NIHON KOHDEN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥108.12B
• Operating Income: ¥6.74B
• Net Income: ¥463M
• EPS: ¥27.74

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Nihon Kohden (6849) reported FY2026 Q2 consolidated results under JGAAP showing steady top-line growth and strong operating leverage. Revenue reached 108.1 billion yen, up 5.2% year on year, indicating resilient demand across core monitoring, treatment, and diagnostics businesses. Gross profit was 51.9 billion yen with a gross margin of 48.0%, reflecting healthy pricing and product mix despite input cost pressures. Operating income rose 31.8% YoY to 6.74 billion yen, lifting the operating margin to 6.2% and demonstrating effective cost control and scale benefits. Ordinary income was essentially in line with operating income at 6.73 billion yen, with negligible net financial burden given interest expense of only 16 million yen. Net income surged to 4.52 billion yen, up 876.7% YoY, suggesting a favorable comparison versus a weak prior period likely affected by non-recurring items. EPS stood at 27.74 yen for the period. Liquidity remains strong with a current ratio of 253% and a quick ratio of 208%, underpinned by 183.1 billion yen in current assets and 72.3 billion yen in current liabilities. The balance sheet is conservative with total equity of 173.8 billion yen and total liabilities of 77.0 billion yen, supporting a low financial risk profile. Operating cash flow was solid at 7.89 billion yen, and the OCF/Net Income ratio of 1.74 indicates good earnings quality and cash conversion. Financing cash flow was an outflow of 5.03 billion yen, likely reflecting debt repayment and/or shareholder returns, though dividends and share data for the period were not disclosed in the dataset. DuPont analysis shows a net margin of 4.18%, asset turnover of 0.438x, and financial leverage of 1.42x, yielding an ROE of 2.60%, which is modest but improving with operating margin gains. Interest coverage is very strong at 421x, highlighting minimal interest burden and substantial debt-servicing capacity. Inventory was 32.9 billion yen, indicating disciplined working capital amid growth. Some reported zero values (e.g., Equity Ratio, Investing CF, Cash & Equivalents, DPS, shares) appear to be undisclosed rather than actual zeros; therefore, certain ratios like FCF and per-share metrics beyond EPS cannot be fully validated. Overall, the company exhibits healthy fundamentals: improving profitability, robust liquidity, low leverage, and solid cash generation, with the main limitations arising from incomplete disclosures in this snapshot.

Profitability Analysis

ROE_decomposition: ROE 2.60% = Net Margin 4.18% × Asset Turnover 0.438 × Financial Leverage 1.42. The primary driver is modest net margin; leverage contribution is limited given a strong equity base. Asset turnover at 0.438x reflects the capital-intensive nature and period-end asset base for a half-year period. margin_quality: Gross margin at 48.0% (51.9bn gross profit on 108.1bn revenue) indicates healthy pricing and product mix. Operating margin improved to 6.2% (6.74bn/108.1bn), supported by SG&A discipline and operating leverage. Net margin at 4.18% benefits from minimal interest expense (16m) and an implied normalized tax burden around low-20s percent based on tax expense of 1.45bn versus ordinary income of 6.73bn (effective tax metric shown as 0.0% appears inconsistent with disclosed tax expense). operating_leverage: Revenue +5.2% YoY versus operating income +31.8% YoY demonstrates positive operating leverage. EBITDA was 8.67bn (8.0% margin), expanding versus sales growth, implying fixed-cost absorption and improved cost structure.

Growth Assessment

revenue_sustainability: Mid-single-digit revenue growth (+5.2% YoY) suggests steady demand in core hospital and outpatient segments; growth appears broad-based given stable gross margin. No segment detail provided; sustainability will hinge on capital equipment cycles, service/consumables mix, and overseas momentum. profit_quality: Operating income growth outpaced sales due to better cost control. Net income growth (+876.7% YoY) likely reflects a low base from prior-period one-offs; underlying profitability improvement appears credible given margin expansion and strong OCF/NI of 1.74. outlook: With strong liquidity and minimal interest burden, the company is positioned to continue investing in R&D and commercialization. Near-term growth visibility is supported by healthcare demand normalization and equipment refresh cycles; FX and component cost trends will influence margins. Lack of disclosed backlog/order intake limits forward visibility in this snapshot.

