SUZUDEN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.10B
• Operating Income: ¥872M
• Net Income: ¥854M
• EPS: ¥52.24

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

Suzuden Co., Ltd. (TSE: 7480) reported FY2026 Q2 consolidated results under JGAAP showing softer topline and margin compression but solid cash generation and a robust balance sheet. Revenue was ¥21.1bn, down 5.5% YoY, reflecting a weaker sales environment and/or normalization after prior strength. Gross profit was ¥3.74bn, implying a gross margin of 17.7%, which appears relatively resilient despite the revenue decline. Operating income declined 22.0% YoY to ¥872m, with operating margin at 4.1%, indicating negative operating leverage as fixed costs weighed on profitability amid lower volumes. Ordinary income of ¥996m exceeded operating income, suggesting a positive net non-operating contribution (e.g., financial income), while net income of ¥732m declined 14.2% YoY. DuPont analysis indicates ROE of 4.52%, driven by a net profit margin of 3.47%, asset turnover of 0.82x, and financial leverage of 1.59x—implying returns are primarily a function of efficient asset use rather than high leverage. EBITDA was ¥986m, with a 4.7% margin; the small spread versus operating margin highlights modest depreciation and amortization (¥114m) and limited non-cash protection to earnings. Liquidity remains a strength with a current ratio of 257% and quick ratio of 218%, supported by substantial working capital of ¥14.29bn. Leverage is moderate with debt-to-equity at 0.64x and very strong interest coverage of ~299x, indicating low financial risk from interest-bearing debt. Operating cash flow of ¥2.07bn substantially exceeded net income (OCF/NI 2.82x), pointing to strong cash conversion and supportive working capital dynamics in the period. Reported free cash flow is not available because investing cash flows were not disclosed; therefore, we cannot fully assess reinvestment needs or capex intensity this quarter. The equity ratio is shown as 0.0% and cash & equivalents as 0, which should be interpreted as undisclosed rather than zero; total equity is ¥16.21bn, implying a healthy capitalization. Dividend data (DPS and payout) appear undisclosed this quarter; without investing cash flows and DPS, dividend capacity cannot be precisely assessed. Overall, Suzuden’s Q2 shows resilient cash generation and balance sheet strength offsetting revenue pressure and operating margin contraction. Near-term focus should be on demand recovery, gross margin management, and cost discipline to stabilize ROE. While operating leverage worked against the company this quarter, the strong liquidity and coverage ratios provide a buffer to navigate a softer cycle. Data limitations (notably cash, equity ratio, investing cash flows, and dividends) constrain some aspects of the analysis, but the available metrics suggest fundamentally sound financial health.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.47%
• asset_turnover: 0.820x
• financial_leverage: 1.59x
• calculated_ROE: 4.52%
• commentary: ROE of 4.52% is largely driven by reasonable asset turnover with modest leverage; margin compression is the main drag. Using total assets of ¥25.75bn and equity of ¥16.21bn yields leverage of ~1.59x, consistent with low balance sheet risk. margin_quality:
• gross_margin: 17.7%
• operating_margin: 4.1%
• ordinary_margin: 4.7% (996m / 21.1bn)
• net_margin: 3.47%
• EBITDA_margin: 4.7%
• commentary: Gross margin held at 17.7%; however, operating margin fell to 4.1% on fixed cost absorption and possibly sales mix. The narrow gap between EBITDA and operating margin indicates limited D&A tailwind and suggests reported profitability largely reflects cash-like operations. operating_leverage: Revenue fell 5.5% YoY while operating income fell 22.0% YoY, indicating negative operating leverage. This implies a relatively fixed cost base and/or margin pressure (pricing/mix) amplifying the impact of lower volumes.

Growth Assessment

revenue_sustainability: The 5.5% YoY revenue decline suggests cyclical softness or demand normalization. Inventory of ¥3.60bn appears manageable versus current assets, but channel/inventory dynamics cannot be fully assessed without turnover data. profit_quality: Ordinary income exceeded operating income, implying favorable non-operating contributions. Net income decline (-14.2% YoY) was less steep than operating income, aided by non-operating items. The OCF/NI ratio of 2.82x supports that earnings were well backed by cash in the period. outlook: Near-term growth hinges on demand recovery in core end-markets and stabilizing gross margin through pricing and mix. Efficiency initiatives to reduce fixed costs would mitigate negative operating leverage in downturns. Given incomplete disclosure on capex, capacity expansion or maintenance trends remain uncertain.

