OIZUMI Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.67B
• Operating Income: ¥783M
• Net Income: ¥998M
• EPS: ¥34.52

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

Oizumi Co., Ltd. (6428) reported FY2026 Q2 consolidated results under JGAAP showing resilience in profitability despite a revenue contraction. Revenue declined 8.4% YoY to ¥10.67bn, but operating income rose 4.4% YoY to ¥0.78bn, indicating effective cost control and/or a more profitable mix. Gross profit reached ¥3.97bn, yielding a healthy gross margin of 37.2%, which underpins the stronger operating performance. Ordinary income of ¥0.79bn slightly exceeded operating income, suggesting positive non-operating balance net of interest expense. Net income was ¥0.78bn, down 22.2% YoY, implying either tougher below-the-line items or prior-year one-offs that created a high comparison base. The DuPont profile indicates a net margin of 7.27%, asset turnover of 0.26x, and financial leverage of 2.18x, producing an ROE of 4.11%. On a balance sheet basis, liquidity is strong with a current ratio of 207.7% and a quick ratio of 189.6%, supported by working capital of ¥9.30bn. Capital structure appears moderate with a debt-to-equity ratio of 1.10x and an implied equity ratio near 45.9% (equity/total assets), although the reported equity ratio metric was not disclosed. Cash flow quality is solid: operating cash flow (OCF) of ¥1.45bn is 1.87x net income, suggesting earnings are backed by cash generation. Financing cash flow was a net outflow of ¥2.05bn, consistent with debt repayment and/or shareholder returns; investing cash flow was not disclosed, limiting visibility on capex and free cash flow (FCF). EBITDA was ¥1.20bn with an EBITDA margin of 11.2%, and interest coverage stands comfortable at 15.7x, indicating manageable financial risk. Inventory stands at ¥1.56bn, which appears reasonable relative to sales but should be monitored given demand variability in the amusement equipment space. EPS was ¥34.52, implying roughly 22–23 million shares outstanding, though share data were not disclosed. Overall, the company demonstrates improved operating efficiency and robust liquidity against a softer top line, but the decline in net income and limited disclosure on investing and dividend data temper visibility. Key watchpoints include demand momentum, gross margin durability, working capital discipline, and the trajectory of below-the-line items affecting net income.

Profitability Analysis

ROE of 4.11% (DuPont) is driven by a 7.27% net profit margin, asset turnover of 0.26x, and financial leverage of 2.18x. The operating margin is approximately 7.34% (¥783m/¥10,668m), reflecting a solid conversion from gross margin of 37.2% and suggesting improved SG&A efficiency or favorable mix. EBITDA margin of 11.2% adds cushion for interest and investment needs, with D&A at ~3.9% of sales, implying a moderately capital-intensive model. Ordinary income exceeded operating income (¥792m vs. ¥783m), indicating net non-operating gains despite interest expense of ¥49.9m; this supports overall profitability quality. The YoY divergence—revenue down 8.4% while operating income rose 4.4%—implies positive operating leverage stemming from fixed cost control and/or higher-margin products. Net income fell 22.2% YoY despite stronger operating profit, pointing to unfavorable below-the-line effects (e.g., tax, minorities, or non-recurring items); given the disclosed income tax expense, timing or consolidation nuances likely affected the reported bottom line. Interest coverage is strong at 15.7x (EBIT/interest), indicating low sensitivity of ongoing operations to financing costs. Overall profitability is satisfactory for a cyclical, hardware-oriented business, but sustaining margins amid revenue softness will be crucial.

Growth Assessment

Revenue declined 8.4% YoY to ¥10.67bn, signaling demand headwinds or shipment timing effects in 1H. The improvement in operating income (+4.4% YoY) despite lower sales suggests revenue quality via mix upgrades and disciplined cost base. Gross profit stability at ¥3.97bn indicates pricing and input cost management offset the top-line pressure. Ordinary income and EBITDA trends confirm core operations remain intact, but the 22.2% YoY decline in net income implies less favorable below-the-line items versus the prior year. Given the semiannual period, asset turnover of 0.26x implies approximately 0.5x annualized, consistent with a manufacturing-driven model; growth will rely on order intake, new product cycles, and regulatory-driven replacement demand. Sustainability of growth depends on maintaining higher-margin product share and avoiding price erosion amid competitive pressures. Near-term outlook factors include component cost normalization, potential regulatory changes in gaming/amusement markets, and macro-sensitive capex by operators. Without guidance in the provided data, a cautious baseline is for modest revenue recovery contingent on product launches and stable utilization, with profitability supported by mix and cost control. Visibility is limited by nondisclosure of segment splits and order backlog.

