ONEX Corporation FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.26B
• Operating Income: ¥89M
• Net Income: ¥-22M
• EPS: ¥62.24

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

Onex Co., Ltd. (TSE: 5987) reported FY2026 Q1 consolidated results under JGAAP showing steady top-line expansion and stronger operating leverage. Revenue was ¥1,263 million, up 2.7% year over year, while operating income rose 26.7% to ¥89 million, indicating meaningful cost discipline and/or pricing traction. Gross profit of ¥226 million translates to a gross margin of 17.9%, with operating margin improving to approximately 7.0%. Ordinary income reached ¥93 million, and quarterly net income was ¥103 million, implying a net margin of 8.16%. Net income modestly exceeded ordinary income due to a small net tax benefit (reported income tax of -¥1.46 million) and/or potential extraordinary items; details are not disclosed. The DuPont bridge yields an ROE of 1.91% for the quarter, based on a net margin of 8.16%, asset turnover of 0.146, and financial leverage of 1.61x. Balance sheet strength appears solid: total assets were ¥8,667 million and total equity ¥5,385 million, implying an equity ratio of about 62% (despite the reported equity ratio field showing 0%, which indicates non-disclosure). Liquidity is robust with a current ratio of 2.58x and working capital of approximately ¥2,817 million. Interest burden is light with interest expense of ¥4.1 million and interest coverage of 21.8x. The company’s debt-to-equity ratio of 0.64x suggests a conservative capital structure with capacity for investment. Cash flow statement items are not disclosed this quarter (zeros indicate unreported), limiting assessment of operating cash conversion and free cash flow. Dividend data are also not disclosed (DPS shown as 0.00), and payout ratios/FCF coverage figures are not usable. Per-share metrics are partially incomplete as shares outstanding are not disclosed, although EPS of ¥62.24 is provided for the quarter. Overall, Q1 shows healthy margin progression on modest revenue growth, a strong balance sheet, and excellent interest coverage, but the absence of cash flow and dividend disclosures constrains conclusions on earnings quality and capital returns. Given likely seasonality and the early stage of the fiscal year, sustained revenue momentum and cost pass-through will be key to maintain the improved operating margin. The outlook appears cautiously positive on profitability trends, with monitoring needed on working capital movements and any normalization of tax effects.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 8.16% × Asset turnover 0.146 × Financial leverage 1.61 = ROE 1.91% for the quarter. Operating margin is ~7.05% (¥89m / ¥1,263m), improving significantly YoY versus revenue growth of 2.7%, evidencing operating leverage from fixed-cost absorption and/or better mix and pricing. Gross margin is 17.9%, indicating adequate value-add for a processing/industrial business, with room for further productivity or procurement gains. Ordinary margin of 7.37% (¥93m / ¥1,263m) points to limited non-operating drag; interest expense is modest. Net margin exceeds ordinary margin due to a net tax benefit (-¥1.46m) and/or possible extraordinary gains; this boosts quarterly ROE but may not be recurring. Asset turnover of 0.146 (quarterly figure) is modest and typical of asset-intensive processing operations; annualized turnover could be materially higher, but confirmation requires full-year data. Financial leverage at 1.61x (Assets/Equity) is moderate, balancing risk and return. Interest coverage is strong at 21.8x, indicating ample headroom for rate or earnings volatility. EBITDA is not disclosed due to unreported depreciation/amortization; hence, the degree of non-cash support to operating profit cannot be assessed. Overall profitability quality appears to have improved, with cost controls and scale benefits driving a larger share of incremental revenue to operating income.

Growth Assessment

Revenue grew 2.7% YoY to ¥1,263m, a modest but positive trajectory in Q1. Operating income growth of 26.7% significantly outpaced sales, highlighting favorable operating leverage and likely improved pricing/mix or cost efficiencies. Ordinary and net income increased, with net income up to ¥103m, but the apparent benefit from a negative tax charge suggests part of the bottom-line strength may be non-recurring. Without segment and order backlog disclosure, sustainability of the top-line trend is uncertain; however, the improved margin profile suggests progress on pass-through of input costs and utilization. Asset turnover (quarterly 0.146) indicates ongoing reliance on efficient asset use; continued revenue growth is needed to further lift returns. Near-term outlook hinges on demand conditions in end-markets and the company’s ability to maintain pricing amid input cost and wage pressures. Given seasonality typical in industrials, Q1 should be viewed as an early indicator rather than a full-year run-rate. Watch for sequential revenue momentum into Q2–Q3 and stability of the 7%+ operating margin. Any reversal of the tax credit or extraordinary gains could normalize net margin closer to ordinary margin levels. Absent cash flow disclosures, we cannot validate whether growth is supported by healthy cash conversion.

