SYSMEX CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥232.53B
• Operating Income: ¥32.96B
• Net Income: ¥18.86B
• EPS: ¥30.50

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

Sysmex (6869) reported FY2026 Q2 consolidated IFRS results with revenue of 2,325.27 (100M JPY), down 4.1% YoY, reflecting softer top-line momentum. Despite a still-robust gross margin of 56.5%, operating income fell 25.9% YoY to 329.57, highlighting elevated operating leverage and cost pressures. Net income declined 26.9% YoY to 190.19, with an effective tax rate of 41.3% weighing on bottom-line conversion. Operating margin stood at 14.2%, down meaningfully versus last year, as SG&A intensity remained high at 31.1% of sales. The DuPont profile shows net margin of 8.2%, asset turnover of 0.347, and financial leverage of 1.39x, yielding an ROE of 3.9%, which is modest for a high-quality diagnostics franchise. Non-operating factors were a headwind: profit before tax of 299.55 was below operating income, implying net non-operating losses (including equity-method loss of -12.90). Cash generation was a bright spot: operating cash flow was 501.31, delivering an OCF/Net Income ratio of 2.64x and supporting positive free cash flow of 263.73. The balance sheet remains strong with total assets of 6,694.10, total equity of 4,831.56, and an equity ratio of 72.1%, implying conservative leverage. Long-term loans are modest at 323.59; cash and short-term debt were not disclosed, but reported debt-to-equity of 0.42x (liabilities-to-equity basis) suggests low balance-sheet risk. Working capital is ample with current assets of 3,648.21, though current liabilities were not reported, limiting ratio analysis. Liquidity appears sound given positive OCF, positive investing for growth, and conservative financing outflows. Dividend outflows were 87.28, and share repurchases were minimal at 0.02; management appears to prioritize balance between shareholder returns and reinvestment. The provided payout ratio is 105.9% and FCF coverage is 1.31x, indicating careful monitoring of dividend sustainability is warranted, especially amid profit pressure; however, strong OCF provides a cushion. Overall, Sysmex remains financially solid with strong gross profitability and cash conversion, but faces cyclical or market-specific demand softness and higher operating leverage that depressed earnings. Near-term priorities include stabilizing revenue, managing SG&A and cost inflation, and addressing non-operating headwinds (including equity-method losses and tax rate). Outlook depends on recovery in instrument placements and consumables volumes, normalization of tax rate, and mix improvements. Data limitations exist for several line items (e.g., non-operating details, current liabilities, DPS), so conclusions focus on available disclosed metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.2% (Net Income 190.19 / Revenue 2,325.27)
• asset_turnover: 0.347x
• financial_leverage: 1.39x (Assets/Equity ≈ 6,694.10 / 4,831.56)
• calculated_ROE: 3.9% (matches provided)
• operating_margin: 14.2% (Operating Income 329.57 / Revenue 2,325.27)
• tax_burden: 63.5% (NI/PBT = 190.19 / 299.55), indicating a high effective tax rate
• interest_nonoperating_burden: 90.9% (PBT/EBIT ≈ 299.55 / 329.57), reflecting net non-operating losses including equity-method loss (-12.90) margin_quality: Gross margin remained high at 56.5%, underscoring a resilient consumables-driven model and pricing power. The gap between gross margin and operating margin (56.5% vs 14.2%) indicates elevated SG&A intensity (~31.1% of sales) and some deleveraging on lower revenue. EBITDA margin was 22.4% (EBITDA 521.48), showing solid cash earnings capacity despite profit headwinds. operating_leverage: Revenue declined 4.1% YoY while operating income fell 25.9% YoY, implying high operating leverage (DOL ~6.3x). This suggests fixed-cost absorption pressure and potentially unfavorable regional/product mix impacts.

Growth Assessment

revenue_sustainability: Top-line contracted 4.1% YoY to 2,325.27, suggesting softer instrument placements or slower reagent volumes in key regions. Gross margin resilience indicates pricing/mix remains favorable, but volume softness weighed on operating leverage. profit_quality: Operating income deterioration (-25.9% YoY) outpaced sales decline, largely due to SG&A deleverage and non-operating drags (equity-method loss). The high effective tax rate (41.3%) further reduced net conversion to 8.2% margin. outlook: Stabilization depends on recovery in diagnostic test volumes and instrument placements, execution on cost control, and normalization of non-operating items and tax rate. With strong cash generation and balance sheet, the company is positioned to invest through the cycle, but near-term growth will likely be constrained until demand reaccelerates.

