Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1153.0B | ¥1207.2B | −4.5% |
| Operating Income | ¥194.8B | ¥238.1B | −18.2% |
| Ordinary Income | ¥216.7B | ¥249.8B | −13.3% |
| Net Income | ¥154.3B | ¥226.9B | −32.0% |
| ROE | 12.2% | 21.6% | - |
Executive Summary
For the cumulative Q3 of FY2026, revenue and earnings declined, with the decline in earnings exceeding the decrease in revenue. Revenue was ¥1153.0B (-4.5% YoY), Operating Income was ¥194.8B (-18.2%), Ordinary Income was ¥216.7B (-13.3%), and Net Income attributable to owners of the parent was ¥153.6B (-31.8%). The main factors behind the earnings decline were the lower profit margin in the core Newbuilding segment and the sharp decline in the Repair Vessel segment’s profit margin (16.8%→8.7%).
Factors Affecting Performance
【Revenue】Revenue was ¥1153.0B, down 4.5% YoY. By segment, Newbuilding recorded ¥911.2B (79.0% of total, -3.7% YoY), Repair Vessels recorded ¥149.4B (13.0% of total, -12.6%), Steel Structures & Machinery recorded ¥43.6B (+2.9%), and Other recorded ¥48.8B (+2.6%). The decline in revenue from the two core segments weighed on overall performance.
【Profit and Loss】Operating Income was ¥194.8B, down 18.2% YoY, and the Operating Margin contracted to 16.9% from approximately 19.7% in the previous year, a decrease of approximately 2.8pt. The Newbuilding segment maintained a high profit margin of 21.5% (roughly in line with the previous year), while the Repair Vessel segment’s profit margin declined to 8.7%, resulting in a 54.8% YoY decline in segment profit. Ordinary Income was ¥216.7B (-13.3% YoY), with non-operating income, including dividend income of ¥13.8B and foreign exchange gains of ¥7.7B, partially offsetting the decline in Operating Income. Net Income was ¥153.6B (-31.8% YoY); the increase in income taxes and other taxes (+171.8% YoY, tax burden coefficient of 0.709) caused the decline to exceed that of Ordinary Income. Overall, the results represent declines in both revenue and earnings.
Segment Analysis
Newbuilding, with revenue of ¥911.2B (-3.7% YoY), segment profit of ¥196.0B (-11.7%), and a profit margin of 21.5%, is the core business, accounting for approximately 9割 of consolidated Operating Income. Repair Vessels recorded revenue of ¥149.4B (-12.6% YoY) and segment profit of ¥13.0B (-54.8%); its profit margin fell sharply from 16.8% in the previous year to 8.7%, becoming the main factor behind the contraction in the consolidated profit margin. Steel Structures & Machinery improved, with revenue of ¥43.6B (+2.9% YoY) and segment profit of ¥2.7B. Other also expanded, with revenue of ¥48.8B (+2.6%) and segment profit of ¥6.8B (+36.1%), but its small scale limited its impact on consolidated performance.
Key Financial Indicators
【Profitability】The Operating Margin was 16.9% and the Net Profit Margin was 13.3%. Both contracted from the same period of the previous year (approximately 19.7% and approximately 18.5%, respectively), but remain at favorable absolute levels. 【Cash Quality】As Operating Cash Flow has not been disclosed, trends in working capital were reviewed using the balance sheet. Accounts receivable were ¥485.5B, with annualized DSO of 115 days, while work in process was ¥31.2B, accounting for more than 6割 of inventory. This suggests a potential time lag between profit recognition and cash collection. 【Investment Efficiency】ROE was 12.2%, supported by a combination of a Net Profit Margin of 13.3%, Total Asset Turnover of 0.459x, and Financial Leverage of 1.99x, with the profit margin serving as the primary driver of fluctuation. 【Financial Soundness】The Equity Ratio was 50.2%, interest-bearing debt had a Debt/Capital ratio of 11.1%, and Interest Coverage was high at 89.8x. Together with a Current Ratio of 176.8%, these indicators suggest a stable financial foundation.
