YOKOGAWA ELECTRIC CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥282.00B
• Operating Income: ¥38.99B
• Net Income: ¥26.68B
• EPS: ¥114.87

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

Yokogawa Electric (TSE:6841) delivered a solid FY2026 Q2 (cumulative) performance, with revenue of ¥281.996bn, up 5.8% YoY, and operating income of ¥38.988bn, up 7.4% YoY. Net income rose 19.5% YoY to ¥29.371bn, indicating improved earnings efficiency beyond top-line growth. Profitability remained healthy: gross margin was 45.2%, operating margin about 13.8%, and EBITDA margin 17.5%. DuPont metrics indicate an ROE of 5.96%, derived from a 10.42% net margin, 0.389x asset turnover, and 1.47x financial leverage. Operating leverage appears modestly positive, with operating income growth outpacing revenue growth. Cash generation was robust: operating cash flow (OCF) reached ¥39.73bn, translating to an OCF/Net Income ratio of 1.35 and an OCF margin of ~14.1%. Liquidity is strong with a current ratio of 250.9% and quick ratio of 240.7%, underpinned by ¥496.313bn in current assets vs. ¥197.784bn in current liabilities. The balance sheet is conservative: total equity is ¥493.067bn against total assets of ¥724.331bn, implying an inferred equity ratio of roughly 68.1% despite the reported 0.0% (the latter is an unreported placeholder). Interest coverage is very high at 72.6x, reflecting low interest burden (¥0.537bn) and solid operating earnings. Ordinary income (¥39.676bn) modestly exceeded operating income, indicating slightly positive net non-operating items. Using income tax expense of ¥10.292bn against an implied pre-tax profit of ~¥39.7bn suggests an effective tax rate around 26%, even though the provided “Effective Tax Rate: 0.0%” line appears to be a calculation artifact due to incomplete tagging. Working capital stands at ¥298.529bn, providing ample operating flexibility. Investing cash flow is shown as 0 and cash & equivalents as 0; these should be treated as undisclosed rather than true zeros. Dividend figures (DPS, payout, FCF coverage) are also undisclosed, limiting dividend analysis to capacity rather than policy. Overall, the company shows steady growth, expanding profitability, strong cash conversion, and a fortress-like balance sheet, with the main analytical constraints coming from unreported cash, capex, and dividend details.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 10.42%
• asset_turnover: 0.389
• financial_leverage: 1.47
• calculated_ROE: 5.96%
• commentary: ROE of 5.96% reflects solid margins and conservative leverage; asset turnover is typical for a project/solution-oriented industrial automation mix. margin_quality:
• gross_margin: 45.2%
• operating_margin: 13.8%
• EBITDA_margin: 17.5%
• ordinary_income_margin: 14.1%
• drivers: ['Stable gross margin supports value-added systems and services mix.', 'Operating margin expansion outpaced revenue growth, implying disciplined SG&A/R&D spend and pricing/mix benefits.', 'Non-operating line slightly positive (ordinary income > operating income).'] operating_leverage:
• revenue_growth_YoY: 5.8%
• operating_income_growth_YoY: 7.4%
• assessment: Positive operating leverage evident as operating income growth exceeded sales growth; scale benefits and mix helped expand margins modestly.

Growth Assessment

revenue_sustainability: Top-line growth of 5.8% YoY indicates steady demand across industrial/energy automation, though order timing and macro capex cycles remain key determinants. Low reported inventories (~¥20.174bn) relative to current assets may be consistent with an engineering/project-heavy model rather than product-heavy stocking. profit_quality: Net income rose 19.5% YoY, outpacing sales, supported by margin expansion and low financing costs. Interest expense is minimal, and ordinary income exceeded operating income, suggesting supportive non-operating contributions without undue reliance. outlook: With strong liquidity and conservative leverage, the company is well-positioned to pursue backlog execution and selective investments. Key external variables are global industrial activity, energy transition-related projects, and FX. Sustaining double-digit operating margins hinges on continued pricing power, project execution, and cost control.

