| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥140.9B | ¥118.3B | +19.1% |
| Operating Income | ¥14.7B | ¥13.2B | +11.3% |
| Ordinary Income | ¥16.2B | ¥13.4B | +20.3% |
| Net Income | ¥11.8B | ¥9.3B | +27.2% |
| ROE | 3.0% | 2.3% | - |
The cumulative results for the first half of FY ending February 2026 (H1) show revenue ¥140.9B (YoY +¥22.6B +19.1%), Operating Income ¥14.7B (YoY +¥1.5B +11.3%), Ordinary Income ¥16.2B (YoY +¥2.7B +20.3%), and Net Income ¥11.8B (YoY +¥2.5B +27.2%), indicating both higher revenue and higher profit. Revenue expansion was driven by the core Construction Machinery Business, which grew +22.4% including overseas, and the Press-in Construction Business, which grew +17.3%, leading the company-wide top-line increase. Operating Income rose in absolute terms due to higher sales, but gross margin declined to 37.1% (prior year 40.4%, down 3.3pt), compressing the operating margin to 10.5% (prior year 11.2%, down 0.7pt). At the Ordinary Income level, gains from foreign exchange and dividend income contributed to a +20.3% increase, and at the Net Income level, a relative reduction in tax burden led to +27.2% double-digit growth.
Revenue: Top line was ¥140.9B, up 19.1% YoY. The Construction Machinery Business was the main driver with revenue ¥102.7B (share 72.9%, +22.4%), comprising Japan ¥76.3B and Other regions ¥21.9B, with overseas expansion contributing. The Press-in Construction Business recorded revenue ¥44.2B (share 31.4%, +17.3%), growing mainly domestically. By region, Japan was ¥116.8B (share 82.8%) and Other regions ¥24.2B (share 17.2%), with the overseas ratio expanding from 9.3% in the prior year. After inter-segment eliminations, external revenue was ¥140.9B.
Profitability: Cost of goods sold was ¥88.7B yielding gross profit ¥52.2B; gross margin of 37.1% declined 3.3pt from 40.4% (impacted by higher raw material and subcontracting costs and product mix). SG&A was ¥37.5B (SG&A ratio 26.6%, improved 2.6pt from 29.2%), reflecting economies of scale and resulting in Operating Income ¥14.7B (Operating Margin 10.5%, compressed 0.7pt from 11.2%). Non-operating income included interest received ¥0.3B, dividend income ¥0.2B, and foreign exchange gains ¥0.5B, while non-operating expenses included foreign exchange losses ¥0.7B and commission expenses ¥0.6B, producing non-operating expenses ¥0.8B and net non-operating income ¥1.5B; thus Ordinary Income was ¥16.2B (YoY +20.3%, Ordinary Income Margin 11.5%). After recording extraordinary loss ¥0.4B (asset disposals), profit before income taxes was ¥16.2B, income taxes ¥4.4B (effective tax rate 27.0%), and Net Income ¥11.8B (Net Margin 8.4%, improved 0.5pt from 7.9%). In conclusion, while gross margin declined, SG&A efficiency and non-operating income supported a double-digit increase in Net Income.
Construction Machinery Business: Revenue ¥102.7B (YoY +22.4%), Operating Income ¥21.5B (YoY +11.0%), Operating Margin 20.9%. Revenue growth captured domestic and international demand, but margin declined 2.9pt from 23.8% in the prior year. Press-in Construction Business: Revenue ¥44.2B (YoY +17.3%), Operating Income ¥5.0B (YoY -0.8%), Operating Margin 11.4% (down 2.2pt from 13.6%), where higher revenue was offset by deterioration in project profitability. After company-wide cost adjustments, consolidated Operating Income was ¥14.7B, with Construction Machinery driving profits and Press-in Construction requiring profitability improvement.
Profitability: Operating Margin 10.5% (down 0.7pt from 11.2%), Net Margin 8.4% (improved 0.5pt from 7.9%). Gross Margin 37.1% (down 3.3pt from 40.4%), SG&A Ratio 26.6% (improved 2.6pt from 29.2%).
Cash Quality: Days Sales Outstanding (DSO) 138 days (prior year 158 days) improved but remains long. Days Inventory Outstanding (DIO) 275 days (prior year 273 days) essentially unchanged. Cash Conversion Cycle (CCC) 352 days (prior year 370 days), shortened by 18 days but working capital efficiency remains low.
Investment Efficiency: ROE 3.0% (annualized 6.0%) indicates low capital efficiency. Total Asset Turnover 0.30x (annualized 0.61x).
Financial Soundness: Equity Ratio 84.9% (prior year 84.2%) at an extremely high level. Current Ratio 335%. Cash ¥73.6B versus interest-bearing debt ¥6.0B (short-term borrowings ¥1.6B + long-term borrowings ¥4.4B), yielding effectively net cash position. Debt/Capital ratio 1.5%. Interest Coverage 368x, indicating exceptional financial safety.
