FUJI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥79.54B
• Operating Income: ¥9.59B
• Net Income: ¥9.00B
• EPS: ¥102.06

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

Verdict: Strong top-line and operating leverage drove a clear beat-like quarter, though cash conversion and sub-target capital efficiency temper the quality of the print. Revenue rose 26.3% YoY to 795.4, supported by robust demand across FUJI’s core equipment franchises. Operating income increased 47.6% YoY to 95.9, outpacing sales and indicating solid operating leverage. Ordinary income climbed 41.4% YoY to 102.3, with non-operating contributions (net +6.4) providing a modest tailwind. Net income surged 72.2% YoY to 89.9, aided by margin expansion and below-line items, lifting net margin to 11.3%. Operating margin improved to roughly 12.1% from about 10.3% a year ago, a ~174 bps expansion. Net margin expanded by ~301 bps (from ~8.3% to 11.3%), reflecting stronger core profitability and non-operating support. Gross margin printed at 33.8%, consistent with improved product mix/pricing and scale benefits. Earnings quality is mixed: OCF/NI of 0.73x is below the 0.8x threshold, implying working capital absorption amid growth. Liquidity is exceptionally strong (current ratio ~579%, quick ratio ~531%) and leverage is minimal (D/E ~0.14x), providing ample financial flexibility. ROE calculated at 4.0% reflects conservative leverage and mid-teens margins offset by a low asset turnover (0.313). ROIC at 4.1% is below the 5% warning line and well shy of a typical 7–8% target for industrial capital allocators. Financing cash outflows were sizable (-54.5), including share repurchases of -23.7, evidencing ongoing shareholder returns. The payout ratio is high at 87.1%, which looks stretched relative to the company’s current OCF conversion and ROIC. Forward-looking, sustained execution will require maintaining order momentum and converting earnings to cash, while lifting ROIC through mix/efficiency and disciplined capex. Overall, the quarter demonstrates strong cyclical momentum and operating discipline, but the cash conversion and ROIC shortfall warrant monitoring.

Profitability Analysis

ROE decomposition: 4.0% ROE = 11.3% Net Profit Margin × 0.313 Asset Turnover × 1.14x Financial Leverage. The biggest swing factor YoY is the net profit margin, which expanded by roughly 301 bps (from ~8.3% to 11.3%), outpacing the change in leverage (largely stable) and asset turnover (still modest at 0.313). Business drivers: revenue growth of 26.3% combined with operating income growth of 47.6% indicates material operating leverage—likely a mix of volume scale, pricing/mix in higher-value equipment, and disciplined SG&A. Non-operating income (interest/dividends) added ~8.1% of operating income, modestly boosting ordinary income. Sustainability: operating leverage should persist while volumes remain elevated, but the incremental margin may normalize if mix/pricing tailwinds fade or if SG&A reinvestment accelerates. Asset turnover remains low, which caps ROE absent higher margins or more leverage—neither appear likely to change drastically near term given the conservative balance sheet. Watchpoints: if SG&A growth begins to outstrip revenue growth, the current ~174 bps operating margin expansion (from ~10.3% to ~12.1%) could reverse; current data show SG&A is up but detailed breakdown is unreported, limiting granularity.

Growth Assessment

Top-line growth of 26.3% is robust and likely demand-driven in core SMT/automation markets. Profit growth exceeded sales growth (ordinary income +41.4%, operating income +47.6%, net income +72.2%), confirming operating leverage and below-line support. Current gross margin of 33.8% and EBITDA margin of 17.8% indicate healthy mix and cost absorption at present volumes. The non-operating contribution (net +6.38) is helpful but not dominant, suggesting underlying core strength. Sustainability hinges on the order pipeline and capex cycles of end-markets; a normalization in customer capex could slow momentum. Given the OCF/NI of 0.73x, part of earnings growth is not yet reflected in cash, likely due to working capital build alongside growth—sustainable only if order-to-cash cycles normalize. Outlook: management can likely sustain mid-teens operating profitability if demand holds, but ROIC needs improvement via asset utilization and disciplined capital deployment. Non-operating tailwinds (interest/dividends) are supportive while rates and invested balances remain favorable.

