SHIBAURA ELECTRONICS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥17.04B
• Operating Income: ¥2.60B
• Net Income: ¥1.76B
• EPS: ¥78.48

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

Shibaura Electronics (TSE:6957) reported FY2026 Q2 (cumulative) results showing modest top-line growth with margin compression and a sharp decline at the bottom line. Revenue rose 1.6% YoY to ¥17.0bn, while operating income fell 5.3% YoY to ¥2.60bn, indicating negative operating leverage in the period. Net income dropped 32.8% YoY to ¥1.18bn, far outpacing the decline in operating profit, suggesting non-operating and tax effects were material. Gross margin printed at 28.4% and operating margin at 15.3%, still solid for a components manufacturer but down YoY based on the operating profit trend. Ordinary income (¥2.59bn) was essentially in line with operating income, implying limited non-operating gains; the large delta between ordinary and net income reflects a heavier tax burden or absence of prior-year one-offs. Using reported income tax expense (¥0.88bn), the implied effective tax rate is about 42–43% for the half, well above the placeholder 0.0% shown in the automated metrics. Balance sheet strength remains a clear positive: equity is ¥36.2bn versus total assets of ¥44.2bn, implying an equity ratio near 82% (the listed 0.0% is unreported, not zero) and low financial leverage (1.22x). Liquidity is ample, with a current ratio of 426% and quick ratio of 391%, and working capital of ¥23.6bn. Cash generation was strong: operating cash flow of ¥3.39bn exceeded net income by 2.86x, signaling high cash conversion, likely aided by working capital movements. Investing cash flow was unreported, so free cash flow cannot be determined; financing cash outflow of ¥3.25bn indicates returns to shareholders and/or debt reduction, though the dividend line items are unreported. ROE is modest at 3.27%, reflecting conservative leverage and lower net profitability. EBITDA was ¥3.42bn (20.0% margin), and interest burden is negligible (interest expense ¥1m; coverage extremely high). Given modest revenue growth, declining operating profit, and a step-up in the tax burden, near-term earnings visibility appears mixed despite robust liquidity and a strong capital base. We acknowledge data limitations where items are reported as zero (unreported) and base our analysis on available, non-zero disclosures. Outlook will hinge on demand trends in key end-markets (e.g., industrial and HVAC/automotive-related sensors), pricing power versus input-cost pressures, and the cadence of capex (unreported here) affecting future capacity and depreciation.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.94% (NI ¥1,183m / Revenue ¥17,044m)
• asset_turnover: 0.385x (Revenue ¥17,044m / Assets ¥44,247m)
• financial_leverage: 1.22x (Assets ¥44,247m / Equity ¥36,214m)
• calculated_ROE: 3.27% (matches reported 3.27%) margin_quality: Gross margin 28.4% and operating margin 15.3% indicate solid product economics but some compression versus last year given operating income declined despite revenue growth. Ordinary income closely tracks operating income, suggesting limited non-operating support; the sharp drop in net income implies a heavier tax rate and/or absence of prior-year non-recurring gains. operating_leverage: Negative in the period: revenue +1.6% YoY while operating income -5.3% YoY suggests fixed-cost absorption pressure and/or higher SG&A (e.g., personnel, logistics) outpacing modest sales growth. additional_notes: EBITDA margin at 20.0% and negligible interest costs highlight strong underlying operating capacity; however, lower NI margin and high implied ETR weigh on ROE.

Growth Assessment

revenue_sustainability: Top-line grew 1.6% YoY to ¥17.0bn, indicating stable demand but limited growth momentum. For a sensor/components supplier, this likely reflects mixed end-market conditions and limited pricing tailwinds. profit_quality: Operating profit decline (-5.3% YoY) versus modest revenue growth points to margin headwinds (mix, price/cost), reducing operating leverage. Ordinary income alignment with OI implies core operations drive earnings, with taxes the main swing factor to net income. outlook: Short-term outlook is cautious: sustaining margins will require cost controls and/or pricing improvements. Watch for normalization of tax rate, FX effects, and input cost trends. Medium-term growth depends on industrial/automotive HVAC sensor demand and capex-driven capacity/efficiency gains (capex not disclosed here).

