ICOM INCORPORATED FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥17.01B
• Operating Income: ¥653M
• Net Income: ¥1.05B
• EPS: ¥30.11

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

For FY2026 Q2 (first half), Icom Inc. reported revenue of ¥17.0bn, down 5.0% YoY, with a sharp compression in profitability as operating income fell 59.3% YoY to ¥0.65bn and net income declined 58.9% YoY to ¥0.43bn. Despite resilient gross profit of ¥8.00bn, the operating margin slid to roughly 3.8%, indicating significant SG&A pressure and/or unfavorable operating leverage. Gross margin remained robust at 47.0%, suggesting product pricing and mix held up, but the gap between gross profit and operating income implies elevated operating expenses (estimated SG&A of ~¥7.35bn, or ~43.2% of sales). Ordinary income of ¥1.01bn exceeded operating income, indicating positive non-operating contributions (likely FX or interest income), partially cushioning the drop in core profitability. The reported net profit margin was 2.54%, and DuPont analysis shows a low ROE of 0.64%, driven primarily by subdued margins and modest asset turnover (0.225) rather than financial leverage (assets/equity ~1.12). The balance sheet remains exceptionally strong: total assets of ¥75.5bn versus liabilities of ¥6.53bn imply an equity ratio of approximately 89.6% (the displayed 0.0% equity ratio is clearly a non-disclosure artifact). Liquidity is ample with a current ratio of 1,078% and quick ratio of 910%, supported by sizable current assets of ¥48.7bn relative to current liabilities of ¥4.52bn. Working capital is substantial at ¥44.2bn, and inventories of ¥7.62bn represent roughly 45% of half-year sales, suggesting careful monitoring of turnover is warranted amid softer demand. Cash flow statements are not disclosed in this dataset, so cash generation and FCF cannot be assessed; calculated OCF/NI and FCF metrics showing zero should be treated as unavailable rather than zero. The effective tax rate shown as 0% is not meaningful given missing pre-tax data; based on reported tax expense of ¥0.43bn and net income of ¥0.43bn, an indicative tax burden around 50% for the period is plausible due to discrete items. The capital structure is conservative with a debt-to-equity ratio of 0.10x and minimal financial risk from leverage. Profit pressure appears cyclical or mix-driven rather than structural to gross margin, with operating leverage amplifying the earnings decline on modest revenue contraction. Absent cash flow data, earnings quality and working capital dynamics cannot be fully validated, though balance sheet strength provides cushion. Dividend data are not disclosed; consequently, payout sustainability cannot be quantified for the half-year. Overall, the period reflects resilient gross profitability but pronounced compression in operating earnings, supported by non-operating gains and underpinned by a very strong balance sheet.

Profitability Analysis

ROE_decomposition: DuPont metrics indicate ROE of 0.64% = Net margin 2.54% × Asset turnover 0.225 × Financial leverage 1.12. The primary drag is low net margin and subdued turnover; leverage is minimal given a high equity base (assets ¥75.5bn vs equity ¥67.6bn). margin_quality: Gross margin is robust at 47.0%, indicating pricing/mix resilience. Operating margin compressed to ~3.8% (¥653m OI on ¥17,012m sales), with SG&A estimated at ~¥7,351m (43.2% of sales), implying cost inflation, increased R&D/marketing, or fixed-cost underabsorption. Ordinary income margin (~5.9%) exceeded operating margin, suggesting non-operating gains (e.g., FX, interest income) were supportive. operating_leverage: A 5.0% YoY revenue decline translated into a 59.3% YoY drop in operating income, evidencing high operating leverage and sensitivity of earnings to volume. The gap between gross and operating profits implies fixed-cost intensity; stabilization of volumes would have an outsized impact on operating earnings.

Growth Assessment

revenue_sustainability: Revenue declined 5.0% YoY to ¥17.0bn. With inventories at ¥7.62bn (~45% of H1 sales), visibility into H2 demand and order intake is important to assess run-rate. Current data do not include backlog/order trends. profit_quality: Core profitability weakened at the operating level while ordinary profit was supported by non-operating gains. Net margin of 2.54% and estimated high SG&A ratio point to pressure on cost absorption. Tax expense (¥426m) relative to net income implies potential one-offs affecting bottom-line quality. outlook: Sustained gross margin suggests underlying product competitiveness, but operating leverage will remain a headwind if volumes do not recover. Absent cash flow and order data, a cautiously neutral outlook on near-term growth is appropriate; H2 mix, FX, and expense control will be key swing factors.

