TADANO (6395) FY2026 Q2 Earnings Report

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Executive Summary

The first half of FY2026 recorded increases in both revenue and earnings, with strong operating leverage driven by an improved gross margin leading profit growth. Revenue was ¥182.58B (+10.8% year on year), Operating Income was ¥14.88B (+82.1%), Ordinary Income was ¥13.52B (+135.4%), and Net Income was ¥10.77B (+174.2%). Revenue growth was primarily driven by expanded sales in Japan and the Americas, while earnings growth was mainly attributable to the gross margin improvement from 26.5% to 30.7%. Profit before tax also benefited from net extraordinary income of approximately ¥1.70B.

Factors Affecting Performance

【Revenue】Revenue increased 10.8% year on year to ¥182.58B. By region, Japan was the largest and fastest-growing market at ¥120.32B (YoY +32.7%), followed by the Americas at ¥69.68B (+1.5%), Europe at ¥52.38B (+0.6%), and Oceania at ¥8.20B (+52.0%). By product, the Aerial Work Platforms and Other Businesses expanded, while the core Construction Cranes Business recorded a slight decline in revenue.

【Profit and Loss】Gross profit improved to ¥56.12B (gross margin 30.7%, versus 26.5% in the previous year). Although SG&A expenses increased to ¥41.24B (+16.7%), at a pace exceeding revenue growth, the effect of the gross margin improvement absorbed this increase, resulting in Operating Income of ¥14.88B (operating margin 8.1%, versus 5.0% in the previous year). Ordinary Income increased 135.4% to ¥13.52B, owing to higher operating income and a reduction in non-operating expenses (¥2.18B, versus ¥3.04B in the previous year). Net Income increased 174.2% to ¥10.77B, including the contribution from net extraordinary income of approximately ¥1.70B. Both revenue and earnings increased, with improved profitability leading profit growth.

Segment Analysis

The Japan segment led company-wide earnings, with revenue of ¥120.32B (YoY +32.7%) and Operating Income of ¥14.86B (margin 12.4%, versus 9.2% in the previous year). The Americas improved to revenue of ¥69.68B (+1.5%) and profit of ¥3.90B (margin 5.6%, versus 2.8% in the previous year). Europe recorded revenue of ¥52.38B (+0.6%); its operating loss narrowed to ¥1.92B from ¥3.68B in the previous year, but remained negative. Oceania expanded to revenue of ¥8.20B (+52.0%), while its profit margin declined to 1.4% from 7.0% in the previous year. Regionally, improved profitability in Japan contrasts with the continuing loss in Europe, with the primary driver of company-wide improvement concentrated in the Japan segment.

Key Financial Indicators

【Profitability】Both the Operating Income margin, at 8.1% (versus 5.0% in the previous year), and the Net Income margin, at 5.9% (versus 2.4%), improved. Annualized ROE was 9.9%. 【Cash Quality】Operating Cash Flow (OCF) turned positive at ¥7.63B; however, OCF/Net Income was only 0.71x and OCF/EBITDA was 0.39x. An increase in inventories of ¥12.82B and a decrease in trade payables of ¥10.33B constrained cash generation. 【Investment Efficiency】Capital expenditures of ¥7.15B were 1.57 times depreciation and amortization of ¥4.56B, indicating an active investment phase in which investment exceeds maintenance capital expenditures. 【Financial Soundness】The Equity Ratio was 48.1% and the current ratio was 223.7%, indicating a sound financial base. However, interest-bearing debt reached approximately ¥101.0B, making leverage management an issue.

Cash Flow Analysis

OCF was ¥7.63B, turning positive from negative ¥5.83B in the same period of the previous year. A ¥13.66B decrease in trade receivables contributed to cash inflows, while a ¥12.82B increase in inventories and a ¥10.33B decrease in trade payables were sources of cash outflows. Consequently, OCF relative to Net Income of ¥10.77B remained at 0.71x. Investing Cash Flow was negative ¥2.87B, including capital expenditures of ¥7.15B, indicating that proactive investment continued. Free Cash Flow (OCF + Investing Cash Flow) was ¥4.76B, but cash capacity after capital expenditures was limited. Financing Cash Flow was negative ¥14.35B, reflecting progress in debt reduction, including a net decrease in short-term borrowings. Overall, while earnings improvement is progressing, cash-generating capacity remains affected by inventory and working capital movements.

