FUJISHOJI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥8.85B
• Operating Income: ¥-3.75B
• Net Income: ¥3.81B
• EPS: ¥-143.31

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

Fujishoji (TSE:6257) reported FY2026 Q2 consolidated results under JGAAP showing a significant revenue contraction alongside a narrowing of losses, underpinned by strong liquidity and a conservative balance sheet. Revenue was ¥8.85bn, down 64.8% YoY, reflecting a light title launch slate and the highly hit-driven nature of the pachinko/pachislot cycle. Operating income was a loss of ¥3.75bn, yet improved by 121.6% YoY, indicating cost control and a lower fixed-cost absorption burden versus the prior year despite the steep top-line decline. Ordinary loss came to ¥3.62bn and net loss to ¥2.99bn (improving 58.2% YoY), with EPS of -¥143.31 (per-share metrics are not fully analyzable due to unreported share count in the dataset). Depreciation was ¥0.84bn, implying limited capital intensity relative to total assets. The DuPont breakdown yields ROE of -6.83% (net margin -33.86%, asset turnover 0.175x, leverage 1.15x), indicating losses primarily driven by weak revenue throughput rather than financial leverage. Reported gross profit and margin appear unusually high versus revenue, suggesting non-standard classification effects (e.g., cost reversals or reclassifications) rather than true margin economics; therefore, margin interpretation should be cautious. Liquidity remains robust, with current assets of ¥32.43bn and current liabilities of ¥4.57bn translating to a 709% current ratio and working capital of ¥27.85bn. The capital structure is conservative: total liabilities are only ¥6.39bn against equity of ¥43.88bn (equity ratio calculable at ~86.7%), keeping solvency risk low. Operating cash flow was a solid positive ¥4.20bn despite the net loss, implying a sizable working capital release or non-cash loss components. Investing cash flow was unreported in the dataset, preventing a clean read-through to free cash flow, and cash-on-hand is also unreported. The company paid out ¥0 in dividends (DPS 0), consistent with a protective stance while earnings are negative. Overall, the quarter evidences cyclical revenue pressure offset by disciplined cost management and a strong balance sheet, with cash generation buoyed by working capital movements. Given the incomplete disclosure of some items (notably cash, investing cash flows, share count), conclusions focusing on liquidity and per-share metrics are necessarily tentative. The near-term trajectory will hinge on the title pipeline, unit shipments, and normalization of gross margin presentation. Despite losses, low leverage and ample working capital provide financial flexibility to navigate a slow launch period.

Profitability Analysis

ROE decomposes to -6.83% via net margin of -33.86%, asset turnover of 0.175x, and financial leverage of 1.15x, highlighting that operating losses and very low turnover, not leverage, are the core drag. Operating income was -¥3.75bn on ¥8.85bn revenue, reflecting negative operating margin due to the severe revenue contraction; YoY improvement in operating loss suggests some fixed-cost reduction and/or lower impairment and development expenses versus the prior year. Reported gross profit of ¥13.34bn on ¥8.85bn revenue implies a gross margin above 100%, which is atypical for this industry and likely reflects classification or one-off items (e.g., cost reversals, reclassifications into other income captured above cost of sales under JGAAP). Consequently, EBITDA of -¥2.92bn and EBITDA margin of -33.0% provide a more intuitive snapshot of negative operating profitability. Operating leverage remains high: a 64.8% revenue decline translated to a loss, underscoring sensitivity of margins to title timing and unit volumes. Ordinary loss (-¥3.62bn) is close to operating loss, consistent with minimal financial income/expense (interest expense reported as 0), indicating core operations drive results. Depreciation (¥0.84bn) is modest, so profitability is not materially obscured by heavy non-cash charges. The positive YoY change in operating income (+121.6%) despite a steep revenue drop suggests either a much lighter prior-year cost burden or non-recurring items; sustainability of this improvement depends on upcoming launches restoring scale.

Growth Assessment

Revenue fell 64.8% YoY to ¥8.85bn, pointing to a weak launch cadence and/or softer acceptance of new titles in H1. Given the industry’s hit-driven dynamics, revenue is inherently volatile quarter-to-quarter; sustainability hinges on the release calendar and approval pipeline for new machines. Profit quality remains mixed: the operating loss narrowed materially, but the magnitude of revenue decline indicates underutilization of the cost base. The unusual gross margin presentation limits margin trend comparability; excluding classification noise, EBITDA negative suggests underlying profitability has yet to inflect. Outlook will depend on second-half title launches, unit ASPs, and reorder momentum; a normalized year typically shows stronger H2 shipments tied to approvals and parlor demand. With a very strong balance sheet and positive OCF, the company is positioned to support development and marketing for upcoming titles, which is supportive for future growth potential. However, absent investing CF data and detailed segment disclosures, visibility into R&D capitalized spend and product pipeline intensity is limited. Near-term growth drivers include a rebound in pachinko titles, possible diversification into amusement or peripheral businesses, and replacement cycles at parlors; risks include regulatory constraints and consumer traffic variability.

