Torishima Pump Mfg.Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥41.24B
• Operating Income: ¥532M
• Net Income: ¥492M
• EPS: ¥-2.13

Income Statement

Balance Sheet

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

Torishima Seisakusho (6363) delivered FY2026 Q2 consolidated results showing solid top-line momentum but notable margin compression and weak bottom-line quality. Revenue rose 9.8% year on year to ¥41.24bn, reflecting healthy demand and/or backlog execution in its pump and engineered solutions businesses. Despite higher sales, gross profit was ¥9.57bn and the gross margin stood at 23.2%, which appears adequate but not sufficient to offset higher operating costs during the period. Operating income declined 16.1% YoY to ¥0.53bn, indicating negative operating leverage and pressure from SG&A or project cost overruns. The operating margin compressed to about 1.3%, highlighting tighter project profitability and/or less favorable mix. Ordinary income fell to ¥0.04bn, implying sizable net non-operating losses of roughly ¥0.49bn beyond interest expense. Interest expense was modest at ¥0.07bn, so the bulk of non-operating drag likely came from items such as forex, valuation losses, or other one-offs typical for export-oriented, project-based businesses. Net income was a small loss of ¥0.06bn even as an income tax expense of ¥0.36bn was recognized, suggesting temporary tax effects, regional profit mix, or non-deductible charges. DuPont shows a slightly negative ROE of -0.10%, driven by a thin net margin (-0.14%) and modest asset turnover (0.374) despite moderate leverage (assets/equity ≈ 2.0x). The balance sheet appears sound: total assets were ¥110.21bn, liabilities ¥59.20bn, and equity ¥55.05bn (implying an equity ratio near 50% based on these balances), with ample working capital of ¥43.85bn. Liquidity indicators are strong on reported figures (current ratio 217% and quick ratio 216%), which is supportive of ongoing project execution and supply chain needs. Interest coverage was 7.2x, indicating that core operations can service interest despite compressed margins. Cash flow statements were not disclosed in the dataset (zeros indicate unreported), so free cash flow and cash conversion cannot be assessed this quarter. Dividend data shows no payout for the period (DPS 0), which may reflect intra-year timing rather than a definitive policy shift. Overall, the quarter underscores the project-cycle sensitivity of earnings: sales growth is intact, but execution risks and non-operating volatility weighed on profitability. Near-term focus should be on margin recovery, stabilization of non-operating items, and confirmation of order quality to sustain revenue growth into the second half.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.14% (Net income -¥56m on revenue ¥41,240m)
• asset_turnover: 0.374x (Revenue ¥41,240m / Total assets ¥110,205m; period-level metric)
• financial_leverage: 2.00x (Assets ¥110,205m / Equity ¥55,048m)
• calculated_ROE: -0.10% (matches reported DuPont ROE) margin_quality: Gross margin 23.2% (gross profit ¥9,573m) indicates reasonable pricing/pipeline quality but not enough to protect operating margins., Operating margin ~1.3% (operating income ¥532m) declined YoY (-16.1% in OI vs +9.8% sales), pointing to negative operating leverage and elevated SG&A or cost inflation., SG&A implied at ~¥9,041m (gross profit ¥9,573m minus OI ¥532m) or ~21.9% of sales, a heavy burden for an engineered equipment business., Ordinary income of ¥40m vs operating income ¥532m implies ¥492m net non-operating losses; with interest expense at ¥74m, other non-operating items (¥418m loss) drove the gap., Tax expense of ¥360m despite a net loss suggests temporary or structural tax effects (non-deductible items, regional profit mix, prior-period adjustments); underlying normalized tax rate likely lower than implied. operating_leverage: Revenue +9.8% YoY but operating income -16.1% YoY evidences negative operating leverage this quarter., Cost absorption and project mix timing likely contributed; a small shift in execution milestones can materially swing quarterly margins in project businesses.

Growth Assessment

revenue_sustainability: Revenue of ¥41.24bn indicates healthy activity; sustainability hinges on order backlog quality and timing of large projects., Asset turnover at 0.374x is modest, consistent with project-based recognition; improvement depends on faster backlog conversion and delivery cadence. profit_quality: Profitability was weak relative to sales growth; margin compression at both operating and ordinary levels raises questions on pricing power and cost pass-through., Non-operating losses materially reduced ordinary income; volatility here reduces earnings quality and visibility. outlook: Key to H2 will be cost normalization (materials, logistics), SG&A control, and the mix of higher-margin after-market/service vs. large EPC-type projects., If non-operating items normalize and project execution improves, ordinary income should rebound from a low base; however, quarterly variability is likely to persist.

