MIURA CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥123.93B
• Operating Income: ¥13.94B
• Net Income: ¥12.15B
• EPS: ¥105.81

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Miura Co., Ltd. delivered a strong FY2026 Q2 performance with clear operating leverage and healthy cash generation. Revenue rose 11.3% year over year to 1,239.26, while operating income surged 53.5% to 139.42, evidencing effective cost control and a favorable mix. Net income increased 66.1% to 122.42, lifting the net margin to 9.9%. We estimate operating margin expanded roughly 309 bps year over year to 11.3%, and net margin widened about 328 bps to 9.9%. Gross margin stood at a solid 38.4%, underpinning the operating margin expansion despite higher SG&A in absolute terms. Non-operating contributions were material: profit before tax (166.81) exceeded operating income by 27.39, broadly in line with equity-method income of 27.09, indicating associates were a meaningful earnings tailwind. Cash flow quality was high: operating cash flow of 184.42 was 1.51x net income, converting earnings into cash effectively. Free cash flow of 147.51 comfortably covered dividends (coverage 1.93x) and capex (24.98), leaving balance sheet flexibility intact. The equity ratio of 49.3% and D/E of 1.02x indicate a prudent capital structure, though several liquidity line items were unreported. Return metrics were mixed: ROE was modest at 5.6% and ROIC at 4.7%, the latter below a 5% warning threshold and below a typical 7–8% target range for high-quality industrials. Asset turnover of 0.283 implies a capital-intensive footprint and/or working capital intensity, constraining capital efficiency despite margin gains. The effective tax rate was 27.1%, consistent with normalized levels and supportive of comparability. While payout ratio (62.4%) is slightly above a conservative 60% benchmark, robust FCF suggests dividends remain serviceable under current conditions. The key forward consideration is sustainability: how much of the margin expansion is structural (pricing, mix, productivity) versus cyclical or non-operating? With equity-method income accounting for about 16% of pre-tax profit, associate volatility is a watch point. Overall, fundamentals improved, cash generation was strong, and the balance sheet remains sound, but capital efficiency needs to improve to sustain higher shareholder returns.

Profitability Analysis

ROE (5.6%) decomposes into Net Profit Margin (9.9%) × Asset Turnover (0.283) × Financial Leverage (2.02x). The largest driver year over year was margin expansion: operating income grew 53.5% versus revenue +11.3%, lifting operating margin to about 11.3% from roughly 8.2% (≈+309 bps), and net margin to 9.9% from ~6.6% (≈+328 bps). The business drivers likely include improved pricing/mix, cost pass-through and productivity gains, with additional uplift from equity-method income (27.09) flowing below operating profit. Asset turnover remains low at 0.283, reflecting working capital intensity (AR 664.76, inventories 425.17) and a sizable fixed asset base (noncurrent assets 2,577.01), which dampens ROE despite better margins. Leverage is moderate (equity multiplier ~2.02x), providing some ROE support without elevating balance-sheet risk. The margin gains appear partly structural (gross margin 38.4% vs tighter SG&A ratio at 27.5%), but the non-operating boost (equity-method income) may be more cyclical and could normalize. No evidence suggests SG&A growth exceeds revenue growth this quarter; SG&A as a percentage of revenue is ~27.5%, allowing strong operating leverage. Overall, improved profitability is the key ROE driver, while low capital turnover and modest leverage cap ROE.

Growth Assessment

Top-line growth of 11.3% to 1,239.26 was healthy and broadly based on improved pricing/mix, given the strong gross margin of 38.4%. Profit growth was outsized: operating income +53.5% and net income +66.1%, indicating significant operating leverage and non-operating support from associates. EBITDA of 207.51 implies an EBITDA margin of 16.7%, validating margin traction. Equity-method income of 27.09 contributed materially to pre-tax profit (about 16% share), enhancing total earnings growth. With effective tax rate steady at 27.1%, bottom-line growth reflects operational improvements rather than tax swings. Sustainability hinges on maintaining price-cost spreads and disciplined SG&A, plus the stability of associate contributions. The absence of R&D and detailed SG&A breakdowns limits visibility into longer-term innovation and cost structure resilience. On balance, revenue growth looks sustainable near term if demand holds, but the earnings cadence could moderate if non-operating contributions normalize or if working capital rebuilds in H2.