Financial Health

liquidity: Current ratio 426% (CA ¥30.8bn / CL ¥7.23bn) and quick ratio 391% (ex-inventory) indicate very strong near-term liquidity. Working capital is ¥23.6bn. solvency: Equity is ¥36.2bn vs assets ¥44.2bn, implying an equity ratio of ~81.9% (reported 0.0% is unreported). Financial leverage is low at 1.22x, supporting solvency. capital_structure: Total liabilities are ¥7.61bn; a headline debt-to-equity of 0.21x likely uses total liabilities/equity (not just interest-bearing debt). Interest expense is minimal (¥1m), indicating limited financial risk from leverage.

Cash Flow Quality

earnings_quality: OCF of ¥3.39bn exceeds net income of ¥1.18bn (OCF/NI 2.86x), indicating strong cash conversion and limited accrual risk in the period. FCF_analysis: Investing CF is unreported (shown as 0), so free cash flow cannot be determined from the data. EBITDA of ¥3.42bn and strong OCF suggest capacity to fund capex while remaining cash generative, but confirmation requires capex disclosure. working_capital: High liquidity and positive OCF imply favorable working capital dynamics (e.g., receivables collections or inventory discipline). Period-end inventories were ¥2.57bn; without prior-period comparatives, we cannot quantify turns or the working capital delta.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.00 (unreported). With EPS at ¥78.48 for H1, there is earnings capacity to pay dividends, but actual policy for the period is not disclosed here. FCF_coverage: FCF coverage cannot be assessed because investing cash flow is unreported; operating cash flow is strong, which is supportive in principle. policy_outlook: Financing CF of -¥3.25bn suggests shareholder returns and/or debt repayment occurred, but the split is unknown. Outlook on dividends depends on management policy and capital allocation priorities; the strong balance sheet provides flexibility.

Risk Assessment

Business Risks:

• End-market demand volatility in industrial, HVAC, and automotive applications for temperature sensors/thermistors
• Input cost inflation (metals, resins) and pricing pressure from customers
• FX fluctuations (e.g., JPY volatility) impacting margins and competitiveness
• Product mix shifts affecting gross margin
• Customer concentration risk common in component supply chains
• Technological substitution or competitive pricing from overseas peers

Financial Risks:

• Potential margin erosion if cost pass-through lags
• Tax rate volatility as implied by the period’s high effective tax rate
• Working capital swings affecting cash conversion in slower demand environments
• Capex cycle visibility (unreported), which could lift depreciation and weigh on ROE

Key Concerns:

• Negative operating leverage despite revenue growth
• Sharp decline in net income (-32.8% YoY) driven by tax/non-operating factors
• Limited visibility on capex and investing cash flows (FCF unknown)
• Dividend policy not disclosed in the data set despite sizable financing outflows

Investment Implications

Key Takeaways:

• Stable revenue but pressured operating profitability indicates near-term execution focus on cost control and mix
• ROE at 3.27% reflects conservative leverage and compressed net margin; improving NI margin is key to enhance returns
• Balance sheet strength (equity ratio ~82%) and liquidity provide resilience
• Cash generation is robust at the operating level (OCF/NI 2.86x), but FCF cannot be confirmed without capex data

Metrics to Watch:

• Order trends and backlog in core end-markets (industrial/HVAC/auto)
• Gross and operating margin trajectory versus input costs and pricing
• Capex and depreciation guidance to gauge future FCF and margin structure
• Effective tax rate normalization and drivers
• Inventory levels and turns; receivables collection days
• FX sensitivity (USD/JPY, CNY/JPY) and hedging practices

Relative Positioning: Financially conservative with strong liquidity and low leverage versus many peers, but with modest growth and pressured operating leverage in the latest half; sustaining margins and clarifying capex/dividend policy will be important for relative appeal.

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