TADANO LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥240.55B
• Operating Income: ¥11.01B
• Net Income: ¥8.77B
• EPS: ¥103.55

Income Statement

Balance Sheet

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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

Tadano (6395) reported FY2025 Q3 (consolidated, JGAAP) results with solid top-line growth but notable margin compression at the operating level. Revenue reached ¥240.5bn, up 13.1% YoY, indicating healthy demand and/or improved shipment execution. Gross profit was ¥63.0bn, translating to a gross margin of 26.2%. Operating income declined 43.3% YoY to ¥11.0bn, reducing the operating margin to 4.6%, implying meaningful cost pressure and/or unfavorable mix and operating leverage. Ordinary income was ¥7.9bn (3.3% margin), reflecting higher finance costs and other non-operating items; interest expense was ¥1.51bn, yielding interest coverage of 7.3x. Net income increased 49.1% YoY to ¥13.1bn (net margin 5.44%), suggesting the presence of sizable non-operating/extraordinary gains and/or tax effects not discernible from the limited line items. The DuPont bridge indicates ROE of 6.65% = 5.44% net margin × 0.529x asset turnover × 2.31x financial leverage. Implied ROA is about 2.9%, which is modest for capital goods and points to a heavy asset base and/or underutilization. Balance sheet strength is adequate: total assets ¥454.4bn, equity ¥196.7bn (implied equity ratio ~43.3% despite the reported 0% placeholder), and current ratio 211%. Working capital is sizable at ¥154.0bn, with inventories of ¥65.4bn; this supports deliveries but elevates execution and cycle risk. Cash flow data are not disclosed in this dataset (zeros denote unreported), limiting assessment of earnings-to-cash conversion and capex intensity. Dividend information is also not disclosed here (DPS shown as 0.00 is a placeholder), so payout policy cannot be inferred from this extract. Overall, revenue momentum is encouraging, but margin headwinds and reliance on non-operating items for bottom-line growth temper the quality of earnings. Leverage appears manageable and liquidity robust, but interest expense has become more visible in ordinary profit. Key focus areas are price–cost spread, operating efficiency, inventory management, and the sustainability of demand across regions and end-markets. Data limitations (notably cash flows, depreciation, and share data) constrain precision in EBITDA, FCF, and per-share balance sheet analytics.

From Earnings Presentation: Tadano's Q3 FY2025 earnings presentation details the backdrop of achieving revenue growth of 240,547 million yen (+13.1%) while operating income declined significantly to 11,008 million yen (△43.3%). The analysis of the 8.4 billion yen operating income decrease identifies acquisition-related costs as the primary factor: Manitex acquisition costs (goodwill amortization 500 million yen, PPA asset amortization 1,400 million yen, one-time costs 2,700 million yen) and TIS acquisition costs (goodwill amortization 300 million yen, one-time costs 400 million yen) totaling 5.3 billion yen in one-time expenses. Additionally, 2.3 billion yen impact from shipment delays due to monitoring US tariff developments and 2.1 billion yen increase in raw material costs pressured profits. In extraordinary income and losses, approximately 9.9 billion yen in extraordinary gains were recorded from European fixed asset sales and step acquisition gains on Manitex shares, resulting in net income attributable to parent company shareholders of 13,088 million yen (+49.1%). By product, stationary LE (material handling equipment, etc.) of 6.9 billion yen was newly consolidated through the TIS acquisition, and vehicle-mounted cranes doubled (28.1 billion yen, +99.9%) with Manitex contribution. By region, North America increased 12.4 billion yen and Europe 9.6 billion yen, showing significant M&A effects. On the balance sheet, interest-bearing debt increased 29.4 billion yen, inventory increased 25.5 billion yen, and fixed assets increased 19.7 billion yen, with M&A and US tariff response affecting both assets and liabilities. While equity ratio declined from 46.8% to 43.3%, short-term liquidity was maintained with a current ratio of 211%.

Financial Analysis

Profitability

ROE_decomposition: ROE 6.65% = Net margin 5.44% × Asset turnover 0.529 × Financial leverage 2.31. Implied ROA ≈ 2.9%. The ROE is modest for capital goods and heavily reliant on financial leverage given subdued operating margins and asset turnover. margin_quality: Gross margin stands at 26.2% on ¥62.96bn gross profit, while operating margin is 4.6% on ¥11.01bn operating income. The steep YoY decline in operating income (-43.3%) despite +13.1% revenue implies adverse price–cost dynamics, higher SG&A, or mix. Implied SG&A is ~¥51.95bn (≈21.6% of sales), indicating elevated overhead absorption and/or reinvestment. operating_leverage: Revenue grew double digits, but operating profit contracted sharply, indicating negative operating leverage in the period. Ordinary income margin at 3.3% is further compressed by ¥1.51bn interest and other non-operating effects. Net income growth (+49.1% YoY) likely reflects non-recurring items; thus, underlying operating profitability appears weaker than the bottom line suggests.