Financial Health

liquidity:

• current_ratio: 250.9%
• quick_ratio: 240.7%
• working_capital: ¥298.529bn
• commentary: Ample liquidity headroom to absorb project timing shifts and receivables cycles. solvency:
• total_assets: ¥724.331bn
• total_liabilities: ¥242.564bn
• total_equity: ¥493.067bn
• inferred_equity_ratio: ≈68.1%
• debt_to_equity: 0.49x
• interest_coverage: 72.6x
• commentary: Balance sheet strength is high with low financial risk; debt service capacity is robust given high coverage. capital_structure: Leverage is conservative (assets/equity ~1.47x). Financing CF of -¥11.894bn likely reflects debt repayments and/or shareholder returns; specifics not disclosed.

Cash Flow Quality

earnings_quality:

• OCF: ¥39.73bn
• net_income: ¥29.371bn
• OCF_to_NI: 1.35
• assessment: OCF comfortably exceeds net income, indicating solid cash conversion and limited reliance on accruals this period. FCF_analysis:
• investing_CF: 0 (undisclosed)
• FCF: Not ascertainable due to missing investing/capex disclosures.
• OCF_margin: ~14.1%
• OCF_to_EBITDA: ~0.81
• commentary: With D&A at ¥10.356bn and healthy OCF, underlying cash generation appears sound, but lack of capex data prevents a definitive FCF view. working_capital:
• inventories: ¥20.174bn
• notes: Low inventories relative to revenue suggest a services/project-oriented mix. Specific receivables/payables movements not disclosed; however, overall OCF indicates net favorable working capital dynamics in the period.

Dividend Sustainability

payout_ratio_assessment: Dividend data (DPS, payout) are undisclosed in this dataset; the shown zeros are placeholders. Based on earnings capacity (NI ¥29.371bn) and strong OCF, dividend capacity appears adequate, but policy and actual distributions cannot be assessed here. FCF_coverage: Not determinable due to undisclosed investing cash flows and capex. policy_outlook: Without disclosed DPS or guidance, we infer a capacity to sustain ordinary dividends consistent with peers, but confirmation requires management policy and historical track record.

Risk Assessment

Business Risks:

• Project timing and acceptance risk in large automation/system integration contracts.
• Cyclicality in global industrial and energy capex, including oil & gas and chemicals.
• FX volatility impacting both revenue and costs given global footprint.
• Supply chain and component availability affecting delivery schedules and costs.
• Competitive pressure from global automation peers on pricing and margins.
• Execution risk on digital/IIoT solutions and software integration.

Financial Risks:

• Working capital swings tied to milestone billing and receivables collections.
• Potential pension/retirement benefit obligations (not disclosed here).
• FX translation impacts on equity and earnings.
• Interest rate risk is limited due to low interest burden but not zero.
• Uncertain capex profile due to undisclosed investing cash flows.

Key Concerns:

• Lack of disclosure on cash, capex, and dividends in this dataset limits FCF and payout analysis.
• Sustaining margin gains amid input cost variability and pricing competition.
• Macro slowdown risk in key regions (e.g., China/EM) could weigh on orders.

Investment Implications

Key Takeaways:

• Steady top-line growth with positive operating leverage (OP +7.4% vs. sales +5.8%).
• Healthy profitability: GM 45.2%, OP margin ~13.8%, EBITDA margin 17.5%.
• Strong cash conversion (OCF/NI 1.35) and high OCF margin (~14%).
• Conservative balance sheet with inferred equity ratio ~68% and interest coverage 72.6x.
• Dividend and FCF conclusions are constrained by undisclosed investing and payout data.

Metrics to Watch:

• Order intake and backlog to gauge revenue visibility.
• Operating margin trajectory and SG&A/R&D efficiency.
• Working capital turns and OCF/NI sustainability.
• Capex and investing CF disclosures to ascertain FCF.
• FX impact on margins and ordinary income.
• Book-to-bill and project execution milestones.

Relative Positioning: Within Japan’s factory/process automation space, Yokogawa exhibits stronger balance sheet conservatism and solid mid-teens operating margins, positioning it closer to high-quality peers on resilience, albeit typically below pure-play sensor/FA peers on absolute margin levels; stability is underpinned by a project- and solutions-heavy mix.

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