Financial Health

liquidity: Current assets 183.1bn vs current liabilities 72.3bn yields a current ratio of 253% and quick ratio of 208%, evidencing strong short-term solvency. Working capital stands at 110.8bn, with inventories at 32.9bn (~18% of current assets). solvency: Total equity 173.8bn vs total liabilities 77.0bn indicates a conservative capital structure. Interest coverage of 421x underscores negligible financial risk. The reported debt-to-equity ratio of 0.44x likely refers to interest-bearing debt; detailed debt composition is not disclosed here. capital_structure: Financial leverage of 1.42x from DuPont indicates modest leverage. Equity ratio was shown as 0.0% in the dataset, which is clearly an undisclosed value rather than an actual metric, given the strong equity position.

Cash Flow Quality

earnings_quality: OCF/Net Income at 1.74 indicates strong cash conversion and low accrual risk in the period. Limited interest burden and stable working capital support quality of earnings. FCF_analysis: Operating CF was 7.89bn. Investing CF is undisclosed (shown as 0), so free cash flow cannot be reliably computed; the displayed FCF of 0 should be treated as a placeholder. Capex and R&D cash outflows are not visible in this snapshot. working_capital: Inventories of 32.9bn are material but manageable relative to sales and current assets. The positive OCF suggests net working capital was not a drag in aggregate; detailed movements in receivables/payables are not disclosed.

Dividend Sustainability

payout_ratio_assessment: EPS is 27.74 yen for the period. The payout ratio is shown as 0.0% and DPS as 0.00, but these are likely undisclosed values; thus, the payout ratio cannot be assessed from this dataset alone. FCF_coverage: With investing cash flows undisclosed, FCF coverage of dividends cannot be calculated reliably; the displayed 0.00x is not informative. policy_outlook: Balance sheet strength and solid OCF suggest capacity for stable shareholder returns over time, but absence of DPS and share count data in this snapshot prevents assessment of current policy or trajectory.

Risk Assessment

Business Risks:

• Healthcare capex cycle sensitivity in domestic and overseas hospital markets
• Reimbursement/pricing changes in Japan and key overseas markets
• Product quality and regulatory approval risks (PMA/510(k)/domestic approvals)
• Supply chain and component availability (electronics and semiconductors)
• FX volatility impacting export competitiveness and translation
• Competitive intensity from global medtech peers across monitoring and diagnostics
• Technology obsolescence risk requiring sustained R&D investment

Financial Risks:

• Working capital swings tied to inventory and receivables
• Potential margin pressure from input cost inflation and FX
• Visibility on capex/FCF limited due to undisclosed investing cash flows
• Potential pension/retirement benefit obligations (not disclosed here)
• Litigation/product liability exposure typical of medtech

Key Concerns:

• Limited disclosure in this snapshot on cash, investing CF, and dividends
• Low reported ROE (2.60%) despite strong balance sheet, requiring further margin and asset efficiency improvements
• Sensitivity to FX and component costs which could erode recent margin gains

Investment Implications

Key Takeaways:

• Top-line growth of 5.2% YoY coupled with 31.8% YoY operating profit growth indicates healthy operating leverage
• Gross margin of 48.0% and operating margin of 6.2% show improving profitability
• Strong liquidity (current ratio 253%, quick ratio 208%) and minimal interest burden (coverage 421x) reduce financial risk
• OCF/NI of 1.74 signals high earnings quality and solid cash conversion
• ROE at 2.60% remains modest; further improvement depends on sustained margin expansion and asset efficiency
• Data gaps (cash balance, investing CF, DPS, share count) limit precision on FCF and shareholder return analysis

Metrics to Watch:

• Order intake and backlog/book-to-bill for demand visibility
• Gross and operating margins, especially product mix and pricing
• Inventory days and receivables collection affecting OCF
• Capex and R&D spend to gauge reinvestment and future growth
• FX rates and hedging impact on revenue and margins
• Effective tax rate normalization relative to ordinary income
• Shareholder return policy (DPS, buybacks) and capital allocation

Relative Positioning: Within Japanese medtech/devices peers, the company exhibits a conservative balance sheet, solid cash generation, and steady mid-single-digit growth, with profitability improving but ROE still modest; execution on cost control, mix upgrade, and global expansion will be key to narrowing any gap with higher-ROE 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