IDEC CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥34.11B
• Operating Income: ¥2.61B
• Net Income: ¥1.28B
• EPS: ¥59.48

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

IDEC’s FY2026 Q2 consolidated results under JGAAP show modest top-line growth with a sharp rebound in profitability. Revenue increased 3.1% year over year to ¥34.1bn, while operating income rose 68.4% to ¥2.61bn, indicating significant operating leverage and cost discipline. Gross profit reached ¥14.39bn, implying a robust gross margin of 42.2%, which underpins improved operating margins at 7.7% (operating income/revenue). Ordinary income of ¥2.91bn exceeded operating income, suggesting positive non-operating contributions (e.g., financial income or other non-operating gains). Net income of ¥1.76bn grew 37.0% YoY, with a net margin of 5.14%, reflecting both better operations and favorable below-the-line items. DuPont decomposition indicates ROE of 2.65%, driven by a 5.14% net margin, asset turnover of 0.321x, and financial leverage (assets/equity) of 1.61x. While the reported effective tax rate metric shows 0.0% (unreported), the presence of ¥692m in income taxes implies an effective tax rate of roughly 28–29% based on net and tax expense. Liquidity indicators are solid, with a current ratio of 186% and a quick ratio of 146%, supported by ¥23.8bn in working capital. Leverage appears moderate with total liabilities/equity of 0.66x; the implied equity ratio is about 62% (equity/total assets), although the reported equity ratio field is unreported at 0.0%. Operating cash flow of ¥6.74bn is strong relative to net profit (OCF/NI of 3.84x), signaling high earnings quality and favorable working capital movements. EBITDA was ¥4.65bn (13.6% margin), and interest coverage is ample at 31.5x, indicating low near-term refinancing stress. Inventories stand at ¥11.23bn; using period COGS, implied inventory days are roughly 109 days, which is reasonable for an industrial components maker but should be tracked amid macro uncertainty. Investing cash flow and cash balances are unreported, limiting visibility into free cash flow and liquidity buffers; financing cash outflows of ¥4.25bn suggest debt repayments and/or shareholder returns, but dividends appear unreported this period. Overall, IDEC demonstrates improved profit quality, healthy liquidity, and comfortable solvency, tempered by incomplete disclosures on cash, investing flows, equity ratio, and share data. Seasonality (first half) and potential non-operating tailwinds should be considered when extrapolating to full-year performance.

Profitability Analysis

ROE_decomposition: Net margin 5.14% × asset turnover 0.321 × financial leverage 1.61 = ROE 2.65%. The primary driver of the YoY improvement is margin expansion, with asset turnover and leverage relatively stable and moderate. margin_quality: Gross margin at 42.2% is strong and likely benefited from mix/pricing and input cost normalization. Operating margin improved to ~7.7% (¥2.61bn/¥34.11bn), supported by lower SG&A intensity and scale benefits. Net margin at 5.14% reflects positive non-operating items (ordinary income > operating income by ~¥298m) and a normalized tax burden. operating_leverage: Revenue grew 3.1% YoY while operating income surged 68.4%, indicating substantial operating leverage and cost control. D&A of ¥2.04bn vs EBITDA of ¥4.65bn implies decent conversion from EBITDA to EBIT, reinforcing structural margin gains beyond one-off cost savings.

Growth Assessment

revenue_sustainability: Top-line growth of 3.1% is modest; given IDEC’s exposure to factory automation and industrial end-markets, growth appears resilient but not exuberant. Inventory days near ~109 suggest demand is broadly stable, though careful monitoring is warranted amid macro softness in certain regions. profit_quality: Ordinary income exceeding operating income suggests some reliance on non-operating gains; however, core margin expansion and strong OCF/NI (3.84x) indicate underlying profit quality is improving. The tax expense reported (¥692m) supports a normalized effective tax rate assumption rather than structural tax benefits. outlook: If current cost discipline persists, operating margin gains could prove sustainable. Full-year trajectory will depend on order momentum in industrial automation, FX swings, and the durability of mix/pricing; Q2 improvements set a constructive base but are subject to seasonality and macro volatility.

