥150.7bn, reflecting softer volumes and/or model transitions in the auto sector, yet profitability improved markedly. Operating income rose 77.6% YoY to ¥6.33bn, with operating margin expanding to roughly 4.2%, indicating effective cost control, mix improvement, or price pass-throughs. Net income increased 213.8% YoY to ¥3.08bn, lifting the net margin to 2.05%. DuPont decomposition indicates a calculated ROE of 2.04%, driven by thin net margins (2.05%), asset turnover of 0.527x, and moderate financial leverage of 1.89x. Gross margin stood at 11.5%, while EBITDA margin reached 12.5%, implying a sizeable non-cash depreciation burden (¥12.48bn) typical of capital-intensive stamping/body parts operations. Interest coverage is adequate at 5.4x EBIT/interest, suggesting manageable financing costs despite a relatively high depreciation base. Cash generation is a clear positive: operating cash flow (OCF) was ¥10.51bn, 3.41x reported net income, underscoring strong cash earnings quality. Liquidity appears solid with a current ratio of 141.6% and a quick ratio of 107.1%, supported by ¥46.34bn in working capital. The capital structure is conservative-to-moderate with total liabilities/equity at 0.95x and assets/equity at 1.89x. Financing cash outflows of ¥13.17bn point to debt reduction and/or other financing uses; dividends remain suspended (DPS ¥0), preserving cash. While the provided “effective tax rate” metric shows 0.0%, the combination of income tax (¥1.38bn) and net income implies an effective rate in the ~30% range, indicating that the 0% figure likely reflects calculation basis limitations rather than true tax expense absence. Reported equity ratio is listed as 0.0%, but this appears unreported; the balance sheet implies equity of ¥151.05bn against assets of ¥285.70bn. Several line items such as cash and equivalents, investing cash flow, and share counts are unreported; conclusions are therefore based on available non-zero items and derived ratios. Overall, despite revenue pressure, the company delivered notable operating leverage and robust cash conversion, positioning it better for margin resilience into 2H if volumes stabilize. Key watchpoints are volume recovery, cost pass-through sustainability, capex intensity (unreported), and financing needs amidst ongoing automotive demand normalization. In the context of auto parts suppliers, profitability remains modest but trending better, with balance sheet flexibility to support necessary investments. The absence of a dividend supports deleveraging and liquidity preservation in the near term.

Profitability Analysis

ROE is 2.04%, decomposed into net margin 2.05% x asset turnover 0.527x x financial leverage 1.89x. Net margin improvement versus last year is implied by the 213.8% YoY increase in net income against lower sales, highlighting cost discipline and/or improved pricing. Gross margin of 11.5% versus operating margin of ~4.2% points to substantial SG&A and overhead absorption, but the 77.6% YoY surge in operating income suggests positive operating leverage on a leaner cost base. EBITDA margin at 12.5% reflects heavy depreciation (¥12.48bn) typical for tooling and press machinery; nevertheless, EBITDA comfortably covers interest expense. Ordinary income of ¥6.26bn is slightly below operating income, indicating modest net non-operating expense, largely interest. The gap between gross and EBITDA margins indicates limited room for further margin expansion without volume tailwinds or additional cost reductions, but current trends show better productivity. Overall, profitability is improving from a low base, with operating leverage evident despite a 7.3% revenue decline.

Growth Assessment

Top-line contracted 7.3% YoY to ¥150.7bn, likely tied to customer production schedules, model changeovers, and regional demand shifts. Despite the sales decline, operating income rose 77.6% YoY to ¥6.33bn, signaling improved cost structures, mix, and/or pricing pass-through of materials. Net income surged 213.8% YoY to ¥3.08bn, benefiting from operating leverage and disciplined non-operating costs. Sustainability hinges on maintaining cost savings and recovering volumes in 2H, as auto OEM schedules normalize. With depreciation at ¥12.48bn, ongoing capex needs are likely material (investing CF is unreported), which can support medium-term competitiveness but may weigh on short-term free cash. Product/program pipeline (unreported) and geographic diversification will influence trajectory amid EV transition and platform consolidation by OEMs. Outlook: cautiously constructive on earnings quality given cash conversion, but top-line visibility remains moderate due to sector cyclicality.