Cash Flow Analysis
As cash flow statement data has not been disclosed, funding trends are assessed based on changes in the balance sheet. Cash and deposits increased to ¥1084.7B from ¥901.4B in the previous year. Meanwhile, accounts receivable of ¥485.5B and work in process of ¥31.2B were both trending upward, while contract liabilities (customer advances) had also accumulated substantially to ¥593.5B. The accumulation of customer advances reflects cash received upfront in connection with shipbuilding orders and supports near-term liquidity; however, it should be noted that these advances entail future construction and performance obligations. The collection status of accounts receivable and the progress of work in process are expected to determine future cash-generation capacity.
Quality of Earnings
Of Ordinary Income of ¥216.7B, non-operating income amounted to ¥26.3B, primarily comprising dividend income of ¥13.8B and foreign exchange gains of ¥7.7B. These items arise from factors distinct from the underlying earning power of the business and partially mitigated the decline in Operating Income (-18.2% YoY) at the Ordinary Income level. Net Income was ¥153.6B, and the decline from Ordinary Income (-31.8%) substantially exceeded the decline in Ordinary Income (-13.3%) because income taxes and other taxes increased from slightly less than ¥27.3B in the previous year to slightly less than ¥66.4B. This temporary tax burden factor reduced the quality of Net Income. Comprehensive Income was ¥241.3B, of which ¥240.6B was attributable to owners of the parent. The difference from Net Income of ¥153.6B was primarily attributable to a valuation difference of ¥87.4B on investment securities.
Earnings Forecast and Guidance
Progress against the Full-Year forecast was 72.1% for Revenue, 74.9% for Operating Income, 83.3% for Ordinary Income, and 85.3% for Net Income. Compared with the standard cumulative Q3 progress rate of 75%, Revenue was slightly below the standard level, while Operating Income had nearly reached the standard line and Ordinary Income and Net Income had already achieved high progress rates. To achieve the Full-Year forecast (Revenue of ¥1600B, Operating Income of ¥260B, Ordinary Income of ¥260B, and Net Income of ¥180B), Q4 would require approximately ¥447.0B in Revenue, approximately ¥65.2B in Operating Income, and approximately ¥26.4B in Net Income.
Shareholder Returns
The interim dividend was ¥20 per share, and the Full-Year dividend forecast is ¥40. The calculated Payout Ratio, based on dividing the interim dividend of ¥20 by Net Income (EPS of ¥221.22), is approximately 9.0%. Even on a Full-Year forecast basis, total dividends are expected to be approximately ¥27.8B, resulting in a Payout Ratio of approximately 15.4% against the Full-Year Net Income forecast of ¥180B. Both are low levels, and together with Cash and deposits of ¥1084.7B and low interest-bearing debt (Debt/Capital ratio of 11.1%), the dividend burden relative to earnings and the financial base is light.
Risk Factors
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Dependence on core businesses and fluctuations in profitability: Newbuilding accounts for 79.0% of consolidated Revenue and approximately 9割 of segment profit, meaning that order profitability and project management in this business determine company-wide performance. The Repair Vessel segment’s profit margin also declined from 16.8% to 8.7%, highlighting the risk of fluctuations in profitability by business.
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Lengthening working capital cycle: Accounts receivable were ¥485.5B, with annualized DSO of 115 days, while work in process was ¥31.2B, accounting for 63.1% of inventory. The timing of collection and acceptance may be creating a gap between profit recognition and cash conversion.
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Performance obligations associated with contract liabilities (customer advances): Contract liabilities were substantial at ¥593.5B. While they support liquidity, they entail future construction and delivery obligations. Fluctuations in steel and material prices and project progress may affect profitability.
