| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥156.0B | ¥164.3B | -5.1% |
| Operating Income | ¥10.8B | ¥14.8B | -27.1% |
| Ordinary Income | ¥10.7B | ¥14.9B | -27.8% |
| Net Income | ¥7.0B | ¥9.7B | -27.8% |
| ROE | 6.4% | 8.2% | - |
FP Partner's 2026 FY Q2 results: Revenue ¥156.0B (Prior ¥164.3B, -¥8.3B, -5.1%), Operating Income ¥10.8B (Prior ¥14.8B, -¥4.0B, -27.1%), Ordinary Income ¥10.7B (Prior ¥14.9B, -¥4.2B, -27.8%), Net Income ¥7.0B (Prior ¥9.7B, -¥2.7B, -27.8%), representing a decline in both revenue and profit. Gross margin was 31.9%, down 0.8pt from 32.7% in the prior year period; SG&A ratio rose to 25.0% from 23.7% (+1.3pt), resulting in an Operating Margin contracted by 2.1pt to 6.9%. ROE was 6.4% and Equity Ratio was 61.8%.
[Revenue] Revenue was ¥156.0B, a -5.1% decrease YoY. Detailed segment drivers are unknown due to lack of disclosed segment information, but topline contraction initiated profit pressure. Gross profit was ¥49.8B, with a gross margin of 31.9%, down 0.8pt from 32.7% in the prior year period. Cost of goods sold was ¥106.2B, and downward rigidity of costs relative to the revenue decline may have contributed to the gross margin deterioration.
[P&L] Operating Income was ¥10.8B, a significant decrease of -27.1% YoY. SG&A was ¥39.0B, marginally up from ¥38.9B in the prior year period, but due to revenue decline the SG&A ratio rose 1.3pt to 25.0%, and the relative weight of fixed and semi-fixed costs pressured profits. Advertising expense was ¥6.8B, down from ¥7.7B a year earlier, but other SG&A of ¥23.1B exceeded prior ¥21.9B, revealing stickiness in the cost structure. Non-operating items were immaterial (Non-operating income ¥0.2B, Non-operating expenses ¥0.2B), so Ordinary Income of ¥10.7B was roughly in line with Operating Income. No extraordinary items were recorded; Pre-tax Income was ¥10.7B and provision for income taxes was ¥3.7B (effective tax rate 34.5%), yielding Net Income ¥7.0B. In conclusion, revenue decline led to relatively higher SG&A and lower gross margin, resulting in decreases in both revenue and profit.
[Profitability] Operating Margin was 6.9%, deteriorating 2.1pt from 9.0% in the prior year period. Net Margin was 4.5%, down 1.4pt from 5.9% a year earlier. ROE was 6.4%, which can be decomposed as Net Margin 4.5% × Total Asset Turnover 0.87 (annualized) × Financial Leverage 1.62x. Gross Margin of 31.9% decreased 0.8pt YoY, and SG&A ratio rose 1.3pt to 25.0%, causing negative operating leverage.
[Cash Quality] Operating Cash Flow (OCF) was ¥12.6B, 1.80x Net Income ¥7.0B, indicating good cash backing of profits. OCF/EBITDA ratio was 0.92x (EBITDA = Operating Income ¥10.8B + Depreciation ¥2.9B = ¥13.7B), maintaining high cash conversion. Free Cash Flow was ¥5.3B and remained positive.
[Investment Efficiency] Capex was ¥7.1B (investing CF), exceeding depreciation of ¥2.9B, indicating a continued growth investment stance. Tangible fixed assets were ¥59.9B, up ¥5.6B from ¥54.3B in the prior year period, showing expansion of the asset base.
[Financial Soundness] Equity Ratio was 61.8%, down 2.4pt from 64.2% in the prior year period but still conservative. Current Ratio was 155.6% and Quick Ratio was 130.8% (Current Assets ¥86.6B - Inventories ¥0.1B - Other Current Assets ¥9.0B = ¥77.5B ÷ Current Liabilities ¥55.7B), indicating good short-term liquidity. Cash and Deposits ¥61.7B exceeded Current Liabilities ¥55.7B, limiting maturity mismatch risk. Interest-bearing debt was Short-term Borrowings ¥1.7B + Long-term Borrowings ¥8.6B = ¥10.3B, with Debt/EBITDA 0.75x and Interest Coverage 166.8x (Operating Income ¥10.8B ÷ Interest Expense ¥0.1B), indicating very high leverage resilience.
OCF was ¥12.6B, up +27.5% from ¥9.9B in the prior year period, 1.80x Net Income ¥7.0B. OCF subtotal (before working capital changes) was ¥15.8B, with depreciation ¥2.9B and other non-cash costs contributing to cash generation above accounting profit. In working capital, a decrease in trade receivables of ¥1.0B was a positive factor, while a decrease in trade payables of -¥0.4B was a negative factor. An increase in other liabilities of ¥2.1B contributed to working capital improvement. After tax payments of -¥3.2B, OCF totaled ¥12.6B. Investing CF was -¥7.3B, mainly attributable to capex of ¥7.1B for tangible fixed assets. Free Cash Flow was ¥5.3B (OCF ¥12.6B + Investing CF -¥7.3B) and remained positive. Financing CF was -¥18.8B, with dividend payments -¥10.9B and share buybacks -¥7.0B as the main cash outflows for shareholder returns. As a result, Cash and Cash Equivalents decreased ¥13.5B from opening ¥75.2B to closing ¥61.7B. Although OCF generated ¥5.3B of Free Cash Flow, total shareholder returns of ¥17.9B (dividends + buybacks) resulted in an FCF coverage of 0.30x, meaning part of returns were financed by drawing down cash balances.
