ALMEDIO INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.16B
• Operating Income: ¥-340M
• Net Income: ¥361M
• EPS: ¥-14.65

Income Statement

Balance Sheet

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

Almedio Co., Ltd. (7859) reported FY2026 Q2 consolidated results under JGAAP showing a severe top-line contraction and continued losses amid a very strong balance sheet liquidity position. Revenue was ¥1,164 million, down 64.7% YoY, indicating substantial demand weakness or portfolio changes versus the prior-year period. Operating income was a loss of ¥340 million (−36.9% YoY), translating to an operating margin of approximately −29.2%, pointing to negative operating leverage as fixed costs could not be flexed down in line with revenue. Ordinary income was a loss of ¥344 million, close to operating loss, suggesting limited non-operating swings; interest expense was modest at ¥4.38 million. Net loss totaled ¥293 million (−49.6% YoY), with EPS of −¥14.65. The provided gross profit of ¥1,380.96 million and gross margin of 118.6% conflict with the reported revenue (¥1,164 million) and cost of sales (¥1,913.84 million); we therefore anchor margin interpretation on operating and net margins rather than the gross profit line. DuPont metrics show a net profit margin of −25.17%, asset turnover of 0.139x, and financial leverage of 1.11x, resulting in an ROE of −3.88%; weak profitability and low turnover are the primary ROE drags, while leverage remains conservative. The balance sheet is strong: total assets of ¥8,396 million versus total liabilities of ¥1,483 million imply a high equity cushion (total equity ¥7,545 million), and current assets of ¥7,515 million versus current liabilities of ¥1,015 million yield a current ratio of 740.6% and working capital of ¥6,500 million. Inventory of ¥311 million is modest relative to current assets, consistent with the high quick ratio of 709.9%. Despite negative earnings, the low reported interest burden (interest coverage −77.6x due to operating loss) and low debt-to-equity of 0.20x indicate low solvency risk near term. Cash flow statements are unreported (showing 0), so operating cash flow, free cash flow, and cash on hand cannot be assessed from this dataset; this is a key limitation. The equity ratio shown as 0.0% contradicts the reported equity and assets; based on totals, equity ratio is approximately 89.9%, suggesting the 0.0% is an unreported placeholder. Dividend per share is 0 with a payout ratio of 0%, reflecting loss-making conditions and/or a conservative policy. Overall, the quarter reflects a business under earnings pressure from a sharp revenue drop and negative operating leverage, buffered by a liquid and lightly leveraged balance sheet. Near-term trajectory hinges on revenue stabilization, mix improvements, and cost realignment. Monitoring H2 order trends, expense discipline, and any restructuring actions will be critical to gauge the path back toward breakeven.

Profitability Analysis

ROE_decomposition: DuPont inputs indicate Net Profit Margin −25.17%, Asset Turnover 0.139x, and Financial Leverage 1.11x, yielding ROE −3.88%. The primary headwinds are margin compression and very low asset turnover; leverage is not amplifying returns due to conservative capital structure. margin_quality: Operating income of −¥340 million on revenue of ¥1,164 million implies an operating margin of roughly −29.2%. The reported gross profit (¥1,380.96 million) exceeds revenue and conflicts with cost of sales (¥1,913.84 million), so gross margin is not reliable from this dataset. Net margin of −25.17% aligns with the reported net loss and revenue, reinforcing weak profitability at the bottom line. operating_leverage: The 64.7% YoY revenue decline versus a 36.9% improvement in operating loss indicates negative operating leverage persisted but was partially mitigated by cost actions. Fixed cost absorption remains an issue at the current revenue run-rate. Interest expense is small (¥4.38 million), so non-operating drag is limited.

Growth Assessment

revenue_sustainability: Revenue fell 64.7% YoY to ¥1,164 million, signaling either a cyclical downturn, loss of key programs, or portfolio changes. With asset turnover at 0.139x in H1, utilization appears low; sustaining this revenue level would likely keep margins negative without further cost adjustment. profit_quality: Ordinary income (−¥344 million) is close to operating income (−¥340 million), indicating limited distortion from non-operating items; however, the presence of income tax expense (¥221.64 million) during a net loss period suggests timing differences or non-recurring tax items under JGAAP. outlook: A return to break-even requires either meaningful H2 revenue recovery and/or incremental cost realignment. Given the strong liquidity and low leverage, the company has capacity to pursue restructuring and commercial initiatives. Visibility is constrained by absent cash flow and backlog data; watch order inflows and utilization trends.