Growth

revenue_sustainability: Top-line growth of 13.1% YoY to ¥240.5bn is solid and likely supported by demand for cranes and related solutions; sustainability hinges on order intake, backlog conversion, and regional infrastructure cycles. profit_quality: Operating earnings declined significantly, with net profit outpacing ordinary profit, signaling reliance on non-operating/extraordinary factors. Without depreciation and OCF disclosure, underlying cash earnings quality cannot be confirmed. outlook: Key drivers include price realization versus input costs (steel, components), supply chain normalization, and mix (higher-margin models/services). Management’s ability to temper SG&A growth and improve utilization should determine margin recovery. FX and interest expense will influence ordinary profit trajectory.

Financial Health

liquidity: Current assets ¥292.4bn vs. current liabilities ¥138.4bn yields a current ratio of 211% and a quick ratio of 164%, indicating strong short-term liquidity. Working capital is ¥154.0bn, supporting delivery schedules but tying up cash. solvency: Total liabilities ¥214.5bn vs. equity ¥196.7bn implies a liabilities-to-equity ratio of 1.09x. Implied equity ratio is ~43.3% (196.7/454.4), suggesting a balanced capital structure for a machinery company. Interest coverage is 7.3x, providing headroom even with higher rates. capital_structure: Financial leverage in DuPont at 2.31x aligns with a moderate leverage profile. Debt composition is not detailed; however, ordinary profit sensitivity to interest costs (¥1.51bn) warrants monitoring if funding needs rise with working capital.

Cash Flow

earnings_quality: Operating cash flow is not disclosed in this dataset (shown as 0 by placeholder), preventing a direct OCF/NI assessment. The provided OCF/NI ratio of 0.00 is not meaningful and should not be interpreted as poor cash conversion. FCF_analysis: Capex and investing cash flows are undisclosed; EBITDA cannot be computed due to missing depreciation. Consequently, FCF and EBITDA-based credit metrics cannot be assessed from this extract. working_capital: Inventories of ¥65.4bn represent ~27% of current assets and ~27% of year-to-date revenue, reflecting sizable build typical of capital goods but exposing the company to demand and execution risk. Working capital to sales is ~64%, indicating substantial capital tied in the operating cycle.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratios are not disclosed here (zeros are placeholders). With EPS at ¥103.55 YTD, capacity exists in principle, but operating earnings softness and absent cash flow data preclude assessment of sustainable payout levels. FCF_coverage: FCF is not reported; therefore, dividend coverage by FCF cannot be evaluated from this dataset. policy_outlook: Dividend policy cannot be inferred from the provided data. Future distributions will depend on OCF generation, capex needs, and margin recovery. Balance sheet capacity appears reasonable, but prudence is warranted given cyclical end-markets.

Business Outlook

While the materials do not explicitly state full-year earnings forecasts or future outlook, analysis of operating income decrease factors suggests potential for improvement. If one-time factors (acquisition-related costs of 5.3 billion yen and shipment delays due to US tariff response of 2.3 billion yen) dissipate, operating income has significant improvement potential. Construction cranes face domestic demand decline challenges, but overseas shows expansion trend through Manitex and TIS integration effects. Aerial work platforms are growing across all fronts with Japan +2.4 billion yen and overseas +2.9 billion yen. The 2.1 billion yen raw material cost increase holds the key to profit margin recovery depending on price transfer progress. Working capital expansion (inventory turnover deterioration) stems from demand fluctuations and supply chain responses, with room for cash flow improvement upon normalization. Realization of M&A integration effects (synergies, economies of scale) becomes the focus for medium-term profitability improvement.

Management Guidance

While the materials do not contain direct management comments or guidance, management intent can be inferred from notes in the earnings summary. They clearly state 'operating income and ordinary income decreased due to increased SG&A expenses including acquisition-related costs,' emphasizing one-time factors, and explain net income increase as attributable to extraordinary income and losses. The operating income variance analysis emphasizes 'one-time factors including acquisition-related costs,' suggesting recognition that the base business remains fundamentally sound. Business portfolio expansion through M&A (addition of stationary LE, strengthening North American and European bases) is positioned as a strategic choice. Shipment delays in response to US tariffs are presented as flexible adaptation to external environment. The increase in interest-bearing debt is explicitly noted as 'preparation for US tariff impact' and 'M&A,' explaining the intent of financial strategy.

