ISUZU MOTORS LIMITED FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.64T
• Operating Income: ¥104.65B
• Net Income: ¥88.05B
• EPS: ¥98.76

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

Isuzu Motors (IFRS, consolidated) delivered FY2026 Q2 results showing resilient top-line growth but margin compression and lower operating leverage. Revenue rose 5.4% YoY to 16,373.09, supported by unit volumes and/or price/mix, while gross profit reached 3,411.27, implying a gross margin of 20.8%. Operating income declined 21.1% YoY to 1,046.49 as SG&A of 2,058.69 (12.6% of sales) and input/mix factors weighed on profitability. The operating margin of 6.4% (calculated) trailed revenue growth, indicating negative operating leverage in the period. Net income fell 11.1% YoY to 698.23, cushioned by non-operating items and a 33.6% effective tax rate, with profit before tax at 1,173.86. DuPont analysis shows a calculated ROE of 4.5%, driven by a 4.3% net margin, 0.482x asset turnover, and 2.17x financial leverage—signaling modest profitability on a sizable asset base. EBITDA was 1,745.94 with a 10.7% margin, and D&A of 699.45 indicates capital intensity consistent with the commercial vehicle cycle. Cash generation was solid: operating cash flow of 1,068.47 exceeded net income (OCF/NI 1.53x), and free cash flow was positive at 489.16 after capex of 578.16. The balance sheet shows total assets of 33,972.03 and equity of 15,667.18, yielding an equity ratio of 41.3% and financial leverage of 2.17x; reported debt-to-equity is 1.13x though interest-bearing debt details are unreported. Liquidity ratios are not directly calculable due to data gaps, but cash and equivalents stood at 3,587.11. Capital allocation was active with dividends paid of 366.54 and share repurchases of 189.08, resulting in negative financing cash flow of -643.44. Dividend payout is shown as 94.0% (calculated per disclosure basis) while free cash flow coverage is 0.75x, suggesting limited headroom if using a broader shareholder return definition; on a dividends-only basis, FCF coverage is stronger. Inventory (6,817.98) and receivables (6,605.12) are large, reflecting ongoing working capital intensity, partly offset by payables (6,840.51). Comprehensive income of 1,123.81 exceeded net income, indicating favorable OCI movements in the period. Overall, Isuzu shows steady sales growth and healthy cash conversion, but margin compression and a low ROE constrain return metrics. Data limitations (notably non-operating details, current liabilities, and interest expense) temper the precision of certain assessments, but the core profitability, cash flow, and capital structure signals are sufficiently clear.

Profitability Analysis

ROE_decomposition: ROE 4.5% = Net margin 4.3% × Asset turnover 0.482 × Financial leverage 2.17x. The low net margin and moderate asset turnover are the primary constraints on ROE; leverage is moderate. margin_quality: Gross margin is 20.8% and operating margin (calculated) is 6.4%. The gap between gross and operating margin reflects SG&A at 12.6% of revenue. EBITDA margin is 10.7%, indicating meaningful non-cash D&A (699.45) tied to capital-intensive operations. operating_leverage: Revenue grew 5.4% YoY but operating income declined 21.1% YoY, indicating negative operating leverage due to cost inflation, mix, and/or higher overhead. The effective tax rate was 33.6%, dampening bottom-line conversion.

Growth Assessment

revenue_sustainability: Top-line grew 5.4% YoY to 16,373.09, suggesting stable demand in core truck and pickup segments and/or positive pricing. Large receivables (6,605.12) and inventories (6,817.98) indicate ongoing delivery/activity levels but also working capital intensity. profit_quality: EBITDA of 1,745.94 and OCF/NI of 1.53x indicate that earnings are supported by cash flow. However, declining operating income vs. rising sales signals margin pressure, which reduces quality of earnings growth. outlook: Absent non-operating detail and R&D disclosure, the near-term outlook hinges on cost pass-through, product mix, and supply-chain normalization. If cost inflation remains elevated or mix shifts adverse, operating margins could stay under pressure despite stable revenues.