Financial Health

Total assets are ¥50.60bn with equity of ¥43.88bn, implying an equity ratio of ~86.7% and low solvency risk. Total liabilities are ¥6.39bn and current liabilities ¥4.57bn, underscoring limited leverage; the reported debt-to-equity of 0.15x is consistent with a conservative capital structure. Liquidity is strong: current assets ¥32.43bn vs current liabilities ¥4.57bn yields a 709% current ratio and ¥27.85bn working capital. Inventories are modest at ¥15.0mn, implying tight inventory management or alternative classification of work-in-process/spares within other current assets; quick ratio near the current ratio supports ample liquid assets. Interest expense is reported as zero, so interest coverage is not a binding constraint; ordinary loss aligns closely with operating loss, indicating minimal financial drag. Cash and equivalents are unreported in this dataset, so absolute cash buffer cannot be quantified, but the magnitude of current assets relative to liabilities indicates strong short-term coverage. No major solvency concerns are evident given low liabilities and substantial equity.

Cash Flow Quality

Operating cash flow was +¥4.20bn versus net income of -¥2.99bn, yielding an OCF/NI ratio of -1.40 (positive OCF despite losses). This divergence likely reflects working capital release (e.g., collections of receivables, lower inventories, or timing of payables) and non-cash charges (depreciation of ¥0.84bn), as well as potential non-cash tax effects. Without the cash flow detail schedule, the precise drivers cannot be isolated, but cash conversion in the period was favorable. Investing cash flow is not disclosed in the dataset (shown as zero), so free cash flow cannot be reliably computed; the provided FCF value of zero should be treated as unreported rather than actual. Financing cash flow of -¥0.63bn suggests modest outflows (e.g., lease repayments, share buybacks, or debt reductions) despite no cash dividends in the period. Overall, earnings quality appears better than accrual earnings suggest due to cash generation from working capital, but durability is uncertain if driven by one-time collections or inventory drawdowns tied to a weak sales period.

Dividend Sustainability

DPS is ¥0.00 with a payout ratio of 0.0%, consistent with preserving capital while earnings are negative. With positive OCF, the company has internal capacity to fund operations; however, the lack of investing CF disclosure and unreported cash balance limit assessment of sustainable FCF coverage for dividends. Equity is substantial at ¥43.88bn and leverage is minimal, providing theoretical capacity for future shareholder returns when profitability normalizes. Given the cyclical nature of earnings and current losses, a conservative dividend stance is prudent; a resumption would likely be contingent on a visible pipeline of profitable titles and consistent positive FCF. Policy outlook: expect management to prioritize balance sheet strength and development investment over distributions until earnings recover and cash flow visibility improves.

Risk Assessment

Business Risks:

• Hit-driven revenue dependent on timing and success of pachinko/pachislot titles
• Regulatory changes in Japan affecting game specifications and approvals
• Parlor capex cycles and operator financial health influencing order timing
• High operating leverage causing earnings volatility with volume swings
• Product obsolescence risk and rapid replacement cycles
• Supply chain and component availability for specialized hardware
• Competition from larger peers with deeper title pipelines and IP

Financial Risks:

• Negative earnings despite positive OCF; cash generation may be timing-related
• Unreported cash balance and investing cash flows limit visibility into liquidity runway and capex needs
• Tax expense despite losses (¥1.98bn) can be a cash drain depending on composition (e.g., enterprise taxes, valuation allowances)
• Potential concentration risk in receivables from pachinko parlors/distributors
• Margin presentation anomalies complicate trend analysis and could mask cost pressures

Key Concerns:

• Sustainability of positive OCF absent revenue recovery
• Revenue dependence on near-term title launches and approvals
• Unusual gross margin metrics reducing confidence in margin trend interpretation
• Continuation of net losses if volumes remain depressed

Investment Implications

Key Takeaways:

• Severe revenue decline (-64.8% YoY) but operating loss narrowed significantly (+121.6% YoY improvement)
• Balance sheet is very strong with equity of ¥43.88bn and low liabilities (equity ratio ~86.7%)
• Operating cash flow positive at ¥4.20bn despite net loss, likely driven by working capital release
• Margin readings are distorted; EBITDA (-¥2.92bn) is a clearer indicator of negative operating performance
• Liquidity ample: current ratio 709% and working capital ¥27.85bn
• Dividend at zero; capital preservation prioritized pending earnings recovery
• Data gaps (cash, investing CF, share count) limit per-share and FCF analysis

Metrics to Watch:

• Title pipeline: number of launches, unit shipments, and ASPs in H2
• Order backlog and acceptance test approvals
• EBITDA margin trajectory and SG&A run-rate
• Working capital movements (receivables and inventories) and OCF sustainability
• Equity ratio and any changes in liabilities/debt usage
• Tax cash outflows versus P&L tax expense
• Disclosure clarity on gross margin composition and any one-offs

Relative Positioning: Within the Japanese amusement equipment space, Fujishoji remains smaller and more volatile than major peers, but carries a notably conservative balance sheet with low leverage, affording resilience through weak launch cycles at the cost of higher earnings variability.

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