Strategic Initiatives

• Significantly expanded North American vehicle-mounted crane business through Manitex acquisition (estimated completed in February), acquiring 15.1 billion yen in overseas sales
• Entered stationary LE business through TIS (Tadano Infrastructure Solutions) acquisition (effective July 1, former IHI Transport Machinery's material handling systems business), strengthening domestic infrastructure and logistics sectors
• Asset efficiency improvement and capital generation through European fixed asset sales (recording extraordinary gains)
• Balanced inventory buildup and risk avoidance through shipment adjustments while monitoring US tariff developments
• Product portfolio diversification: establishing four-pillar structure of construction cranes, vehicle-mounted cranes, aerial work platforms, and stationary LE
• Geographic diversification: overseas sales ratio increased to 66.6% through North American and European M&A, strengthening resilience to geopolitical risks and demand fluctuations
• Promoting price transfers: selling price impact of +3.7 billion yen explicitly stated, continuing price revisions as inflation countermeasure

Risk Assessment

Business Risks:

• Cyclical demand in construction, energy, and infrastructure end-markets affecting crane orders and utilization
• Input cost volatility (steel, components) pressuring gross margins if not offset by pricing
• Supply chain constraints and lead times impacting delivery schedules and working capital
• Product mix shifts toward lower-margin models or regions
• FX fluctuations affecting both competitiveness and translation of overseas revenues
• Execution risk in managing large inventory and backlog conversion
• Technology transition and compliance (emissions, electrification) requiring sustained R&D and capex
• Product liability and warranty cost variability in heavy machinery

Financial Risks:

• Interest rate exposure evidenced by ¥1.51bn interest expense reducing ordinary income
• Potential cash conversion risk given high working capital and undisclosed OCF
• Refinancing or liquidity risk if working capital needs increase during downturns
• Margin compression reducing coverage ratios if price–cost spread remains unfavorable

Key Concerns:

• Operating income down 43.3% YoY despite strong revenue growth
• Net income strength appears supported by non-operating/extraordinary items, not core operations
• Absence of cash flow and depreciation data prevents validation of earnings quality and FCF

Risk Factors from Presentation:

• Uncertainty in US tariff developments causing shipment delays (2.3 billion yen negative impact on operating income)
• Raw material cost increases (2.1 billion yen negative impact) and delays in price transfers
• M&A integration risks: one-time costs for Manitex and TIS (total 5.3 billion yen) and ongoing PPA amortization burden
• Working capital expansion: reduced cash efficiency due to deterioration in accounts receivable and inventory turnover
• Foreign exchange fluctuations: USD appreciation (△3.1 yen) resulting in △800 million yen foreign exchange impact
• Domestic construction crane demand decline (△3.9 billion yen) and domestic market stagnation
• Interest burden increase risk from 29.4 billion yen increase in interest-bearing debt (maintaining interest coverage ratio is a challenge)

Investment Implications

Key Takeaways:

• Top-line momentum (+13.1% YoY) contrasts with sharp operating margin compression (4.6% OM)
• ROE 6.65% is modest and supported by leverage rather than high operating returns
• Balance sheet and liquidity are solid (implied equity ratio ~43%, current ratio 2.1x)
• Interest expense (¥1.51bn) is materially impacting ordinary profit; coverage is 7.3x
• Inventory and working capital are elevated, amplifying cash conversion risk

Metrics to Watch:

• Order intake and backlog conversion rates
• Gross margin and SG&A ratio trends (price–cost spread)
• Operating cash flow, capex, and FCF once disclosed
• Interest expense trajectory and funding mix
• Inventory days and receivables collection
• Ordinary income vs. net income gap (non-operating items/one-offs)

Relative Positioning: Within Japanese capital goods peers, Tadano shows strong liquidity and a mid-40s implied equity ratio, but profitability is currently subdued with ROE of ~6.7% and operating margin ~4.6%. Revenue growth is competitive, yet margin and cash conversion visibility lag due to data gaps and elevated working capital.

Supplementary Insights (Key Highlights)

• Of the 8.4 billion yen operating income decrease, Manitex-related costs of 4.6 billion yen (goodwill and PPA amortization 1.9 billion yen, one-time costs 2.7 billion yen) and TIS-related costs of 700 million yen were identified as one-time factors
• The impact of shipment delays due to monitoring US tariff developments was quantified at 2.3 billion yen, revealing specific geopolitical risk impacts not identified in GPT analysis
• The structure whereby net income was boosted by extraordinary gains of 9.9 billion yen (European fixed asset sale gains, Manitex step acquisition gains) was clarified
• The TIS acquisition (effective July 1) resulted in the stationary LE business becoming a new segment, with material handling equipment at 2.97 billion yen and other at 3.97 billion yen totaling 6.9 billion yen consolidated
• While construction cranes remained flat overseas (△200 million yen), a decline of △3.9 billion yen in Japan showed significant domestic demand reduction
• Vehicle-mounted crane overseas sales expanded significantly by 13.6 billion yen (+913%) through the Manitex acquisition, driven by North America and Europe
• Working capital efficiency deteriorated with accounts receivable turnover period extending from 63.4 to 67.6 days and inventory turnover period from 172.8 to 185.6 days
• Cash on hand decreased from 93,125 million yen to 87,434 million yen (△5.6 billion yen), while interest-bearing debt increased from 122,473 million yen to 151,919 million yen, up 29.4 billion yen
• Exchange rates diverged with USD at 151.3→148.2 yen (△3.1 yen appreciation) and EUR at 164.4→165.5 yen (+1.1 yen depreciation), resulting in a negative foreign exchange impact of △800 million yen

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