Financial Health

liquidity: Operating CF of 501.31 supports liquidity; cash and short-term debt were not disclosed, but cash & equivalents stood at 895.70. Current assets are 3,648.21; current liabilities were unreported, so current and quick ratios are not calculable. solvency: Equity ratio is 72.1% with total equity of 4,831.56 versus total liabilities of 2,007.34. Debt-to-equity (liabilities-to-equity basis) is 0.42x. Long-term loans are 323.59; short-term loans are unreported. Leverage is conservative. capital_structure: Low reliance on interest-bearing debt with likely net cash position when comparing cash & equivalents (895.70) to long-term loans (323.59), acknowledging short-term borrowings are unreported.

Cash Flow Quality

earnings_quality: OCF/Net Income of 2.64x indicates strong cash conversion and low accrual risk for the period. EBITDA of 521.48 supports healthy cash earnings relative to EBIT of 329.57, with D&A at 191.91. free_cash_flow_analysis: Free cash flow reported at 263.73, after operating CF of 501.31 and investment outlays including capex of 114.90 and other investing cash flows (Investing CF -237.58). Positive FCF despite profit pressure underscores resilient consumables cash generation. working_capital: Accounts receivable 1,630.07 and inventories 818.11 are sizable relative to half-year sales/COGS. Using period approximations, DSO ~128 days, DIO ~134 days, and DPO ~52 days imply a long cash conversion cycle (~210 days), consistent with instrument/reagent model; figures are indicative given half-year timing and unreported current liabilities.

Dividend Sustainability

payout_ratio_assessment: The provided payout ratio is 105.9%, suggesting dividends are high relative to the reported earnings base for the period (likely influenced by timing/annual policy). Dividends paid were 87.28 against net income of 190.19 (~46% on a cash basis for the period). FCF_coverage: Provided FCF coverage is 1.31x, indicating dividends are covered by free cash flow, albeit with reduced headroom during earnings softness. FCF of 263.73 and minimal buybacks (0.02) support ongoing distributions. policy_outlook: Given strong balance sheet and cash generation, the company appears capable of maintaining dividends, but sustainability depends on profit recovery, tax rate normalization, and maintaining OCF strength. DPS details were unreported; assessment is based on available cash flow and payout metrics.

Risk Assessment

Business Risks:

• Demand volatility in diagnostic instruments and reagent consumables across key regions
• Pricing and reimbursement pressures in healthcare markets
• Product quality or regulatory risks affecting approvals and installed base utilization
• FX fluctuations impacting overseas revenue and costs
• Competitive intensity in hematology and broader IVD segments
• Supply chain constraints and component cost inflation affecting margins
• Equity-method investee underperformance (evidenced by -12.90) impacting non-operating results

Financial Risks:

• High effective tax rate (41.3%) depressing net margins and ROE
• Potential undisclosed short-term borrowings or lease obligations (current liabilities not reported)
• Working capital intensity (large AR and inventory) increasing cash cycle sensitivity
• Non-operating losses beyond equity-method effects (details unreported) creating earnings volatility

Key Concerns:

• Operating leverage magnifying profit downside on modest revenue declines
• Sustained high tax rate and non-operating drags suppressing bottom-line recovery
• Visibility on dividend policy and payout given provided payout ratio above 100%

Investment Implications

Key Takeaways:

• Top-line declined 4.1% YoY; operating income fell 25.9%, indicating high operating leverage
• Gross margin remained elevated at 56.5%, but SG&A deleverage compressed operating margin to 14.2%
• ROE is modest at 3.9% due to lower net margin and modest asset turnover despite low leverage
• Cash generation is strong: OCF 501.31 and FCF 263.73 support liquidity and reinvestment
• Balance sheet is robust with equity ratio 72.1% and low long-term debt (323.59)
• Non-operating headwinds include equity-method loss (-12.90) and an elevated 41.3% tax rate
• Dividend capacity supported by cash flows, but payout ratio (105.9%) suggests careful monitoring

Metrics to Watch:

• Revenue trajectory by region and instrument vs reagent mix (top-line stabilization)
• Operating margin recovery and SG&A ratio
• Effective tax rate normalization
• Non-operating items including equity-method results and FX impacts
• Working capital turns: AR and inventory levels relative to sales/COGS
• Free cash flow and dividend coverage
• EBITDA margin and OCF/NI ratio as indicators of earnings quality

Relative Positioning: Within the Japanese IVD/medtech peer set, Sysmex maintains superior gross margins and a conservative balance sheet, but near-term profitability trails historical norms due to operating leverage, non-operating drags, and a high tax rate; cash flow strength and low leverage underpin resilience relative to peers facing similar demand and cost headwinds.

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