FUJITEC CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥115.42B
• Operating Income: ¥11.41B
• Net Income: ¥9.20B
• EPS: ¥117.55

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

Verdict: Strong profit beat on margins and cash flow despite slight top-line contraction. Revenue declined 1.1% YoY to 1,154.2, but operating income rose 28.8% YoY to 114.1, ordinary income increased 18.0% to 126.5, and net income advanced 11.9% to 91.7. Operating margin improved to 9.9% (114.1/1,154.2), up sharply given revenue fell; by back-solving, operating margin expanded roughly 230 bps YoY (from ~7.6% to ~9.9%). Net margin reached 8.0% (91.7/1,154.2), up about 90 bps YoY (from ~7.0% to ~8.0%). Ordinary margin improved around 180 bps YoY (from ~9.2% to ~11.0%), reflecting higher non-operating contributions, notably interest income of 8.3 and total non-operating income of 15.7. Gross margin printed 25.9%, consistent with the stronger operating margin result. Earnings quality was high: operating cash flow of 147.3 exceeded net income (OCF/NI = 1.61x), indicating robust cash conversion. Liquidity and solvency are very strong, with a current ratio of 228.6%, quick ratio of 223.6%, and interest coverage of 82.1x; debt remains conservative (D/E 0.52x). Balance sheet strength is underscored by cash of 772.8 versus short-term loans of 43.5 and long-term loans of only 1.6, minimizing refinancing risk. ROE is 5.5% via DuPont (net margin 8.0% × asset turnover 0.458 × leverage 1.52x), with improvement principally driven by margin expansion. ROIC is 9.1%, exceeding typical 7–8% targets and indicating value-accretive operations. Comprehensive income of 32.2 lagged net income significantly, implying negative OCI (likely FX translation and/or valuation losses) that partially offsets earnings gains at equity. Capex was modest at 31.6, supporting a healthy estimated FCF (OCF minus capex) of about 115.7, while financing outflows of -82.1 suggest dividends/buybacks and/or debt repayment. Note that reported payout ratio is 141.9%, which looks elevated versus earnings; without disclosed dividends paid, we treat this as a caution signal subject to confirmation against full-year context. Forward-looking, improved margins, high ROIC, and ample liquidity provide cushion against a softer revenue backdrop, but the sharp gap between net and comprehensive income and elevated calculated payout ratio warrant monitoring. Overall, Fujitec delivered quality earnings with cash discipline, positioning it well to navigate macro and FX volatility.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 8.0% × 0.458 × 1.52 ≈ 5.5%. Component change: Operating leverage and margin expansion were the dominant drivers, as operating income rose 28.8% YoY on a 1.1% revenue decline, implying substantial operating margin expansion. Business reason: Likely pricing/mix improvement (greater service/maintenance share and disciplined project execution), cost pass-through benefits, and tighter SG&A control; non-operating tailwinds (higher interest income of 8.3) supported ordinary income as well. Sustainability: Service/maintenance mix and cost discipline are more durable; non-operating interest income may partially normalize with rate/path of deposits and FX, and some project margin gains could be cyclical. Operating margin rose from an estimated ~7.6% to 9.9% (+230 bps), ordinary margin from ~9.2% to 11.0% (+180 bps), and net margin from ~7.0% to 8.0% (+90 bps). The SG&A ratio is ~16.0% of revenue this period (184.8/1,154.2); while prior-year SG&A is not disclosed, the margin uplift alongside lower revenue suggests SG&A grew below revenue or was reduced. Watchpoints: if SG&A growth accelerates above revenue or if pricing discipline weakens in new installations, margin gains could retrace. Overall, ROE improvement potential rests on sustaining the higher margin while lifting asset turnover; leverage is already conservative and not the lever to pull.

Growth Assessment

Revenue fell 1.1% YoY to 1,154.2, indicating modest top-line softness. Profit growth outpaced sales: operating income +28.8%, ordinary income +18.0%, net income +11.9%, driven by cost and mix improvements. EBITDA was 138.0 with an EBITDA margin of ~12.0%, supporting the quality of the operating uplift. The revenue decline suggests order timing/project phasing or regional softness; however, service revenues typically add resilience, which appears consistent with the margin pattern. Non-operating income (15.7), anchored by interest income (8.3), contributed to ordinary income; this component is less structural and may fluctuate with rates and FX. ROIC at 9.1% indicates efficient capital deployment, above common industry hurdles. Outlook: Maintaining mid-to-high single-digit operating margins near ~10% hinges on continued cost control and stable installation/service mix; backlog conversion and order intake will drive second-half revenue recovery potential. Key growth dependencies include construction activity, urban modernization, and maintenance penetration; FX may influence overseas contributions. Given high cash generation and modest capex, reinvestment capacity is intact to support digital/service initiatives. Absent disclosed order/backlog details, near-term revenue visibility is limited; focus should be on order trends and service retention.