Industry Benchmark (Reference; Compiled by the Company)
Industry Benchmark (manufacturing)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 16.9% | 8.6% (4.3%–12.7%) | +8.3pt |
| Net Profit Margin | 13.4% | 6.4% (2.8%–10.3%) | +7.0pt |
The Company’s profitability is substantially above the industry median and ranks among the top group.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | −4.5% | 3.3% (-2.1%–8.9%) | −7.8pt |
Revenue growth was below the industry median, and the current period was characterized by a decline in revenue.
※Source: Compiled by the Company
Key Takeaways from the Financial Results
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The core Newbuilding business maintained a profit margin of 21.5% and remains a highly profitable central business. However, the sharp decline in the Repair Vessel segment’s profit margin (16.8%→8.7%) was the primary factor behind the contraction in the consolidated Operating Margin (approximately 2.8pt), making this an important change in the earnings structure by segment.
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Progress against the Full-Year forecast was high at 83.3% for Ordinary Income and 85.3% for Net Income, while Operating Income was also near the standard line at 74.9%. Revenue progress was slightly behind at 72.1%, making Q4 results a key factor in assessing achievement of the Full-Year plan.
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The working capital position, including annualized DSO of 115 days for accounts receivable and a work-in-process ratio of 63.1%, should be closely monitored as an indicator of project and acceptance management unique to order-based industries.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmark is reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.
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AI Financial Analysis
Executive Summary
Namura Shipbuilding delivered still-excellent profitability in FY2026 Q3, but revenue, operating profit, and net income declined year on year and margin normalization is evident. Cumulative revenue was ¥115.3bn, down 4.5% year on year. Operating income was ¥19.5bn, down 18.2%, while operating margin declined 284bp to 16.9% from 19.7%. Gross profit fell 12.0% to ¥25.1bn, and gross margin compressed 185bp to 21.8% from 23.7%. The larger operating-margin decline relative to gross-margin pressure reflects higher SG&A expenses, which increased 19.2% to ¥5.7bn despite lower revenue. SG&A therefore rose to 4.9% of sales from 3.9% a year earlier. Ordinary income declined 13.3% to ¥21.7bn, supported by ¥2.6bn of non-operating income. Dividend income of ¥1.4bn and foreign-exchange gains of ¥0.8bn were meaningful contributors to non-operating income. Net income attributable to owners fell 31.8% to ¥15.4bn, a sharper decline than operating income. The effective tax rate increased to 28.8% from approximately 9.2% in the prior-year period, accounting for much of the net-profit contraction. Nevertheless, the net margin remained a strong 13.3%, and annualized ROE was 16.2%, both above the stated excellence thresholds. The balance sheet remains highly liquid, with cash and deposits of ¥108.5bn, a current ratio of 176.8%, and cash equal to 20.6 times short-term loans. Contract liabilities increased to ¥59.4bn, supporting funding and visibility associated with shipbuilding contracts. The full-year forecast implies FY2026 revenue of ¥160.0bn, operating income of ¥26.0bn, and profit attributable to owners of ¥18.0bn. Q3 progress is 72.1% for revenue, 74.9% for operating income, 83.3% for ordinary income, and 85.3% for attributable profit. The profit progress rate is ahead of the standard 75% Q3 pace, while sales progress remains modestly below it, indicating that the forecast relies on a substantial fourth-quarter delivery and revenue-recognition contribution. The key debate is whether the company can preserve its still-high shipbuilding margins as production mix, contract execution, overhead absorption, foreign exchange, and tax normalization evolve.
