OKADA AIYON CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.89B
• Operating Income: ¥1.25B
• Net Income: ¥731M
• EPS: ¥105.52

Income Statement

Balance Sheet

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

Okada Aiyon (6294) reported FY2026 Q2 consolidated results showing resilient profitability despite a slight top-line contraction. Revenue was ¥12.89bn (-1.4% YoY), while operating income rose to ¥1.25bn (+7.4% YoY), indicating effective cost control and positive operating leverage. Gross profit was ¥3.87bn, yielding a 30.0% gross margin, a solid level for heavy equipment/attachments with a mix of domestic sales and exports. Net income increased to ¥849m (+16.2% YoY), lifting the net margin to 6.59% per the provided DuPont metrics. Return on equity is calculated at 4.89%, based on a net margin of 6.59%, asset turnover of 0.355x, and financial leverage of 2.09x. Liquidity appears healthy with a current ratio of 156.3% and a quick ratio of 100.4%, supported by working capital of ¥8.82bn. Balance sheet strength is solid; while the equity ratio is shown as 0.0% in the template, the reported totals imply equity of ¥17.37bn versus assets of ¥36.30bn, suggesting an equity ratio of roughly 47.8%. Ordinary income (¥1.253bn) is close to operating income, indicating limited non-operating noise; interest expense was ¥79.6m with an interest coverage of about 15.7x, underscoring manageable financial burden. The effective tax rate shown as 0.0% in the template appears to be an unreported placeholder; using disclosed figures (income tax ¥371m; ordinary income ¥1.253bn) implies an effective tax rate around 29–30%. Inventory stood at ¥8.77bn within current assets of ¥24.50bn, consistent with business seasonality but warranting turnover monitoring given the slight revenue decline. Cash flow statements are unreported in this dataset (zeros), so operating and free cash flow quality cannot be assessed from the provided figures. EPS was ¥105.52, though shares outstanding were not disclosed in the template. Dividend data are also unreported (DPS shown as 0.00), so payout analysis relies on earnings capacity rather than distributions. Overall, the company delivered improved profits on slightly lower sales, maintained solid liquidity and moderate leverage, and demonstrated operational discipline, but confirmation from cash flow data and order trends is needed to gauge the durability of this inflection.

Profitability Analysis

ROE decomposition (DuPont): Net margin 6.59% × asset turnover 0.355 × financial leverage 2.09 = ROE 4.89%. Margin quality: Gross margin at 30.0% suggests stable pricing and product mix; operating margin is approximately 9.7% (¥1.25bn/¥12.89bn), showing YoY improvement as operating income grew despite lower revenue. Ordinary income closely tracking operating income indicates limited reliance on non-operating gains/losses; interest expense of ¥79.6m is modest relative to EBIT. Operating leverage: With revenue down 1.4% YoY and operating income up 7.4% YoY, fixed cost absorption and SG&A efficiency improved; the spread implies cost containment and possibly favorable mix. Tax rate normalization (calculated ~29–30%) supports net margin sustainability versus the template's unreported 0.0%. EBITDA was shown as 0 due to unreported depreciation; however, true EBITDA is higher than operating income by the amount of depreciation/amortization, which is undisclosed. Overall profitability trajectory is positive, with improving operating margin offsetting slight volume softness.

Growth Assessment

Revenue declined 1.4% YoY to ¥12.89bn, indicating near-flat demand conditions, likely influenced by construction machinery replacement cycles and macro conditions. Profit growth outpaced sales (OP +7.4% YoY; NP +16.2% YoY), suggesting a better product mix, price realization, and/or cost efficiencies. Sustainability: The durability of margin gains will depend on maintaining pricing and controlling input costs (e.g., steel) and freight. Backlog/order intake are not disclosed here; lacking that, growth visibility is limited. Geographic/segment mix is not provided; export exposure could provide tailwinds or headwinds depending on FX. Profit quality appears solid from the P/L perspective (ordinary near operating), but confirmation from operating cash flow is missing due to unreported CF statements. Near-term outlook: Modest demand with selective strength in demolition attachments and aftermarket/services could support stable to slightly improving margins if cost discipline continues. Risks to growth include softer construction activity domestically or in key overseas markets and elongated delivery lead times tied to supply chains.