Quality of Earnings

Ordinary Income was ¥13.52B against Operating Income of ¥14.88B, resulting in non-operating expenses exceeding non-operating income by ¥1.36B. Non-operating income of ¥0.82B represented approximately 0.4% of revenue and consisted primarily of recurring income such as interest and dividend income, indicating a low dependence on non-operating income. Meanwhile, interest expenses of ¥1.40B and foreign exchange losses of ¥0.35B pressured Ordinary Income. Profit before tax of ¥15.21B exceeded Ordinary Income by ¥1.70B, primarily due to net extraordinary income comprising extraordinary gains of ¥1.74B (including gains on sales of fixed assets and other items) and extraordinary losses of ¥0.04B. This component should be distinguished as a temporary factor. OCF/Net Income of 0.71x indicates a lag in cash conversion relative to accrual-based earnings, making working capital movements, including inventories and trade payables, an important consideration in assessing earnings quality.

Earnings Forecast and Guidance

First-half progress against the full-year plan was 45.6% for Revenue, 59.5% for Operating Income, 61.4% for Ordinary Income, and 76.7% for Net Income. Although revenue progress was slightly below the standard 50%, Operating Income and Ordinary Income were progressing at rates above this level, with first-half profitability improvements supporting achievement of the full-year plan. The particularly high progress rate for Net Income includes the benefit of approximately ¥1.70B in net extraordinary income; when evaluated based solely on recurring profit growth, the progress rate would be more conservative. Neither the earnings forecast nor the dividend forecast has been revised.

Shareholder Returns

The Q2 (interim) dividend was ¥17.00 per share, equivalent to 50.0% of the full-year dividend forecast of ¥34.00. The first-half Payout Ratio (total dividends ÷ Net Income) was approximately 20.5%, a low level, indicating a limited dividend burden relative to Net Income. As no share repurchases were conducted during the first half, shareholder returns are evaluated solely based on the Payout Ratio. Based on the full-year forecast of ¥14.00B in Net Income attributable to owners of the parent, the forecast Payout Ratio is approximately 30.7%. Assuming achievement of the plan, there are no significant concerns regarding dividend sustainability.

Risk Factors

1. Prolonged Working Capital Tie-Up: Inventories reached ¥72.48B and increased by ¥12.82B during the first half. Together with the ¥10.33B decrease in trade payables, this placed pressure on OCF, creating risks related to inventory valuation and production adjustments in the event of demand fluctuations.

2. Leverage and Short-Term Funding: Interest-bearing debt was approximately ¥101.0B, with short-term borrowings of ¥45.51B accounting for approximately 45% of interest-bearing debt. Although short-term borrowings declined on a net basis in Financing Cash Flow, the burden of refinancing and the impact of interest-rate fluctuations require continued monitoring.

3. Profitability of the European Business: The Europe segment recorded an operating loss of ¥1.92B on revenue of ¥52.38B (margin negative 3.7%). Although the loss narrowed from the previous year, it remains negative, and the sustainability of profitability improvement is an issue.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

The Operating Income margin is slightly below the industry median, while the Net Income margin exceeds the median.

Growth and Capital Efficiency

The revenue growth rate is approximately in line with the industry median.

※Source: Company analysis

Key Takeaways from the Financial Results

1. Revenue increased 10.8%, while Operating Income increased 82.1%, reflecting strong operating leverage originating from the gross margin improvement (26.5%→30.7%). The improvement in the Japan segment’s margin (9.2%→12.4%) was the central driver of company-wide improvement.

2. OCF turned positive, but the conversion rate relative to Net Income remained at 0.71x, with the increase in inventories and decrease in trade payables constraining cash generation. The gap between earnings improvement and cash generation will be an important point of focus in evaluating future working capital management.

3. The 76.7% first-half progress against the full-year Net Income plan includes approximately ¥1.70B in net extraordinary income. Meanwhile, progress based on Operating Income and Ordinary Income is proceeding ahead of plan even excluding extraordinary factors, confirming improvement in the profitability of the core business.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,568–¥1,659 at ±1% for the cost of equity, and ¥1,609–¥1,615 at ±0.1 for ω.

Notes:

• Goodwill amortization of ¥8.7 per share is added back to earnings (to account for a non-cash expense and comparability with IFRS companies).
• Because Net Income progress against the full-year forecast (77%) exceeds the standard level (50%), forecast EPS is adjusted upward within a range of up to +10% (because companies with progress ahead of plan tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a time lag relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit five-year fade) / Interest-rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, and you should consult a professional as necessary.

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