TAKAMISAWA CYBERNETICS COMPANY,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.71B
• Operating Income: ¥35M
• Net Income: ¥444M
• EPS: ¥7.26

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Takamizawa Cybernetics (6424) reported FY2026 Q2 consolidated JGAAP results characterized by a sharp topline contraction and severe margin compression, partially cushioned by positive operating cash flow. Revenue declined 21.0% YoY to ¥5,710mn, while operating income fell 94.6% YoY to ¥35mn, yielding an operating margin of 0.6%. Gross profit was ¥2,030.7mn, translating to a gross margin of 35.6%, which is relatively healthy but insufficient to cover fixed SG&A amid lower volumes. Ordinary income was ¥34mn and net income came in at ¥31mn (net margin 0.54%), indicating minimal impact from non-operating items. DuPont analysis indicates ROE of 0.51%, driven by extremely thin net margin (0.54%), low asset turnover (0.388x), and moderate financial leverage (2.43x). The pronounced drop in operating profit versus revenue underscores high operating leverage and fixed-cost rigidity. EBITDA was ¥215.8mn (EBITDA margin 3.8%), with depreciation and amortization of ¥180.8mn consuming the bulk of EBITDA and highlighting a capital-intensive model. Liquidity appears adequate with a current ratio of 180.5% and quick ratio of 170.3%; working capital stands at ¥5,286.7mn. Leverage is elevated with a debt-to-equity ratio of 1.79x, suggesting reliance on liabilities within the capital structure. Operating cash flow was positive at ¥233.0mn, and OCF/Net Income of 7.52x indicates that cash generation exceeded accounting earnings in the period, a positive signal for earnings quality. Financing cash outflows of ¥397.5mn suggest debt repayment or other financing uses, while investing cash flows are undisclosed (reported as 0). Dividend per share is reported as ¥0.00 with a payout ratio of 0.0%, consistent with profit preservation and/or investment in balance sheet strength. Several data points are undisclosed in the XBRL (e.g., investing cash flow, cash balance, equity ratio, share data), limiting precision in some assessments. The reported income tax expense (¥204.5mn) is incongruent with the small gap between ordinary income and net income, and the provided effective tax rate metric (0.0%) likely reflects classification or disclosure differences; we rely primarily on the provided margins and ROE for profitability interpretation. Overall, the first half shows demand and project timing pressure causing profit squeeze, but sufficient liquidity and positive OCF provide near-term resilience. Outlook hinges on the timing of equipment orders and project deliveries in the second half, cost pass-through, and stabilization of fixed-cost absorption.

Profitability Analysis

ROE_decomposition: ROE 0.51% = Net Margin 0.54% × Asset Turnover 0.388 × Financial Leverage 2.43. Profitability is primarily constrained by the very low net margin; asset efficiency is modest, while leverage provides only a small boost to equity returns. margin_quality: Gross margin of 35.6% indicates acceptable pricing/mix and cost-of-goods control, but operating margin compresses to 0.6% as SG&A and fixed costs overwhelm gross profit at reduced volumes. Ordinary margin (~0.6%) and net margin (0.54%) are nearly aligned with operating margin, implying limited non-operating support. EBITDA margin of 3.8% is thin for a capital-intensive equipment/system business. operating_leverage: Revenue decreased 21.0% YoY while operating income fell 94.6% YoY, evidencing high operating leverage and poor fixed-cost absorption in the half. D&A of ¥180.8mn nearly equals EBITDA, highlighting limited buffer from non-cash costs and contributing to EBIT sensitivity.

Growth Assessment

revenue_sustainability: The 21.0% YoY revenue decline suggests weaker demand and/or project timing deferrals. Given the project-based nature typical in this industry, second-half recoveries can hinge on order intake and delivery schedules, but visibility is limited from disclosed data. profit_quality: Gross margin remains resilient at 35.6%, but operating profit nearly vanished due to fixed-cost rigidity, indicating that profitability recovery depends on volume normalization and SG&A discipline. Ordinary income tracks operating income closely, suggesting limited reliance on one-offs. outlook: Near-term growth will depend on the booking and execution of equipment/system projects and potential normalization of customer capex. Cost pass-through and improved utilization in H2 are critical for margin recovery. Absent explicit order backlog disclosures, we assume a cautious second-half ramp with potential operating margin recovery if revenue stabilizes.

