GIKEN (6289) FY2026 FY Earnings Report

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Executive Summary

In the current fiscal year, revenue increased, and operating income rose as selling, general and administrative (SG&A) expenses grew more slowly than revenue. Net income also increased substantially, partly due to the reduction in special losses from the prior year. Revenue was ¥28.42B (+7.9% YoY), operating income was ¥3.06B (+19.3%), and ordinary income was ¥3.44B (+25.7%). Net income attributable to owners of the parent was ¥2.52B (+69.5%). The gross profit margin was 38.4%, nearly unchanged from 38.5% in the prior year, while the operating margin improved from 9.7% to 10.8%. The primary driver of the increase in operating income was a lower SG&A expense ratio, rather than an improvement in the gross margin. Net income growth also reflects a comparison effect: special losses declined from ¥0.85B in the prior year to ¥0.06B in the current year.

Factors Behind Performance Changes

【Revenue】Revenue was ¥28.42B (+7.9% YoY), with both segments posting increases. The Construction Machinery Business generated ¥19.2B (+8.8%, 67.6% of revenue), while the Press-in Construction Business generated ¥9.22B (+6.2%, 32.4%). By region, domestic revenue was ¥23.17B (+8.7%) and revenue from other regions was ¥5.25B (+4.8%), with domestic sales leading the increase.

【Profit and Loss】Operating income was ¥3.06B (+19.3%). SG&A expenses were ¥7.85B (+3.8%), growing more slowly than revenue and resulting in operating leverage. The cost-of-sales ratio was nearly flat, so improved cost efficiency was the main contributor to higher earnings. Non-operating income was ¥0.49B, including a foreign exchange gain of ¥0.07B. Special losses consisted of an impairment loss of ¥0.06B, down from ¥0.85B in the prior year; this is a temporary factor. Overall, the company achieved higher revenue and earnings.

Segment Analysis

The Construction Machinery Business was the main source of operating income. Revenue was ¥19.2B (+8.8%), segment income was ¥4.33B (+11.3%), and the segment margin was 22.6%. The Press-in Construction Business generated revenue of ¥9.22B (+6.2%) and segment income of ¥1.16B (+6.1%), for a segment margin of 12.5%. The approximately 10-point difference in segment margins means that the sales mix of the Construction Machinery Business has a significant impact on overall profitability. Consolidated operating income of ¥3.06B is calculated by subtracting ¥2.43B in adjustments, primarily attributable to corporate expenses, from total segment income of ¥5.49B.

Domestic sales accounted for 81.5% of revenue by region, while other regions (Europe, Asia, and North America) accounted for 18.5%. An impairment loss of ¥0.06B in the Construction Machinery Business was also recorded in the current period.

Key Financial Indicators

【Profitability】ROE improved to 6.2% from 3.7% in the prior year. The operating margin was 10.8% (9.7% in the prior year), and the net income margin was 8.9% (5.6% in the prior year). ROA based on ordinary income was 7.1% (5.7% in the prior year). 【Cash Flow Quality】Operating cash flow (OCF) was ¥4.18B, or 1.66 times net income. EBITDA, including depreciation and amortization of ¥1.43B, was ¥4.49B, resulting in an OCF/EBITDA ratio of 0.93x. Cash conversion of earnings was solid. 【Investment Efficiency】Capital expenditures were ¥2B, equivalent to 1.4 times depreciation and amortization. EPS was ¥98.62 (¥55.74 in the prior year), and BPS was ¥1,603.61. 【Financial Soundness】The equity ratio was 83.8% (84.2% in the prior year), and the current ratio was approximately 325%. Cash and deposits totaled ¥7.42B, substantially exceeding interest-bearing debt of approximately ¥1B. A strong equity base is one factor keeping ROE in the single digits.

Cash Flow Analysis

OCF expanded to ¥4.18B, approximately three times the prior-year ¥1.38B. The decline in income tax payments, which had been substantial in the prior year, to ¥0.33B also contributed. While an increase in trade receivables resulted in a ¥0.53B cash outflow and a decrease in contract liabilities resulted in a ¥0.18B outflow, a ¥0.2B decrease in inventories and a ¥0.27B increase in trade payables provided support. Investing cash flow was △¥1.23B; capital expenditures of ¥2B were offset by factors including net withdrawals from time deposits. Free cash flow (OCF plus investing cash flow) was ¥2.95B, and OCF less capital expenditures was ¥2.18B. Financing cash flow was △¥3.52B, mainly due to ¥2B in share repurchases and approximately ¥1.52B in dividends. Cash and cash equivalents at year-end were ¥4.87B, down ¥0.4B from ¥5.28B in the prior year.

