NOHMI BOSAI LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥57.02B
• Operating Income: ¥2.88B
• Net Income: ¥2.52B
• EPS: ¥35.72

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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

Nohmi Bosai Co., Ltd. reported FY2026 Q2 (cumulative) consolidated results under JGAAP with revenue of ¥57.0bn (+4.5% YoY), but profitability contracted as operating income declined 20.1% YoY to ¥2.88bn and net income fell 17.2% to ¥2.10bn. Gross profit was ¥17.44bn, implying a gross margin of 30.6%, but the operating margin compressed to 5.0%, highlighting rising SG&A burden and/or project margin pressure. Ordinary income reached ¥3.27bn, benefitting from minimal interest expense (¥9m), indicating non-operating items were supportive relative to the small financial cost base. Estimated effective tax appears around the high 30%s based on disclosed income tax (¥1.27bn), which contradicts the “0.0%” metric and suggests that figure is an unreported placeholder. ROE is modest at 1.63% on a DuPont basis, reflecting a combination of low asset turnover (0.366x) and low financial leverage (1.21x), despite a positive (albeit compressed) net margin of 3.69%. Liquidity is very strong with a current ratio of 390% and quick ratio of 374%, supported by substantial working capital of ¥87.1bn. The balance sheet is conservative: total liabilities are ¥36.8bn against equity of ¥129.3bn, implying an equity-heavy structure and very low interest burden. Cash flow quality is solid with operating cash flow of ¥7.49bn, equating to 3.56x net income, suggesting robust cash conversion from earnings and favorable working capital dynamics in the half. Investing cash flow and cash & equivalents are shown as zero in the dataset and should be treated as undisclosed rather than true zeros; hence Free Cash Flow cannot be assessed from the provided figures. Financing cash outflow of ¥5.61bn indicates capital returns or debt repayments, but dividends per share and payout are shown as zero, likely unreported; EPS of ¥35.72 confirms ordinary equity is outstanding. The revenue growth alongside lower operating profits points to negative operating leverage this period—likely from input cost inflation, project mix, or execution timing. Inventories stand at a modest ¥4.97bn versus the revenue base, consistent with an engineering/project-centric model where work-in-process and receivable timing drive cash flows. The company’s financial resilience is underscored by a 319.7x interest coverage ratio and a leverage profile that minimizes solvency risk. Overall, Nohmi Bosai remains financially robust with strong liquidity and conservative leverage, though near-term margin pressure has weighed on earnings momentum. Data limitations include unreported equity ratio, cash and cash equivalents, investing cash flows, dividends, and share counts, which constrain depth of FCF and per-share analyses. Given these constraints, conclusions prioritize the disclosed non-zero items and internally consistent derivations.

From Earnings Presentation: Nohmi Bosai's Q2 FY03/2026 results demonstrated a robust order intake environment, with orders received reaching 86,064 million yen (+7.2% YoY), marking the fifth consecutive year of record-high Q2 orders, and order backlog at 99,010 million yen (+10.3% YoY), also at record-high levels. Revenue reached 57,020 million yen (+4.5% YoY), achieving record-high Q2 revenue for the second consecutive year, and operating cash flow of 7,492 million yen indicated strong cash generation capability. However, operating profit declined to 2,877 million yen (-20.1% YoY) primarily due to: (1) impact of large-scale projects with low profitability, and (2) increase in SG&A expenses (+1,775 million yen YoY). Management emphasized that the company's performance tends to be concentrated in the second half (particularly Q4) when project completions overlap, and maintained its full-year record profit forecast with the outlook that 'profit margins are expected to improve toward the fiscal year-end.' The market environment for the fire protection industry continues to remain favorable, ensuring sustainability of medium- to long-term growth. While the cost of sales ratio improved to 67.6% (from 68.0% in the prior period) and gross margin showed improvement, the increase in SG&A expense ratio was the main factor pressuring profits. The CF generation through working capital improvement highlighted in the GPT analysis is consistent with the materials, and the focus will be on improving project mix and cost corrections in the second half.

Financial Analysis

Profitability

ROE_decomposition:

• net_profit_margin: 3.69% (¥2,102m / ¥57,020m)
• asset_turnover: 0.366x (Revenue/Total assets; half-year context limits interpretability)
• financial_leverage: 1.21x (Assets/Equity ≈ ¥155,906m/¥129,319m)
• calculated_ROE: 1.63% (matches reported DuPont figure)
• commentary: Low leverage and modest asset turnover constrain ROE despite a positive net margin. margin_quality:
• gross_margin: 30.6% (Gross profit ¥17,436m)
• operating_margin: 5.0% (Operating income ¥2,877m)
• ordinary_margin: 5.7% (Ordinary income ¥3,265m)
• net_margin: 3.69% (Net income ¥2,102m)
• SG&A: Implied ¥14,559m (≈25.5% of sales), indicating elevated overhead and/or project-related costs.
• tax_rate: Estimated high-30%s based on income tax ¥1,272m; the reported 0.0% is an unreported placeholder.
• drivers: YoY revenue growth with falling operating income indicates mix and cost pressures, likely in project execution timing and input costs. operating_leverage: Negative in the period: +4.5% revenue growth vs -20.1% operating income implies higher incremental costs and/or lower project margins; fixed cost absorption likely deteriorated.

