IWAKI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥22.69B
• Operating Income: ¥2.73B
• Net Income: ¥2.24B
• EPS: ¥103.82

Income Statement

Balance Sheet

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

Iwaki Co., Ltd. (6237) reported FY2026 Q2 (cumulative) results showing modest topline growth and resilient profitability, underpinned by non-operating contributions and a strong balance sheet. Revenue grew 0.7% YoY to ¥22.693bn, while operating income declined slightly by 1.6% YoY to ¥2.726bn, indicating some pressure at the operating level despite a still-solid operating margin of roughly 12.0%. Gross profit of ¥9.227bn implies a robust gross margin of 40.7%, suggesting favorable product mix and/or effective pricing relative to input costs. Ordinary income reached ¥3.231bn, exceeding operating income by about ¥505m, pointing to positive non-operating items (e.g., FX gains, interest/other income) more than offsetting ¥43.5m of interest expense. Net income increased 5.8% YoY to ¥2.299bn, lifting net margin to 10.13%, aided by those non-operating tailwinds. The DuPont breakdown yields a net margin of 10.13%, asset turnover of 0.425x, and financial leverage of 1.40x, producing an ROE of 6.01% for the period. Calculated equity ratio is approximately 71.6% (equity ¥38.226bn / assets ¥53.402bn), underscoring very conservative leverage versus total liabilities of ¥16.041bn. Liquidity appears strong with a current ratio of 309% and quick ratio of 248%, supported by current assets of ¥37.405bn versus current liabilities of ¥12.106bn. Working capital stands at ¥25.300bn, offering ample operating flexibility but also implying capital tied up in inventories (¥7.330bn) and receivables (not disclosed). Interest coverage is very comfortable at 62.6x, reflecting low financial risk. While the effective tax rate field shows 0.0% due to data limitations, a simple approximation using disclosed tax expense suggests a more normal rate near the high-20s percent. Cash flow statements (OCF, capex, FCF) and depreciation are not disclosed in the dataset, so EBITDA and cash-based quality metrics cannot be reliably assessed from this release. Dividend information is also not disclosed; thus payout and FCF coverage cannot be evaluated. Overall, Iwaki’s H1 shows steady revenue, slightly softer operating profit, stronger bottom line due to non-operating items, and a fortress-like balance sheet. The outlook will hinge on the sustainability of gross margins, normalization of non-operating gains, inventory discipline, and the trajectory of end-market demand into H2.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 10.13%
• asset_turnover: 0.425x
• financial_leverage: 1.40x
• calculated_ROE: 6.01%
• comments: ROE is driven primarily by healthy net margin and modest leverage; asset turnover is relatively low, partially reflecting H1 cumulative timing and a cash-rich balance sheet. margin_quality: Gross margin of 40.7% is strong for machinery/industrial components, implying favorable mix and pricing power. Operating margin of ~12.0% is solid but slightly down YoY given operating income -1.6% on +0.7% revenue, signaling modest deleveraging at the operating level. Ordinary margin of ~14.2% and the gap over operating income indicate non-operating gains were supportive this period. operating_leverage: Revenue growth was limited (+0.7% YoY) and operating income fell (-1.6% YoY), suggesting negative operating leverage in H1. Cost discipline kept margins resilient, but incremental profitability did not expand with sales. Monitoring fixed cost absorption and mix will be key for H2.

Growth Assessment

revenue_sustainability: Topline grew 0.7% YoY to ¥22.693bn, indicating stable but subdued demand. Given Iwaki’s exposure to industrial and chemical pump markets, growth likely varies by region and end-market cycles; mix management supported margins despite slow growth. profit_quality: Net income rose 5.8% YoY to ¥2.299bn despite softer operating profit, implying non-operating items (e.g., FX gains, interest/other income) were a meaningful contributor. Sustainability of bottom-line growth may be less certain if those items normalize. outlook: Assuming stable end-market conditions and no sharp reversal in FX-related gains, margins should remain resilient into H2. However, reacceleration in revenue will likely be needed to expand operating profit, and normalization of non-operating gains could temper net income growth.

