KOKUSAI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.95B
• Operating Income: ¥992M
• Net Income: ¥48M
• EPS: ¥49.49

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

For FY2026 Q2 (consolidated, JGAAP), 国際計測器株式会社 delivered strong top-line and operating momentum with revenue of ¥6,946 million, up 22.5% year over year. Gross profit reached ¥1,987.6 million, implying a gross margin of 28.6%, which, alongside tight operating cost control, supported operating income of ¥992 million (+314.4% YoY). Ordinary income of ¥1,086 million exceeded operating income, indicating positive non-operating contributions despite interest expense of only ¥12.6 million. Net income was ¥667 million (+1.0% YoY), showing a significant divergence versus operating profit growth, suggesting the presence of non-operating/extraordinary items or minority interests that weighed on bottom-line growth. DuPont decomposition shows a net margin of 9.60%, asset turnover of 0.336, and financial leverage of 1.72x, yielding an ROE of 5.56% for the period. The operating margin (approximately 14.3%) reflects meaningful operating leverage on higher volumes. Liquidity is strong with a current ratio of 230.5% and quick ratio of 221.1%, backed by ¥8,980.9 million in working capital. The company’s capital structure appears balanced with total liabilities of ¥9,239.3 million against total equity of ¥12,000 million (debt-to-equity of 0.77x). Although the reported equity ratio is shown as 0.0% (undisclosed), the computed equity ratio is approximately 58.1% (equity/total assets), indicating a conservative balance sheet. Cash generation quality is robust: operating cash flow of ¥1,730.9 million equates to 2.60x net income, evidencing strong earnings-to-cash conversion. Investing cash flow and cash & equivalents are shown as zero (undisclosed), limiting visibility into capex and cash balances; therefore, free cash flow cannot be reliably calculated from the provided data. Financing cash flow was an outflow of ¥462.4 million, likely reflecting debt repayment and/or shareholder returns, though dividends are shown as zero (undisclosed). Interest coverage is ample at 78.5x, reducing near-term refinancing risk. Overall, the first half demonstrates solid recovery in core profitability and healthy liquidity, but bottom-line growth lag and limited disclosures on cash, capex, and dividends temper visibility into full-year sustainability. Users should be mindful that several fields reported as zero are undisclosed, not actual zero values.

Profitability Analysis

ROE of 5.56% (DuPont) is driven by: net margin 9.60% × asset turnover 0.336 × financial leverage 1.72. The operating margin is roughly 14.3% (¥992m / ¥6,946m), a large expansion from the prior year implied by +314% YoY operating profit on +22.5% sales growth, indicating strong operating leverage as fixed costs were absorbed over higher volumes. Gross margin of 28.6% suggests improved mix/pricing or manufacturing efficiency versus the prior period (prior-year margin not provided), and opex discipline helped translate gross profit into operating profit. Ordinary income (¥1,086m) above operating income indicates positive non-operating balance, likely financial income or other recurring items, more than offsetting ¥12.6m interest expense. The net income was ¥667m; the gap from ordinary income points to extraordinary losses and/or non-controlling interests/tax impacts that diluted bottom line, despite reported income tax of ¥104m. EBITDA is ¥1,066.8m (15.4% margin), evidencing healthy cash earnings and relatively low D&A intensity (¥74.8m), which supports return on invested capital if maintenance capex remains modest. Overall margin quality appears sound, but the disparity between operating and net income growth flags below-the-line headwinds to monitor.

Growth Assessment

Revenue growth of +22.5% YoY demonstrates strong demand in the company’s measurement/instrumentation niches, possibly supported by project timing and end-market recovery. Operating income growth of +314.4% YoY indicates significant operating leverage, supported by a 28.6% gross margin and contained opex. However, net income growth of +1.0% YoY suggests transitory non-operating/extraordinary impacts or higher minority interests offsetting operational gains. Ordinary income (¥1,086m) above operating income signals some recurring non-operating tailwinds, but these were not enough to drive net income in line with EBIT growth. The sustainability of revenue growth will depend on order backlog, customer capex cycles, and export demand; these datapoints are not disclosed here. Profit quality is supported by OCF/NI of 2.60x, indicating cash-backed earnings, which bodes well for durability if working capital remains well managed. Given the strong H1, the outlook for full-year operating performance is favorable, but bottom-line volatility may persist if extraordinary items recur. Limited visibility on capex (investing CF undisclosed) constrains assessment of growth reinvestment needs and future capacity. In sum, topline and operating momentum appear sustainable near term, with the caveat of below-the-line noise and disclosure gaps.