Growth

revenue_sustainability: Top-line +4.5% YoY suggests steady demand for fire protection systems and services; visibility typically tied to construction and public-sector cycles. profit_quality: Compression from gross to operating level points to cost inflation, mix shifts, or execution timing; minimal interest burden supports ordinary income resilience. outlook: Near-term hinges on project mix normalization and cost pass-through; if procurement costs stabilize and backlog quality is healthy, margins can recover in H2. Order inflow and backlog (not disclosed) are key to sustaining growth.

Financial Health

liquidity:

• current_ratio: 390.1% (¥117,150m / ¥30,032m)
• quick_ratio: 373.5% (implies limited inventory reliance; inventories ¥4,972m)
• working_capital: ¥87,118m
• commentary: Ample liquidity and strong working capital buffer underpin operational flexibility. solvency:
• total_liabilities_to_assets: 23.6% (¥36,846m / ¥155,906m)
• equity_ratio: Not disclosed in dataset (0% is an unreported placeholder); implied equity ~76% of assets.
• interest_coverage: 319.7x (Operating income/interest expense ≈ ¥2,877m/¥9m)
• debt_to_equity: 0.28x (provided; underlying debt split not disclosed)
• commentary: Very conservative balance sheet with de minimis interest burden limits solvency risk. capital_structure: Equity-heavy with low leverage; capacity to absorb volatility without balance sheet stress.

Cash Flow

earnings_quality: OCF of ¥7,492m vs net income ¥2,102m (OCF/NI 3.56x) indicates strong cash conversion, aided by favorable working capital movements. FCF_analysis: Investing CF is unreported; therefore, Free Cash Flow cannot be determined from provided data. Depreciation ¥1,315m suggests ongoing asset base upkeep. working_capital: Large positive working capital (¥87.1bn) and low inventories indicate a receivables/advance billing-driven model; period OCF suggests effective collections or customer advances.

Dividend Sustainability

payout_ratio_assessment: DPS and payout shown as 0.00 are unreported; EPS is ¥35.72, implying distributable capacity absent explicit policy constraints. FCF_coverage: Not assessable due to missing investing cash flows; OCF of ¥7.49bn provides theoretical headroom. policy_outlook: With low leverage and strong liquidity, sustained dividends would be supportable from a balance sheet perspective; actual policy depends on capital allocation priorities (capex, R&D, M&A) and project pipeline.

Business Outlook

While management stated that 'attention to the outlook for the overall Japanese economy remains necessary,' they clearly indicated that 'the market environment for the fire protection industry continues to remain favorable.' Although profit levels through Q2 were notably impacted by large-scale projects with low profitability and increased SG&A expenses, management emphasized the 'tendency for company performance to be concentrated in the second half (particularly Q4) when project completions overlap,' and expects profit margin improvement toward the fiscal year-end. The full-year record profit forecast remains unchanged, and with order backlog trending at record-high levels, management expresses confidence in revenue and profit recovery in the second half. Strong order momentum continues with fire alarm equipment order backlog +17.9% and fire extinguishing equipment order backlog +10.0%, securing a medium-term growth foundation. This aligns with the GPT analysis view that 'focus will be on second-half project mix improvement, cost corrections, and SG&A expense control progress,' with profit margin recovery for the full year being a key management priority.

Management Guidance

Management's full-year performance forecast remains unchanged, maintaining the record profit forecast. They clearly stated 'despite Q2 profit decline, the full-year record profit forecast remains unchanged,' expressing confidence in profit recovery in the second half. Top-line momentum is strong, with revenue at 57,020 million yen versus plan of 55,500 million yen (+2.7% vs. plan), and orders received significantly exceeding plan at 86,064 million yen versus 76,500 million yen (+12.5% vs. plan). On the profit side, operating profit of 2,877 million yen fell short of the plan of 3,640 million yen (-21.0% vs. plan), but the statement 'profit margins are expected to improve toward the fiscal year-end' suggests expectations to achieve the full-year target through second-half large project completions and profitability improvements. SG&A expenses at 15,611 million yen remained largely on track versus the plan of 15,480 million yen (+0.8% vs. plan), with cost management within a certain range. Management again emphasized the seasonality of performance with 'tendency to be concentrated in the second half when project completions overlap,' encouraging investors not to be overly concerned about the first-half profit decline.