Financial Health

liquidity: Current ratio 309% and quick ratio 248% indicate ample short-term liquidity. Working capital totals ¥25.300bn, supported by ¥37.405bn current assets versus ¥12.106bn current liabilities. Inventories are ¥7.330bn (~32% of H1 sales), warranting monitoring of turns. solvency: Total liabilities are ¥16.041bn against equity of ¥38.226bn, yielding a debt-to-equity ratio of 0.42x and an equity ratio of ~71.6%. Interest coverage is 62.6x, indicating low financial risk and high capacity to service obligations. capital_structure: Leverage is conservative with significant equity cushion. The company appears under-levered relative to peers, providing optionality for strategic investments while maintaining resilience.

Cash Flow Quality

earnings_quality: Effective tax rate shown as 0.0% reflects unavailable pre-tax data; a simple approximation suggests ~27–28% (¥878.7m tax / ~¥3.18bn pre-tax). Non-operating gains lifted ordinary income above operating income by ~¥505m, a source of volatility to monitor. FCF_analysis: OCF, capex, and FCF are not disclosed in the provided dataset; thus, FCF quality and coverage cannot be assessed. Given high working capital and inventory levels, cash conversion should be monitored once cash flow data is available. working_capital: Working capital is ¥25.300bn with inventories at ¥7.330bn. Without receivables and payables detail, we cannot compute DSO/DIO/DPO, but the magnitude suggests material cash tied in operations; inventory discipline will be important for OCF in H2.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed here. With EPS of ¥103.82 and strong balance sheet metrics, the capacity for dividends appears sound in principle, but actual payout cannot be evaluated without policy and cash flow details. FCF_coverage: Not assessable due to missing OCF and capex data; reported FCF and coverage ratios show as 0 because of non-disclosure. policy_outlook: No dividend policy information is provided in this dataset. If Iwaki follows a stable or progressive payout framework, the conservative capital structure would be supportive, but confirmation requires management guidance.

Risk Assessment

Business Risks:

• End-market cyclicality in industrial and chemical sectors impacting pump demand
• Product mix shifts affecting gross margin sustainability
• Supply chain and component availability risks
• Foreign exchange volatility influencing non-operating gains/losses and competitiveness
• Inventory obsolescence risk if demand slows
• Competitive pricing pressure from domestic and overseas peers
• Regulatory and environmental compliance requirements for chemical-handling equipment

Financial Risks:

• Reliance on non-operating gains to support bottom line in H1
• Potential working capital build weighing on cash conversion
• FX translation and transaction exposure
• Interest rate normalization (limited impact given low leverage, but relevant for non-operating income/expense)
• Customer credit concentration risk (receivables detail not disclosed)

Key Concerns:

• Sustainability of non-operating income that boosted ordinary and net profit
• Soft operating leverage with revenue up only 0.7% YoY and operating income down 1.6% YoY
• Lack of disclosed OCF/capex/FCF and depreciation, limiting visibility on cash earnings and reinvestment needs

Investment Implications

Key Takeaways:

• Stable revenue (+0.7% YoY) with resilient gross margin (40.7%)
• Operating income declined slightly (-1.6% YoY), implying modest negative operating leverage
• Ordinary income exceeded operating income by ~¥505m, highlighting non-operating support
• Net income grew 5.8% YoY; net margin at 10.13%
• Strong balance sheet: ~71.6% equity ratio, 0.42x liabilities-to-equity, 62.6x interest coverage
• Ample liquidity: current ratio 309%, quick ratio 248%
• Working capital heavy (¥25.3bn) with inventories at ¥7.33bn
• Cash flow data not disclosed; EBITDA not available due to missing depreciation
• Dividend metrics not disclosed; payout policy visibility limited

Metrics to Watch:

• Breakdown of non-operating income (FX gains/losses, financial income/expenses)
• Order intake, backlog, and book-to-bill for demand visibility
• Gross margin trajectory and product mix
• Inventory turns and overall cash conversion (OCF) once disclosed
• Capex and depreciation trends (to assess maintenance vs. growth investment)
• Receivables quality and DSO
• FX rates (USD/JPY, EUR/JPY, CNY/JPY) sensitivity

Relative Positioning: Compared with domestic machinery/component peers, Iwaki exhibits strong gross margins and a very conservative balance sheet, but shows slower topline growth in this half and a greater reliance on non-operating items to support net profit.

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