Profitability Analysis
Annualized ROE is 16.2%, decomposed into a 13.3% net profit margin, 0.612x asset turnover, and 1.99x financial leverage. The principal year-on-year deterioration was in profitability rather than balance-sheet leverage: operating margin fell 284bp and net margin fell 534bp. Gross margin declined 185bp to 21.8%, showing that production and contract profitability moderated from an unusually strong prior-year level. SG&A increased to ¥5.7bn from ¥4.7bn, or 19.2% year on year, materially outpacing the 4.5% revenue decline. Salaries and allowances increased 24.3% to ¥2.2bn, consistent with a higher fixed-cost burden against lower sales. The core business is the new shipbuilding segment, which generated ¥91.1bn of external revenue and ¥19.6bn of segment profit, representing approximately 90% of aggregate segment profit before corporate-cost allocation. New shipbuilding revenue declined 3.7% year on year and segment profit declined 11.7%, with segment margin falling 192bp to 21.5%. Repair ships generated ¥14.9bn of revenue, down 12.6%, while segment profit fell 54.8% to ¥1.3bn and margin compressed to 8.7% from 16.8%. Steel structures and machinery was smaller but improved, with revenue up 2.9% to ¥4.4bn and segment profit up 145.4% to ¥0.3bn. Other operations increased revenue 2.6% to ¥4.9bn and segment profit 36.1% to ¥0.7bn. Unallocated corporate costs increased to ¥2.3bn from ¥1.9bn, further reducing consolidated operating-profit conversion. The tax burden factor was 0.709, within a normal range but materially below the prior-year period because the effective tax rate rose. The interest burden factor of 1.112 reflects net non-operating gains rather than debt stress, with interest coverage remaining very strong at 89.77x. Profitability remains high, but sustaining the prior-year peak margin structure appears more challenging given lower sales and overhead growth.
Growth Assessment
Revenue declined 4.5% year on year, led by repair ships, while new shipbuilding revenue also declined modestly. The top-line profile is consistent with the timing sensitivity of shipbuilding delivery milestones and revenue recognition. New shipbuilding remains the dominant earnings engine and its 21.5% segment margin remains exceptionally strong for a cyclical, project-based manufacturing activity. However, its year-on-year profit decline exceeds its revenue decline, indicating lower contract-margin conversion. Repair ships experienced the most pronounced weakening, with a 12.6% revenue decline and a 54.8% decline in segment profit. Steel structures and machinery and other operations provided limited diversification and improved profitability, but their aggregate earnings contribution remains small relative to new shipbuilding. Full-year sales guidance calls for 0.5% revenue growth to ¥160.0bn, requiring ¥44.7bn of Q4 revenue, equivalent to 27.9% of the annual target. Full-year operating-income guidance of ¥26.0bn requires ¥6.5bn in Q4 operating income, or 25.1% of the annual target. The implied Q4 operating margin is approximately 14.6%, below the Q1-Q3 cumulative 16.9%, which is consistent with some expected margin normalization. Attributable-profit guidance requires ¥2.6bn in Q4, with Q1-Q3 already representing 85.3% of the annual forecast. This conservative implied Q4 attributable-profit profile may reflect expected tax expense, delivery mix, or an absence of further non-operating support. Contract liabilities increased by ¥18.5bn year on year to ¥59.4bn, underpinning order-related customer advances and providing operating funding. Revenue sustainability should be evaluated primarily through the conversion of this contract-liability base into deliveries without material erosion in shipbuilding execution margins.
Financial Health
Financial health is strong. The current ratio is 176.8% and the quick ratio is 176.7%, substantially exceeding healthy liquidity benchmarks. Working capital was ¥73.5bn, and cash and deposits were ¥108.5bn, equal to 43.2% of total assets. Current assets of ¥169.2bn comfortably exceed current liabilities of ¥95.7bn, mitigating maturity-mismatch risk. Interest-bearing debt was ¥15.7bn, consisting of ¥5.3bn of short-term loans and ¥10.4bn of long-term loans. Cash covered short-term loans by 20.61x, leaving the company with substantial immediate liquidity capacity. Debt-to-equity was 0.99x, below the 2.0x warning threshold, while debt-to-capital was a conservative 11.1%. Interest coverage of 89.77x confirms that financing costs are immaterial relative to operating earnings. Total equity rose ¥20.9bn year on year to ¥126.0bn, supported by retained earnings growth of ¥11.9bn and higher valuation differences on securities. Investment securities increased ¥13.1bn, or 40.2%, to ¥45.6bn and represent 18.2% of total assets; this strengthens asset value but introduces sensitivity of equity and comprehensive income to market-price movements. Cash and deposits increased ¥18.5bn year on year, reinforcing balance-sheet resilience. Accounts receivable increased ¥8.4bn to ¥48.5bn, and their expansion requires attention alongside the elevated collection period. Contract liabilities increased ¥18.5bn to ¥59.4bn, providing an important source of contract-related operating funding. Long-term loans declined ¥2.5bn year on year and short-term loans increased only ¥0.4bn, indicating that balance-sheet expansion was not debt-led. Net defined-benefit liability was ¥5.4bn and should remain a consideration within noncurrent obligations. No goodwill-related balance-sheet concentration is evident, while intangible assets are only 0.2% of total assets.