Financial Health

liquidity: Current ratio 180.5% and quick ratio 170.3% indicate sound short-term liquidity. Working capital totals ¥5,286.7mn. Cash and equivalents are undisclosed in the XBRL (reported as 0), so absolute cash cushion cannot be assessed from the provided data. solvency: Debt-to-equity ratio is 1.79x, reflecting a relatively leveraged balance sheet versus equity. Interest coverage is 1.8x (EBIT/interest), leaving limited headroom if earnings weaken further; improvement in operating income is needed to expand coverage. capital_structure: Total assets are ¥14,712mn against total liabilities of ¥10,884mn and equity of ¥6,065mn. The reported equity ratio of 0.0% is an undisclosed metric rather than zero; based on the balance sheet, the equity ratio would be approximately 41% if calculated as equity/total assets.

Cash Flow Quality

earnings_quality: Operating CF of ¥233.0mn versus net income of ¥31.0mn (OCF/NI 7.52x) suggests earnings are well supported by cash generation this period, potentially aided by favorable working-capital movements and non-cash charges (D&A ¥180.8mn). FCF_analysis: Free cash flow is reported as 0 due to undisclosed investing cash flow; we cannot compute FCF or capex intensity. The lack of investing CF data is a key limitation for assessing structural cash generation. working_capital: Inventories are ¥669.0mn, relatively small versus current assets (¥11,853.8mn), consistent with a high quick ratio. The positive OCF implies net inflows from working capital and/or strong collections, but detailed components are undisclosed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 and payout ratio is 0.0%, which is consistent with preserving capital amid compressed earnings (net margin 0.54%). FCF_coverage: FCF coverage cannot be assessed because investing CF is undisclosed; reported FCF of 0 likely reflects missing data, not actual zero. policy_outlook: Given thin profitability, elevated leverage, and the need to reinforce interest coverage, a conservative dividend stance appears consistent with near-term financial priorities. Any resumption would likely hinge on a visible recovery in operating income and confirmed positive FCF.

Risk Assessment

Business Risks:

• Project timing and order intake volatility affecting revenue recognition and utilization
• High operating leverage leading to outsized profit swings on small volume changes
• Potential pricing pressure or input cost inflation compressing margins
• Customer capex cyclicality (public and private sector equipment investments)
• Execution risk on complex system deliveries and after-sales service performance

Financial Risks:

• Elevated leverage (D/E 1.79x) and modest interest coverage (1.8x) amid low EBIT
• Cash balance undisclosed; limits visibility on immediate liquidity buffers
• Inability to assess FCF due to missing investing cash flow data
• Tax line disclosure inconsistency complicating net profit normalization analysis

Key Concerns:

• Sustainability of operating profit given a 21.0% YoY revenue drop and 94.6% YoY OP decline
• Thin EBITDA margin (3.8%) with high D&A, constraining EBIT recovery
• Need for second-half revenue rebound to restore coverage of fixed costs

Investment Implications

Key Takeaways:

• Revenue contraction (-21.0% YoY) and operating margin of 0.6% highlight pressure from operating leverage
• Gross margin resilient at 35.6%, but SG&A/fixed costs dominate at current volume
• ROE is very low at 0.51%, primarily due to thin net margin
• Liquidity appears adequate (current ratio 180.5%, quick ratio 170.3%)
• Leverage is elevated (D/E 1.79x) with limited interest coverage (1.8x)
• OCF strong relative to earnings (OCF/NI 7.52x), supporting earnings quality in the period
• FCF not assessable due to undisclosed investing CF; dividend set at ¥0 reflecting caution

Metrics to Watch:

• Order intake/backlog and H2 revenue trajectory
• Operating margin recovery and SG&A control
• Interest coverage trend and debt reduction (financing CF suggests repayments)
• Working-capital dynamics sustaining OCF
• Capex and investing cash flows (once disclosed) to gauge FCF
• Tax normalization and reconciliation of tax expense with net income

Relative Positioning: Versus small-cap TSE machinery/equipment peers, the company currently exhibits lower profitability (OP margin ~0.6%, EBITDA margin 3.8%) and higher financial leverage (D/E ~1.8x), offset by stronger near-term operating cash conversion; competitive standing will depend on recovering volumes and improving fixed-cost absorption.

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