Financial Health

Liquidity is exceptionally strong: current ratio 578.8% and quick ratio 531.1%; no warning flags (both well above benchmarks). Solvency is conservative: D/E ~0.14x and interest coverage ~799x reflect negligible financial risk. Maturity mismatch risk is minimal: current assets (1,680.6) comfortably exceed current liabilities (290.3), and cash and deposits alone (583.7) exceed accounts payable (106.5). Total liabilities are modest at 313.9 against equity of 2,224.5, with noncurrent liabilities only 23.5. No off-balance sheet obligations are reported in the provided data. Equity base remains strong with retained earnings of 2,103.1.

Cash Flow Quality

OCF/Net Income is 0.73x, below the 0.8x threshold—flagging weaker cash conversion this period. Likely drivers include working capital investment: accounts receivable (465.0) and inventory (138.7) grew with sales, while payables (106.5) provide limited offset, consistent with growth-phase absorption. Free cash flow is unreported, so dividend and capex coverage cannot be precisely assessed; depreciation is 45.7, indicating meaningful ongoing capex needs for an equipment maker. Financing CF was -54.5, including -23.7 in share repurchases; without investing CF and dividend cash flow disclosures, the sustainability of total shareholder returns from internal cash is uncertain. No explicit signs of aggressive working capital management are evident, but the OCF shortfall warrants monitoring if growth decelerates.

Dividend Sustainability

The calculated payout ratio is 87.1%, above the <60% benchmark for comfort. With OCF/NI at 0.73x and FCF unreported, near-term dividend coverage from internally generated cash is unclear. The balance sheet is very strong (net cash posture implied, very low leverage), which can support distributions temporarily. For medium-term sustainability, improving cash conversion and ROIC (currently 4.1%, below the 5% warning threshold) will be important. Share repurchases of -23.7 this period signal continued shareholder returns; pacing may need to align with realized OCF if growth slows.

Risk Assessment

Business Risks:

• Cyclical demand risk tied to customer capex in SMT/automation end-markets
• Pricing/mix normalization risk that could erode the ~174 bps operating margin expansion
• Execution risk in scaling production while maintaining quality and lead times
• FX volatility impacting export competitiveness and translated earnings

Financial Risks:

• Cash conversion risk (OCF/NI 0.73x) if working capital remains elevated
• ROIC at 4.1% below the 5% threshold, signaling underutilized capital
• Potential dependence on non-operating income (8.1% of operating income) to support ordinary profits

Key Concerns:

• Sustaining order momentum to support operating leverage
• Normalizing accounts receivable and inventory to improve OCF
• High payout ratio (87.1%) relative to current cash generation
• Unreported investing cash flows and capex obscure true FCF

Investment Implications

Key Takeaways:

• Strong revenue growth (+26.3%) translating into outsized operating profit growth (+47.6%) and margin expansion
• Net margin uplift to 11.3% and ROE of 4.0% under conservative leverage
• Cash conversion below par (OCF/NI 0.73x) amid working capital build
• Exceptional liquidity and minimal leverage provide downside protection
• ROIC at 4.1% highlights need for efficiency and asset utilization improvements
• Shareholder returns continue via buybacks (-23.7) alongside a high payout ratio

Metrics to Watch:

• Order intake, backlog, and book-to-bill to gauge demand durability
• OCF/NI ratio and working capital turns (AR days, inventory turns, AP days)
• Operating margin trajectory versus SG&A growth
• ROIC progression and capital allocation (capex vs. buybacks/dividends)
• Non-operating income sensitivity to interest rates and investment balances
• FX rates (USD/JPY, EUR/JPY, CNY/JPY) and hedging impacts

Relative Positioning: Within Japanese industrial equipment and SMT peers, FUJI exhibits stronger-than-average balance sheet strength and liquidity, with above-sector sales and profit growth this period, but trails best-in-class peers on capital efficiency (ROIC) and cash conversion.

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