TAMURA CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥58.19B
• Operating Income: ¥2.88B
• Net Income: ¥309M
• EPS: ¥3.96

Income Statement

Balance Sheet

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

Verdict: Mixed quarter—solid top-line and operating recovery, but bottom-line sharply undercut by below-the-line losses and an unusually high tax burden. Revenue grew 10.9% YoY to 581.9, driving gross profit of 154.9 and operating income of 28.8 (+73.7% YoY). Operating margin improved to 5.0% (from ~3.2% a year ago), reflecting better cost control and operating leverage. Ordinary income rose 46.1% YoY to 25.8, but profit before tax fell to 15.1, indicating sizable extraordinary/one-off losses not itemized in the disclosure. Net income dropped 66.1% YoY to 3.19, implying a net margin of 0.6%, primarily due to below-the-line losses and an elevated effective tax rate of 79.4%. Total comprehensive income swung to a loss of -16.6, suggesting significant valuation losses in other comprehensive income (likely securities/FX). Interest coverage improved to 6.14x (Operating income/Interest expense = 28.84/4.70), comfortably above the 5x benchmark. Liquidity is healthy with a current ratio of 170% and quick ratio of 149%; D/E of 1.02x is moderate. Working capital stands at 308.3, supported by cash of 180.4 and receivables of 277.4 against short-term loans of 162.6. ROE is weak at 0.5%, with ROIC at 2.1% (below the 5% threshold), highlighting capital efficiency challenges. Operating margin expanded ~179 bps YoY, but net margin compressed ~124 bps due to non-operating/extraordinary items and taxes. Earnings quality assessment is constrained: OCF and FCF are unreported, so we cannot validate cash conversion or dividend coverage. Payout metrics indicate a calculated payout ratio of 337.3%, which appears unsustainably high if accurate, but dividend data are otherwise unreported and must be treated cautiously. Forward-looking, normalization of below-the-line items and tax rate is key for earnings recovery; sustained revenue momentum with disciplined SG&A will be necessary to lift ROE/ROIC. Overall, fundamentals at the operating level improved, but headline earnings were diluted by non-core factors, and capital efficiency remains a priority area for management.

Profitability Analysis

DuPont decomposition (ROE = Net Profit Margin × Asset Turnover × Financial Leverage): 0.5% ROE = 0.6% net margin × 0.475 asset turnover × 2.02x leverage. The largest driver of weak ROE is the compressed net profit margin, despite an improved operating margin. Business drivers: strong revenue and OI (+10.9% and +73.7% YoY, respectively) indicate core operations improved, but ordinary-to-PBT bridge (25.75 to 15.05) points to material extraordinary expenses/impairments, and the 79.4% effective tax rate further eroded net income. Sustainability: operating margin gains from cost control and scale effects appear more sustainable; however, the below-the-line drag and tax spike look one-time in nature if not recurring. Watch SG&A discipline: SG&A absolute level is 126.0 (YoY detail not disclosed), but OI growth outpaced revenue growth, signaling positive operating leverage in the period. Overall margin dynamics: Operating margin expanded about +179 bps YoY (~5.0% vs ~3.2%), but the net margin contracted by roughly -124 bps (~0.6% vs ~1.8% prior), driven by non-operating/extraordinary items and taxes. Conclusion: To lift ROE, the company needs to sustain operating improvements, reduce extraordinary losses, and normalize the tax rate; leverage is already moderate, so financial gearing is not the lever to pursue.

Growth Assessment

Revenue growth of +10.9% YoY to 581.9 indicates healthy demand, likely aided by recovery in end-markets for electronic components and solutions. Operating income surged +73.7% YoY to 28.8, reflecting improved mix and/or cost execution. Ordinary income up +46.1% YoY shows enhanced recurring profitability before one-offs. However, PBT of 15.1 and NI of 3.19 (-66.1% YoY) reveal that below-the-line factors overwhelmed operating gains. Non-operating items netted -3.10 (5.87 income vs 8.97 expenses), and an additional extraordinary/other loss is implied in the ordinary-to-PBT gap (~10.7). Effective tax rate spiked to 79.4%, suppressing net growth; normalization would materially improve EPS. With comprehensive income at -16.6, mark-to-market and FX headwinds likely weighed on equity securities (74.4) and other OCI-sensitive items. Outlook: Revenue momentum and margin management are constructive near term; earnings growth trajectory depends on limiting extraordinary losses and bringing the tax rate closer to a mid-20s to 30% range. Data gaps (no OCF/CapEx) limit visibility on capacity-led growth and sustainability of investment pace.

