FUSO DENTSU CO.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥54.68B
• Operating Income: ¥3.43B
• Net Income: ¥2.52B
• EPS: ¥216.89

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

Fuso Dentsu Co., Ltd. (single-entity, JGAAP) delivered a strong FY2025 Q4 (full-year) performance, combining solid top-line growth with pronounced operating leverage. Revenue rose 16.9% YoY to ¥54.684bn, while operating income surged 83.8% YoY to ¥3.428bn, lifting operating margin to approximately 6.3%. Ordinary income reached ¥3.663bn and net income ¥2.517bn, implying a net margin of 4.60%. DuPont-calculated ROE stands at 16.34%, supported by a 4.60% net margin, 1.377x asset turnover, and 2.58x financial leverage. Cash generation was robust: operating cash flow (OCF) of ¥4.877bn equated to 1.94x net income, and free cash flow (FCF) was ¥3.946bn after ¥0.931bn investing outflows. Liquidity appears sound with a current ratio of 150.9% and working capital of ¥6.704bn, despite cash and inventories not being disclosed in the XBRL. The balance sheet shows total assets of ¥39.715bn, liabilities of ¥17.146bn, and equity of ¥15.407bn; computed equity ratio is roughly 38.8% (reported equity ratio is unfilled). Interest burden is negligible (¥0.78m), yielding an interest coverage ratio of over 4,300x, indicative of minimal financial risk from debt service. EBITDA was ¥3.631bn (6.6% margin), supported by modest D&A (¥203m), reinforcing that profit growth is predominantly operational rather than depreciation-driven. The effective tax rate shown as 0.0% is not reflective of the actual tax burden; using disclosed tax expense (¥648m) versus implied pre-tax profit suggests an effective rate around 20%–21%. A disclosure inconsistency exists between reported cost of sales and gross profit; the gross profit figure (¥8.451bn, 15.5% margin) aligns with the provided gross margin, while the cost of sales line appears defined under a different basis. No dividend was reported (DPS 0), so payout and FCF coverage metrics are not meaningful this period; however, cash flow capacity suggests potential flexibility pending policy. Overall, the company demonstrated improved profitability quality, strong cash conversion, and manageable leverage, albeit with some disclosure gaps typical of single-entity JGAAP reporting. Monitoring margin sustainability, working capital discipline, and order momentum will be key to assessing durability into the next fiscal year.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.60%
• asset_turnover: 1.377
• financial_leverage: 2.58
• calculated_ROE: 16.34%
• commentary: ROE is driven by healthy asset efficiency and moderate leverage; margin expansion from operating leverage materially contributed in FY2025. margin_quality:
• gross_margin: 15.5% (¥8.451bn gross profit; note: reported COGS appears inconsistent with this figure)
• operating_margin: 6.3% (¥3.428bn / ¥54.684bn)
• ordinary_margin: 6.7% (¥3.663bn / ¥54.684bn)
• net_margin: 4.60%
• EBITDA_margin: 6.6%
• commentary: Margin expansion reflects a favorable revenue mix and SG&A efficiency; low D&A (¥203m) indicates margins are not inflated by accounting effects. operating_leverage:
• revenue_growth_YoY: 16.9%
• operating_income_growth_YoY: 83.8%
• implied_operating_leverage: ≈5.0x (OI growth vs. sales growth)
• commentary: High incremental margins suggest better pricing, execution, and/or a shift toward higher-value projects/services.

Growth Assessment

revenue_sustainability: Top-line growth of 16.9% is strong for a systems/IT solutions-oriented business; sustainability will depend on backlog, renewal cycles, and public/private IT spend. profit_quality: Profit growth is supported by core operations (EBIT up strongly with minimal D&A and negligible interest expense), indicating genuine operating improvement rather than below-the-line gains. outlook: If mix and utilization remain favorable, mid-single-digit operating margins could be maintained or modestly improved. Key swing factors are order intake, project execution, and cost control amid potential hardware supply normalization and wage inflation.

Financial Health

liquidity:

• current_ratio: 150.9%
• quick_ratio: 150.9% (inventories not disclosed)
• working_capital: ¥6.704bn
• commentary: Strong short-term coverage, further underpinned by ¥4.877bn OCF; cash balance not disclosed, so actual liquidity buffer relies on receivables and payables quality. solvency:
• debt_to_equity: 1.11x (total liabilities/equity)
• interest_coverage: ≈4,395x (EBIT/interest)
• equity_ratio_computed: ≈38.8% (¥15.407bn/¥39.715bn)
• commentary: Moderate leverage with very low interest burden; solvency appears solid for a single-entity balance sheet. capital_structure: Balance tilts toward operating liabilities rather than interest-bearing debt; ability to self-fund growth is supported by FCF.

Cash Flow Quality

earnings_quality: OCF/NI of 1.94 indicates strong cash conversion; earnings are well-backed by cash. FCF_analysis: FCF of ¥3.946bn (OCF ¥4.877bn less investing outflows ¥0.931bn) provides capacity for reinvestment or shareholder returns. working_capital: Positive cash conversion suggests efficient billing and collections; specific components (AR, AP, inventory) are not disclosed, so sustainability of WC tailwinds requires monitoring.

Dividend Sustainability

payout_ratio_assessment: No dividend reported (DPS 0; payout 0%). Based on earnings and cash generation, the capacity to fund dividends exists, but policy is not disclosed. FCF_coverage: Not applicable this period; if a dividend were declared, current FCF would likely offer ample coverage. policy_outlook: Without guidance, dividend trajectory is uncertain; potential future payouts would hinge on capital needs, balance sheet targets, and management’s capital allocation priorities.

Risk Assessment

Business Risks:

• Project execution risk on fixed-price SI and infrastructure deployments affecting margins.
• Demand cyclicality tied to corporate IT budgets and public-sector spending.
• Vendor and product mix dependence potentially impacting gross margin.
• Human capital constraints and wage inflation in the IT services market.
• Supply chain/timing risk for hardware-dependent projects.

Financial Risks:

• Working capital swings affecting cash conversion (receivables collection and milestone billings).
• Customer concentration risk if large clients dominate revenue.
• Limited disclosure of cash and inventory balances complicates liquidity assessment.
• Potential increase in interest rates from low base could modestly raise financing costs (albeit current interest is minimal).

Key Concerns:

• Inconsistency between reported cost of sales and gross profit implies classification differences in disclosed line items.
• Effective tax rate shown as 0.0% conflicts with disclosed tax expense; actual tax burden appears around 20%–21%.
• Absence of dividend disclosure limits visibility on shareholder return policy.

Investment Implications

Key Takeaways:

• Strong operating leverage drove a step-up in profitability (OI +83.8% on sales +16.9%).
• ROE of 16.34% is attractive, supported by healthy asset turnover and moderate leverage.
• Cash generation is robust (OCF/NI 1.94; FCF ¥3.946bn), supporting self-funded growth.
• Liquidity and solvency are comfortable, with minimal interest burden.
• Data gaps (cash, inventories, share count) and line-item inconsistencies warrant cautious interpretation.

Metrics to Watch:

• Order backlog and book-to-bill to gauge revenue durability.
• Gross and operating margin trajectory, especially mix of services vs. hardware.
• Working capital days (DSO/DPO) to confirm sustained cash conversion.
• Capex and R&D/IT investment intensity vs. growth needs.
• Tax rate normalization and any changes in capital allocation/dividend policy.

Relative Positioning: Versus domestic mid-tier SI/integrators, profitability now sits in the mid-single-digit operating margin range with above-peer ROE, aided by strong asset turnover and disciplined costs; sustained performance depends on maintaining mix and execution advantages.

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