NOK CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥359.40B
• Operating Income: ¥15.71B
• Net Income: ¥15.54B
• EPS: ¥81.66

Income Statement

Balance Sheet

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

NOK Co., Ltd. reported FY2026 Q2 consolidated results under JGAAP showing top-line and operating profit contraction, but resilient bottom-line performance relative to operating trends. Revenue was ¥359.4bn, down 8.7% YoY, reflecting softer demand and/or mix headwinds in its core segments (not specified here), with gross profit of ¥68.3bn and a gross margin of 19.0%. Operating income declined 17.7% YoY to ¥15.7bn, bringing the operating margin to 4.4%, indicating margin compression versus the prior year. Ordinary income reached ¥21.6bn, exceeding operating income by ¥5.9bn, suggesting net non-operating gains (e.g., financial income, FX, equity-method income) offset interest expense of ¥1.7bn. Net income was ¥13.3bn, down a comparatively modest 2.0% YoY, with a net margin of 3.71%, helped by the above-mentioned non-operating line. DuPont metrics indicate ROE of 2.09%, driven by a modest net margin (3.71%), low asset turnover (0.384x), and moderate leverage (1.47x). The balance sheet appears solid with total assets of ¥936.1bn and total equity of ¥638.9bn; this implies an equity ratio around 68% based on available non-zero figures, consistent with a conservative capital structure. Liquidity is strong: current ratio 226% and quick ratio 169%, supported by sizable working capital of ¥234.5bn and inventories of ¥106.1bn. Interest coverage is 9.3x, indicating comfortable debt service capacity from operating earnings. Cash flow statements are not disclosed here (reported as zeros), so operating cash flow and capex/FCF cannot be assessed from this dataset. EPS is ¥81.66; outstanding shares are not disclosed, limiting per-share and valuation context beyond EPS. Dividend information is also undisclosed in this dataset (DPS shown as zero indicates not reported), so payout and policy assessment rely on inference rather than confirmed figures. Overall, results reflect cyclical pressure on revenue and operating margins, partially cushioned by non-operating gains, while the balance sheet provides ample flexibility. Key watchpoints include the trajectory of volume recovery, pricing and cost pass-through, inventory normalization, and the sustainability of non-operating contributions to earnings. Given missing cash flow and equity-related detail, conclusions emphasize income statement and balance sheet signals while acknowledging data limitations.

Profitability Analysis

ROE is 2.09%, decomposed as: net profit margin 3.71% × asset turnover 0.384 × financial leverage 1.47. Operating margin is 4.37% (¥15.7bn/¥359.4bn), down YoY given the -17.7% decline in operating income versus -8.7% revenue contraction, indicating negative operating leverage in the period. Gross margin is 19.0%, implying that cost of sales absorbed most of the revenue decline; fixed cost absorption and mix likely weighed on operating profitability. The spread between ordinary income (¥21.6bn) and operating income (¥15.7bn) suggests non-operating positives (e.g., FX gains, investment income) of roughly ¥5.9bn before interest expense, which supported net income resilience. Interest expense is ¥1.7bn, with interest coverage of 9.3x (operating income basis), consistent with manageable financial costs. The implied effective tax burden, based on income tax of ¥5.9bn against pre-tax approximated by ordinary income, is roughly in the mid-20s percent range, though the provided ‘effective tax rate’ metric is shown as 0.0% due to non-disclosure in the calculated table. Overall margin quality is mixed: core operating margin compressed, while below-the-line items provided a cushion; sustainability of these non-operating gains should be monitored. Asset turnover of 0.384x is low for an auto/industrial supplier profile, which, together with modest margins, constrains ROE despite low leverage.

Growth Assessment

Revenue declined 8.7% YoY to ¥359.4bn, indicating cyclical or end-market softness and/or adverse mix effects. Operating income fell 17.7% YoY, a steeper decline than sales, suggesting negative operating leverage and/or lagging cost pass-through. Net income decreased only 2.0% YoY, implying that non-operating gains and possibly financial income or FX effects cushioned the bottom line. Given the magnitude of the ordinary-versus-operating gap, profit quality tilts toward non-operating contributions this quarter; core earnings growth will depend on restoring operating margin. Without cash flow data, we cannot corroborate earnings with operating cash generation or assess capex intensity; thus, near-term growth quality assessment is income-statement based. Revenue sustainability will hinge on demand recovery in key customer industries and the company’s ability to manage pricing and input costs. The gross margin at 19.0% suggests some pressure from costs or pricing; improving gross margin would be a key signal of healthier growth. Outlook-wise (not disclosed), a stabilization in volumes and inventories could relieve operational deleverage in subsequent quarters. Monitoring currency effects is important as they may materially influence ordinary income. In summary, current growth trends are soft on sales and operating profit, with bottom-line resilience supported by non-operating items; a return to operating-led profit growth is the key for durable improvement.