Financial Health

liquidity: Current assets ¥7,514.80 million vs current liabilities ¥1,014.68 million yields a current ratio of 740.6% and quick ratio of 709.9%, implying ample near-term liquidity. Working capital stands at ¥6,500.11 million. Cash balance is unreported in this dataset. solvency: Total liabilities ¥1,483.21 million against total equity ¥7,545 million indicate a conservative balance sheet. Debt-to-equity is 0.20x, and interest expense is modest. The reported equity ratio of 0.0% is inconsistent with the totals; based on assets and equity, the equity ratio is approximately 89.9%, pointing to low solvency risk. capital_structure: Leverage is light (Financial Leverage 1.11x). The company appears primarily equity-funded, providing flexibility to absorb operating losses while pursuing turnaround measures.

Cash Flow Quality

earnings_quality: With operating and net losses, earnings quality assessment is constrained. The proximity of operating and ordinary losses indicates limited non-operating noise. The tax expense in a loss period warrants monitoring for one-off or timing impacts. FCF_analysis: Operating CF and Investing CF are unreported (0 placeholders). Free cash flow cannot be determined from this dataset. Given the strong working capital position, cash burn risk depends on actual cash on hand and the pace of operating losses. working_capital: Inventories of ¥311.32 million are modest relative to current assets, supporting the high quick ratio. Without cash flow statements, changes in receivables, payables, and inventory turnover cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: DPS is 0 and payout ratio is 0%, aligning with loss-making conditions (EPS −¥14.65). Maintaining a dividend would not be sustainable without profits or excess distributable reserves. FCF_coverage: Free cash flow is unreported; therefore, FCF coverage of dividends cannot be assessed. Given DPS is 0, coverage is a non-issue for the period. policy_outlook: Given ongoing losses and the apparent focus on liquidity preservation, a conservative dividend stance is likely to persist until earnings normalize and cash generation is demonstrably positive.

Risk Assessment

Business Risks:

• Severe revenue contraction (−64.7% YoY) suggesting demand loss or product/portfolio disruptions
• Negative operating leverage and fixed-cost absorption risk at low volumes
• Potential pricing and mix pressure affecting margins
• Execution risk around cost reductions and restructuring
• Customer concentration or end-market cyclicality (implied by volatility)
• Inventory obsolescence risk if demand remains weak
• Supply chain and lead-time uncertainties impacting fulfillment and costs

Financial Risks:

• Continued operating losses leading to cash burn (cash flow data unavailable)
• Tax expense during a loss period introduces earnings volatility under JGAAP
• Potential impairment or write-down risk if volumes do not recover
• Low asset turnover (0.139x) depressing ROA and ROE
• Reliance on working capital to fund operations if losses persist

Key Concerns:

• Inconsistency in gross profit and gross margin data versus revenue and cost of sales
• Absence of cash flow statements and cash balance, limiting assessment of runway
• Visibility on H2 demand recovery and order intake remains limited

Investment Implications

Key Takeaways:

• Top-line down 64.7% YoY to ¥1,164 million with operating loss of ¥340 million (margin ~−29.2%)
• ROE −3.88% driven by negative margins and low asset turnover; leverage modest at 1.11x
• Balance sheet liquidity is strong: current ratio 740.6%, working capital ¥6.5 billion
• Debt load is light (D/E 0.20x); interest burden minimal (¥4.38 million)
• Gross margin data unreliable; use operating and net margins for profitability tracking
• Cash flow and cash balance unreported, constraining assessment of cash burn and FCF
• Dividend suspended (DPS 0) consistent with losses and preservation of liquidity

Metrics to Watch:

• Quarterly revenue trajectory and order/backlog indicators
• Operating margin progression and fixed-cost reductions
• Asset turnover and inventory turns
• Operating cash flow and free cash flow once disclosed
• Cash and equivalents balance and any changes in net debt
• Non-operating and tax items affecting net income volatility

Relative Positioning: Within peers, Almedio currently exhibits weaker profitability and utilization (low turnover, negative margins) but stronger-than-average liquidity and conservative leverage, providing time to execute on revenue recovery and cost realignment.

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