TAKUMA CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥70.11B
• Operating Income: ¥4.12B
• Net Income: ¥4.16B
• EPS: ¥50.94

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

Takuma (60130) delivered modest top-line growth in FY2026 Q2 with revenue of ¥70.1bn, up 3.0% YoY, but profitability softened as operating income declined 9.5% YoY to ¥4.12bn. Gross profit was ¥13.87bn, implying a gross margin of 19.8%, while operating margin compressed to 5.9%, indicating cost pressure or less favorable project mix. Ordinary income of ¥4.56bn yielded an ordinary margin of 6.5%, supported by negligible interest expense (¥2m) and non-operating items. Net income fell 7.1% YoY to ¥3.82bn, resulting in a net margin of 5.45%. DuPont analysis points to ROE of 3.53%, driven by a modest net margin (5.45%), low asset turnover (0.391x), and moderate financial leverage (1.66x). ROA is approximately 2.1% (¥3.82bn / ¥179.48bn), consistent with an engineering/project business carrying substantial assets and work-in-process. Liquidity is strong: the current ratio is 196% and quick ratio 179%, with working capital of ¥66.79bn. The balance sheet is conservative; equity of ¥108.34bn equates to an equity ratio of about 60.4% (equity/total assets), despite the reported 0.0% equity ratio flag (which reflects non-disclosure rather than a true value). Cash generation was robust with operating cash flow of ¥15.67bn, 4.1x net income, suggesting favorable cash conversion, likely aided by working capital inflows on long-term contracts. EBITDA was ¥5.03bn (7.2% margin), and the D&A burden (¥0.92bn) indicates a relatively asset-light profile compared to revenue scale. Interest coverage is extremely high at ~2,058x, reflecting minimal financial risk from debt service. The effective tax rate, inferred from disclosed tax expense (¥1.6bn), is approximately 29.5%, not 0.0% (the latter is an artifact of unreported metric fields). Investing and cash balance figures are shown as zero, which should be treated as undisclosed; therefore, free cash flow cannot be reliably determined from the provided data. Dividend fields (DPS, payout, FCF coverage) are also undisclosed and should not be interpreted as zero payout. Overall, the quarter shows resilient sales with margin compression at the operating level, strong operating cash flow, and a solid balance sheet, but limited visibility on capex, cash balances, and shareholder returns due to data gaps.

Profitability Analysis

ROE decomposition: Net profit margin 5.45% x Asset turnover 0.391x x Financial leverage 1.66x = ROE 3.53%. Operating margin is 5.9% (¥4.12bn / ¥70.11bn) versus gross margin 19.8%, indicating SG&A and project execution costs absorbed ~14pp of sales. EBITDA margin is 7.2%, implying D&A burden of roughly 1.3pp of sales—consistent with a relatively light capital intensity. Operating income declined 9.5% YoY despite 3.0% revenue growth, indicating negative operating leverage in the period (cost inflation, mix, or project timing). Ordinary margin (6.5%) exceeded operating margin, helped by minimal interest expense (¥2m), suggesting financial items are not diluting profitability. ROA is ~2.1% and remains constrained by low asset turnover typical of project-based businesses. Overall margin quality appears adequate but under pressure; sustaining gross margin near 20% while stabilizing SG&A intensity will be key to re-expanding operating margin.

Growth Assessment

Revenue grew 3.0% YoY to ¥70.1bn, indicating steady demand, but operating income fell 9.5% YoY and net income fell 7.1% YoY, revealing margin compression. The divergence between topline and profit growth suggests cost pressure, less favorable project mix, or revenue recognition timing effects on EPC/long-term contracts. EBITDA grew modestly relative to sales (7.2% margin), but not enough to offset higher costs at the operating line. Sustainability of revenue growth will depend on order intake and backlog conversion; these are not disclosed here, limiting visibility. Profit quality is mixed: strong OCF relative to net income (4.1x) is positive, but could be influenced by temporary working capital releases or milestone billings. Outlook hinges on ability to pass through input costs, maintain gross margins on new orders, and execute backlog without schedule slippage. With leverage low and liquidity strong, the company has capacity to pursue growth, but improvements in asset turnover and operating margin are needed to lift ROE.