Strategic Initiatives

• Continued expansion of orders received: Maintaining stable order intake capability with fifth consecutive year of record-high Q2 orders
• Building order backlog: Maintaining record-high level of 99,010 million yen (+10.3% YoY), securing revenue visibility for the second half and beyond
• Profitability improvement: Absorbing the impact of large-scale projects with low profitability through improved project mix in the second half and beyond
• SG&A expense control: Limiting increase to +0.8% vs. plan despite +12.8% YoY increase, pursuing full-year efficiency improvements
• Segment-specific optimization: Deploying high profitability of fire extinguishing equipment (profit margin 15.8%) to other segments
• Strengthening recurring revenue from maintenance and inspection: Maintaining solid growth of +7.0% in revenue, pursuing revenue stabilization
• Expansion of special projects for plants and tunnels: Special project revenue in fire extinguishing equipment growing by +7.0%
• Expansion of repair work: High growth of +10.7% in repair work within maintenance and inspection segment
• Addressing second-half concentration structure: Advancing project management sophistication to level out full-year performance

Risk Assessment

Business Risks:

• Project execution risk and margin variability tied to mix and timing of large installations.
• Input cost inflation and supply chain constraints affecting detectors, electronics, and installation materials.
• Demand cyclicality linked to construction activity and public-sector budgets.
• Competition in fire protection systems and pricing pressure on commoditized components.
• Regulatory/specification changes requiring product updates and potential certification costs.
• After-sales/service capacity constraints impacting customer satisfaction and recurring revenue.

Financial Risks:

• Working capital swings inherent in project billing and collection cycles.
• FX exposure on imported components or overseas projects (not disclosed).
• Potential pension/retirement benefit obligations (not disclosed in dataset).
• Concentration risk in specific large projects or customers (orders not disclosed).

Key Concerns:

• Negative operating leverage in H1 despite revenue growth.
• Margin compression at the operating level due to elevated SG&A or lower project margins.
• Limited visibility on FCF and cash balances due to unreported investing CF and cash data.

Risk Factors from Presentation:

• Need for attention to the outlook for the overall Japanese economy (explicitly stated in materials)
• Impact of large-scale projects with low profitability (explicitly stated as main cause of first-half profit decline)
• Increasing trend in SG&A expenses (+12.8% YoY)
• Performance volatility risk due to second-half concentration of project completions (particularly concentration in Q4)
• Profit margin decline in fire alarm equipment segment (14.8% → 11.6%)
• Profit margin decline in maintenance and inspection segment (16.7% → 15.2%)
• Cautionary statement explicitly noting 'potential risks and uncertainties' and 'possibility that actual results may differ significantly depending on economic environment, demand trends, etc. surrounding the business'

Investment Implications

Key Takeaways:

• Top-line growth (+4.5% YoY) but notable operating profit decline (-20.1% YoY) indicates cost/mix headwinds.
• Balance sheet strength is a differentiator: low leverage, high liquidity, and exceptional interest coverage.
• Cash conversion is robust (OCF/NI 3.56x), mitigating earnings volatility.
• ROE remains modest (1.63%) due to low leverage and slow asset turnover; margin recovery is pivotal.
• Data gaps (cash, investing CF, dividend details) limit FCF-based valuation precision.

Metrics to Watch:

• Order backlog and book-to-bill ratio.
• Gross margin progression and SG&A ratio in H2.
• Working capital movements (receivables, advance receipts) and OCF sustainability.
• Capex and investing CF to gauge FCF and capital intensity.
• Project win rates in public and private sectors; pricing power vs input costs.

Relative Positioning: Within Japan’s fire protection market, Nohmi Bosai appears financially conservative with strong liquidity and minimal leverage, positioning it well versus peers during cost inflation, albeit with currently weaker operating leverage and ROE.

Supplementary Insights (Key Highlights)

• Orders received of 86,064 million yen marks the fifth consecutive year of record-high Q2 orders, significantly exceeding plan by +12.5%
• Order backlog of 99,010 million yen remains at record-high levels, providing high revenue visibility for the second half and beyond
• Revenue of 57,020 million yen marks the second consecutive year of record-high Q2 revenue, exceeding plan by +2.7%
• The decline in operating profit is explicitly attributed to 'large-scale projects with low profitability,' suggesting potential one-time factors
• Management clearly stated that 'profit margins are expected to improve toward the fiscal year-end,' maintaining the full-year record profit forecast unchanged
• Fire alarm equipment segment posted revenue +7.3% but profit -15.8%, the largest profit decline, with profit margin decreasing to 11.6%
• Fire extinguishing equipment segment showed the most notable profitability improvement with revenue +1.2% and profit +20.4%, profit margin improving to 15.8%
• Maintenance and inspection segment showed solid revenue growth of +7.0% but profit declined slightly by -2.7%, profit margin at 15.2%
• Fire alarm equipment orders received reached 28,497 million yen (+10.4% YoY), order backlog at 25,043 million yen (+17.9% YoY), showing strong order momentum
• Fire extinguishing equipment orders received reached 30,741 million yen (+11.0% YoY), order backlog at 55,503 million yen (+10.0% YoY), holding the largest order backlog

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