Takatori Corporation FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥7.33B
• Operating Income: ¥820M
• Net Income: ¥603M
• EPS: ¥107.15

Income Statement

Balance Sheet

Cash Flow Statement

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

Takatori Co., Ltd. (6338) FY2025 Q4 (consolidated, JGAAP) shows a sharp cyclical downswing with revenue down 54.4% YoY to ¥7.33bn and operating income down 70.6% to ¥0.82bn, but profitability remains positive and the balance sheet is robust. The company posted net income of ¥0.584bn (EPS ¥107.15), implying a net margin of 7.97% and ROE of 5.69% per the provided DuPont metrics. Despite steep top-line decline, the reported gross profit margin is high at 58.7%, indicating resilient pricing and/or favorable mix, though this contrasts with the cost of sales line item, which appears misreported versus revenue and gross profit. Operating leverage worked against earnings on the way down, with EBITDA margin at 13.4% versus a substantially higher prior-year level implied by the operating income decline. Ordinary income of ¥0.851bn exceeded operating income, suggesting positive non-operating contributions (e.g., financial income, FX) that partially cushioned the operating downturn. The interest coverage ratio remains very strong at 89.3x, reflecting minimal financial burden relative to earnings. Cash conversion deteriorated significantly: operating cash flow was negative at -¥0.916bn, driving free cash flow to -¥1.344bn, pointing to a material working capital build and/or timing effects. Liquidity remains sound with a current ratio of 198.6% and working capital of ¥7.34bn; calculated equity ratio is approximately 64.5% (equity ¥10.266bn / assets ¥15.911bn), despite the disclosed equity ratio field showing 0.0% (unreported). Leverage is conservative with liabilities-to-equity (proxy D/E) at 0.73x, leaving ample capacity to navigate volatility. Dividend distributions were halted (DPS ¥0, payout 0%), consistent with negative FCF and a prudent preservation stance amid cyclical softness. The OCF/Net income ratio of -1.57 highlights weak cash earnings quality for the period, likely tied to order timing, receivables, and inventory movements (not disclosed in detail). Reported effective tax rate of 0.0% conflicts with the presence of a sizable tax expense; we treat the provided effective tax figure as unreliable and rely on earnings lines as given. Asset turnover at 0.461 indicates slower throughput, consistent with lower revenue and potential accumulation of working capital. The combination of high gross margin, low asset turnover, and modest leverage yields a middling ROE of 5.69%, below typical capital cost thresholds. Data limitations are present (several zeros are undisclosed, not true zeros), but the broad picture is of a profitable, cash-flow-negative year with strong liquidity and low financial risk.

Profitability Analysis

ROE_decomposition: Reported DuPont: Net margin 7.97% x Asset turnover 0.461 x Financial leverage 1.55 = ROE 5.69%. The main drag is low asset turnover given the steep revenue decline; leverage is modest, and margin remains positive but compressed. margin_quality: Gross margin 58.7% (from revenue and gross profit provided) suggests favorable mix/pricing and/or a higher share of proprietary, high-value tools or services. Operating margin of ~11.2% (¥0.82bn/¥7.33bn) is significantly lower YoY, indicating negative operating leverage and higher fixed-cost absorption. Ordinary margin (~11.6%) benefited from non-operating items. operating_leverage: A 54.4% revenue drop versus a 70.6% operating income decline indicates meaningful fixed cost pressure. EBITDA margin at 13.4% vs. EBIT margin ~11.2% shows limited D&A cushion (D&A ¥0.164bn), reinforcing that cost flexibility is moderate.

Growth Assessment

revenue_sustainability: Revenue fell to ¥7.33bn (-54.4% YoY), signaling a cyclical correction or normalization after a strong prior year. Asset turnover at 0.461 reflects slower throughput; without order book data, sustainability into FY2026 remains uncertain. profit_quality: Operating income ¥0.82bn and ordinary income ¥0.851bn indicate core profitability remains intact but pressured. Net margin 7.97% is respectable but down sharply; reliance on non-operating gains to bridge EBIT to ordinary income suggests some earnings mix sensitivity. outlook: Near-term recovery hinges on order intake, lead times, and backlog conversion. High gross margin provides earnings power if volume rebounds, but cash conversion must improve to support growth. With conservative leverage, the company is positioned to participate in an upcycle once demand stabilizes.