Financial Health

Liquidity is strong with a current ratio of 196% and quick ratio of 179%, supported by ¥66.79bn in working capital. Current assets of ¥136.31bn comfortably cover current liabilities of ¥69.52bn. The balance sheet is conservative: equity is ¥108.34bn versus total assets of ¥179.48bn, implying an equity ratio of ~60.4% (the reported 0.0% is an undisclosed placeholder). Total liabilities are ¥81.36bn. Debt-to-equity is shown as 0.75x; without a split between interest-bearing debt and other liabilities, this should be treated cautiously. Interest burden is negligible (¥2m), yielding an interest coverage of ~2,058x, implying minimal near-term solvency risk. Inventory is modest at ¥11.93bn, consistent with a project-services mix where receivables/contract assets likely dominate current assets (not disclosed). Overall solvency and liquidity positions appear robust.

Cash Flow Quality

Operating cash flow of ¥15.67bn is 4.1x net income, indicating strong cash conversion during the period. The OCF margin is approximately 22.4% (¥15.67bn/¥70.11bn), suggesting significant working capital inflows, likely from milestone billings or reduced WIP on projects. Earnings quality appears solid in this period given the cash backing; however, in project businesses OCF can be volatile across quarters depending on billing schedules and inventory/procurement timing. Investing cash flow is shown as 0 and cash & equivalents are shown as 0; per guidance, these represent undisclosed items, so free cash flow cannot be reliably calculated and the reported FCF figure should not be interpreted as true zero. Depreciation of ¥0.92bn versus EBITDA of ¥5.03bn indicates a modest non-cash component of earnings and supports cash conversion. Without details on contract assets/liabilities and receivables, the durability of working capital-driven OCF cannot be fully assessed.

Dividend Sustainability

Dividend fields (annual DPS 0.00, payout 0.0%, FCF coverage 0.00x) reflect non-disclosure rather than actual zero values. As such, we cannot assess the current dividend level or payout ratio. From a capacity perspective, the company generated ample OCF relative to net income and holds a strong equity base, which would typically support dividends; however, the absence of investing cash flow data and cash balances prevents confirming free cash flow coverage. Policy outlook cannot be inferred from the provided data; any assessment would require disclosure of DPS, total dividends paid, and at least capex or investing CF.

Risk Assessment

Business Risks:

• Project execution risk on long-term EPC and service contracts (schedule slippage, cost overruns).
• Input cost inflation and procurement risk pressuring gross margins.
• Order intake and backlog timing affecting revenue recognition and quarterly volatility.
• Customer concentration in public/municipal or utility segments exposing budgets and tender cycles.
• Competitive bidding pressure compressing margins on new awards.

Financial Risks:

• Working capital volatility inherent to milestone billing and contract asset/liability swings.
• Limited visibility on interest-bearing debt and cash balances due to undisclosed items.
• Potential tax rate variability (inferred ~29.5%) impacting net profit.
• Currency exposure on imported components if applicable, with margin sensitivity.

Key Concerns:

• Negative operating leverage: operating income down 9.5% YoY despite 3% sales growth.
• Unreported investing cash flows and cash position obscure true free cash flow and liquidity buffer.
• Low asset turnover (0.391x) and modest ROE (3.53%) relative to balance sheet size.

Investment Implications

Key Takeaways:

• Revenue grew 3.0% YoY to ¥70.1bn, but operating income declined 9.5% YoY, indicating margin compression.
• Strong liquidity and conservative balance sheet: equity ratio ~60%, current ratio 196%.
• Robust OCF (¥15.67bn; 4.1x net income) supports earnings quality this period, albeit potentially timing-related.
• ROE at 3.53% is constrained by low asset turnover and compressed margins.
• Dividend and cash balance data are undisclosed; free cash flow cannot be confirmed.

Metrics to Watch:

• Order intake, book-to-bill, and backlog margin (not disclosed here).
• Gross margin on new awards and pass-through of input cost inflation.
• Contract assets/liabilities and receivables to gauge working capital swings.
• Capex and investing cash flows to firm up free cash flow.
• ROE drivers: operating margin and asset turnover trends.
• Tax rate normalization versus inferred ~29.5%.

Relative Positioning: Within Japan’s engineering/project services peers, Takuma shows solid liquidity and low financial risk, but profitability metrics (operating margin ~5.9%, ROE ~3.5%) appear middling and currently pressured; sustained improvement will depend on execution and order quality.

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