Earnings composition in the period was driven by operating profit; non-operating items were immaterial (Interest Income ¥0.1B, Interest Expense ¥0.1B), so Ordinary Income ¥10.7B closely matched Operating Income ¥10.8B. No extraordinary gains/losses were recorded, and Pre-tax Income ¥10.7B equaled Ordinary Income. OCF ¥12.6B was 1.80x Net Income ¥7.0B, yielding an accrual ratio of -55.7% (Accrual = Net Income - OCF = -¥5.6B ÷ Net Income ¥7.0B), negative and indicating cash generation exceeding accounting profit. OCF/EBITDA ratio 0.92x further demonstrates strong cash backing of profits. Non-operating income was only 0.1% of revenue, so profit sources are concentrated in core operating activities. Therefore, there is no apparent reliance on one-off factors or non-cash gains; earnings quality is high.
Progress against full-year forecast: Revenue 49.1% (Actual ¥156.0B ÷ Forecast ¥317.9B), Operating Income 46.9% (Actual ¥10.8B ÷ Forecast ¥23.0B), Ordinary Income 44.2% (Actual ¥10.7B ÷ Forecast ¥24.2B), Net Income 43.4% (Actual ¥7.0B ÷ Forecast ¥16.2B). Against a standard Q2 cumulative progress of 50%, Revenue is roughly on track but profitability is 3–6pt behind. There has been no revision to guidance since the disclosure of Q1 results; the full-year forecast remains unchanged. Full-year forecasts imply Revenue -1.0% YoY, Operating Income -22.9% YoY, Ordinary Income -23.3% YoY, Net Income -20.8% YoY, indicating expectations for full-year declines greater than first-half results. The profit shortfall is within an acceptable range, but recovery in gross margin and improvement in SG&A efficiency in H2 are prerequisites to meeting guidance.
Q2 dividend was ¥47 per share, and the full-year dividend forecast remains ¥47. Dividend payments of ¥10.9B against Net Income ¥7.0B imply a Payout Ratio of 154.2% (Dividend Payments ¥10.9B ÷ Net Income ¥7.0B), substantially exceeding net income. Including share buybacks of ¥7.0B, Total Shareholder Returns were ¥17.9B, yielding a Total Return Ratio of 255.7% (Total Returns ¥17.9B ÷ Net Income ¥7.0B). With Free Cash Flow ¥5.3B versus Total Returns ¥17.9B, FCF coverage was 0.30x, and part of returns were funded by drawing down cash balances. Cash and Deposits ¥61.7B remain ample, so there is no short-term concern over dividend payment capability; however, to sustain this level of returns management will likely need either improvement in earnings/FCF or adjustment of return policy.
Cost-structure stickiness risk: While Revenue declined -5.1% YoY, SG&A remained ¥39.0B (prior ¥38.9B), and SG&A ratio rose 1.3pt to 25.0%. Advertising was reduced to ¥6.8B (prior ¥7.7B), but Other SG&A ¥23.1B exceeded prior ¥21.9B, revealing downward rigidity in fixed and semi-fixed costs. If revenue recovery in H2 is delayed, negative operating leverage may persist and delay recovery of Operating Margin.
Sustainability of capital allocation risk: Total Return Ratio 255.7% and FCF coverage 0.30x indicate shareholder returns materially exceed profit and cash generation. Cash and Deposits ¥61.7B exceed current liabilities and short-term payment capacity is solid, but cash decreased ¥13.5B in the quarter; continuing the same level of returns will erode cash buffers. If profitability improvement is slow, dividend and buyback policies may need to be reconsidered.
Gross margin deterioration risk: Gross Margin 31.9% fell 0.8pt from 32.7% YoY. Likely drivers include downward rigidity in cost of goods sold relative to revenue decline or deterioration in pricing / project mix. Gross margin decline directly compresses Operating Margin, so recovery of margin via price maintenance and productivity improvement is key to profitability improvement.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.9% | – | – |
| Net Margin | 4.5% | – | – |
Industry-relative positioning data is insufficient for comparison.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -5.1% | – | – |
Industry-relative positioning data is insufficient for comparison.
※ Source: Company aggregation
Structural deterioration in Operating Margin: Operating Margin contracted to 6.9% from 9.0% in the prior year period (-2.1pt), driven by a 0.8pt decline in Gross Margin and a 1.3pt increase in SG&A ratio. Downward rigidity of costs relative to revenue decline is apparent; the pace of revenue recovery and the degree of SG&A efficiency improvement in H2 are key to restoring operating leverage. Against the full-year forecast Operating Margin of 7.2%, first-half performance at 6.9% shows weak progress, so monitoring gross margin recovery and cost control in H2 is important.
Balance between capital allocation and cash trajectory: Total Return Ratio 255.7% and FCF coverage 0.30x show shareholder returns considerably exceed profit and cash generation. Cash and Deposits ¥61.7B remain ample and short-term payment capability is sound, but cash declined ¥13.5B in the quarter; sustaining the same level of returns requires expansion of FCF or adjustment of return policy. High Payout Ratio of 154.2% could trigger reconsideration of return levels if profit recovery lags.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the firm based on public financial statements and are provided for reference only. Investment decisions are your responsibility; consult a professional as appropriate.