Financial Health

Liquidity: Current ratio 156.3% and quick ratio 100.4% reflect comfortable short-term coverage; quick assets (¥15.74bn) are about equal to current liabilities (¥15.68bn). Working capital is ¥8.82bn, providing buffer for operations. Solvency: Debt-to-equity is 1.08x based on disclosed totals, indicating moderate leverage typical for capital goods firms. Equity ratio shown as 0.0% is clearly unreported; computed equity ratio is approximately 47.8% (¥17.37bn/¥36.30bn), which is healthy. Interest coverage of 15.7x (operating income/interest expense) shows ample headroom against interest costs. Asset base of ¥36.30bn with inventories of ¥8.77bn indicates a material working capital component; monitoring inventory and receivables turnover remains important. Overall capital structure is balanced with sufficient equity and manageable financial liabilities.

Cash Flow Quality

Cash flow statements are unreported in this dataset (OCF, ICF, FCF shown as 0), so OCF/Net income and free cash flow coverage cannot be evaluated from the provided figures. Earnings quality signals from the income statement are constructive: ordinary income aligns with operating income, and interest expense is modest relative to EBIT. However, inventory at ¥8.77bn within current assets of ¥24.50bn suggests cash conversion is sensitive to working capital management. Without OCF and capex data, we cannot assess cash realization of earnings, capex intensity, or FCF sustainability for the period. Key items to confirm when available: OCF relative to net income, capex versus depreciation (unreported), and changes in inventories and receivables.

Dividend Sustainability

Dividend per share is shown as 0.00 and payout ratio 0.0% due to unreported data; no inference should be made about actual distributions. EPS is ¥105.52 for the period, indicating capacity to pay dividends if policy permits, but coverage must be judged against OCF/FCF, which are not disclosed here. In absence of cash flow data, FCF coverage of dividends cannot be assessed. Historical policy and management guidance (not provided here) would be necessary to gauge stability and target payout. For now, dividend sustainability assessment is deferred pending OCF and capex disclosure.

Risk Assessment

Business Risks:

• Demand cyclicality in construction/demolition equipment and attachments
• Project timing and order intake volatility affecting revenue visibility
• Input cost inflation (steel and components) impacting gross margins
• Supply chain constraints leading to delivery delays and working capital build
• Competitive pricing pressures in domestic and export markets
• FX fluctuations affecting export competitiveness and margins

Financial Risks:

• Inventory concentration (¥8.77bn) and potential obsolescence risk
• Moderate leverage (D/E ~1.08x) exposing earnings to interest rate changes
• Cash flow uncertainty due to unreported OCF/FCF during the period
• Potential tax rate variability (calculated ~29–30%) impacting net margins

Key Concerns:

• Lack of disclosed cash flow data limits assessment of earnings-to-cash conversion
• Slight revenue decline despite margin gains; need confirmation of demand trends
• Inventory management and turnover amid softened sales

Investment Implications

Key Takeaways:

• Profitability improved with operating income +7.4% YoY on -1.4% revenue, reflecting positive operating leverage
• Gross margin at 30.0% and operating margin near 9.7% indicate solid margin structure
• ROE at 4.89% is supported by modest leverage (2.09x) and a 6.59% net margin
• Liquidity is strong (current ratio 156%, quick ratio 100%) and interest coverage is ample (~15.7x)
• Balance sheet appears healthy with an implied equity ratio around 47.8%
• Cash flow data are unreported; confirmation of OCF and capex is critical to validate earnings quality
• Inventory levels are sizable and should be monitored for turnover and cash conversion

Metrics to Watch:

• Order intake and book-to-bill ratio
• Operating cash flow and free cash flow vs. net income
• Inventory and receivables turnover days
• Gross margin and SG&A ratio trends
• Capex vs. depreciation (once disclosed)
• FX rates and steel/input cost indices
• Leverage metrics (net debt/EBITDA when available) and interest coverage
• Effective tax rate normalization

Relative Positioning: Within Japanese capital goods and construction equipment peers, Okada Aiyon shows solid mid-teen interest coverage, healthy liquidity, and improving margins despite flat sales, positioning it as operationally disciplined; however, lack of cash flow disclosure in this period tempers confidence relative to peers with clearer cash generation profiles.

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