Financial Health

Liquidity is sound: Current ratio 170.3% and quick ratio 149.0% exceed healthy thresholds. No warning on Current ratio (<1.0) or D/E (>2.0); D/E at 1.02x is moderate. Maturity profile: Short-term loans of 162.6 are covered by cash (180.4) and receivables (277.4), reducing near-term refinancing risk; current assets (746.5) comfortably exceed current liabilities (438.2). Total liabilities 620.1 vs equity 605.4 indicates balanced capital structure. Interest coverage at 6.14x suggests manageable debt service from operations. Off-balance sheet: none disclosed in the provided data. Key watchpoints: exposure to valuation swings via investment securities (74.4) affecting equity and OCI; and reliance on short-term borrowings warrants monitoring if working capital needs rise or rates increase.

Cash Flow Quality

OCF, FCF, and capex are unreported, so OCF/Net income and FCF coverage cannot be assessed. As such, we cannot verify cash conversion or the sustainability of any shareholder returns. Working capital snapshot shows receivables (277.4) exceed payables (106.5) with inventories at 93.7; absent OCF detail, we cannot determine whether the period’s sales growth drove a receivables build or improved collections. No clear signs of working-capital manipulation can be concluded from the limited data. Given the gap between operating income and net income (due to below-the-line losses and taxes), cash earnings quality likely exceeds accounting net income if non-cash items/one-offs are involved, but this remains unverified without OCF.

Dividend Sustainability

Dividend data are largely unreported. A calculated payout ratio of 337.3% indicates potential unsustainability if accurate; however, with OCF and total dividends paid unreported, this figure may reflect timing or estimation effects. Without FCF, we cannot confirm coverage of dividends by cash generation. Balance sheet capacity exists (retained earnings 229.3; cash 180.4), but given ROE of 0.5% and ROIC of 2.1%, preserving cash for productivity-enhancing investments may be prudent. Policy outlook: pending visibility on cash flows and normalization of tax/extraordinary items, dividend growth visibility is limited.

Risk Assessment

Business Risks:

• End-market cyclicality in electronic components and industrial electronics demand, potentially impacting volume and pricing.
• Raw material price volatility (e.g., copper, resins) affecting gross margins.
• FX fluctuations (JPY vs USD/EUR/CNY) given global sales and procurement footprints.
• Inventory obsolescence risk amid product cycles and customer qualification timelines.
• Customer concentration or OEM program timing risk (not disclosed but common in the sector).

Financial Risks:

• High effective tax rate (79.4%) depresses net income; persistence would structurally lower ROE.
• Extraordinary/one-off losses implied between ordinary income and PBT (~10.7) create earnings volatility.
• Comprehensive income loss (-16.6) suggests mark-to-market/FX valuation risk on securities (74.4) and other OCI items.
• Moderate leverage (D/E 1.02x) with meaningful short-term borrowings (162.6) exposes the firm to interest-rate and refinancing risk.
• Limited disclosure of OCF/FCF/CapEx constrains assessment of liquidity under stress.

Key Concerns:

• Capital efficiency: ROIC at 2.1% (<5% threshold) and ROE at 0.5% signal subpar returns.
• Net margin compression to 0.6% despite stronger operations, driven by non-operating/extraordinary items and taxes.
• Earnings quality/visibility: absence of cash flow data, and large OCI swing to negative comprehensive income.

Investment Implications

Key Takeaways:

• Core operations improved materially: operating income +73.7% YoY and operating margin ~5.0% (+~179 bps).
• Headline earnings weak: net income -66.1% YoY due to below-the-line losses and a 79.4% effective tax rate.
• Liquidity solid; leverage moderate with 6.14x interest coverage.
• Capital efficiency remains a challenge: ROIC 2.1%, ROE 0.5%.
• Negative comprehensive income (-16.6) highlights valuation/FX sensitivity.

Metrics to Watch:

• Bridging items from ordinary income to PBT (extraordinary losses, impairment, and one-offs).
• Effective tax rate normalization trajectory.
• Operating cash flow, FCF, and CapEx once disclosed; OCF/NI target >1.0.
• Working capital turns: receivables days and inventory turns vs prior periods.
• Operating margin sustainability and SG&A discipline relative to revenue growth.
• ROIC progression toward >5% near term and >7% medium term.

Relative Positioning: Within Japanese electronic components/industrial electronics peers, Tamura shows improving operating execution but lags on capital efficiency and net profitability due to non-core losses and tax effects; balance sheet resilience is adequate, but sustained ROIC uplift and normalized below-the-line items are needed to close the gap with higher-ROIC peers.

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