PRESS KOGYO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥92.26B
• Operating Income: ¥5.54B
• Net Income: ¥4.08B
• EPS: ¥31.46

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

Press Kogyo Co., Ltd. (TSE:7246) posted FY2026 Q2 consolidated results showing resilient profitability despite a modest topline decline. Revenue was ¥92.264bn, down 3.2% YoY, while operating income rose 8.7% YoY to ¥5.537bn, indicating effective cost control and/or favorable mix. Gross profit of ¥12.993bn implies a gross margin of 14.1%, and the operating margin improved to roughly 6.0%. Ordinary income of ¥5.702bn exceeded operating income, evidencing net positive non-operating items (e.g., financial income or FX). Net income was ¥3.124bn, down 8.2% YoY, with EPS of ¥31.46; the YoY decline at the bottom line points to higher taxes or below-the-line items despite operating improvement. DuPont metrics indicate a net margin of 3.39%, asset turnover of 0.474x, and financial leverage of 1.55x, yielding an ROE of 2.49% for the period (not annualized). Cash generation was strong: operating cash flow of ¥8.773bn equates to an OCF/Net Income ratio of 2.81x, suggesting healthy earnings quality and working capital inflows. Liquidity is solid with a current ratio of 163.7% and quick ratio of 160.8%, supported by sizeable working capital of ¥34.172bn. The balance sheet is conservative: total equity of ¥125.696bn against total assets of ¥194.716bn (assets/equity 1.55x), and a debt-to-equity ratio of 0.56x, pointing to moderate leverage. Interest expense was modest at ¥0.201bn, and EBITDA/interest coverage stood at a robust 27.5x, providing ample headroom against rate or earnings shocks. Depreciation and amortization totaled ¥6.831bn, underscoring the capital-intensive nature of the business and the gap between EBITDA margin (13.4%) and operating margin (~6.0%). Reported effective tax rate shows as 0.0%, but with income tax expense of ¥1.262bn and net income of ¥3.124bn, the implied tax burden is materially above zero; the reported 0.0% should be treated as a disclosure artifact. The reported inventory balance is low relative to sales; classification differences or partial disclosures may be at play. Free cash flow cannot be reliably assessed this quarter because investing cash flows were not disclosed (reported as zero). Dividend data show as zero, likely reflecting non-disclosure for the period rather than an actual suspension; therefore, payout and FCF coverage cannot be inferred. Overall, the company delivered margin expansion and strong cash conversion against a softer revenue backdrop, underpinned by a healthy balance sheet; however, several cash and equity-related data points are undisclosed, which tempers precision.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 3.39% × asset turnover 0.474 × financial leverage 1.55 = ROE 2.49% for the period. The margin profile improved at the operating level: operating margin ~6.0% (¥5.537bn/¥92.264bn), up YoY as operating income grew 8.7% on a 3.2% revenue decline. Gross margin was 14.1%, indicating decent conversion of revenue into gross profit in a metal/auto-parts context; the spread between EBITDA margin (13.4%) and operating margin reflects significant D&A (¥6.831bn), consistent with capital intensity. Ordinary income exceeded operating income by ¥0.165bn, implying positive non-operating contributions (e.g., FX gains or interest income net of ¥0.201bn interest expense). Net income declined 8.2% YoY despite higher operating profit, suggesting adverse below-the-line items or tax normalization. Operating leverage appears favorable: lower revenue with higher operating profit implies cost reductions, mix improvements, or pricing offsets that expanded margins. The current ROE of 2.49% is a half-year snapshot; on a simple annualized basis it would approximate ~5% absent major second-half swings.

Growth Assessment

Revenue contracted 3.2% YoY to ¥92.264bn, indicating softer demand or pricing pressures in key end markets. Despite the decline, operating income grew 8.7% YoY to ¥5.537bn, evidencing successful cost control, productivity gains, or a richer product mix. Ordinary income at ¥5.702bn also improved versus operating, bolstered by non-operating factors. Net income fell 8.2% YoY to ¥3.124bn, likely reflecting higher tax expense or non-recurring items; the implied tax burden is materially positive despite a reported 0.0% effective rate. EBITDA of ¥12.368bn (13.4% margin) highlights stable underlying cash earnings capability. Sustainability: margin expansion amid lower sales suggests operational improvements that may persist; however, durability will depend on OEM production schedules, steel input costs, and currency. Profit quality looks sound given strong OCF-to-net income (2.81x), though the absence of investing cash flow data limits full-cycle assessment. Outlook considerations include potential normalization of non-operating gains, input cost tailwinds reversing, and the trajectory of automotive demand domestically and overseas. Absent guidance, the base case is stable-to-modestly improving profitability if cost discipline holds and volumes stabilize.

