TAKAMATSU MACHINERY CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.10B
• Operating Income: ¥-188M
• Net Income: ¥-784M
• EPS: ¥-25.13

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

Takamatsu Machinery (6155) reported FY2026 Q2 consolidated results under JGAAP showing a topline contraction and losses at the operating and net levels amid solid liquidity and modest leverage. Revenue was ¥6,096m, down 5.5% YoY, indicating soft demand or shipment timing in its machine tools-related markets. Gross profit was ¥1,415m, translating to a 23.2% gross margin, which is moderate for the sector but insufficient to cover fixed costs. Operating income was a loss of ¥188m (operating margin -3.1%), unchanged YoY in direction but reflecting ongoing difficulty in absorbing fixed SG&A and depreciation. Ordinary income deteriorated to a ¥236m loss, suggesting incremental non-operating pressures such as forex or other non-operating items despite minimal interest expense (¥5m). Net income was a ¥270m loss (EPS -¥25.13), producing a net margin of -4.43% and a calculated ROE of -1.71%, with low financial leverage (assets/equity ≈ 1.31x) constraining both upside and downside on equity returns. EBITDA was positive at ¥46m, indicating that cash earnings before depreciation were marginally positive, but not enough to overcome SG&A and other charges. Asset turnover of 0.296x is low, pointing to underutilized assets or subdued volumes in the period. Liquidity is strong: current ratio 354% and quick ratio 321%, supported by sizeable working capital of ¥9,616m and relatively modest liabilities (debt-to-equity 0.36x). The balance sheet shows total assets of ¥20,580m against equity of ¥15,748m, implying an equity ratio around the mid-70%s based on available amounts, although the disclosed equity ratio figure is not provided. Operating cash flow was slightly negative at -¥10m, lagging the net loss, while financing cash inflow of ¥843m likely supported working capital needs; investing cash flow was not disclosed. Dividend per share is nil, which is sensible given the loss and limited cash flow information. Cash and equivalents were not disclosed; most current assets likely comprise receivables and other items, given the quick ratio and inventory levels. Reported income tax expense of ¥500m is notable against a net loss and likely reflects deferred tax movements or non-recurring tax adjustments under JGAAP, complicating effective tax rate interpretation for this quarter. Overall, results reflect cyclical headwinds and high operating leverage typical of capital goods, offset by a conservative capital structure and robust liquidity, with near-term focus on restoring margins and improving cash conversion. Data limitations (notably cash balance, investing CF, equity ratio disclosure, and share count) constrain precision in certain analyses; conclusions are therefore based on the available non-zero data points.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.0443
• asset_turnover: 0.296
• financial_leverage: 1.31
• calculated_ROE: -0.0171
• commentary: Negative ROE is driven primarily by a -4.43% net margin, with low leverage (≈1.31x) and subdued asset turnover (0.296x). Improvements in margin and utilization will be the main levers to normalize ROE. margin_quality: Gross margin of 23.2% provides limited buffer for fixed costs, yielding an operating margin of -3.1% and net margin of -4.4%. EBITDA was barely positive (¥46m; 0.8% margin), indicating thin cash earnings before depreciation. The presence of a sizable tax expense under a loss suggests deferred tax adjustments and reduces clarity on underlying after-tax profitability quality this quarter. operating_leverage: A modest 5.5% revenue decline translated into an operating loss, evidencing high fixed-cost intensity. Depreciation of ¥234m versus small EBITDA highlights that D&A is a sizable cost component; small volume changes materially impact operating profit. Tight cost control and volume recovery are necessary to re-establish positive operating leverage.

Growth Assessment

revenue_sustainability: Revenue fell 5.5% YoY to ¥6,096m, indicating softer demand or shipment delays. Asset turnover of 0.296x suggests subdued volume throughput relative to the asset base, limiting sustainability without order intake acceleration. profit_quality: Despite positive EBITDA, operating and ordinary losses point to weak core earnings quality. The ¥500m tax expense amid losses likely reflects deferred tax movements, obscuring after-tax comparability. Ordinary loss (¥236m) below operating loss implies net negative non-operating items beyond small interest costs. outlook: Near-term recovery hinges on order inflows in key end-markets and utilization improvement. Margin normalization requires better pricing/mix and capacity absorption. With low leverage and strong liquidity, the company is positioned to endure cyclical softness, but earnings visibility remains constrained until demand stabilizes and the cost base adjusts.

