EBARA CORPORATION FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥663.55B
• Operating Income: ¥69.54B
• Net Income: ¥47.19B
• EPS: ¥96.76

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

Ebara Corporation (6361) reported solid FY2025 Q3 consolidated results under IFRS, with revenue of 6,635.55 (100M JPY), up 9.8% YoY, demonstrating healthy top-line momentum. Operating income rose 16.2% YoY to 695.41, indicating positive operating leverage and cost discipline. Gross profit of 1,968.80 implies a gross margin of 29.7%, and the operating margin improved to roughly 10.5%, reflecting efficiency gains despite higher SG&A of 1,317.36. Net income reached 446.83, up 8.9% YoY, with an effective tax rate of 25.0%, and total comprehensive income of 415.80 suggests negative OCI items (~-31), likely FX or valuation effects. DuPont analysis shows a net margin of 6.7%, asset turnover of 0.633, and financial leverage of 2.13x, yielding a robust calculated ROE of 9.1% (equals reported). EBITDA was 918.27, for an EBITDA margin of 13.8%, and D&A was 222.86, indicating a capital-intensive base but manageable non-cash charges. Cash generation was strong: operating cash flow (OCF) of 926.51 exceeded net income by 2.07x, and free cash flow (FCF) was 618.70, comfortably positive after investing outflows of -307.81. The balance sheet remains sound with total assets of 10,482.90 and equity of 4,923.90, implying an equity ratio of 45.8% and a total liabilities-to-equity ratio of about 1.06x. Liquidity is bolstered by cash and equivalents of 1,710.31, though detailed current liability and debt-maturity data are not disclosed in this set. Working capital appears ample with current assets of 7,053.09, supported by sizable receivables (1,702.82) and inventories (2,059.60). Financing cash flow was -265.53, mainly dividends (-227.63) with minimal buybacks, pointing to a shareholder return stance weighted to dividends. The reported payout ratio (calculated) of 152.1% contrasts with cash flow coverage implied by FCF and dividends, indicating potential methodology or timing differences; this requires monitoring. Equity-method income of 12.06 contributed modestly to PBT and is not a primary earnings driver. With revenue growth outpacing cost growth and margin expansion at operating level, earnings quality appears solid. However, the decline from net to comprehensive income and unreported details (interest expense, debt composition, capex) temper visibility. Overall, Ebara’s Q3 shows healthy growth, improving profitability, strong cash conversion, and a balanced capital structure, with continued focus needed on working capital dynamics, dividend policy metrics, and investment outlays.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.7%
• asset_turnover: 0.633
• financial_leverage: 2.13x
• calculated_ROE: 9.1%
• commentary: ROE of 9.1% is driven by moderate margins and steady asset turnover, amplified by reasonable leverage; improvement in operating margin supports ROE stability. margin_quality:
• gross_margin: 29.7% (1,968.80 / 6,635.55)
• operating_margin: 10.5% (695.41 / 6,635.55)
• EBITDA_margin: 13.8%
• pretax_margin: 10.0% (662.27 / 6,635.55)
• net_margin: 6.7%
• notes: Operating margin expansion alongside revenue growth indicates cost control and/or favorable mix; D&A burden is manageable relative to EBITDA. operating_leverage: Revenue grew 9.8% YoY while operating income rose 16.2% YoY, signaling positive operating leverage. SG&A rose but was outpaced by gross profit growth, supporting incremental margins.

Growth Assessment

revenue_sustainability: Top-line growth of 9.8% YoY suggests demand resilience across core businesses; absence of segment detail limits granularity on sustainability and mix. profit_quality: Net income growth of 8.9% trails operating profit growth due to tax and non-operating items; EBITDA growth and strong OCF support underlying earnings quality. outlook: With improving operating margins and solid order-to-cash conversion implied by OCF, near-term momentum appears constructive. Key uncertainties include FX, input cost pass-through, and timing of large project deliveries.

