ANEST IWATA Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥26.32B
• Operating Income: ¥2.51B
• Net Income: ¥2.67B
• EPS: ¥54.89

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

For FY2026 Q2, Anest Iwata reported revenue of ¥26.33bn, down 2.7% YoY, with operating income of ¥2.51bn (-15.2% YoY) and net income of ¥2.16bn (-1.5% YoY). Gross profit was ¥12.42bn, implying a robust gross margin of 47.2%, but operating margin compressed to 9.5% as SG&A outpaced sales. Ordinary income of ¥3.30bn exceeded operating income by ¥0.79bn, indicating sizable non-operating gains (likely FX or financial income), which helped cushion bottom-line pressure. Net margin stood at 8.21%, supported by non-operating items despite softer operating profits. DuPont analysis yields ROE of 4.04% = 8.21% net margin × 0.382 asset turnover × 1.29 financial leverage, highlighting that low asset turnover is the key ROE constraint. Liquidity is strong with a current ratio of 372% and a quick ratio of 315%, reflecting ample current assets relative to current liabilities. Leverage remains conservative with debt-to-equity at 0.29x and interest coverage at 55.8x, underscoring low financial risk. Operating cash flow of ¥3.04bn exceeded net income (OCF/NI = 1.41x), suggesting solid earnings-to-cash conversion for the period. EBITDA was ¥3.61bn (13.7% margin), indicating healthy core cash earnings against modest interest expense of ¥45m. Working capital is sizable at ¥33.07bn, providing resilience but possibly weighing on asset turnover. Investing cash flow and cash balances are shown as zero in the data but should be treated as undisclosed, not actual zeros; hence free cash flow cannot be reliably derived. The reported effective tax rate of 0.0% is also an undisclosed placeholder; using reported income tax of ¥795m suggests a normalized tax burden likely in the mid-20s percent range, subject to extraordinary items. The equity ratio reported as 0.0% is likewise undisclosed; balance sheet totals indicate equity of ¥53.49bn against assets of ¥68.93bn (implying an equity ratio around the high-70% range). Dividend per share is shown as zero (undisclosed), so payout analysis requires caution despite EPS of ¥54.89. Overall, the company exhibits resilient bottom-line performance aided by non-operating gains, strong liquidity, conservative leverage, and good cash conversion, offset by negative operating leverage, low asset turnover, and limited visibility on capex and dividend policy due to unreported items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.21%
• asset_turnover: 0.382
• financial_leverage: 1.29
• calculated_ROE: 4.04%
• interpretation: ROE is constrained primarily by low asset turnover; leverage is modest and margin is respectable, aided by non-operating gains. margin_quality:
• gross_margin: 47.2%
• operating_margin: 9.5%
• ordinary_income_margin: 12.5%
• net_margin: 8.21%
• comments: High gross margin signals pricing/premium mix strength, but SG&A intensity (approx. 37.7% of sales) compressed operating margin. Ordinary income exceeded operating income by ¥785m, suggesting reliance on non-operating gains to support net margin. operating_leverage: Revenue declined 2.7% YoY while operating income fell 15.2% YoY, indicating negative operating leverage in H1. Fixed-cost absorption and/or higher opex likely amplified the modest top-line contraction.

Growth Assessment

revenue_sustainability: Top line contracted 2.7% YoY to ¥26.33bn. Without segment/backlog data, visibility is limited; the high gross margin suggests relatively stable core demand/pricing, but the decline implies softening in certain end-markets. profit_quality: Core profitability weakened at the operating level, while ordinary income and net income benefited from non-operating gains. EBITDA margin of 13.7% indicates decent cash earnings capacity despite opex pressure. outlook: With limited disclosure on orders, backlog, and regional mix, near-term growth hinges on normalization of operating expenses and recovery in demand. A return to positive operating leverage would require stabilization or growth in sales and disciplined SG&A.

Financial Health

liquidity:

• current_ratio: 371.9%
• quick_ratio: 314.9%
• working_capital: ¥33,068m
• inventories: ¥6,931m
• assessment: Very strong liquidity; ample current assets vs. liabilities. Large working capital base supports resilience but may depress asset turnover. solvency:
• debt_to_equity: 0.29x
• interest_coverage: 55.8x
• total_assets: ¥68,932m
• total_equity: ¥53,491m
• assessment: Low leverage and very high coverage indicate low financial risk and capacity to withstand earnings volatility. capital_structure: Financial leverage (Assets/Equity) at 1.29x aligns with a conservative balance sheet. The reported equity ratio of 0.0% is undisclosed; based on balances, equity/asset ratio is roughly 77.6%.

Cash Flow Quality

earnings_quality: OCF of ¥3,040m vs. net income of ¥2,160m (OCF/NI = 1.41x) indicates solid conversion. D&A of ¥1,095m supports EBITDA of ¥3,606m and cash earnings quality. FCF_analysis: Investing cash flow is shown as zero but is undisclosed; capex is not available. Therefore, free cash flow cannot be reliably computed from the provided data. Financing outflow of ¥2,194m suggests dividends, buybacks, or debt repayment. working_capital: High working capital (¥33,068m) and inventories (¥6,931m) provide buffer but may weigh on asset turns. Without period-over-period WC deltas, we cannot quantify WC drag or release in OCF.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as zero (undisclosed). EPS is ¥54.89. Without declared DPS, we cannot compute payout. FCF_coverage: Free cash flow not determinable due to undisclosed investing cash flows; FCF coverage cannot be assessed. policy_outlook: Financing cash outflow (¥2,194m) implies potential shareholder returns and/or debt service, but the split is unknown. Dividend sustainability assessment awaits disclosure of DPS and capex/FCF.

Risk Assessment

Business Risks:

• Demand cyclicality in industrial end-markets affecting compressors and coating equipment
• Pricing and mix risks despite currently high gross margin
• Supply chain and logistics volatility impacting lead times and costs
• Foreign exchange fluctuations affecting revenue and non-operating income
• Geographic/regional exposure risks (details undisclosed)
• Competition-driven margin pressure in machinery/tooling markets

Financial Risks:

• Low asset turnover constraining ROE
• Potential working capital build tying up cash if demand softens
• Dependence on non-operating gains to support net income in the period
• Limited visibility on capex and cash balances due to undisclosed investing CF and cash

Key Concerns:

• Negative operating leverage (opex growth vs. sales decline)
• Inability to assess FCF and dividend coverage due to undisclosed items
• ROE at 4.04% below typical sector mid- to high-single-digit norms

Investment Implications

Key Takeaways:

• Resilient net income underpinned by non-operating gains despite weaker operating profit
• High gross margin but SG&A intensity pressured operating margin
• ROE of 4.04% limited by low asset turnover; balance sheet leverage is conservative
• Strong liquidity and coverage metrics mitigate financial risk
• OCF exceeds net income, indicating solid cash conversion
• Data gaps (capex, cash, DPS) constrain FCF and payout analysis

Metrics to Watch:

• Order intake, backlog, and book-to-bill to gauge near-term demand
• SG&A ratio trajectory and operating margin recovery
• Gross margin stability vs. input costs and pricing
• Asset turnover and inventory days to assess efficiency
• Capex and investing cash flows to derive FCF
• FX gains/losses in non-operating income and their sustainability
• ROE progression and capital allocation (buybacks/dividends vs. reinvestment)

Relative Positioning: Within Japanese industrial machinery peers, Anest Iwata shows conservative leverage and strong liquidity but below-peer ROE due to low asset turnover and recent operating deleverage; margin profile is solid at the gross level, with scope to improve operating efficiency.

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