Financial Health

Liquidity is strong: current assets of ¥4,595m versus current liabilities of ¥1,778m produce a current ratio of 2.58x and working capital of ¥2,817m. The quick ratio is shown equal to the current ratio because inventories are unreported; true quick liquidity could be lower once inventories are included. Solvency is solid with total liabilities of ¥3,425m and total equity of ¥5,385m, implying a debt-to-equity ratio of 0.64x and an inferred equity ratio of about 62% (total equity/total assets), notwithstanding the disclosed equity ratio field showing 0% due to non-disclosure. Interest expense is low at ¥4.1m and coverage is 21.8x, indicating limited refinancing risk in the near term. Financial leverage is moderate (Assets/Equity 1.61x), suggesting balance sheet flexibility for capex or bolt-on investments. Cash and equivalents, as well as detailed debt breakdown and maturities, are not disclosed, limiting a fuller liquidity assessment.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported this quarter (zeros indicate non-disclosure), so OCF/Net income and free cash flow metrics provided mechanically as 0.00 cannot be interpreted as actual performance. Earnings quality cannot be triangulated via cash conversion, capex intensity, or working capital release/consumption. Balance sheet indicates strong working capital (¥2,817m), but without period-over-period movements, the impact of receivables/payables and inventory on OCF cannot be evaluated. Depreciation and amortization are also unreported, preventing EBITDA construction and assessment of non-cash earnings components. Until cash flow data are disclosed, we cannot confirm whether the improved operating margin translates into sustainable free cash flow.

Dividend Sustainability

Dividend per share is not disclosed (DPS shown as 0.00), and payout ratio/FCF coverage figures are therefore not meaningful for analysis. With quarterly EPS of ¥62.24 and a robust balance sheet, the capacity for dividends appears supported in principle; however, the absence of cash flow and capital allocation disclosures prevents assessing coverage from operating and free cash flow. No stated dividend policy is provided in the data. Outlook on dividends remains indeterminate pending clarity on full-year earnings trajectory, cash conversion, and any planned capex.

Risk Assessment

Business Risks:

• End-market demand variability affecting utilization and operating leverage
• Input cost inflation (energy, materials) testing pricing power and margins
• Potential customer concentration typical in industrial processing
• Execution risk in maintaining cost discipline after margin expansion
• Seasonality and cyclical exposure inherent to industrial supply chains

Financial Risks:

• Limited cash flow visibility due to non-disclosure of OCF/FCF
• Potential working capital swings that could dilute cash conversion
• Interest rate risk, albeit mitigated by low interest burden and strong coverage
• Tax normalization risk given a negative tax charge in the quarter

Key Concerns:

• Lack of cash flow and inventory disclosure constraining earnings quality assessment
• Net margin uplift partly driven by a tax benefit and/or one-offs
• Uncertain sustainability of operating margin gains without volume confirmation

Investment Implications

Key Takeaways:

• Modest revenue growth (+2.7% YoY) with outsized operating profit growth (+26.7% YoY) indicates improved operating leverage
• Gross margin at 17.9% and operating margin at ~7.0% show margin progress
• Strong balance sheet with inferred equity ratio ~62% and D/E 0.64x
• Interest coverage is robust at 21.8x, limiting financial risk
• Cash flow and dividend data not disclosed, constraining assessment of FCF and capital returns
• Net margin benefited from a tax credit/one-off; sustainability needs monitoring

Metrics to Watch:

• Sequential revenue growth and backlog/orders to validate demand momentum
• Operating margin sustainability at or above ~7% amid input cost dynamics
• Cash conversion (OCF/NI) and FCF once disclosed, including capex intensity
• Working capital turns (receivables, payables, inventory) to assess OCF resilience
• Effective tax rate normalization and any extraordinary items
• Asset turnover trends as a driver of ROE alongside leverage

Relative Positioning: Balance sheet strength appears above average for industrial/processing peers, with profitability improving but still moderate; visibility on cash generation and capital returns lags peers that provide fuller cash flow and dividend disclosures.

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
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