RISO KAGAKU (6413) FY2026 Q3 Earnings Report

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Executive Summary

Cumulative Q3 FY2026 results showed lower revenue and lower profit. Although core earnings power declined from the previous year, net income increased due to temporary extraordinary gains. Revenue was ¥564.7B (down -1.1% YoY), Operating Income was ¥36.9B (down -13.7%), Ordinary Income was ¥43.3B (down -5.4%), and Net Income was ¥32.3B (¥27.0B in the previous year). The Operating Income margin narrowed to 6.5% from the previous year, while the cost structure in which SG&A expenses accounted for 89.2% of gross profit placed pressure on earnings during the revenue decline. Meanwhile, the increase in Net Income was largely attributable to extraordinary gains, primarily a gain on the sale of investment securities of ¥6.7B, and therefore needs to be evaluated separately from the core business trend.

Factors Affecting Performance

【Revenue】Revenue was ¥564.7B, down 1.1% year on year. By segment, PrintingEquipmentRelated accounted for ¥552.3B (97.8% of total), while RealEstate remained at ¥7.8B. Stagnation in the core printing equipment-related business was the main factor behind the overall revenue decline.

【Profit and Loss】Operating Income was ¥36.9B (down -13.7%), and the Operating Income margin narrowed to 6.5% from the previous year. Although the cost of sales ratio improved, SG&A expenses accounted for 53.9% of revenue and 89.2% of gross profit, and the fixed-cost burden during the revenue decline placed pressure on earnings. Ordinary Income was ¥43.3B (down -5.4%), with non-operating income of ¥7.6B, including foreign exchange gains of ¥2.7B, mitigating the decline. Net Income increased to ¥32.3B (up +19.5%), but this was attributable to the temporary factor of a ¥6.7B gain on the sale of investment securities, representing a contrast to the decline in Ordinary Income. In conclusion, the Company experienced lower revenue and lower profit on a core business basis, while the increase in Net Income represents an apparent improvement resulting from temporary factors.

Segment Analysis

PrintingEquipmentRelated represented the Company’s core business, with Revenue of ¥552.3B, Operating Income of ¥34.7B, and a profit margin of 6.3%. RealEstate was small in scale, with Revenue of ¥7.8B, but generated Operating Income of ¥5.0B and a high profit margin of 63.6%, contributing support to the Company-wide profit margin. The profit margin of the core printing equipment-related business was close to the Company-wide average, creating a structure in which demand trends in this business determine overall performance.

Key Financial Indicators

【Profitability】The Operating Income margin was 6.5%, narrowing from the previous year, while the gross profit margin was maintained at 60.5%. The Net Income margin improved to 5.7% year on year, but the contribution from the gain on the sale of investment securities was substantial, so this cannot be regarded as an improvement in core earnings power.【Cash Flow Quality】Inventory was ¥83.6B (of which finished products accounted for ¥83.6B), and accounts receivable were ¥113.6B, indicating a significant allocation to working capital. The pace of inventory turnover will determine future capital efficiency.【Investment Efficiency】ROE was 4.8%, against a conservative capital structure reflected by an Equity Ratio of 72.5% and low total asset turnover.【Financial Soundness】The Equity Ratio was 72.5%, cash and deposits were ¥176.8B, and long-term borrowings were ¥18.8B, indicating a sound financial base and a limited interest expense burden.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is not available, cash trends can be confirmed from changes in the balance sheet. Cash and deposits increased to ¥176.8B from ¥136.1B in the previous year, strengthening on-hand liquidity. Meanwhile, inventory was ¥83.6B and accounts receivable were ¥113.6B, indicating substantial funds tied up in working capital; their combined total reached ¥197.2B. Accounts payable remained at ¥63.0B, limiting the cash flow relief effect from trade payables. The recognition of a ¥6.7B gain on the sale of investment securities suggests that funds were generated through investment securities holdings; however, this is a non-recurring source of funds and should be distinguished from the cash-generating capacity of the core business.

