YUTAKA GIKEN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥83.36B
• Operating Income: ¥2.37B
• Net Income: ¥2.01B
• EPS: ¥121.15

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

Yutaka Giken (72290) posted FY2026 Q2 consolidated IFRS results showing modest profitability under pressure from softer top-line and cost rigidity. Revenue was 833.56 (100M JPY), down 5.8% YoY, while operating income fell 12.9% YoY to 23.74, indicating negative operating leverage in the period. Gross profit of 109.54 implies a gross margin of 13.1%, reflecting constrained pricing power and/or higher input/logistics costs. Operating margin is approximately 2.9% (calculated), consistent with a low-margin, volume-driven auto parts profile. Despite weaker operations, net income rose 59.2% YoY to 17.95, supported by net non-operating gains (profit before tax of 32.78 versus operating income of 23.74) and within-period tax dynamics (effective tax rate 33.3%). Total comprehensive income was 23.22, exceeding net income and signaling positive OCI contributions (e.g., FX translation or valuation gains). The DuPont decomposition yields a 1.6% ROE, driven by a 2.1% net margin, 0.490x asset turnover, and 1.50x financial leverage; this is below typical cost of equity thresholds for the sector. Cash conversion was weak: operating cash flow of -50.05 led to an OCF/NI of -2.79x and free cash flow of -65.29, indicating working capital outflows and ongoing investment. The balance sheet remains conservative with an equity ratio of 61.0% and debt-to-equity of 0.50x (based on reported totals), providing ample solvency headroom. Cash and equivalents stood at 427.62, offering liquidity buffer despite negative OCF this half. Dividend payout ratio is listed at 59.4%, though cash dividends paid in the CF statement were 7.38, implying a much lower cash payout versus net income; mid-year timing and disclosure basis differences likely explain the variance. Book value per share is 7,632.72 JPY (calculated) versus 6,997.03 JPY (XBRL), suggesting definitional differences (e.g., owners’ equity vs total equity). Revenue decline and operating income compression point to cyclical and cost headwinds, while the jump in net income appears driven by non-operating items, which may not be recurring. The company’s subdued ROE and negative FCF temper the near-term quality of earnings, but the solid balance sheet mitigates financial risk. Data limitations exist (several line items unreported: ordinary income, interest expense, current liabilities, R&D, etc.), and zeros indicate non-disclosure rather than actual zeros per the note. Overall, the period shows resilience in comprehensive income and balance sheet strength, but cash flow quality and operating leverage warrant close monitoring.

Profitability Analysis

ROE_decomposition: ROE 1.6% = Net margin 2.1% x Asset turnover 0.490x x Financial leverage 1.50x (calculated DuPont aligns with reported ROE 1.6%). Low ROE is primarily constrained by thin margins and moderate asset turns rather than excessive leverage. margin_quality: Gross margin 13.1% (109.54/833.56) and operating margin ~2.9% (23.74/833.56) indicate limited pricing power and cost pass-through. Net margin improved to 2.1% despite lower OPM, reflecting non-operating gains (PBT 32.78 vs OI 23.74) and a 33.3% effective tax rate. Sustainability of net margin depends on recurrence of non-operating items, which are not disclosed in detail. operating_leverage: Revenue -5.8% YoY vs operating income -12.9% YoY points to negative operating leverage. Fixed cost absorption likely weakened; depreciation is sizable at 45.59 (~5.5% of sales), contributing to operating leverage and sensitivity to volume.

Growth Assessment

revenue_sustainability: Revenue decreased to 833.56 (-5.8% YoY), indicating softer OEM demand and/or pricing pressure. Asset turnover of 0.490x suggests capital intensity typical of the sector; without volume recovery or mix improvement, top-line growth may be constrained near term. profit_quality: Operating profit declined faster than revenue, while net income rose on non-operating contributions. The reliance on below-the-line items reduces the quality of earnings. Total comprehensive income (23.22) exceeding net income supports valuation/FX tailwinds but may be volatile. outlook: With operating margin under pressure and negative OCF, near-term profit growth depends on stabilizing volumes, material cost relief, and working-capital normalization. Absent structural margin improvements, ROE is likely to remain subdued.

