DAIFUKU CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥486.01B
• Operating Income: ¥75.21B
• Net Income: ¥58.47B
• EPS: ¥159.01

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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

Daifuku (TSE: 6383) reported FY2025 Q3 consolidated results under JGAAP showing solid profitability and a conservative balance sheet, while cash flow conversion was moderate. Revenue totaled ¥486.0bn, implying essentially flat year-on-year momentum based on the provided indicator. Gross profit was ¥119.4bn for a gross margin of 24.6%, indicating healthy project and service mix economics for a material handling systems provider. Operating income reached ¥75.2bn, translating to a 15.5% operating margin, which underscores disciplined SG&A and good execution on orders in progress. Ordinary income was ¥77.6bn, marginally above operating income due to limited non-operating items, and net income was ¥58.5bn, equating to a 12.0% net margin. EPS came in at ¥159.01 for the period. Depreciation and amortization were ¥6.47bn, implying low capital intensity relative to scale and an EBITDA of ¥81.7bn (16.8% margin). The DuPont framework indicates ROE of 13.9% driven by a net profit margin of 12.0%, asset turnover of 0.687x, and financial leverage of 1.68x. The balance sheet shows total assets of ¥707.0bn against total equity of ¥421.5bn, indicating modest leverage; total liabilities were ¥290.3bn (debt-to-equity of 0.69x). Liquidity is strong with current assets of ¥531.6bn versus current liabilities of ¥214.2bn, yielding a current ratio of 248% and working capital of ¥317.3bn. Interest burden is negligible with interest expense of only ¥0.16bn and an interest coverage ratio around 470x, highlighting ample debt service capacity. Operating cash flow was ¥45.7bn, or 0.78x net income, suggesting some working capital absorption during the period. Investing cash flow and cash balance were not disclosed in the dataset, which constrains full free cash flow and liquidity analysis; likewise, the equity ratio, DPS, and share counts were not reported in XBRL under the provided labels. Based on the income tax line (¥23.0bn) versus pre-tax income proxy, the effective tax rate appears closer to circa 30% rather than the placeholder metric shown. Overall, Daifuku’s operating performance looks resilient with high returns and low financial risk, though cash conversion is an area to monitor and several key disclosures (cash, investing CF, dividends, share data) were not provided in this snapshot.

Profitability Analysis

ROE of 13.9% is supported by a 12.0% net margin, 0.687x asset turnover, and 1.68x financial leverage. Operating margin stands at 15.5% (¥75.2bn operating income on ¥486.0bn revenue), indicating strong cost control and favorable project execution. Gross margin of 24.6% suggests solid pricing and mix; the spread from gross to operating margin (approximately 9.1pp) reflects efficient SG&A absorption. EBITDA margin of 16.8% and D&A of ¥6.47bn (only ~1.3% of revenue) confirm low non-cash expense drag and modest capital intensity. Ordinary income margin of 16.0% exceeds operating margin slightly, implying minimal non-operating headwinds. Interest expense is de minimis (¥0.16bn), resulting in an interest coverage ratio of roughly 470x and highlighting negligible financing cost pressure. Margin quality appears robust, with a healthy conversion from gross to operating income; however, period-to-period volatility can arise from project timing in systems integration businesses. Operating leverage looks favorable given that a relatively fixed SG&A base can support incremental margins when revenue expands; conversely, a slowdown could compress margins if utilization or project mix weakens.

Growth Assessment

Revenue is reported at ¥486.0bn with a YoY indicator showing flat growth, suggesting stable top-line conditions in the period provided. Operating income is similarly shown as flat YoY, implying limited margin expansion or contraction in this snapshot. Without backlog, order intake, or segment mix detail, growth sustainability cannot be fully assessed; however, margins indicate that pricing and execution remain disciplined. Profit quality is supported by high operating margin and low interest burden, though cash conversion (OCF/NI at 0.78x) points to working capital use that can dampen near-term growth cash funding. Outlook hinges on the cadence of large project deliveries and service revenues; these can create lumpy recognition but generally support mid-cycle resilience when diversification across end markets is maintained. Given the low D&A and high EBITDA, internal capacity to support selective growth investments appears intact, subject to working capital dynamics. In the absence of disclosed YoY growth rates beyond the placeholder, we treat revenue and operating profit trajectory as broadly stable within the quarter-to-date context.