Earnings Quality

The earnings structure for the current period included a mixture of recurring and temporary items. Ordinary Income of ¥43.3B comprised Operating Income of ¥36.9B plus non-operating income of ¥7.6B, including foreign exchange gains of ¥2.7B, dividend income of ¥1.6B, and interest income, less non-operating expenses of ¥1.2B. This indicates a meaningful contribution from non-operating income. Net Income of ¥32.3B represented Profit Before Tax of ¥49.0B less income taxes and other taxes of ¥16.7B; however, Profit Before Tax included the extraordinary gain of ¥6.7B on the sale of investment securities, meaning that profit derived from the core business would be lower if this gain were excluded. Comprehensive Income was ¥48.5B, substantially exceeding Net Income of ¥32.3B, primarily due to a ¥16.3B increase in foreign currency translation adjustments. This divergence reflects the upward impact of yen depreciation on the valuation of foreign-currency-denominated assets and does not indicate an improvement in recurring earnings power.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the full-year Company plan were 73.2% for Revenue, 69.6% for Operating Income, and 75.9% for Ordinary Income. The Operating Income progress rate was 5.4pt below the standard 75% level, requiring Q4 Operating Income of ¥16.1B and an Operating Income margin of 7.8%, above the cumulative Q3 level of 6.5%. The full-year plan calls for Revenue of ¥772.0B (down -1.9% YoY) and Operating Income of ¥53.0B (down -14.3%), broadly consistent with the cumulative decline in profit. Improvements in SG&A efficiency and a favorable shift in product mix during Q4 will be key to achieving the plan.

Shareholder Returns

The full-year Company dividend forecast is ¥50.0 per share. The Payout Ratio against full-year forecast EPS of ¥70.4 is approximately 71.0%, exceeding the general sustainability guideline of 60% for dividends alone. No dividend was paid for Q2, meaning that realization of the annual ¥50.0 dividend depends on the year-end dividend. Retained earnings of ¥382.3B and an Equity Ratio of 72.5% provide financial support for the dividend, but cumulative Q3 Net Income includes a ¥6.7B gain on the sale of investment securities. Accordingly, the recurring accumulation of funds available for dividends will depend on the extent of the recovery in Operating Income.

Risk Factors

1. Inventory accumulation risk: Finished product inventory was ¥83.6B, representing the vast majority of total inventory. If demand stagnation continues, the gross profit margin may come under downward pressure through discount sales, inventory write-downs, and production adjustments.

2. Decline in core earnings power: The Operating Income margin narrowed to 6.5% and deteriorated from the previous year. Under a structure in which SG&A expenses account for 89.2% of gross profit, operating leverage is likely to work in the opposite direction during periods of declining revenue.

3. Dependence on temporary gains: The 19.5% year-on-year increase in Net Income was largely attributable to the ¥6.7B gain on the sale of investment securities, and gains of a similar scale cannot be expected to recur every period. Foreign exchange gains of ¥2.7B also contributed to the increase in non-operating income, and changes in foreign exchange conditions may affect Ordinary Income.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin were below the industry median, placing profitability somewhat toward the lower end of the industry.

Growth and Capital Efficiency

The Revenue growth rate was substantially below the industry median, indicating an inferior position within the industry in terms of growth.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The core business experienced lower revenue and lower profit, and the Operating Income margin declined to 6.5%, while the gross profit margin was maintained at 60.5%. This indicates that demand trends, rather than the cost structure, were the primary driver of changes in the profit margin.

2. The 19.5% year-on-year increase in Net Income was largely attributable to the ¥6.7B gain on the sale of investment securities and must be evaluated separately from the Operating Income trend.

3. Although the financial base is robust, with an Equity Ratio of 72.5% and a low level of interest-bearing debt, the progress rate for the full-year Operating Income plan remained at 69.6%, making an improvement in the Q4 profit margin a condition for achieving the plan.

Theoretical Share Price (Reference Value)

Sensitivity: ¥959–¥1,013 at ±1% for the cost of equity, and ¥983–¥987 at ±0.1 for ω.

Notes:

• Since 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 timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this 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 through analysis of XBRL earnings summary data. It does not recommend investment in any specific issue. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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