Financial Health

Liquidity: Current ratio 163.7% and quick ratio 160.8% indicate strong short-term coverage; working capital is ¥34.172bn. Cash and equivalents are undisclosed (reported as zero), so absolute liquidity buffers cannot be quantified from this dataset. Solvency: Debt-to-equity of 0.56x and assets/equity of 1.55x reflect moderate leverage with ample equity backing. Interest coverage is strong at 27.5x (EBITDA basis), providing cushion against earnings volatility and rate increases. Total assets ¥194.716bn and total equity ¥125.696bn imply an equity ratio near 64.6% by calculation, while the reported equity ratio of 0.0% is a disclosure placeholder rather than an actual metric. Inventories are reported at ¥1.594bn; given the scale of sales, this appears low and may reflect classification differences or partial disclosure. Overall balance sheet quality appears sound, but missing cash and detailed debt breakdowns constrain precision.

Cash Flow Quality

Earnings quality is strong: OCF of ¥8.773bn versus net income of ¥3.124bn yields an OCF/NI ratio of 2.81x, indicating robust cash conversion and likely working capital release. EBITDA of ¥12.368bn supports the cash-generating profile despite substantial D&A (¥6.831bn). Free cash flow cannot be determined because investing cash flows are undisclosed (reported as zero). Working capital: with low reported inventories and strong liquidity ratios, the period likely benefited from receivables collections or payables management; however, the absence of detailed WC breakdowns limits attribution. Financing cash flow was -¥5.462bn, suggesting debt repayment and/or shareholder returns, but without cash and equity movement details, the composition is unclear. Overall, cash flow quality appears favorable on the operating side, with insufficient data to assess reinvestment intensity or FCF sustainability.

Dividend Sustainability

Reported annual DPS is 0.00 and payout ratio 0.0%, which likely reflects non-disclosure for the interim period rather than an actual zero distribution. With net income of ¥3.124bn and strong OCF, capacity to fund dividends appears intact in principle; however, FCF coverage cannot be assessed because investing cash flows and capex are not disclosed. Capital intensity (¥6.831bn D&A in the half) implies ongoing reinvestment needs, so sustainable dividends depend on capex requirements relative to OCF. Policy outlook cannot be inferred from the provided data; no stated payout policy is included here. Until investing cash flow and DPS are disclosed for the fiscal year, payout ratio assessment and FCF coverage remain indeterminate.

Risk Assessment

Business Risks:

• Automotive demand cyclicality affecting OEM production schedules and volumes
• Raw material price volatility, especially steel and energy
• Foreign exchange fluctuations impacting non-operating income and margins
• Customer concentration risk typical of Tier-1/2 auto suppliers
• Supply chain disruptions (logistics, components, labor availability)
• Technological shifts toward EV platforms and lightweight materials
• Pricing pressure from OEMs and competitive dynamics

Financial Risks:

• Capital intensity requiring sustained capex to maintain competitiveness
• Potential reversal of favorable working capital movements impacting OCF
• Interest rate risk on floating-rate debt despite high coverage
• Currency translation and transaction effects on earnings and equity
• Data gaps on cash and debt structure limiting visibility

Key Concerns:

• Topline contraction (-3.2% YoY) despite margin resilience
• Net income decline (-8.2% YoY) despite higher operating profit
• Undisclosed cash, investing cash flows, and equity ratio fields reduce transparency
• Low reported inventories relative to sales suggest classification differences or incomplete disclosure

Investment Implications

Key Takeaways:

• Operating margin expansion to ~6.0% despite a 3.2% revenue decline demonstrates effective cost/mix management
• Strong cash conversion with OCF/NI at 2.81x supports earnings quality
• Balance sheet appears conservative with D/E at 0.56x and high interest coverage (27.5x)
• Net income softness versus operating income strength likely reflects higher taxes or below-the-line items
• Non-operating gains contributed positively (ordinary income > operating income)
• Capital intensity remains high (¥6.831bn D&A), underscoring the importance of capex discipline
• Data limitations (cash, capex/ICF, DPS) cap the precision of FCF and dividend assessments

Metrics to Watch:

• Volume/mix trends and OEM production schedules into H2
• Gross and operating margins versus steel and energy cost trends
• Non-operating income components and FX sensitivity
• Working capital movements (receivables, payables, inventory days)
• Capex and investing cash flows to gauge sustainable FCF
• Effective tax rate normalization and one-off items
• Leverage and interest coverage amid rate environment

Relative Positioning: Within Japanese auto-parts peers, Press Kogyo currently exhibits solid operating discipline and cash conversion with moderate leverage and high coverage. Profitability is improving from operations despite softer sales, but bottom-line growth lags due to taxes/other items. Visibility on FCF and shareholder returns is lower than best-in-class peers due to interim disclosure gaps on cash, investing flows, and DPS.

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