NOMURA CORPORATION FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥7.11B
• Operating Income: ¥753M
• Net Income: ¥436M
• EPS: ¥384.39

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

For FY2025 Q4 (consolidated, JGAAP), Nomura Sangyo Co., Ltd. delivered solid top-line growth and strong margin expansion. Revenue rose 7.5% YoY to 71.11 (100M JPY), while operating income surged 49.1% YoY to 7.53, highlighting significant operating leverage. Gross profit reached 19.14 with a gross margin of 26.9%, and SG&A of 11.61 translated to an SG&A ratio of roughly 16.3%, yielding an operating margin of about 10.6%. Non-operating items were negligible (net +0.00), making performance predominantly operating-driven. Net income increased 49.8% YoY to 5.08, with an effective tax rate of 31.1%, in line with standard domestic corporate tax ranges. Cash generation was strong: operating cash flow (OCF) of 9.77 comfortably exceeded net income (OCF/NI = 1.92x), while free cash flow (FCF) was 9.32 amid modest capex of 0.44. The balance sheet shows ample liquidity (current ratio 158.1%) and a conservative capital structure; equity was 23.49 against total assets of 49.10 (calculated equity ratio ~47.8%), and interest expense was only 0.01, implying minimal reliance on debt. Cash and deposits stood at 22.68, nearly covering total current liabilities (24.87), which, together with strong OCF, underpins financial flexibility. DuPont analysis indicates a healthy 21.6% ROE, supported by a 7.1% net margin, 1.448x asset turnover, and 2.09x financial leverage. EBITDA was 7.97 with an 11.2% margin, and interest coverage was very high, reflecting low financial risk. While several line-item breakdowns (e.g., SG&A components, R&D, detailed dividends) were not disclosed, the available data indicate improving profitability quality and efficient working capital. Reported ratios in XBRL for ROA and operating margin appear inconsistent with the income statement; we therefore rely on calculations from the disclosed financials. On dividends, the calculated payout ratio is 16.2% and FCF coverage is 11.35x, suggesting significant capacity to sustain and potentially grow distributions, though actual DPS was not reported. Overall, results depict a business with strengthening margins, robust cash conversion, and low leverage risk, albeit with limited detail on segment drivers and dividend policy specifics. Key watch points include sustaining gross margin at current levels, managing SG&A discipline, and preserving OCF strength as growth continues. Data limitations (notably unreported line items) modestly constrain the granularity of analysis, but core conclusions remain well-supported by the disclosed figures.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 7.1% × Asset turnover 1.448 × Financial leverage 2.09x = ROE 21.6% (matches reported). Operating margin calculated from disclosed figures is ~10.6% (7.53 / 71.11), indicating meaningful margin expansion versus revenue growth (+49.1% OI vs +7.5% sales), evidencing positive operating leverage. Gross margin stands at 26.9% (19.14 / 71.11), supported by disciplined SG&A at ~16.3% of sales (11.61 / 71.11). EBITDA margin is 11.2% (7.97 / 71.11), with D&A of 0.44 indicating a relatively light asset base and low fixed-cost depreciation drag. Non-operating effects are negligible (non-op income/expenses both 0.02), so ordinary income essentially equals operating income, underscoring the quality of earnings. Effective tax rate is 31.1%, consistent with statutory norms. The magnitude of OI growth relative to sales implies favorable mix/pricing and/or cost control. Reported operating margin and ROA in XBRL (0.1% and 0.2%, respectively) likely reflect differing definitions or tagging; analysis relies on computed margins from the disclosed P/L.

Growth Assessment

Revenue increased 7.5% YoY to 71.11, a moderate pace that appears sustainable given the low customer financing burden (DSO ~40 days). Profit growth substantially outpaced sales (operating income +49.1% YoY; net income +49.8% YoY), driven by gross margin resilience and SG&A discipline. The contribution from non-operating items was minimal, indicating that profit growth was primarily operational. EBITDA growth mirrors operating income trends given stable D&A, suggesting core improvement rather than one-off effects. Working capital intensity remained low: inventory days ~11 and AP days ~31, supporting cash generation even as sales expand. FCF of 9.32 with capex of 0.44 (capex/sales ~0.6%) indicates headroom to support growth initiatives without stressing cash. Outlook hinges on sustaining current gross margins and controlling SG&A as volumes grow; the strong OCF/NI (1.92x) suggests earnings are well-backed by cash, which improves the durability of growth. However, lack of segment disclosure and SG&A breakdown limits visibility on specific drivers and the repeatability of cost efficiencies. Absent external shocks (input cost spikes, FX), current momentum in margins and cash conversion appears maintainable.