Financial Health

Liquidity is robust: current ratio 228.6% and quick ratio 223.6%; no warning thresholds breached. Cash and deposits of 772.8 far exceed short-term loans of 43.5, minimizing near-term refinancing risk. Solvency is strong with D/E at 0.52x and interest coverage at 82.1x; long-term loans are minimal at 1.6. Working capital stands at 1,046.8, backed by sizable receivables (806.7) and low inventories (40.5), consistent with a project/service-heavy model. There is no explicit maturity mismatch risk given ample cash and low short-term debt; current liabilities (814.1) are comfortably covered by current assets (1,860.9). Off-balance sheet obligations are not disclosed; contingent liabilities/guarantees are unknown from the provided data. Equity of 1,660.4 supports a conservative leverage profile (assets/equity 1.52x). We explicitly note no red flags: Current Ratio well above 1.0 and D/E well below 2.0.

Cash Flow Quality

OCF of 147.3 exceeds net income of 91.7, yielding OCF/NI of 1.61x, a positive indicator of earnings quality. While detailed working-capital drivers are not disclosed, the strong cash conversion suggests healthy collections and controlled WIP/inventory. Estimated FCF (OCF − capex) is ~115.7; however, full investing CF is unreported, so acquisitions/disposals could affect true FCF. Financing CF of -82.1 likely reflects dividends, share repurchases, and/or debt repayments, all comfortably funded by OCF. Interest expense is low (1.39) relative to OI, and interest coverage is very strong at 82.1x, underscoring resilience. No obvious signs of working capital manipulation are evident from the limited data; receivables are large as typical for the business model, but liquidity remains ample. Overall, cash flow quality is high for the period.

Dividend Sustainability

The calculated payout ratio of 141.9% appears elevated relative to earnings, but dividends paid and DPS are unreported; this figure may reflect interim timing or inclusion of buybacks/specials in the calculation base. With estimated FCF of ~115.7 (OCF 147.3 less capex 31.6), the business could fund ordinary dividends and modest buybacks; however, without actual dividend outflows, FCF coverage cannot be conclusively assessed. Balance sheet capacity is strong (net cash position implied by high cash vs. debt), offering flexibility for shareholder returns. Policy outlook: Fujitec historically targets stable/progressive dividends in line with earnings and cash flow, but sustaining a payout above 100% would be a risk if repeated. Watch for full-year guidance updates on DPS and capital allocation; a normalized payout ratio (<60%) is a healthier benchmark longer term.

Risk Assessment

Business Risks:

• Project timing and order intake volatility impacting installation revenues
• Commodity and parts cost inflation potentially squeezing margins if not passed through
• FX fluctuations affecting overseas revenues, costs, and OCI
• Competitive pricing pressure in new installations
• Dependence on service/maintenance mix to sustain margin gains

Financial Risks:

• Elevated calculated payout ratio (141.9%) could pressure cash if sustained
• Receivables concentration and collection timing risk in project business
• OCI volatility (comprehensive income well below net income) affecting equity
• Interest income normalization risk reducing non-operating contributions

Key Concerns:

• Revenue contraction (-1.1% YoY) despite profit growth; sustainability hinges on backlog and orders
• Margin gains may include cyclical or one-time efficiency tailwinds
• Limited disclosure on investing cash flows and dividends paid constrains FCF/dividend analysis

Investment Implications

Key Takeaways:

• Strong margin-led earnings beat with operating margin near 10% despite lower sales
• High cash conversion (OCF/NI 1.61x) and conservative balance sheet (D/E 0.52x)
• ROIC at 9.1% signals value-accretive operations
• Comprehensive income weakness flags FX/OCI headwinds
• Calculated payout ratio looks high; confirm with full-year cash return plans

Metrics to Watch:

• Order intake and backlog conversion
• Service/maintenance revenue share and gross margin
• SG&A growth vs. revenue growth
• AR days and cash conversion cycle
• OCF/NI ratio and capex pace
• FX impacts on OCI and ordinary income
• ROIC trajectory and capital allocation (dividends/buybacks)

Relative Positioning: Within capital goods/elevator peers, Fujitec shows superior liquidity and healthy ROIC with improving margins; revenue momentum lags modestly, and OCI/dividend visibility should be monitored to validate durability of the earnings and cash return profile.

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