Financial Health

liquidity:

• current_ratio: 257.4%
• quick_ratio: 217.7%
• working_capital: ¥14,289,529,000
• commentary: Strong liquidity buffer reduces refinancing risk and supports operations during weaker demand. solvency:
• debt_to_equity: 0.64x
• interest_coverage: 298.9x
• equity_base: ¥16,212,000,000
• commentary: Moderate leverage and exceptional interest coverage indicate low near-term solvency risk. Equity ratio was undisclosed; however, total equity is sizable relative to assets (assets ¥25.75bn vs equity ¥16.21bn). capital_structure: Leverage is conservative; financial flexibility is high given large working capital and low interest burden. No evidence of aggressive debt-funded growth.

Cash Flow Quality

earnings_quality: OCF/Net income at 2.82x indicates strong cash conversion, suggesting earnings are not reliant on accounting accruals this quarter. FCF_analysis: Investing cash flow was undisclosed; thus, free cash flow cannot be reliably calculated beyond noting that operating cash flow was ¥2.07bn. Without capex data, sustainability of cash generation after reinvestment cannot be assessed. working_capital: With inventories at ¥3.60bn and strong OCF, working capital appears to have been a source of cash. Detailed drivers (receivables/payables) were not disclosed, limiting granularity.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to undisclosed DPS; this should not be interpreted as no dividend. Without DPS and investing cash flows, a robust payout assessment is not possible. FCF_coverage: FCF coverage cannot be computed because investing cash flows are undisclosed. On a pre-investment basis, OCF of ¥2.07bn would provide ample coverage for a typical dividend, but this is indicative only. policy_outlook: Given strong liquidity and low leverage, the balance sheet could support stable shareholder returns; however, actual policy depends on capex needs and earnings trajectory, both partially undisclosed this quarter.

Risk Assessment

Business Risks:

• Demand cyclicality in core industrial and automation end-markets impacting volumes and pricing.
• Negative operating leverage from a relatively fixed cost base during downturns.
• Potential gross margin pressure from mix shifts and competitive pricing.
• Supply chain variability affecting lead times, inventory, and customer delivery.
• Customer concentration and project timing risk typical for B2B distribution.

Financial Risks:

• Limited visibility on capital expenditure and investing cash flows constrains FCF assessment.
• Equity ratio and cash balances undisclosed, reducing clarity on capital buffers.
• Exposure to interest rate changes is low currently, but refinancing terms could tighten if leverage rises.
• Working capital intensity may increase if demand rebounds unevenly, pressuring cash.

Key Concerns:

• Operating margin compression (4.1%) amid a 5.5% revenue decline signals cost rigidity.
• ROE at 4.52% is subdued, requiring margin or turnover improvement to enhance returns.
• Data gaps (cash, investing CF, DPS) limit evaluation of dividend capacity and long-term reinvestment needs.

Investment Implications

Key Takeaways:

• Revenue down 5.5% YoY with operating income down 22% YoY indicates negative operating leverage.
• ROE at 4.52% is driven by asset turnover and modest leverage; margin is the main constraint.
• Strong liquidity (current ratio 257%) and interest coverage (~299x) underpin low financial risk.
• OCF at ¥2.07bn and OCF/NI of 2.82x demonstrate strong cash conversion in the period.
• Incomplete disclosure on investing cash flows, cash balances, and DPS limits FCF and payout analysis.

Metrics to Watch:

• Topline momentum and order backlog to gauge demand recovery.
• Gross margin trajectory and pricing/mix management.
• Operating expense discipline to reduce negative operating leverage.
• Working capital turns (receivables, inventories, payables) and their impact on OCF.
• Disclosure of capex/investing CF and dividend policy updates.

Relative Positioning: Within Japan’s industrial distribution and automation ecosystem, the company shows conservative leverage and strong liquidity versus peers, but current profitability and ROE are on the lower side due to margin compression and negative operating leverage.

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