Financial Health

Liquidity is strong: current ratio 158.1% and reported quick ratio 151.5%—backed by cash and deposits of 22.68 versus current liabilities of 24.87. Working capital totals 14.44, providing cushion for operations. Solvency is conservative: total liabilities/equity is 1.09x (25.61 / 23.49), and calculated equity ratio is ~47.8% (23.49 / 49.10). Interest expense is minimal at 0.01 with interest coverage far in excess of requirements (EBIT/interest >700x), indicating very low financial risk. Interest-bearing debt line items were unreported, but the tiny interest charge and large cash balance point to a likely net cash or de minimis net debt position. Asset base is predominantly current (39.31 of 49.10), aligning with a short cash conversion cycle and mitigating refinancing needs. Noncurrent assets are modest (9.79), with limited intangible/goodwill (0.19 total), reducing impairment risk.

Cash Flow Quality

Earnings quality is strong: OCF of 9.77 exceeds net income of 5.08 (OCF/NI = 1.92x), indicating robust cash conversion with limited accrual buildup. Free cash flow of 9.32 (OCF 9.77 minus capex 0.44) demonstrates ample internal funding capacity; FCF margin is ~13.1% (9.32 / 71.11). Capex is low relative to sales (~0.6%) and close to depreciation (0.44), suggesting maintenance-level reinvestment with limited capital intensity. Working capital appears efficient: DSO ~40 days (7.81 / 71.11 × 365), inventory days ~11 (1.64 / 51.98 × 365), and DPO ~31 (4.35 / 51.98 × 365), yielding a cash conversion cycle around 21 days. Investing CF was modest (-0.45), broadly consistent with reported capex (-0.44). Financing CF was -1.26, likely reflecting dividends and minor treasury stock activity, with internal cash generation more than covering outflows. Non-operating cash flows are limited, reducing volatility in cash generation.

Dividend Sustainability

Dividend details (DPS, total dividends paid) were not disclosed; however, the calculated payout ratio is 16.2% and reported FCF coverage is 11.35x, implying a conservative distribution relative to earnings and cash generation. With net income of 5.08 and FCF of 9.32, the assumed cash dividend burden appears easily serviceable from OCF. DOE is shown as 0.0 in XBRL, likely unreported rather than indicative of zero dividends. The balance sheet’s likely net cash position and strong OCF/NI support sustainability and potential headroom for increases, subject to capital allocation priorities. Absent specific policy guidance, a stable payout with potential incremental growth appears consistent with fundamentals, but confirmation requires management policy disclosure.

Risk Assessment

Business Risks:

• Gross margin sensitivity to input cost volatility (materials, logistics) that could compress margins.
• Demand variability from key customers or end-markets, given moderate scale.
• Potential FX exposure on imported inputs if applicable, affecting COGS.
• Execution risk in sustaining SG&A efficiency as the company scales.
• Limited disclosure of segment and SG&A details reduces transparency into drivers.

Financial Risks:

• Short-term liability concentration (current liabilities 24.87) requires ongoing liquidity discipline, though cash is ample.
• Interest rate risk is limited but not zero; any increase would have modest P/L impact given minimal interest cost.
• Reinvestment risk if capex needs rise from current low levels to support growth, potentially reducing FCF.
• Working capital swings could temporarily affect OCF despite currently efficient cycle.

Key Concerns:

• Sustaining the current operating margin (~10.6%) after a sharp YoY expansion.
• Reliance on operating leverage; a slowdown in sales could disproportionately impact profits.
• Data gaps (dividend specifics, SG&A breakdown, interest-bearing debt composition) constrain precision of forward assessments.

Investment Implications

Key Takeaways:

• ROE of 21.6% is underpinned by a 7.1% net margin, 1.448x asset turnover, and moderate leverage (2.09x).
• Operating margin strengthened to ~10.6%, with OI up 49.1% on 7.5% sales growth, signaling strong operating leverage.
• Cash generation is robust: OCF/NI 1.92x and FCF 9.32, with low capex intensity (~0.6% of sales).
• Balance sheet appears conservative with high liquidity (current ratio 158.1%) and minimal interest burden.
• Dividend capacity looks ample (payout ~16.2%, FCF coverage 11.35x), though DPS details are unreported.

Metrics to Watch:

• Gross margin trajectory and input cost trends.
• SG&A ratio and operating margin sustainability.
• OCF/NI and FCF margin to validate earnings quality.
• Working capital efficiency (DSO, inventory days, DPO, CCC).
• Cash balance versus any changes in interest-bearing debt.
• Dividend policy disclosures (DPS, payout target, DOE).

Relative Positioning: Within small/mid-cap industrial and trading-oriented peers, the company exhibits above-average cash conversion, solid ROE driven mainly by margin and turnover rather than high leverage, and a conservative liquidity profile; limited disclosure granularity modestly tempers transparency compared to best-in-class 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