Financial Health

liquidity: Current assets ¥48.7bn vs current liabilities ¥4.52bn yield a current ratio of ~1,078% and a quick ratio of ~910%. Working capital stands at ~¥44.2bn, indicating ample liquidity buffer. solvency: Total liabilities of ¥6.53bn vs equity ¥67.6bn imply an equity ratio around 89.6% (computed), with low leverage (debt-to-equity 0.10x). Interest expense is not disclosed and reported coverage metrics are not meaningful; balance sheet risk is low. capital_structure: Financial leverage of ~1.12 (assets/equity) underscores a conservative capital structure dominated by equity. The company retains significant balance sheet flexibility to weather earnings volatility.

Cash Flow Quality

earnings_quality: OCF is undisclosed in this dataset; the displayed OCF/NI of 0.00 should be treated as unavailable. As a result, conversion of earnings to cash cannot be evaluated. FCF_analysis: Investing and financing cash flows are undisclosed; Free Cash Flow cannot be computed. Assessment of capital intensity and discretionary outlays (e.g., capex) is not possible with current data. working_capital: Inventories of ¥7.62bn versus H1 cost of sales (¥9.89bn) indicate elevated stock relative to throughput; this warrants monitoring of turnover and potential obsolescence risk, though exact days on hand cannot be reliably determined without average inventory and full cash flow detail.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed; values shown as 0.00 should be treated as unreported. With H1 net income at ¥432m and ROE at 0.64%, near-term distributable profit appears modest for the half-year. FCF_coverage: FCF is not available; therefore, cash coverage of dividends cannot be assessed. policy_outlook: Given the strong equity base and low leverage, the balance sheet could support a dividend policy; however, sustainability depends on H2 earnings recovery and actual cash generation, which are not disclosed here.

Risk Assessment

Business Risks:

• Demand cyclicality in amateur, marine, aviation, and professional communications equipment
• High operating leverage causing profit volatility on modest volume changes
• Product mix and pricing pressure amid competitive dynamics
• FX exposure affecting revenues and non-operating gains (e.g., USD/JPY fluctuations)
• Inventory management risk if demand softens further
• Supply chain and component availability impacting lead times and costs

Financial Risks:

• Earnings sensitivity to non-operating items (FX/financial income) supporting ordinary profit
• Potential tax-rate volatility given discrete items inferred in H1
• Working capital swings (receivables/inventory) potentially impacting cash generation

Key Concerns:

• Sharp YoY decline in operating income (-59.3%) on a modest revenue decline
• Elevated SG&A ratio (~43.2% of sales) pressuring operating margins
• Lack of disclosed cash flow data, limiting assessment of earnings quality and FCF

Investment Implications

Key Takeaways:

• Revenue down 5.0% YoY with significant operating profit compression
• Gross margin resilient at 47.0%, but SG&A intensity elevated
• Ordinary income benefited from non-operating gains, cushioning core weakness
• ROE low at 0.64% due to weak margins and low turnover, not leverage
• Balance sheet extremely strong with ~90% equity ratio and ample liquidity
• Cash flow metrics are undisclosed; FCF and OCF conversion remain key unknowns

Metrics to Watch:

• Order intake/backlog and H2 revenue trajectory
• SG&A ratio and operating margin recovery
• Gross margin stability and pricing/mix trends
• Inventory turnover and working capital days
• FX impacts on ordinary income and realized vs. unrealized gains
• Effective tax rate normalization in H2
• OCF/Net income and FCF once disclosed

Relative Positioning: Operationally, the company exhibits strong gross profitability and an exceptionally conservative balance sheet relative to many electronics/communications peers, but current-period earnings are pressured by high operating leverage and elevated SG&A; near-term performance hinges on volume recovery, expense control, and FX tailwinds.

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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