Financial Health

liquidity: Cash and equivalents of 427.62 provide a cushion, but current ratio and quick ratio are not computable due to unreported current liabilities and cash breakdown. Accounts receivable 503.08 and inventories 237.88 imply significant working-capital tied up. solvency: Equity ratio 61.0% and debt-to-equity 0.50x indicate low leverage and solid solvency. Total assets 1,699.92 vs total liabilities 568.58 underscore a strong capital base. Interest coverage cannot be computed due to unreported interest expense; however, low leverage reduces refinancing risk. capital_structure: Total equity is 1,131.02 with retained earnings of 890.61 and capital surplus 12.73, highlighting internal capital generation capacity over time. Financial leverage of 1.50x (DuPont) remains conservative for the industry.

Cash Flow Quality

earnings_quality: OCF/Net income is -2.79x, signaling poor cash conversion in the period. The gap between NI (17.95) and OCF (-50.05) is likely driven by working-capital outflows and possibly timing of payables/receivables; detailed drivers are not disclosed. FCF_analysis: Free cash flow was -65.29 (OCF -50.05 plus investing CF -15.24; capex -14.56 broadly matches investing outflows), indicating that internal cash did not cover investment needs this half. Sustained negative FCF would pressure net cash over time if continued. working_capital: Receivables of 503.08 and inventories of 237.88 versus accounts payable of 475.27 suggest a sizeable net working-capital position. Without beginning-period comparatives, we infer that increased WC needs contributed to negative OCF.

Dividend Sustainability

payout_ratio_assessment: The calculated payout ratio is reported at 59.4%, but cash dividends paid were 7.38 versus net income of 17.95, implying ~41% cash payout on a cash basis for the half. Differences reflect timing and measurement bases; annual DPS and interim DPS are unreported. FCF_coverage: FCF coverage is -6.12x, indicating dividends were not covered by free cash flow in the period. While the balance sheet can absorb short-term shortfalls, sustained negative FCF would challenge dividend headroom. policy_outlook: Given subdued ROE (1.6%) and negative FCF, a conservative payout stance is prudent until cash conversion normalizes. Lack of disclosed DOE and DPS limits visibility on formal policy or target payout frameworks.

Risk Assessment

Business Risks:

• Cyclical demand from automotive OEMs and model cycles impacting volumes and pricing.
• Input cost volatility (steel, energy) and pass-through timing affecting margins.
• Product mix and platform exposure risk as powertrain technologies evolve.
• Foreign exchange fluctuations affecting translation and transaction results.
• Supply chain disruptions impacting deliveries and working capital.

Financial Risks:

• Negative operating cash flow and FCF in the period, elevating liquidity draw if persistent.
• Operating leverage from high fixed costs (depreciation 45.59) amidst revenue softness.
• Limited visibility on interest burden and maturities due to unreported interest expense and loan details.
• Potential working-capital volatility tied to receivables and inventory levels.

Key Concerns:

• Sustainability of net income improvement given dependence on non-operating gains.
• Weak cash conversion (OCF/NI -2.79x) and negative FCF (-65.29).
• Declining revenue (-5.8% YoY) and operating income (-12.9% YoY), indicating negative operating leverage.

Investment Implications

Key Takeaways:

• Top-line softness (-5.8% YoY) and greater decline in operating income (-12.9% YoY) indicate negative operating leverage.
• Net income +59.2% YoY was supported by non-operating gains; core profitability remains pressured.
• ROE is low at 1.6%, constrained by thin margins and moderate asset turnover.
• Cash conversion is weak with OCF/NI at -2.79x and FCF at -65.29.
• Balance sheet is strong with equity ratio 61.0% and D/E 0.50x, mitigating solvency risk.
• Dividend coverage by FCF is inadequate this half; payout optics differ by measurement (59.4% reported vs ~41% cash-based).
• Comprehensive income exceeded net income, suggesting positive OCI contributions.

Metrics to Watch:

• Operating margin trajectory and gross margin recovery from 13.1%.
• Working capital movements (AR 503.08, inventory 237.88, AP 475.27) and OCF normalization.
• Recurrence and composition of non-operating items (gap between OI 23.74 and PBT 32.78).
• Capex discipline relative to depreciation (capex 14.56 vs D&A 45.59).
• ROE progression via DuPont levers (margin, asset turnover, leverage).
• Cash balance trend (427.62) versus FCF and financing outflows.

Relative Positioning: Within Japan auto parts peers, Yutaka Giken exhibits conservative leverage and solid equity buffers but currently trails on ROE and cash conversion; improving operating efficiency and stabilizing volumes are needed to close the gap.

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