Notable B/S Changes
Cash and deposits: +¥18.5bn (+20.3%) to ¥108.5bn - materially strengthens liquidity and supports funding flexibility. Accounts receivable: +¥8.4bn (+21.1%) to ¥48.5bn - aligns with the elevated 115-day DSO and heightens collection-timing exposure. Contract liabilities: +¥18.5bn (+45.4%) to ¥59.4bn - customer advances provide project funding, but require successful delivery execution. Investment securities: +¥13.1bn (+40.2%) to ¥45.6bn - increases exposure of equity and comprehensive income to market valuations. Valuation difference on securities: +¥8.7bn (+47.7%) to ¥27.1bn - a significant contributor to equity growth and potential market-value volatility. Retained earnings: +¥11.9bn (+24.2%) to ¥61.0bn - reflects continued earnings accumulation and supports dividend capacity. Inventories: +¥0.4bn (+60.0%) to ¥1.1bn - finished goods increased, while work in process remains the predominant manufacturing inventory component. Electronically recorded operating obligations: +¥1.3bn (+28.1%) to ¥5.8bn - indicates greater use of supplier-related operating obligations. Long-term loans: -¥2.5bn (-19.8%) to ¥10.4bn - debt reduction supports the conservative debt-capital profile.
Cash Flow Quality
The earnings profile is supported by a high operating margin, substantial cash balances, and contract liabilities of ¥59.4bn. The increase in contract liabilities of ¥18.5bn year on year is favorable for project funding because customer advances can finance working-capital needs before vessel delivery. However, the quality-alert DSO of 115 days is materially above the 60-day warning threshold. The root cause is the sizeable ¥48.5bn accounts-receivable balance relative to cumulative revenue, which is consistent with the milestone-based billing and collection structure of large shipbuilding contracts. This collection pattern can be typical in project manufacturing, but it increases the importance of customer credit quality, acceptance timing, and collection discipline. The impact is that reported earnings can remain exposed to delayed cash realization even where accounting profitability is strong. The quality-alert work-in-process ratio of 63.1% of inventory is also above the 40% warning threshold. This reflects the predominance of incomplete production within the manufacturing inventory base, which is structurally consistent with long-duration vessel construction. Its impact is heightened exposure to schedule delays, cost overruns, and the risk that production bottlenecks defer delivery-based revenue and profit recognition. Raw materials were ¥17.2bn and work in process was ¥31.2bn, illustrating the operational importance of materials procurement and production execution. Accounts payable were broadly stable at ¥16.4bn, while electronically recorded operating obligations increased to ¥5.8bn from ¥4.5bn. The combination of higher receivables and work in process makes working-capital discipline central to earnings conversion and should be monitored alongside contract liabilities.
Dividend Sustainability
The interim dividend was ¥20.0 per share. The calculated interim payout ratio was 9.0% against cumulative Q1-Q3 attributable earnings, indicating a low near-term earnings distribution burden. The full-year forecast calls for a ¥40.0 per-share dividend and forecast EPS of ¥259.25. This implies a forecast dividend payout ratio of approximately 15.4%, which is conservative and well below the 60% sustainability benchmark. Retained earnings increased to ¥61.0bn from ¥49.1bn a year earlier, providing a growing internal capital base. The balance sheet also carries ¥108.5bn of cash and deposits against ¥15.7bn of interest-bearing debt. Accordingly, the indicated dividend level has substantial earnings and balance-sheet capacity. Dividend flexibility is nevertheless linked to the durability of shipbuilding contract margins, working-capital conversion, and the company’s capacity-investment requirements.