Financial Health

Total assets are ¥20,646m, equity ¥12,000m, and liabilities ¥9,239m, implying a computed equity ratio of ~58.1% (despite the reported 0.0% being undisclosed), indicating a solid solvency buffer. Debt-to-equity of 0.77x (liabilities/equity proxy) reflects moderate leverage overall. Liquidity is strong with a current ratio of 230.5% and quick ratio of 221.1%, and working capital of ¥8,980.9m, suggesting ample short-term coverage. Inventories of ¥641.8m are small relative to current assets (¥15,864.6m), implying a balance sheet weighted toward receivables and/or cash equivalents (though cash is undisclosed). Interest coverage of 78.5x demonstrates very low financial strain from interest costs. Financing cash outflow of ¥462.4m indicates deleveraging and/or shareholder returns, both manageable given OCF of ¥1,730.9m. Overall solvency and liquidity appear robust, although the lack of disclosed cash and exact interest-bearing debt composition limits precision in assessing refinancing schedules.

Cash Flow Quality

Operating cash flow of ¥1,730.9m versus net income of ¥667m yields an OCF/NI ratio of 2.60x, indicating high earnings quality and favorable working capital dynamics. EBITDA of ¥1,066.8m versus OCF suggests healthy conversion after working capital and taxes. D&A is modest at ¥74.8m, implying limited non-cash earnings inflation. Investing cash flow is undisclosed (shown as ¥0), so free cash flow cannot be reliably determined; the reported FCF of 0 should be treated as missing, not zero. Without capex detail, we cannot distinguish maintenance versus growth investment, a key input for sustainable FCF. Financing CF was an outflow of ¥462.4m, likely debt repayment and/or dividends/share repurchases (dividend data undisclosed), and appears comfortably covered by OCF. Working capital appears well managed given strong OCF and relatively low inventories, but receivables timing and order advances are not disclosed. Overall, cash flow quality is strong on the operating side, with the main limitation being lack of capex and cash balance disclosure.

Dividend Sustainability

Dividend per share is shown as 0.00 and payout ratio 0.0% (undisclosed), so no firm conclusions can be drawn about current distributions. With OCF of ¥1,730.9m and strong liquidity metrics, the capacity to fund dividends appears adequate in principle, but the absence of investing cash flow (capex) data prevents a clean free cash flow assessment or coverage calculation. Financing cash outflow of ¥462.4m may include dividends and/or debt repayment; given undisclosed DPS and shares outstanding, we cannot allocate the mix. Policy stance (target payout ratio or DOE) is not provided, limiting visibility on medium-term return strategy. Near-term sustainability would depend on underlying FCF after maintenance capex; given modest D&A, maintenance needs may be manageable, but this remains an assumption until capex is disclosed.

Risk Assessment

Business Risks:

• Cyclical demand from industrial and electronics end-markets affecting order timing and utilization.
• Project concentration risk; slippage or cancellations could impact quarterly earnings volatility.
• Pricing pressure and competitive intensity in measurement/instrumentation niches.
• Supply chain constraints for electronic components and precision parts.
• Foreign exchange volatility impacting export competitiveness and translation effects.
• Potential extraordinary items or one-offs affecting net income visibility.

Financial Risks:

• Disclosure gaps on cash, capex, and equity ratio reduce transparency of true FCF and liquidity buffers.
• Potential working capital swings given large current asset base relative to inventories.
• Refinancing and interest rate risk appear low but debt composition and maturity profiles are not disclosed.
• Bottom-line sensitivity to non-operating/extraordinary items and minorities.

Key Concerns:

• Net income growth (+1.0% YoY) lagging operating income growth (+314.4% YoY), implying below-the-line headwinds.
• Investing cash flow and cash balance undisclosed, preventing robust FCF and liquidity analysis.
• Reported equity ratio, DPS, and share counts undisclosed, limiting capital policy assessment.

Investment Implications

Key Takeaways:

• Strong H1 operating recovery: revenue +22.5% YoY and operating income +314.4% YoY with a 14.3% operating margin.
• Healthy gross margin (28.6%) and EBITDA margin (15.4%) indicate solid margin quality.
• Robust liquidity with current ratio 230.5% and computed equity ratio ~58.1%.
• Cash conversion is strong: OCF/NI at 2.60x.
• Ordinary income exceeding operating income suggests favorable non-operating balance, but bottom-line impacted by other items.
• Visibility constraints: cash, capex, equity ratio (reported), DPS, and share data are undisclosed.

Metrics to Watch:

• Order backlog and book-to-bill for visibility into revenue sustainability.
• Capex and investing cash flows to refine FCF and reinvestment profile.
• Extraordinary gains/losses and minority interests to reconcile net income with operating performance.
• Working capital movements (receivables and advances) to sustain OCF strength.
• Gross and operating margin trends to gauge operating leverage durability.
• FX exposure and hedging effectiveness given potential export mix.

Relative Positioning: Within Japan’s measurement/instrumentation peer set, the company presents strong operating recovery, conservative balance sheet leverage (~58% equity ratio computed), and superior cash conversion in this period; however, disclosure gaps on capex, cash, and dividends limit comparability on FCF and shareholder return metrics versus more transparent peers.

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