AIPHONE CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥30.21B
• Operating Income: ¥891M
• Net Income: ¥1.69B
• EPS: ¥52.29

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

Aiphone Co., Ltd. reported FY2026 Q2 consolidated results under JGAAP showing top-line resilience but pronounced profit compression. Revenue was ¥30.21bn, declining 2.5% YoY, indicating modest demand softness or product mix headwinds. Gross profit was ¥13.66bn, implying a robust gross margin of 45.2%, which suggests pricing and product mix remained supportive at the gross level. However, operating income declined 57.9% YoY to ¥0.89bn, compressing the operating margin to 2.95%, pointing to significant SG&A pressure or temporary cost items. Ordinary income was ¥0.96bn, and net income was ¥0.86bn, with a net margin of 2.83%, reflecting weaker operating profit flow-through despite very low interest expense. The DuPont ROE is 1.28% (net margin 2.83% × asset turnover 0.390 × leverage 1.16), highlighting low profitability and conservative leverage. Asset turnover at 0.390 indicates a relatively asset-heavy or working capital-intensive profile for the current period. Financial leverage is modest at 1.16x (assets ¥77.48bn vs equity ¥66.98bn), underscoring a strong balance sheet with limited dependence on debt. Liquidity metrics are very strong: current ratio of 635.6% and working capital of ¥47.47bn, suggesting ample short-term solvency. Interest coverage is exceptionally high at 178.2x, consistent with minimal interest-bearing debt. Cash generation was solid: operating cash flow reached ¥2.82bn, equivalent to 3.3x net income, implying supportive working capital dynamics or non-cash charges. EBITDA was ¥1.42bn (margin 4.7%), highlighting thin operating profit with limited immediate operating leverage benefits. Reported effective tax rate in the summary metrics is 0.0%, but tax expense of ¥0.73bn is disclosed; precise ETR cannot be validated from the provided figures due to presentation differences under JGAAP. Several items are undisclosed (e.g., inventories, cash and equivalents, investing cash flows, dividend per share, equity ratio, share counts), limiting depth on capital intensity, cash buffer, FCF, and per-share analysis. Overall, the period reflects resilient gross profitability but material SG&A/overhead drag, conservative leverage, excellent liquidity, and strong OCF conversion, with ROE suppressed by both weak margins and low leverage.

Profitability Analysis

ROE_decomposition: ROE 1.28% = Net margin 2.83% × Asset turnover 0.390 × Financial leverage 1.16. Low ROE is driven primarily by compressed net margins and moderate asset turnover; leverage provides minimal amplification given a strong equity base. margin_quality: Gross margin of 45.2% is healthy, suggesting product mix/price discipline. Operating margin of 2.95% and EBITDA margin of 4.7% indicate elevated SG&A or non-manufacturing costs. Net margin at 2.83% reflects limited non-operating drag given very low interest expense. operating_leverage: YoY revenue fell 2.5% while operating income fell 57.9%, implying negative operating leverage due to fixed cost absorption and/or incremental SG&A. The gap between gross margin and operating margin points to overhead pressure outweighing gross profit stability.

Growth Assessment

revenue_sustainability: Revenue of ¥30.21bn (-2.5% YoY) suggests soft demand or mix shifts but no structural collapse. Without backlog, regional mix, or segment data, sustainability is uncertain; the stable gross margin indicates underlying pricing power in core intercom/communications solutions. profit_quality: Despite revenue resilience, operating profit compression (-57.9% YoY) indicates cost pressures likely in SG&A (e.g., logistics, R&D, selling, or labor). Ordinary income outperformed operating income modestly, consistent with limited financial costs. Net margin at 2.83% remains modest. outlook: Short-term recovery hinges on overhead normalization, cost control, and volume stabilization. With low leverage and strong liquidity, the company has capacity to invest in margin recovery. Key to outlook will be the pace of SG&A rationalization and demand trends in core building/intercom markets.