Financial Health

liquidity: Cash and equivalents were 3,587.11. Current ratio and quick ratio are not calculable due to unreported current liabilities and cash detail components. Working capital is effectively the reported current assets of 18,153.43 (current liabilities not disclosed), indicating ample current assets but incomplete visibility on short-term obligations. solvency: Equity ratio is 41.3% and financial leverage is 2.17x (assets/equity). Reported debt-to-equity is 1.13x, but the split of interest-bearing vs. operating liabilities is unreported. Overall capital structure appears balanced for an auto/commercial vehicle OEM. capital_structure: Total assets: 33,972.03; total liabilities: 17,656.51; total equity: 15,667.18. Comprehensive income exceeding net income supports equity accretion. Lack of interest expense detail precludes interest coverage analysis.

Cash Flow Quality

earnings_quality: OCF/Net income at 1.53x indicates strong cash realization from earnings. Accrual intensity appears moderate given EBITDA-to-OCF alignment, though working capital reliance remains significant. FCF_analysis: Operating CF: 1,068.47; Capex: -578.16; FCF: 489.16. Positive FCF despite margin compression reflects disciplined capex and solid cash conversion. working_capital: Receivables 6,605.12, inventories 6,817.98, and payables 6,840.51 highlight a material working capital cycle characteristic of the sector. Without prior-period comparatives, we cannot quantify WC delta, but the absolute balances imply ongoing cash tied in operations.

Dividend Sustainability

payout_ratio_assessment: Reported calculated payout ratio is 94.0%. Given period net income of 698.23 and dividends paid of 366.54, the cash payout vs. period earnings is approximately 52.5%, but payout calculations may reflect annualized or fiscal-year policy metrics; therefore, use the 94.0% figure with caution. FCF_coverage: FCF was 489.16. Coverage of dividends alone is roughly 1.34x (489.16 / 366.54). Including share repurchases (total shareholder returns of ~555.62), coverage falls below 1x (~0.88x). The provided FCF coverage metric of 0.75x suggests an even stricter definition or timing effects. policy_outlook: With positive FCF and a 41.3% equity ratio, the base dividend appears supportable; however, elevated payout metrics and concurrent buybacks narrow flexibility if operating pressure persists. Future distributions will likely align with cash generation and inventory/receivable normalization.

Risk Assessment

Business Risks:

• Input cost volatility (steel, components) impacting gross margin
• Adverse product mix or pricing pressure in key truck markets
• Supply chain disruptions affecting deliveries and inventories
• Regulatory and emissions standards requiring ongoing capex/R&D
• Foreign exchange fluctuations affecting revenue and costs
• Competitive intensity in commercial vehicles and pickups

Financial Risks:

• Margin compression leading to lower interest coverage (interest data unreported)
• Working capital build tying up cash in receivables and inventories
• Potential increase in leverage if financing growth or returns to shareholders exceed FCF
• Exposure to associates’ performance (equity-method income 40.92) affecting bottom line

Key Concerns:

• Operating income decline (-21.1% YoY) despite revenue growth
• Low ROE (4.5%) versus capital intensity and shareholder return outlays
• Limited visibility on current liabilities and interest-bearing debt due to unreported items

Investment Implications

Key Takeaways:

• Top-line growth (+5.4% YoY) but notable margin compression and negative operating leverage
• Cash conversion strong (OCF/NI 1.53x) and positive FCF of 489.16
• Balance sheet solid with 41.3% equity ratio and 2.17x financial leverage
• Shareholder returns (dividends + buybacks) approaching or exceeding FCF depending on definition
• ROE of 4.5% constrained by low net margins and moderate asset turnover

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio
• Inventory and receivables trends versus payables (working capital intensity)
• Free cash flow versus total shareholder returns
• Effective tax rate stability and non-operating income/expense details
• Interest-bearing debt and interest coverage once disclosed

Relative Positioning: Within Japanese commercial vehicle peers, Isuzu shows solid balance sheet strength and cash conversion but currently lags on profitability momentum and ROE due to margin 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
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