Earnings Quality

Current-period earnings were primarily driven by operating income, and overall earnings quality was sound. Net non-operating income was ¥0.37B, including interest income of ¥0.07B, dividend income of ¥0.04B, and a foreign exchange gain of ¥0.07B. Foreign exchange gains are highly volatile and are considered to have limited repeatability. Special losses consisted solely of an impairment loss of ¥0.06B, down from ¥0.85B in the prior year; therefore, the year-on-year increase of +69.5% in net income benefited from this comparison effect. OCF exceeded net income by ¥1.65B, also confirming cash backing for earnings from an accrual perspective. Comprehensive income was ¥3.88B, ¥1.35B higher than net income of ¥2.52B. Foreign currency translation adjustments and valuation differences on available-for-sale securities each contributed ¥0.61B, warranting attention to the inclusion of valuation-related fluctuations.

Earnings Forecast and Guidance

The forecast for the next fiscal year is revenue of ¥31B (+9.1%), operating income of ¥3.3B (+7.8%), ordinary income of ¥3.6B (+4.8%), net income of ¥2.65B (+5.1%), and EPS of ¥104.47. The forecast operating margin is approximately 10.6%, around 0.2 points below the current-year actual of 10.8%. The plan calls for earnings growth below revenue growth despite higher revenue, making the ability to maintain margins a key focus going forward.

Shareholder Returns

The annual dividend for the current fiscal year was ¥55 (¥27 interim and ¥28 year-end), with a payout ratio of 55.8%. The annual dividend in the prior year was ¥22; the year-end dividend included an ordinary dividend of ¥22 and a commemorative dividend of ¥10. Total dividends were approximately ¥1.4B, within the ¥2.95B of free cash flow. Including ¥2B in share repurchases, total shareholder returns were approximately ¥3.4B, exceeding net income of ¥2.52B. The dividend forecast for the next fiscal year is ¥57.

Risk Factors

1. Business concentration risk: The Construction Machinery Business accounts for 67.6% of revenue and approximately 79% of total segment income. Changes in construction investment trends could have a significant impact on company-wide earnings.

2. Working capital risk: Work in process increased approximately 65%, from ¥0.78B to ¥1.28B. Accounts receivable also rose from ¥5.42B to ¥5.92B, potentially extending the period for which funds remain tied up. However, cash and deposits of ¥7.42B provide a buffer.

3. Overseas and foreign exchange risk: Revenue from other regions was ¥5.25B (18.5% of total revenue). Foreign currency translation adjustments contributed ¥0.61B to comprehensive income, and foreign exchange fluctuations could affect earnings and net assets.

Industry Benchmarks (Reference; Compiled by the Company)

Profitability and Returns

Both the operating margin and net income margin exceed the industry median and are positioned toward the upper end of the interquartile range.

Growth and Capital Efficiency

Revenue growth exceeds the industry median and is close to the upper end of the interquartile range.

※Source: Company compilation

Key Points in the Earnings Results

1. The improvement in the SG&A expense ratio was the main driver of higher operating income, and OCF also increased to ¥4.18B. Cash backing for earnings was solid. However, the gross margin was flat, and the sustainability of earnings growth depends on containing SG&A expenses.

2. The +69.5% increase in net income includes the effect of lower special losses in the prior year. Evaluating this separately from the +19.3% increase in operating income is useful for understanding earnings quality.

3. The dividend was ¥55 (payout ratio of 55.8%), and total shareholder returns, including share repurchases, exceeded net income. ROE remained at 6.2% despite the strong financial foundation reflected in an 83.8% equity ratio. The next-period forecast indicates an approximately 0.2-point decline in the operating margin; trends in margins and working capital will be key points to monitor.

Theoretical Share Value (Reference)

Sensitivity: ¥1,434 to ¥1,514 for cost of equity ±1%; ¥1,469 to ¥1,476 for ω ±0.1.

Notes:

• Forecast ROE is below the cost of equity, so the estimate falls below book value per share.

(Model: residual income model (Ohlson-type, explicit 5-year fade) / rate reference month: 2026-09 / a mechanical estimate from public data only; it is not a forecast of the market price or a recommendation of any investment action, and it does not predict or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI analysis of XBRL earnings release data. It does not recommend investing in any specific security. Industry benchmarks are reference information compiled by the company based on publicly available earnings data. Investment decisions should be made at your own discretion and, where appropriate, after consulting a professional.

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