Financial Health

liquidity: Current assets ¥14.79bn vs. current liabilities ¥7.45bn yields a current ratio of 198.6% and working capital of ¥7.34bn. Quick ratio is reported equal to current ratio due to undisclosed inventories; true quick liquidity may be lower if inventories are material. solvency: Total liabilities ¥7.518bn and total equity ¥10.266bn imply a liabilities-to-equity ratio of 0.73x and an estimated equity ratio of ~64.5%. Interest expense is low at ¥9.2m with coverage at 89.3x, indicating minimal solvency risk. capital_structure: Leverage is conservative with modest financial leverage (1.55 per DuPont). The company utilized ¥0.183bn net financing inflow, likely debt draw to partially fund working capital and capex.

Cash Flow Quality

earnings_quality: OCF/Net income is -1.57, signaling weak cash conversion in the period. The gap likely reflects working capital outflows (receivables, inventories, and/or advanced production costs) amid revenue volatility. FCF_analysis: Operating CF -¥0.916bn plus investing CF -¥0.428bn results in FCF of approximately -¥1.344bn, indicating internal cash generation did not cover reinvestment needs. Negative FCF was partially offset by ¥0.183bn financing inflow. working_capital: Working capital is ample at ¥7.34bn; however, period cash outflows suggest significant increases in operating assets. Inventories are undisclosed (shown as 0), so the composition of the outflow cannot be precisely attributed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 and payout ratio is 0%. Given negative FCF and a sharp earnings decline, suspension/absence of dividends aligns with capital preservation. FCF_coverage: With FCF at -¥1.344bn, there is no near-term coverage for distributions from internal cash generation. policy_outlook: Resumption of dividends likely depends on restoration of positive and stable OCF and clearer demand visibility. The strong balance sheet can support flexibility, but management appears cautious amid cyclical headwinds.

Risk Assessment

Business Risks:

• Cyclical demand swings in end markets leading to large revenue volatility (-54.4% YoY).
• Operating leverage from fixed costs amplifying profit swings (-70.6% YoY in operating income).
• Dependence on non-operating items to bolster ordinary income in weak periods.
• Potential customer concentration risk (not disclosed) typical in capital equipment niches.
• Supply chain and lead-time risks impacting delivery and cash conversion.

Financial Risks:

• Weak cash conversion (OCF/NI -1.57) and negative FCF (-¥1.344bn).
• Working capital accumulation risking liquidity if demand softens further.
• Data limitations around inventories and cash balances impede precise liquidity assessment.
• Possible tax and accounting timing effects causing earnings vs. cash flow mismatches.

Key Concerns:

• Sustainability of high gross margins amid lower volumes.
• Restoration of positive operating cash flow and normalization of working capital.
• Visibility on order intake/backlog and revenue trajectory into FY2026.

Investment Implications

Key Takeaways:

• Significant revenue contraction but maintained profitability and strong margins.
• ROE of 5.69% driven by low asset turnover and modest leverage; margin remains supportive.
• Balance sheet is strong with an estimated ~64.5% equity ratio and low interest burden.
• Cash flow is the weak link: OCF negative and FCF materially negative.
• Dividend on hold (DPS ¥0), consistent with FCF and prudence.

Metrics to Watch:

• Order intake and backlog conversion to revenue (leading indicator for turnover).
• Operating CF and OCF/NI ratio for cash earnings quality improvement.
• Working capital components (receivables, inventories, advances).
• Gross margin resilience as volumes normalize.
• Capex intensity vs. sales and the path back to positive FCF.

Relative Positioning: Within capital goods/semiconductor-related equipment peers, Takatori appears financially conservative with strong margins but currently inferior cash conversion and asset turnover due to cyclical softness; balance sheet strength offers resilience versus more leveraged peers.

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