Operating Cash Flow (OCF) data was not disclosed; funding trends are analyzed from B/S movements. Cash and deposits were ¥73.6B (down ¥12.3B from ¥85.9B). Trade receivables (notes receivable + electronic recorded monetary claims + accounts receivable) totaled ¥107.8B (up ¥8.9B from ¥98.9B) increasing with revenue growth; DSO improved to 138 days from 158 days but remains lengthy, constraining cash. Inventories (finished goods + work-in-progress + raw materials) totaled ¥66.9B (down ¥12.8B from ¥79.7B), aided by reductions in finished goods inventory; DIO was 275 days, broadly flat. Accounts payable were ¥14.7B (up ¥4.2B from ¥10.4B, +40.5%), reflecting expanded use of payment terms. Contract liabilities (advances received) were ¥25.1B (down ¥3.8B from ¥28.9B) as projects progressed. Short-term borrowings were ¥1.6B (down ¥3.5B from ¥5.1B, -69.3%), and with long-term borrowings ¥4.4B total interest-bearing debt was ¥6.0B, maintaining a net cash position. Although prolonged working capital retention constrains the quality of cash generation, financial headroom remains ample.
Operating Income ¥14.7B is the core earnings source. Non-operating income ¥2.3B (1.6% of revenue) comprised interest received ¥0.3B, dividend income ¥0.2B, and foreign exchange gains ¥0.5B, serving as supplementary recurring income. Non-operating expenses included foreign exchange losses ¥0.7B and commission expenses ¥0.6B, totaling non-operating expenses ¥0.8B, resulting in net non-operating income ¥1.5B. Extraordinary loss ¥0.4B (asset disposal) represented 3.4% of Net Income, limiting the impact of one-off items. Of Ordinary Income ¥16.2B, non-operating contribution was ¥1.5B (share 9.3%), indicating a business-driven earnings structure. Comprehensive income ¥19.6B comprised Net Income ¥11.8B plus foreign currency translation adjustments ¥4.7B and unrealized gains on available-for-sale securities ¥3.0B; the ¥7.8B difference between comprehensive income and net income reflects OCI-driven equity increases. With OCF data undisclosed, direct accrual assessment is not possible, but prolonged working capital cycles (DSO 138 days, DIO 275 days, CCC 352 days) continue to constrain cash conversion quality.
Full Year (FY) forecasts remain unchanged: Revenue ¥278.0B (YoY +5.6%), Operating Income ¥29.0B (YoY +13.0%), Ordinary Income ¥30.5B (YoY +11.6%), Net Income ¥22.0B. H1 progress rates vs. full year are Revenue 50.7%, Operating Income 50.8%, Ordinary Income 53.0%, Net Income 53.6%; Ordinary and Net Income are slightly ahead of a linear 50% pace but within expected range. For H2, incremental targets of Revenue ¥137.1B, Operating Income ¥14.3B, Ordinary Income ¥14.3B, and Net Income ¥10.2B are required; given seasonality and project progress, achievement probability is assessed as neutral to slightly positive. Recovery of gross margin and normalization of working capital are key to H2 earnings and cash generation.
An interim dividend of ¥27 per share was paid. With H1 Net Income ¥11.8B (weighted average shares outstanding 25,786 thousand shares giving EPS 45.79 yen) and total dividends approximately ¥7.0B, the payout ratio was about 59%. Full year dividend forecast remains ¥27 (unchanged), implying a payout ratio of about 32% based on full year Net Income forecast ¥22.0B. Given cash and deposits ¥73.6B and interest-bearing debt ¥6.0B (net cash position) and low interest expense (¥0.04B), dividend paying capacity is ample. If working capital efficiency improves and FCF generation increases, dividend sustainability will further strengthen. No share buyback has been disclosed; shareholder return is focused on dividends.
Revenue & Returns
| Metric | Company | Median (IQR) | Delta | Rank | Trend |
|---|---|---|---|---|---|
| Operating Margin | 10.5% | 8.8% (3.0%–11.0%) | △+1.7pt | – | – |
| Net Margin | 8.4% | 5.4% (1.1%–8.2%) | △+3.0pt | – | – |
Company Operating Margin 10.5% and Net Margin 8.4% exceed manufacturing medians by 1.7pt and 3.0pt respectively, placing the company in the upper tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta | Rank | Trend |
|---|---|---|---|---|---|
| Revenue Growth Rate (YoY) | 19.1% | 11.7% (-5.4%–28.3%) | △+7.4pt | – | – |
Revenue growth rate 19.1% outpaces the manufacturing median 11.7% by 7.4pt, indicating strong growth relative to peers.
※ Source: Company compilation
Three key takeaways from the results: First, despite achieving higher revenue and profit, gross margin declined 3.3pt YoY compressing Operating Margin by 0.7pt; however, SG&A efficiency and non-operating income enabled a +27.2% increase at the Net Income level. The main drivers of gross margin decline appear to be higher raw material and subcontracting costs, product mix changes, and FX impacts; rigorous price pass-through and accumulation of high-margin projects are essential for margin recovery. Second, structural issues in working capital efficiency persist: DSO 138 days, DIO 275 days, CCC 352 days indicate prolonged retention, and in a growth phase working capital buildup suppresses cash generation. This is a key factor behind low ROE 3.0%, and collecting receivables and inventory compression are prerequisites for improving capital efficiency. Third, segment profitability polarization: Construction Machinery (20.9% margin) is supporting the company but margins have fallen 2.9pt YoY, while Press-in Construction (11.4% margin) likewise declined 2.2pt YoY and is showing reduced absolute profit; maintaining profitability in the core business and correcting the Construction Business are pivotal for restoring consolidated margins. Financial soundness is strong with Equity Ratio 84.9% and net cash position, providing high downside resilience. Full year plan attainment probability is neutral to slightly positive, contingent on improving earnings quality and normalizing cash generation for sustainable growth.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company from public financial data. Investment decisions are your responsibility; please consult a professional advisor as needed.