Financial Health

liquidity: Cash and equivalents of 1,710.31 provide a strong buffer. Current ratio and quick ratio are not calculable due to unreported current liabilities and cash detail by component; working capital indicated at 7,053.09 but may reflect current assets only. solvency: Total liabilities of 5,197.48 versus equity of 4,923.90 yield a liabilities-to-equity ratio of ~1.06x. Equity ratio of 45.8% indicates a conservative capital base for a capital goods company. capital_structure: Interest-bearing debt details and maturities are unreported, limiting assessment of refinancing risk and interest coverage (not calculable). Nonetheless, leverage appears moderate at the consolidated level.

Cash Flow Quality

earnings_quality: OCF/Net income at 2.07x indicates strong cash realization and limited reliance on accruals in the period. FCF_analysis: FCF of 618.70 (OCF 926.51 less investing CF -307.81) is solid, supporting organic investment and shareholder returns. Capex is unreported, so the split between maintenance and growth capex is unclear. working_capital: Receivables of 1,702.82 and inventories of 2,059.60 vs. payables of 1,674.52 suggest a significant net working capital position; further detail on days metrics and changes is not provided but OCF strength implies favorable working capital movements.

Dividend Sustainability

payout_ratio_assessment: The provided calculated payout ratio is 152.1%, which appears elevated relative to net income trends; DPS is unreported and timing differences (TTM vs. quarterly EPS) may drive this figure. Based on dividends paid of 227.63 versus net income of 446.83, a simple cash payout proxy would be ~51%, but this may not align with declared basis. FCF_coverage: Reported FCF coverage is 0.91x; however, comparing FCF of 618.70 to dividends paid of 227.63 implies coverage >2x on a cash basis. Methodology differences likely explain the discrepancy. policy_outlook: Company appears to prioritize dividends over buybacks in the current period. Without DPS guidance or DOE disclosure, we assume a progressive yet earnings-linked policy subject to investment needs and cash generation.

Risk Assessment

Business Risks:

• Cyclical demand in pumps and industrial machinery tied to capex cycles and project timing
• Input cost inflation and FX volatility affecting margins and competitiveness
• Project execution risk and revenue recognition timing in engineered systems
• Supply chain constraints impacting deliveries and inventory management
• Competition and pricing pressure in global markets

Financial Risks:

• Limited visibility on interest-bearing debt and maturities; interest coverage not calculable
• Potential working capital swings given large receivables/inventories base
• Negative OCI items reducing comprehensive income and potentially equity via valuation effects
• Dividend payout metrics uncertainty due to reporting/timing differences

Key Concerns:

• Unreported details on capex and debt structure constrain assessment of long-term capital allocation and solvency buffers
• Discrepancy between reported payout ratio and cash-based coverage may signal timing or policy shifts
• Sustainability of operating margin gains amid macro and FX headwinds

Investment Implications

Key Takeaways:

• Revenue +9.8% YoY with operating income +16.2% indicates healthy operating leverage
• Operating margin at ~10.5% and EBITDA margin at 13.8% reflect improved efficiency
• ROE at 9.1% supported by moderate leverage and better margins
• Strong cash generation: OCF 926.51 (2.07x net income) and FCF 618.70
• Balance sheet solid with 45.8% equity ratio and cash/equivalents of 1,710.31
• Dividend outflows dominated shareholder returns; buybacks minimal
• Negative OCI depressed comprehensive income, worth monitoring

Metrics to Watch:

• Order intake and backlog to gauge revenue sustainability
• Operating margin trajectory and pricing/mix effects
• Working capital turns (DSO/DIO/DPO) and OCF conversion
• Capex level and allocation between maintenance and growth
• FX impacts and OCI movements
• Debt composition, interest costs, and coverage once disclosed
• Dividend policy disclosures (DPS, payout framework, DOE)

Relative Positioning: Within Japanese industrials, Ebara exhibits above-peer cash conversion and prudent leverage, with margins improving but still mid-teens at EBITDA level; visibility on capex and debt is below best-in-class due to disclosure gaps in this dataset.

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