Shimadzu Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥256.34B
• Operating Income: ¥31.58B
• Net Income: ¥21.32B
• EPS: ¥81.79

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

Shimadzu Corporation (7701) delivered steady H1 FY2026 results with modest top-line growth and improved profitability. Revenue rose 2.0% YoY to ¥256.3bn, while operating income grew 4.5% YoY to ¥31.6bn, indicating positive operating leverage. Gross profit of ¥108.9bn implies a robust gross margin of 42.5%, supporting resilient pricing and mix. Operating margin stands at 12.3%, and EBITDA margin at 16.1%, reflecting solid cost control and moderate fixed-cost absorption. Net income increased 10.9% YoY to ¥23.6bn, lifting net margin to 9.22% and underscoring improved below-OP items and tax effects. DuPont ROE is 4.60%, driven by a healthy net margin, modest asset turnover (0.381x), and conservative leverage (1.31x), pointing to structurally lower ROE chiefly due to capital intensity. Liquidity remains strong with a current ratio of 300% and a quick ratio of 246%, supported by ample current assets and low short-term pressure. The balance sheet is conservative: total liabilities are ¥174.1bn against equity of ¥514.0bn, for a debt-to-equity ratio of 0.34x. Interest burden is negligible (¥0.15bn), and interest coverage is exceptionally high at ~205x, indicating minimal financial risk from borrowing costs. Operating cash flow of ¥28.2bn exceeds net income (OCF/NI = 1.19), suggesting reasonable earnings quality and cash conversion. Inventory is ¥81.7bn; working capital is sizeable at ¥303.2bn, which supports delivery but can weigh on asset turnover. The reported effective tax rate of 0.0% appears non-representative; using disclosed taxes and ordinary income implies an effective tax rate of about 22.7%, consistent with domestic norms. Free cash flow and dividend data are not fully disclosed; Investing CF and DPS are shown as zero, which should be treated as unreported. Financing cash outflow of ¥16.4bn implies capital returns and/or debt changes, but details are not provided. Overall, the company exhibits stable growth, improving profitability, strong liquidity, and low financial risk; ROE is capped by moderate asset turnover and conservative leverage. Data limitations on equity ratio, cash balance, FCF, DPS, and share count constrain precision in capital allocation and per-share analyses. Outlook hinges on sustaining order intake in analytical/medical segments, managing inventories, and maintaining pricing amid FX and global demand variability.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 9.22%
• asset_turnover: 0.381x
• financial_leverage: 1.31x
• calculated_ROE: 4.60%
• commentary: ROE is primarily constrained by modest asset turnover and deliberate low leverage; margins are the strongest contributor. margin_quality:
• gross_margin: 42.5%
• operating_margin: 12.3%
• EBITDA_margin: 16.1%
• net_margin: 9.22%
• effective_tax_rate_estimate: ≈22.7% (¥7.1bn tax / ¥31.3bn ordinary income)
• commentary: Stable to improving margins indicate decent pricing power and cost discipline. Net non-operating items were slightly negative (ordinary income ¥31.35bn < operating income ¥31.58bn), but the impact is small. operating_leverage:
• revenue_growth_YoY: 2.0%
• operating_income_growth_YoY: 4.5%
• assessment: Positive operating leverage evidenced by OP growth outpacing sales. Fixed-cost absorption and mix likely contributed.

Growth Assessment

revenue_sustainability: Low-single-digit growth suggests steady demand across analytical instruments and medical systems. Sustainability depends on backlog, installed base consumables, service revenue, and geographic demand resilience. profit_quality: OP growth > sales growth and net income growth at 10.9% indicate improving profit mix and cost control. Interest expense is de minimis, so earnings quality is not masked by financial items. outlook: Near-term growth should track global capex and healthcare budgets; currency and China/US demand will matter. Maintaining pricing and product mix should support margins, while inventory normalization could aid cash conversion and asset turnover.

Financial Health

liquidity:

• current_ratio: 300.4%
• quick_ratio: 246.4%
• working_capital: ¥303.2bn
• commentary: Very strong liquidity with ample buffer to meet short-term obligations. solvency:
• debt_to_equity: 0.34x (liabilities/equity)
• interest_coverage: ≈205x (operating income/interest expense)
• commentary: Conservative capital structure and negligible interest burden imply low solvency risk. capital_structure:
• assets: ¥672.5bn
• liabilities: ¥174.1bn
• equity: ¥514.0bn
• equity_ratio_note: Reported 0.0% is undisclosed; based on totals, equity ratio would be high (~76%), indicating a strong balance sheet.

Cash Flow Quality

earnings_quality:

• OCF_to_Net_Income: 1.19x (¥28.2bn / ¥23.6bn)
• assessment: Cash conversion is healthy, supporting the credibility of earnings. FCF_analysis:
• operating_CF: ¥28.2bn
• investing_CF: Undisclosed (shown as 0)
• free_cash_flow: Not derivable due to undisclosed investing cash flows (capex).
• commentary: Absent capex data, true FCF and reinvestment intensity cannot be assessed; however, positive OCF suggests underlying capacity to fund investments and returns. working_capital:
• inventories: ¥81.68bn
• observations: Inventory levels are significant for the period; continued management of WIP/finished goods and lead times will be key to sustaining OCF.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are shown as 0, which should be treated as undisclosed. With NI of ¥23.6bn and healthy liquidity, there is capacity for dividends in principle, but policy and actual cash returns are not stated. FCF_coverage: Cannot assess due to undisclosed investing cash flow and DPS. policy_outlook: Without stated dividend data or guidance, infer policy discipline tied to earnings stability and investment needs; balance sheet allows flexibility.

Risk Assessment

Business Risks:

• Cyclical demand in analytical and industrial instrumentation affecting order intake.
• Healthcare capital equipment procurement timing and budget constraints.
• Geopolitical and trade frictions impacting export orders and service access.
• Technological competition from global peers in analytical instruments and life-science tools.
• Supply chain lead times and component availability affecting deliveries.

Financial Risks:

• Inventory build tying up working capital and pressuring asset turnover.
• FX volatility impacting margins and overseas demand.
• Potential increase in reinvestment needs (capex/R&D) reducing near-term FCF.
• Customer credit risk in downturns, despite strong liquidity.

Key Concerns:

• Moderate asset turnover structurally constrains ROE despite solid margins.
• Limited disclosure on investing cash flows and dividends obscures FCF and capital return visibility.
• Revenue growth at low-single-digit pace; sensitivity to macro and capex cycles.

Investment Implications

Key Takeaways:

• Steady H1 top-line with improving profitability; positive operating leverage.
• Strong balance sheet and liquidity; minimal interest burden.
• ROE at 4.6% is margin-driven but capped by asset intensity and low leverage.
• OCF exceeds net income, indicating decent earnings quality.
• Data gaps on capex/FCF and dividends limit capital allocation analysis.

Metrics to Watch:

• Order intake and backlog/book-to-bill across analytical and medical segments.
• Inventory turns and days; progress on working capital normalization.
• Capex and investing cash flows to gauge FCF and reinvestment.
• Geographic sales mix and FX sensitivity (esp. USD/CNY/EUR vs JPY).
• Operating margin trajectory and R&D intensity.
• Any updates to dividend/buyback policy.

Relative Positioning: Within Japanese analytical instrumentation and medical systems peers, Shimadzu shows stronger-than-average balance sheet resilience and solid margin structure, but delivers mid-pack growth and ROE constrained by asset turnover and conservative 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