Financial Health

Total assets are ¥936.1bn and total equity ¥638.9bn, implying an equity ratio of approximately 68% based on available figures, consistent with a strong capital base. Total liabilities are ¥275.2bn, yielding a debt-to-equity ratio around 0.43x (using total liabilities as a proxy for debt in the absence of breakdown). Liquidity is robust: current assets ¥420.7bn versus current liabilities ¥186.3bn give a current ratio of 226% and a quick ratio of 169% (excluding ¥106.1bn inventories). Working capital stands at ¥234.5bn, providing a substantial buffer for operations and seasonality. Interest expense of ¥1.7bn is well covered by operating income (9.3x), indicating low refinancing or covenant risk based on earnings capacity. The asset base relative to sales (asset turnover 0.384x) suggests capital intensity; efforts to optimize asset utilization could enhance returns. No cash and cash equivalents are disclosed in this dataset (reported as zero), so absolute liquidity on-hand cannot be evaluated here. Overall solvency and liquidity appear strong, supported by high equity and ample short-term coverage, with the main caveat being the absence of detailed cash and debt composition data.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed in this dataset (reported as zeros), so we cannot assess OCF/NI, capex, or free cash flow generation. As such, the reported OCF/NI ratio of 0.00 and FCF of 0 should be treated as not available rather than actual values. Earnings quality must therefore be inferred from the income statement: the sizeable gap between ordinary and operating income indicates meaningful non-operating contributions this period; durability of these items is uncertain. Working capital: inventories are ¥106.1bn; without AR/AP detail or cash flow data, we cannot determine whether inventory levels rose or fell or whether working capital absorbed/provided cash. In the absence of capex disclosure, we cannot evaluate maintenance versus growth investment or the trajectory of depreciation (D&A is not disclosed here). Conclusion: cash conversion and FCF quality are indeterminable from the provided data; future updates should be assessed once cash flow statements and capex are available.

Dividend Sustainability

Dividend per share is not disclosed in this dataset (DPS shown as 0.00 indicates non-reporting), and the payout ratio/FCF coverage figures provided as zeros should be treated as unavailable. With EPS at ¥81.66 and a strong equity base, the company appears to have capacity to fund dividends in principle, but without cash flow and policy details we cannot assess sustainability or alignment with historical payout practices. Key considerations for future assessment include: normalized OCF, capex requirements (to infer FCF), leverage targets, and management’s stated payout policy or shareholder return framework. Until cash flow data and policy disclosures are available, dividend visibility remains limited in this analysis.

Risk Assessment

Business Risks:

• Demand cyclicality in key end-markets (e.g., automotive/industrial) affecting volumes and mix
• Input cost inflation and pricing pressure impacting gross margin
• Operational deleverage when volumes soften, pressuring operating margin
• Supply chain disruptions and inventory normalization risks
• FX volatility influencing ordinary income and competitiveness
• Customer concentration risk typical of Tier-1/2 suppliers

Financial Risks:

• Reliance on non-operating gains to support bottom line in periods of margin compression
• Potential working capital swings without disclosed OCF to validate cash generation
• Unknown debt composition and maturity profile (only total liabilities available)
• Capex intensity and maintenance needs not observable without investing cash flows
• Interest rate changes affecting financing costs, albeit currently well covered

Key Concerns:

• Operating margin compression alongside revenue decline (negative operating leverage)
• Low asset turnover (0.384x) constraining ROE despite conservative leverage
• Absence of cash flow disclosure, limiting assessment of earnings quality and FCF

Investment Implications

Key Takeaways:

• Top-line down 8.7% YoY with operating income down 17.7% YoY, indicating operating deleverage
• Net income down only 2.0% YoY, supported by non-operating gains lifting ordinary income
• ROE of 2.09% reflects modest margins and low asset turnover more than leverage
• Strong balance sheet with implied equity ratio around 68% and current ratio of 226%
• Interest coverage of 9.3x indicates comfortable debt service capacity
• Cash flow and dividend details are not disclosed here, constraining FCF and payout analysis

Metrics to Watch:

• Operating margin and gross margin recovery trajectory
• Ordinary vs. operating income gap (sustainability of non-operating gains)
• Inventory levels and turnover; working capital intensity
• Operating cash flow and capex once disclosed; FCF conversion
• Revenue momentum and pricing/pass-through to offset cost pressures
• FX impacts on non-operating income and competitiveness

Relative Positioning: Compared with Japanese auto/industrial component peers, NOK exhibits a conservative balance sheet and strong liquidity but currently operates with lower ROE driven by modest margins and low asset turnover; near-term relative performance will hinge on restoring operating profitability and demonstrating cash conversion once disclosures are available.

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