Financial Health

liquidity: Current assets ¥56.33bn vs current liabilities ¥8.86bn yields a current ratio of 635.6% and working capital of ¥47.47bn, indicating very strong short-term solvency. Quick ratio is shown equal to current ratio due to undisclosed inventories; actual quick ratio may be lower but still likely robust. solvency: Total liabilities ¥10.27bn vs equity ¥66.98bn reflect conservative capitalization with financial leverage of 1.16x and debt-to-equity of 0.15x. Interest coverage at 178.2x (EBIT/interest) signals minimal financial risk. capital_structure: The balance sheet is equity-heavy with modest liabilities. The undisclosed equity ratio (reported 0.0% in the dataset) should not be interpreted as zero; based on assets and equity, the equity ratio approximates 86.4% (¥66.98bn/¥77.48bn), underscoring conservative structure.

Cash Flow Quality

earnings_quality: OCF/Net income at 3.30x (¥2.82bn / ¥0.855bn) indicates strong cash conversion, likely aided by favorable working capital movements and non-cash D&A (¥0.526bn). FCF_analysis: Free cash flow is shown as 0 due to undisclosed investing cash flows; therefore, true FCF cannot be assessed. The strong OCF suggests capacity to fund typical capex absent significant step-ups. working_capital: Detailed components are limited as inventories are undisclosed. Nonetheless, the large working capital base (¥47.47bn) and high current assets point to significant receivables and/or cash, which supported OCF in the period.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to undisclosed dividends (DPS unreported). With net income of ¥0.855bn and robust OCF, the capacity for dividends exists in principle, but the sharp profit decline tempers visibility. FCF_coverage: FCF coverage cannot be evaluated because investing cash flows are undisclosed; the reported 0.00x is not informative. policy_outlook: Without DPS or stated policy, assessment is limited. Given conservative leverage and liquidity, a stable-to-cautious stance is plausible, but margin recovery will likely be a prerequisite for dividend increases.

Risk Assessment

Business Risks:

• End-market sensitivity to construction cycles and building retrofit activity in Japan and overseas.
• Pricing pressure and competition in intercom and security communication systems.
• Component cost volatility and supply chain disruptions affecting lead times and margins.
• FX fluctuations impacting overseas revenue and imported component costs.
• Product mix shifts toward lower-margin SKUs pressuring operating margins.
• Execution risk in cost control and SG&A efficiency amid revenue softness.

Financial Risks:

• Profit volatility leading to low ROE despite strong balance sheet.
• Working capital swings impacting OCF sustainability.
• Potential capex or R&D needs for product refresh cycles affecting cash generation.
• Tax rate variability under JGAAP presentation complicating net profit predictability.

Key Concerns:

• Material YoY decline in operating income (-57.9%) despite modest revenue drop (-2.5%).
• Low EBITDA margin (4.7%) and operating margin (2.95%) limiting resilience.
• Dependence on overhead normalization for earnings recovery.

Investment Implications

Key Takeaways:

• Revenue contraction is modest, but margins compressed significantly, indicating cost-side issues more than demand collapse.
• ROE at 1.28% is suppressed by thin margins and conservative leverage.
• Liquidity and solvency are very strong, reducing financial risk and providing flexibility to pursue margin recovery initiatives.
• OCF strength (¥2.82bn, 3.3x net income) supports earnings quality this period, though sustainability hinges on working capital.
• Dividend assessment is constrained by undisclosed DPS; policy signals are absent in the data.

Metrics to Watch:

• SG&A ratio and operating margin trajectory.
• Gross margin stability vs component cost trends and pricing actions.
• Order intake/backlog and regional/segment mix (when disclosed).
• Working capital turns (receivables and inventories) and OCF sustainability.
• Capex and investing cash flows to gauge true FCF.
• FX exposure and hedging impacts on margins.

Relative Positioning: Within Japanese electronics/communication equipment peers, Aiphone appears conservatively financed with strong liquidity but currently exhibits weaker operating profitability and ROE; recovery depends on restoring operating leverage while maintaining gross margin discipline.

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