Financial Health

Total assets are ¥707.0bn and total equity is ¥421.5bn, yielding financial leverage (assets/equity) of 1.68x and a debt-to-equity proxy (total liabilities/equity) of 0.69x, indicating modest leverage. Liquidity is strong with current assets of ¥531.6bn and current liabilities of ¥214.2bn, for a current ratio of 248% and working capital of ¥317.3bn. The quick ratio of 244% reflects limited reliance on inventories (¥9.73bn, roughly 1.8% of current assets), consistent with a project- and service-heavy business model. Interest expense is minimal at ¥0.16bn, supporting very high interest coverage (~470x) and low refinancing risk. The equity ratio field is not disclosed in this dataset; based on reported totals, equity constitutes roughly 59.6% of assets. Absence of cash and equivalents disclosure limits precision on immediate liquidity buffers, but large net working capital and low leverage underpin solvency.

Cash Flow Quality

Operating cash flow of ¥45.7bn equates to 0.78x net income (¥58.5bn), indicating moderate cash conversion and some working capital consumption in the period. EBITDA of ¥81.7bn provides ample internal cash generation capacity before working capital and capex. Investing cash flow is not disclosed, preventing a direct free cash flow calculation; the placeholder FCF value shown should be treated as unavailable rather than zero. Given D&A of ¥6.47bn, maintenance capex is likely well below EBITDA, but actual capex cannot be inferred without investing cash details. Working capital appears to be the primary swing factor this quarter; large project businesses often see OCF volatility due to receivables and contract assets/liabilities timing. Financing cash flow was an outflow of ¥26.0bn, potentially reflecting shareholder returns or debt movements, but without a cash balance we cannot triangulate net liquidity changes. Overall, earnings quality is good from a margin perspective, while cash conversion warrants monitoring until investing cash flows and cash balances are disclosed.

Dividend Sustainability

The dataset shows DPS, payout ratio, and FCF coverage as zero, which indicates non-disclosure under the provided labels rather than actual zero payments. With net income of ¥58.5bn and strong margins, the capacity to pay dividends appears supported in principle; however, without disclosed DPS, total dividends, or investing cash flows, we cannot calculate payout or free cash flow coverage. Operating cash flow of ¥45.7bn suggests underlying support for distributions, but working capital swings and unknown capex requirements are key variables. Financing cash outflow of ¥26.0bn could include dividends or buybacks, yet the mix is not specified. Policy outlook cannot be inferred from the provided data; we assume a balanced approach between growth investment and shareholder returns given the low leverage and healthy profitability.

Risk Assessment

Business Risks:

• Project execution and delivery timing risk impacting revenue recognition and margins
• End-market cyclicality in manufacturing, logistics, and possibly semiconductor/automotive customers
• Supply chain and component availability affecting project schedules and costs
• Competition and pricing pressure in material handling and automation solutions
• FX exposure from overseas contracts and costs
• Warranty, after-sales service, and long-term performance obligations

Financial Risks:

• Working capital volatility affecting operating cash flow and free cash flow timing
• Customer credit risk concentrated in large projects or key accounts
• FX translation and transaction impacts on earnings and equity
• Potential off-balance-sheet commitments or guarantees not visible in the provided data
• Reinvestment requirements (capex/R&D) not disclosed in investing cash flows

Key Concerns:

• OCF/Net income at 0.78x indicates weaker cash conversion this period
• Investing cash flows and cash balance are undisclosed, limiting visibility on FCF and liquidity buffers
• Revenue and operating income YoY indicators appear placeholder-level, constraining trend analysis

Investment Implications

Key Takeaways:

• High-quality profitability with 24.6% gross margin and 15.5% operating margin
• ROE of 13.9% underpinned by strong margins and moderate leverage (1.68x assets/equity)
• Very low interest burden with ~470x interest coverage reduces financial risk
• Strong liquidity position (current ratio 248%, working capital ¥317.3bn)
• Cash conversion moderate (OCF/NI 0.78x) due to working capital use
• Several key disclosures (cash, investing CF, DPS/share data) are not available in the dataset
• Earnings quality solid; FCF assessment pending disclosure of investing cash flows

Metrics to Watch:

• Order intake, backlog, and project mix to gauge revenue sustainability
• Working capital components (receivables, contract assets/liabilities) and OCF/NI ratio
• Capex and investing cash flows to determine true free cash flow and coverage
• Tax rate normalization (implied ~30%) and any one-off items
• FX impacts on revenue and margins
• Dividend and buyback disclosures, including payout and coverage

Relative Positioning: Versus Japanese machinery and factory automation peers, Daifuku exhibits above-average operating margins, strong liquidity, and low financing risk, positioning it favorably on profitability and balance sheet quality while cash conversion volatility remains a watch point typical of project-driven businesses.

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