Financial Health

Total assets were 4,381.41 against total equity of 2,173.08, yielding an equity ratio of 49.3% and D/E of 1.02x—conservative within the industrial peer context. Current assets totaled 1,804.40, but current liabilities were unreported, so the current ratio and quick ratio cannot be assessed; no explicit warning on Current Ratio < 1.0 is possible due to data limitations. Interest-bearing debt was unreported, and interest coverage cannot be calculated; however, profit before tax (166.81) provides a cushion against plausible interest costs. Maturity mismatch risk cannot be quantified given missing current liability and debt maturity data; receivables (664.76) and inventories (425.17) indicate notable working capital exposure. No off-balance sheet obligations were disclosed in the provided data. Overall solvency is strong; liquidity appears adequate but is unverified due to missing details.

Cash Flow Quality

OCF of 184.42 was 1.51x net income (122.42), comfortably above the 1.0x quality threshold. With D&A at 68.09, cash conversion was robust, suggesting only a modest working capital use/inflow overall. Free cash flow of 147.51 more than covered dividends (42.75) and capex (24.98), leaving residual cash for optionality. No signs of aggressive working capital management are evident from the aggregate data; receivables and inventories remain sizable but OCF strength offsets concern this quarter. Financing CF was -147.08, consistent with net shareholder returns and/or debt reduction; share repurchases were unreported. Overall, earnings quality is high this quarter.

Dividend Sustainability

The calculated payout ratio is 62.4%, slightly above the <60% benchmark but close, and supported by strong FCF. FCF coverage of dividends is 1.93x, indicating good headroom even with potential variability in equity-method income. Cash and equivalents of 558.03 add further buffer. With ROE at 5.6% and ROIC at 4.7%, scope for dividend growth will depend on sustaining higher operating margins and improving capital efficiency. Absent explicit DPS guidance, our view is that the current dividend level is serviceable under base-case assumptions.

Risk Assessment

Business Risks:

• Demand cyclicality in industrial boilers/thermal systems impacting order intake and capacity utilization
• Input cost and pricing spread risk affecting gross margin sustainability
• Execution risk in overseas expansion and service network scaling
• Associate performance variability affecting equity-method income (27.09 contribution)
• Supply chain and lead-time disruptions potentially driving inventory and receivable swings

Financial Risks:

• Capital efficiency risk: ROIC 4.7% is below the 5% warning threshold
• Working capital intensity (AR 664.76, inventories 425.17) could tie up cash if growth slows
• Liquidity assessment constrained by unreported current liabilities and interest-bearing debt
• Potential normalization of non-operating income reducing total profit

Key Concerns:

• Sustainability of ~309 bps operating margin expansion amid competitive pricing
• Reliance on associates for roughly 16% of pre-tax profit
• Limited disclosure of SG&A, R&D, and interest expense constrains forward visibility

Investment Implications

Key Takeaways:

• Strong quarter with revenue +11.3% and operating income +53.5%, showcasing operating leverage
• Margin expansion: operating margin ~11.3% (≈+309 bps YoY) and net margin 9.9% (≈+328 bps YoY)
• High cash quality with OCF/NI at 1.51x and FCF 147.51 supporting dividends and capex
• Capital structure healthy (equity ratio 49.3%, D/E 1.02x) but ROIC low at 4.7%
• Non-operating uplift meaningful: equity-method income 27.09 (~16% of PBT)

Metrics to Watch:

• Order backlog and book-to-bill for core boilers and services
• Gross margin trajectory and SG&A ratio to sustain double-digit operating margins
• Working capital turns (DSO, DIO) to preserve OCF as growth continues
• Equity-method income trend and composition by affiliate/region
• ROIC vs WACC progression and capital allocation to improve capital efficiency
• Dividend policy updates versus payout ratio near 60%

Relative Positioning: Within Japanese industrial equipment peers, Miura demonstrates improving profitability and strong cash conversion, with a conservative balance sheet; however, it trails top-tier peers on capital efficiency (ROIC 4.7%) and maintains some earnings sensitivity to associate contributions.

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