Financial Health

Liquidity is solid: current ratio 141.6%, quick ratio 107.1%, and working capital ¥46.34bn support near-term obligations. Solvency is adequate with total liabilities/equity at 0.95x and assets/equity (financial leverage) at 1.89x, denoting a balanced capital structure. Interest coverage at 5.4x indicates manageable debt service capacity. Equity is ¥151.05bn against total assets of ¥285.70bn; the reported equity ratio of 0.0% appears unreported rather than reflective of the balance sheet. Inventory of ¥38.38bn relative to current liabilities appears manageable; inventory risk should remain monitored given volume variability. Financing cash outflows of ¥13.17bn suggest deleveraging or other financing uses, which, combined with no dividends, supports balance sheet strength. Overall, the company exhibits reasonable solvency and liquidity buffers for a capital-intensive supplier.

Cash Flow Quality

OCF of ¥10.51bn exceeds net income of ¥3.08bn by 3.41x, indicating strong earnings quality and working capital management. EBITDA of ¥18.81bn supports cash generation despite significant depreciation, consistent with the capital intensity of press/stamping operations. Free cash flow is not derivable from the provided data because investing cash flow is unreported (shown as zero by disclosure convention), so FCF coverage metrics are not meaningful. Working capital appears contributory to cash generation, with current assets comfortably exceeding current liabilities; further detail on receivables/payables turns is not available. Financing CF of -¥13.17bn likely reflects net debt repayment and/or other financing activities; combined with strong OCF and no dividends, this suggests a focus on balance sheet consolidation. Overall, cash conversion looks robust in the period, but sustainability depends on maintaining operating margins and disciplined capex.

Dividend Sustainability

DPS is reported at ¥0.00, with a payout ratio of 0.0%. Given the strong OCF and lack of reported investing outflows, cash capacity appears adequate; however, true FCF cannot be assessed because capex data are not disclosed here. The company appears to prioritize liquidity and possibly debt reduction, as evidenced by negative financing cash flow and no dividends. Under typical auto supplier policies, dividends resume when earnings and FCF visibility improve and leverage targets are met. With net income positive and cash generation strong, capacity may emerge, but policy timing is uncertain pending capex needs for new programs and EV-related tooling. Near-term sustainability of any payout would depend on confirmed FCF after maintenance/growth capex, which is not provided.

Risk Assessment

Business Risks:

• Automotive production cyclicality and exposure to OEM build schedules
• Customer concentration risk (large exposure to major Japanese OEMs)
• Raw material cost volatility (steel) and timing of pass-through adjustments
• EV transition and platform consolidation requiring new tooling/capex
• Program launch and ramp risks affecting yield and scrap rates
• Geopolitical and FX volatility affecting overseas operations and margins
• Operational execution risks in a capital-intensive, high fixed-cost base

Financial Risks:

• Moderate leverage with sensitivity to interest rate and refinancing conditions
• High depreciation implying ongoing capex needs and potential FCF pressure
• Working capital swings tied to OEM production fluctuations
• Potential covenant constraints if profitability weakens (details not disclosed)
• Tax rate variability and extraordinary items affecting net income

Key Concerns:

• Top-line decline (-7.3% YoY) despite improving margins
• Visibility on capex and investing cash flows is absent in this disclosure
• Dividend policy remains suspended; timing of reinstatement unclear

Investment Implications

Key Takeaways:

• Earnings quality improved: OCF 3.41x net income and EBITDA margin 12.5%
• Operating leverage materialized despite a 7.3% revenue decline
• Balance sheet is reasonably strong with current ratio 1.42x and D/E 0.95x
• Interest coverage at 5.4x indicates manageable debt service
• Dividend suspended, with cash seemingly funneled to balance sheet strengthening

Metrics to Watch:

• Volume recovery and pricing/mix in 2H (revenue trajectory)
• Operating margin sustainability and cost pass-through effectiveness
• Capex and investing cash flow (true FCF and payback)
• Net debt and interest coverage trends
• Working capital turns (inventory and receivables days)
• FX rates (USD/JPY, EUR/JPY, CNY/JPY) and raw material surcharge mechanisms

Relative Positioning: Within Japanese auto parts peers, Unipres shows modest profitability but improving operating leverage and strong cash conversion this period; balance sheet leverage is moderate, offering flexibility to support program investments, though sustained margin gains and clearer FCF are needed to close the performance gap with higher-margin suppliers.

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