Risk Assessment
Business risks include Shipbuilding contract-execution risk: the 63.1% work-in-process ratio creates exposure to production delays, cost inflation, quality issues, and margin revisions before delivery., Customer collection risk: DSO of 115 days exceeds the 60-day warning level, leaving earnings sensitive to acceptance milestones and the credit quality of counterparties., Margin-normalization risk: new shipbuilding segment margin declined to 21.5% from 23.4%, while repair ship margin declined to 8.7% from 16.8%., Industry-specific cost risk: vessel construction remains exposed to steel and other input-price volatility, subcontractor and skilled-labor availability, energy costs, and supply-chain disruption., Foreign-exchange risk: ¥0.8bn of foreign-exchange gains supported Q1-Q3 non-operating income, so future currency movements can affect earnings outside core operations., Market-value risk in investment securities: securities of ¥45.6bn and valuation differences on securities of ¥27.1bn create exposure to equity-market movements in comprehensive income and equity..
Financial risks include Receivables increased ¥8.4bn year on year to ¥48.5bn, requiring continued scrutiny of collection timing despite strong liquidity., Contract liabilities of ¥59.4bn support funding but also represent delivery and performance obligations that must be fulfilled at expected contract margins., The effective tax rate rose to 28.8% from approximately 9.2% in the prior-year period, demonstrating that net income can be materially more volatile than operating income., Non-operating income of ¥2.6bn represented 2.3% of revenue and included dividends and foreign-exchange gains, creating some dependence on items outside shipbuilding operations..
Key concerns include Highest priority: preserve new shipbuilding execution and margins as revenue is converted from the contract-liability base., High priority: reduce or stabilize the elevated receivable collection period and prevent a further build in project-related working capital., High priority: contain SG&A, which rose 19.2% year on year despite a 4.5% revenue decline., Moderate priority: assess whether the repair-ship segment’s steep margin decline is temporary or indicates a weaker competitive and cost environment., Moderate priority: monitor whether the large investment-securities portfolio amplifies equity volatility..
Investment Implications
Key takeaways include Operating profitability remains strong, with a 16.9% operating margin, 13.3% net margin, and annualized ROE of 16.2%., Earnings have moved below the prior-year peak: revenue declined 4.5%, operating income declined 18.2%, and attributable profit declined 31.8%., New shipbuilding is the core business and remains highly profitable, but its segment margin declined 192bp year on year., Liquidity and debt capacity are strong, supported by ¥108.5bn of cash, a 176.8% current ratio, 11.1% debt-to-capital, and 89.77x interest coverage., High receivable days and a high work-in-process ratio are the principal operating-quality issues because they increase exposure to project timing and cash conversion., The forecast dividend of ¥40.0 per share implies a conservative approximately 15.4% forecast payout ratio..
Metrics to watch include New shipbuilding segment margin and delivery-related revenue conversion, Repair ships segment margin recovery, Accounts receivable and DSO versus the current 115 days, Work-in-process levels, production schedules, and construction-loss provisions, Contract liabilities and their conversion into revenue, SG&A growth relative to revenue growth, Effective tax rate and the contribution from dividend income and foreign-exchange gains, Investment-securities valuation changes and accumulated other comprehensive income.
Regarding relative positioning, Namura combines unusually high reported shipbuilding profitability with a conservative debt-capital structure and exceptional cash liquidity. Relative to a typical cyclical project manufacturer, the main differentiator is the high current margin and contract-liability funding base; the principal offset is that profitability has begun to normalize and working-capital exposure is elevated through slow receivables and work in process.