Financial Health

Total assets are ¥41.08bn and total equity is ¥18.86bn, implying an equity ratio near 45.9% (computed), notwithstanding the undisclosed equity ratio metric. Total liabilities of ¥20.65bn translate to a debt-to-equity ratio of 1.10x, a moderate leverage level for the sector. Liquidity is robust: current assets of ¥17.93bn vs. current liabilities of ¥8.63bn yield a current ratio of 207.7% and a quick ratio of 189.6%, suggesting strong coverage of short-term obligations. Working capital of ¥9.30bn provides operational flexibility and a buffer against inventory and receivable cycles. Interest expense of ¥49.9m is well covered by EBIT (15.7x), indicating low near-term solvency risk. Inventory of ¥1.56bn looks manageable relative to revenue; however, demand variability warrants monitoring for obsolescence risk. Financing cash outflows of ¥2.05bn in 1H likely reflect debt reduction and/or distributions; absent investing CF disclosure, net debt trajectory cannot be precisely assessed. Overall balance sheet strength is solid with a conservative liquidity posture and moderate leverage.

Cash Flow Quality

Operating cash flow of ¥1.45bn is 1.87x net income, indicating strong earnings quality and favorable working capital contribution in the period. EBITDA of ¥1.20bn supports OCF generation, suggesting limited non-cash distortions beyond standard D&A. Investing cash flow was not disclosed; as such, free cash flow cannot be reliably computed from the provided data (the reported FCF figure is not usable due to missing capex/ICF). Financing cash flow was a net outflow of ¥2.05bn, consistent with deleveraging and/or shareholder returns, and is covered by OCF assuming modest capex, but confirmation requires investing data. Working capital appears a positive driver (given OCF > NI), but detailed components (receivables, payables) are not provided; sustainability should be monitored through inventory-to-sales and receivables days. Overall, cash conversion is strong in 1H, yet full-year FCF depends on capex intensity and seasonality in 2H.

Dividend Sustainability

Dividend per share and payout metrics were not disclosed in the data provided; the zeros shown should not be interpreted as actual values. With EPS at ¥34.52 and OCF at ¥1.45bn, the company appears to have capacity for distributions subject to capex and balance sheet priorities, but investing CF and actual dividend policy are not provided. Financing CF outflow suggests potential debt repayment and/or distributions; however, absent explicit DPS and capex data, FCF coverage of dividends cannot be assessed. The balance sheet’s strong liquidity and moderate leverage are supportive of future shareholder returns if management prioritizes them. Near-term dividend sustainability outlook is therefore data-limited and contingent on undisclosed capex plans and policy guidance.

Risk Assessment

Business Risks:

• End-market cyclicality in gaming/amusement equipment demand and replacement cycles
• Regulatory changes affecting pachislot/pachinko machine specifications and approvals
• Competitive pricing pressure and product obsolescence risk
• Supply chain volatility for key components and electronics
• Execution risk on new product launches and mix upgrades
• Customer concentration risk with major operators/distributors
• Foreign exchange exposure on sourced components (if applicable)

Financial Risks:

• Moderate leverage (D/E ~1.10x) amplifies earnings volatility in downturns
• Working capital swings affecting cash conversion and liquidity
• Interest rate risk on floating-rate borrowings
• Inventory write-down risk if demand softens
• Visibility constraints due to limited disclosure on investing cash flows and dividends

Key Concerns:

• Top-line contraction (-8.4% YoY) despite improved operating income
• Net income decline (-22.2% YoY) driven by below-the-line items, reducing ROE uplift
• Lack of investing cash flow disclosure impedes FCF assessment
• Sustainability of gross and operating margins amid potential demand softness

Investment Implications

Key Takeaways:

• Margin resilience: operating income up 4.4% YoY despite revenue down 8.4%
• Solid cash conversion: OCF is 1.87x net income
• Healthy liquidity: current ratio 208% and quick ratio 190%
• Moderate leverage with strong interest coverage (15.7x)
• ROE of 4.11% restrained by low asset turnover and net income decline
• Limited visibility on FCF and payout due to missing investing and dividend disclosures

Metrics to Watch:

• Order intake, unit shipments, and backlog
• Gross margin and operating margin trajectory
• Inventory-to-sales and receivables days (working capital efficiency)
• Capex and investing cash flows to gauge true FCF
• Net debt/EBITDA and interest coverage
• Ordinary income vs. operating income gap (non-operating items)
• EPS trend and any dividend policy announcements

Relative Positioning: Within Japan’s amusement equipment peer set, Oizumi exhibits solid liquidity and moderate leverage with mid-teens interest coverage and EBITDA margin around low double digits; profitability is competitive on gross margin but overall ROE remains modest due to subdued asset turnover and a weaker bottom line in the period.

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