Financial Health

liquidity: Current assets ¥81.19bn vs current liabilities ¥37.34bn yields a current ratio of 217.4% and quick ratio of 216.3%, indicating ample short-term liquidity on reported figures., Working capital stands at ¥43.85bn, providing a buffer for project execution and procurement cycles. solvency: Total liabilities ¥59.20bn vs equity ¥55.05bn implies a liabilities-to-equity ratio of 1.08x., Implied equity ratio (equity/asset) is approximately 49.9% using reported balances, suggestive of a conservative capital structure. capital_structure: Financial leverage at ~2.0x assets/equity is moderate for an industrial manufacturer., Interest coverage at 7.2x supports debt service capacity despite weak operating margins this quarter.

Cash Flow Quality

earnings_quality: OCF not disclosed for the period; OCF/Net income ratio shown as 0.00 reflects non-disclosure rather than cash burn., Given the small net loss and low operating margin, cash conversion would hinge on working capital movements (collection of receivables/contract assets) typical in project cycles. FCF_analysis: Free cash flow not disclosed; cannot assess capex intensity or FCF coverage in this quarter., Depreciation not reported (0 indicates undisclosed), limiting EBITDA/OCF triangulation. working_capital: Large working capital (¥43.85bn) is consistent with project businesses; quarterly swings in receivables and advances can materially affect OCF., Inventories were reported at ¥0.42bn within current assets; given potential under-reporting nuances, monitoring inventory and contract balances is important for assessing cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS reported as ¥0.00 and payout ratio 0%; the period shows no distribution., With net income at -¥56m for the half, a payout would not be covered by earnings; assessment of full-year payout capacity requires H2 recovery and FCF visibility. FCF_coverage: FCF not disclosed; hence, dividend coverage by FCF cannot be evaluated for this period. policy_outlook: Absent period cash flow data, dividend outlook hinges on normalization of margins, stabilization of non-operating items, and working capital release in H2., If management targets stable dividends, maintaining balance sheet strength (~50% implied equity ratio) provides flexibility, but earnings recovery is key.

Risk Assessment

Business Risks:

• Project execution risk leading to cost overruns and milestone slippage.
• Raw material and component cost volatility affecting gross margin.
• Adverse product/project mix (lower-margin large projects vs higher-margin service/aftermarket).
• Foreign exchange volatility impacting both operating and non-operating results.
• Demand cyclicality in oil & gas, power, water infrastructure, and overseas projects.

Financial Risks:

• Non-operating losses (e.g., forex, valuation) materially reducing ordinary income.
• Working capital build-up tying up cash during execution phases.
• Potential tax expense volatility relative to pretax income.
• Interest rate risk on floating-rate borrowings (partially mitigated by 7.2x interest coverage).

Key Concerns:

• Operating margin compressed to ~1.3% despite 9.8% sales growth.
• Ordinary income of ¥40m vs operating income of ¥532m indicates significant non-operating drag (~¥492m).
• Net loss of ¥56m recorded alongside a ¥360m tax expense, clouding near-term earnings visibility.

Investment Implications

Key Takeaways:

• Top-line growth (+9.8% YoY) is intact, but profitability lags due to negative operating leverage.
• Non-operating losses were the principal driver of the drop from operating to ordinary income.
• Balance sheet appears solid with ~¥43.9bn working capital and implied equity ratio near 50%.
• Cash flow was not disclosed; assessing cash conversion must await further disclosures.
• H2 performance needs margin recovery and stabilization of non-operating items to support earnings normalization.

Metrics to Watch:

• Order intake and backlog quality/margin.
• Operating margin trajectory and SG&A ratio (currently ~21.9% of sales).
• Non-operating items breakdown (forex gains/losses, investment income/expenses).
• Working capital movements (receivables/contract assets, advances, inventory).
• Tax rate normalization and any one-off tax items.
• Interest coverage and leverage levels amid potential rate changes.

Relative Positioning: Within Japanese industrial machinery peers focused on pumps and engineered solutions, Torishima shows solid balance sheet resilience and revenue growth but exhibits elevated earnings volatility tied to project execution and non-operating swings; margin recovery and cash conversion are key to closing the gap with steadier-margin 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
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