Financial Health

liquidity: Current ratio 353.9% and quick ratio 320.7% indicate very strong short-term solvency, supported by working capital of ¥9,616m. Cash and equivalents are undisclosed, but quick ratio suggests sizeable liquid assets net of inventory. solvency: Debt-to-equity is 0.36x (total liabilities/equity 5,622/15,748), indicating modest leverage. Based on reported assets and equity, the implied equity ratio is approximately 76.5%, though the disclosed figure is not provided in XBRL. capital_structure: Low financial leverage (1.31x assets/equity) limits financial risk. Interest expense is small (¥5m), and negative EBIT drove an interest coverage of -37.6x on an EBIT basis, but EBITDA coverage of interest would be positive; thus, the near-term constraint is operating profitability rather than financing capacity.

Cash Flow Quality

earnings_quality: OCF/Net Income is 0.04, reflecting weak conversion this quarter (OCF -¥10m vs. net loss -¥270m) despite ¥234m of depreciation add-back, implying working capital outflows or tax-related cash effects. FCF_analysis: Free cash flow is shown as ¥0 due to undisclosed investing cash flows. Therefore, FCF is not assessable this period; any assessment should be deferred until capex data are available. working_capital: Inventories are ¥1,256m (~21% of quarterly revenue run-rate), not excessive, but the negative OCF points to pressure likely from receivables or other current asset build. Monitoring receivables collection and order-to-cash cycle is critical to improve cash conversion.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 with a payout ratio of 0.0%, appropriate given the net loss (-¥270m) and limited cash generation. FCF_coverage: FCF coverage is unassessable this quarter due to undisclosed investing cash flows; reported 0.00x is not economically meaningful. policy_outlook: Resumption of dividends would likely require restoration of sustained positive operating income, clearer visibility on cash generation, and normalization of the tax line. The strong balance sheet provides optionality, but near-term priority appears to be earnings and cash flow stabilization.

Risk Assessment

Business Risks:

• Cyclical demand for machine tools and capital goods affecting order intake and utilization
• Pricing pressure and product mix shifts compressing gross margins
• Dependence on key end-markets (e.g., automotive, machinery, electronics) with macro sensitivity
• Supply chain and lead-time variability impacting deliveries and working capital
• Foreign exchange volatility affecting both competitiveness and non-operating items

Financial Risks:

• Sustained negative operating profit leading to diminished interest coverage on an EBIT basis
• Weak cash conversion (OCF/NI 0.04) potentially necessitating incremental financing
• Tax volatility (¥500m tax expense amid a loss) creating after-tax earnings uncertainty
• Low asset turnover (0.296x) indicating underutilization of the asset base

Key Concerns:

• Ability to restore operating margin above breakeven given high fixed costs
• Visibility on order backlog and book-to-bill to support revenue recovery
• Working capital discipline to translate earnings into cash
• Clarity around tax expense drivers and sustainability under JGAAP

Investment Implications

Key Takeaways:

• Topline declined 5.5% YoY to ¥6.1bn, with operating and net losses despite positive EBITDA
• Gross margin at 23.2% is insufficient to cover fixed costs; high operating leverage evident
• Balance sheet strength (D/E 0.36x, implied equity ratio mid-70%s) provides resilience
• Cash conversion is weak (OCF -¥10m vs. NI -¥270m), likely due to working capital
• Tax line volatility complicates bottom-line interpretation this quarter

Metrics to Watch:

• Order intake, backlog, and book-to-bill
• Gross margin trajectory and pricing/mix
• Operating margin and EBITDA progression
• Receivables days, inventory turns, and OCF
• Capex and investing cash flows once disclosed
• FX impacts within non-operating income/expenses

Relative Positioning: Within Japan’s machine tools and precision equipment cohort, the company exhibits weaker near-term profitability but comparatively strong liquidity and low leverage, positioning it to weather the cycle if demand normalizes.

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
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