Financial Health

liquidity: Current ratio 186.1% and quick ratio 145.5% indicate ample near-term liquidity. Working capital totals ¥23.82bn, providing an adequate buffer. Cash and equivalents are unreported, limiting precision on immediate cash coverage. solvency: Total liabilities are ¥43.41bn versus equity of ¥66.14bn (liabilities/equity 0.66x), implying a conservative capital structure. Interest expense is modest at ¥83m with 31.5x coverage, indicating low refinancing risk. capital_structure: Implied equity ratio is ~62.2% (¥66.14bn/¥106.32bn), despite the equity ratio field being unreported. Financial leverage (assets/equity) stands at ~1.61x, consistent with a solid balance sheet.

Cash Flow Quality

earnings_quality: OCF of ¥6.74bn versus net income of ¥1.76bn (3.84x) suggests strong earnings quality, aided by favorable working capital movements and robust underlying cash generation. FCF_analysis: Investing cash flow is unreported; therefore, free cash flow cannot be reliably calculated this period. Based on OCF alone, the company appears positioned to fund capex and selective shareholder returns, but the absence of investing data is a key limitation. working_capital: Inventories are ¥11.23bn, with implied inventory days ~109 based on period COGS. Receivables and payables details are not disclosed here, but the OCF strength implies net working capital release or disciplined collections.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are reported as 0.00, which should be treated as unreported. EPS is ¥59.48 for the first half, but without DPS we cannot compute an actual payout ratio. FCF_coverage: Free cash flow is unreported due to missing investing cash flows; hence FCF coverage of dividends cannot be assessed. Operating cash flow is strong, which is a positive indicator, but insufficient for coverage analysis. policy_outlook: Financing cash outflows of ¥4.25bn suggest capital returns and/or debt reduction; however, without DPS or buyback data, dividend policy trends cannot be inferred. Historical payout norms and full-year guidance would be needed for a robust view.

Risk Assessment

Business Risks:

• Cyclical exposure to factory automation and industrial capex cycles
• FX volatility impacting overseas revenue and cost bases (USD, EUR, CNY)
• Supply chain constraints and component availability/price fluctuations
• Competitive pricing pressure in switches, safety, and control products
• Geographic demand softness, particularly in China and Europe
• Product obsolescence risk amid rapid industrial automation innovation

Financial Risks:

• Potential normalization of non-operating gains that supported ordinary income
• Working capital swings impacting cash generation (inventory and receivables)
• Limited visibility on cash balance and investing cash flows
• Interest rate movements affecting financing costs (albeit currently well covered)
• FX translation and transaction impacts on margins and equity

Key Concerns:

• Investing cash flow and cash balance are unreported, constraining FCF and liquidity analysis
• Equity ratio field is unreported despite strong implied equity, pointing to disclosure gaps
• Seasonality and one-off non-operating items may overstate the sustainability of H1 margins

Investment Implications

Key Takeaways:

• Strong margin expansion with operating income up 68.4% on modest 3.1% revenue growth
• Robust gross margin at 42.2% supports improved operating margin (~7.7%)
• Healthy liquidity with current ratio 186% and quick ratio 146%
• Moderate leverage (liabilities/equity 0.66x) and high interest coverage (31.5x)
• High cash conversion (OCF/NI 3.84x) indicating solid earnings quality
• Ordinary income exceeds operating income, suggesting non-operating tailwinds
• Key data gaps: investing CF, cash balance, DPS, and share data are unreported

Metrics to Watch:

• Order intake and book-to-bill for FA/industrial end-markets
• Gross and operating margins for evidence of sustainable pricing/mix benefits
• Working capital metrics (inventory days, receivable days) and OCF trend
• FX impacts on revenue and margins (USD/EUR/CNY)
• Investing cash flow and capex plans to assess FCF and growth investments
• Dividend and buyback disclosures to clarify capital return policy

Relative Positioning: IDEC appears operationally stronger with improved margins and solid balance sheet metrics versus typical Japanese mid-cap industrial peers, though the lack of investing cash flow and cash balance disclosure tempers visibility relative to best-in-class peers with fuller transparency.

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
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