TAKARA STANDARD CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥123.14B
• Operating Income: ¥8.71B
• Net Income: ¥3.88B
• EPS: ¥104.88

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

Takara Standard (7981) reported FY2026 Q2 (cumulative) consolidated results showing solid top-line growth and sharp profit expansion under JGAAP. Revenue rose 6.2% YoY to ¥123.1bn, supported by improved pricing and/or product mix as the housing-related market remains mixed. Gross profit reached ¥39.7bn with a gross margin of 32.2%, reflecting better input cost conditions and manufacturing efficiencies. Operating income increased 46.3% YoY to ¥8.7bn, lifting operating margin to approximately 7.1% from roughly 5.1% a year ago, indicating meaningful operating leverage. Ordinary income was ¥9.0bn and net income was ¥6.95bn, up 79.0% YoY, suggesting additional tailwinds from non-operating items and disciplined cost control. EBITDA was ¥12.4bn (10.1% margin), confirming improved earnings quality beyond accounting depreciation effects. Liquidity is strong: current ratio 254% and quick ratio 238%, with working capital of ¥97.3bn and modest leverage (total liabilities/equity of 0.43x). The DuPont decomposition indicates a net margin of 5.64%, asset turnover of 0.444x, and financial leverage of 1.44x, yielding an ROE of 3.60% for the period; on a simple annualized basis this could trend toward the mid-to-high single digits if performance sustains. Cash conversion is healthy with operating cash flow (OCF) of ¥9.20bn and OCF/Net income at 1.32x, implying earnings are backed by cash. Interest expense is minimal at ¥28m, and interest coverage is a robust 311x, underscoring low financial risk. While the provided “effective tax rate” metric shows 0.0%, available figures imply an approximate effective tax rate around 20% for the period. The balance sheet shows total assets of ¥277.3bn and equity of ¥193.1bn, consistent with conservative capital structure. Several items are undisclosed in the dataset (e.g., equity ratio, investing cash flows, cash balance, dividends, and share counts), so certain metrics (e.g., FCF and payout) cannot be confirmed from this extract. Despite disclosure gaps, the reported non-zero data points indicate improving profitability, strong liquidity, and low leverage. The near-term outlook hinges on sustaining pricing power, cost control, and demand trends in new housing and renovation markets.

Profitability Analysis

ROE (DuPont) = Net margin (5.64%) × Asset turnover (0.444x) × Financial leverage (1.44x) = 3.60% for the half-year period; on a run-rate basis, this could improve if margin gains persist and turnover normalizes over a full year. Operating margin is approximately 7.1% (¥8.714bn / ¥123.142bn), up ~200bps YoY, pointing to positive operating leverage as sales growth outpaced fixed cost inflation. Gross margin of 32.2% suggests improved input cost environment and/or mix (e.g., higher value-added enamel system kitchens/baths). EBITDA margin of 10.1% highlights incremental profitability beyond depreciation. Ordinary margin is approximately 7.3% (¥9.011bn / ¥123.142bn), indicating modest non-operating contributions. Interest burden is negligible (interest expense ¥28m), supporting clean operating-to-net translation. Overall margin quality appears improved, driven by pricing/mix and cost discipline, with scope to further scale margins if volumes and utilization hold.

Growth Assessment

Revenue grew 6.2% YoY to ¥123.1bn, a solid outcome given a mixed residential demand backdrop in Japan. Operating income rose 46.3% YoY to ¥8.7bn, evidencing substantial operating leverage from cost control and efficiency gains. Net income jumped 79.0% YoY to ¥6.95bn, benefiting from stronger operations and a benign non-operating/tax environment. The sustainability of revenue growth likely hinges on renovation demand, product differentiation (e.g., enamel technology), and pricing retention. Margin expansion appears driven by both better gross margin and contained SG&A growth; maintaining this may require continued procurement discipline and stable energy/logistics costs. Asset turnover of 0.444x is period-based and may trend higher on a full-year basis with seasonality and production normalization. With interest costs minimal, profit quality is primarily an operating question—execution on product mix and capacity utilization will be key. Near-term outlook is cautiously positive contingent on housing starts, consumer sentiment, and competitive pricing dynamics.

Financial Health

The company maintains a conservative balance sheet with total liabilities of ¥82.4bn against equity of ¥193.1bn (debt-to-equity proxy at 0.43x). Liquidity is strong: current assets of ¥160.4bn vs current liabilities of ¥63.1bn yield a current ratio of 254% and a quick ratio of 238%. Working capital stands at ¥97.3bn, providing ample buffer for operational needs and inventory procurement. Interest expense is only ¥28m, and interest coverage is 311x, indicating negligible solvency risk from financial charges. Asset base totals ¥277.3bn, and financial leverage is modest at 1.44x (Assets/Equity), consistent with a low-risk capital structure. While the reported equity ratio is shown as 0.0% in the data extract, this item appears undisclosed rather than truly zero; using available balances implies an equity ratio roughly in the high-60% range (Equity/Assets ≈ 69.6%). Overall solvency and liquidity profiles are robust.

Cash Flow Quality

Operating cash flow of ¥9.196bn exceeds net income of ¥6.949bn, yielding an OCF/Net income ratio of 1.32x, a positive indicator of earnings quality. Depreciation and amortization totaled ¥3.708bn, consistent with capital-intensive manufacturing but not excessive relative to EBITDA (D&A/EBITDA ≈ 30%). Free cash flow cannot be reliably computed from this dataset because investing cash flows and/or capital expenditures are undisclosed (reported as 0, which indicates unreported, not zero). Working capital details by line are limited; inventories are reported at ¥10.215bn, and high quick ratio suggests limited cash tied up in slow-moving stock as of period-end. Cash conversion appears healthy, but sustainability will depend on maintaining receivables discipline and inventory turnover. Given minimal interest burden, operating cash generation is the main determinant of internal funding capacity.

Dividend Sustainability

Dividend data (DPS, payout, and FCF coverage) are shown as 0.00/0.0%/0.00x, which indicates non-disclosure in this dataset rather than actual zero payments. With net income positive and OCF exceeding net income, internal capacity to fund dividends appears adequate, subject to actual capex needs and policy priorities. Payout ratio assessment is not possible without disclosed DPS or board guidance; historically, companies in this segment target stable dividends aligned with earnings stability. FCF coverage cannot be assessed without investing cash flows; capex requirements for manufacturing lines could be significant and would influence dividend headroom. Policy outlook will depend on management’s capital allocation between growth capex, maintenance capex, and shareholder returns.

Risk Assessment

Business Risks:

• Domestic housing starts softness or renovation demand volatility impacting volumes
• Raw material price fluctuations (e.g., steel, enamel inputs) and energy/logistics costs
• Competitive pricing pressure in system kitchens/baths and fixtures
• Product mix risk if premium enamel products underperform
• Execution risk on manufacturing efficiency and capacity utilization
• Supply chain disruptions affecting components and delivery lead times

Financial Risks:

• Potential capex upcycles elevating free cash outflows if investing ramps
• Working capital swings tied to receivables/inventory cycles
• Currency exposure on imported materials and overseas sourcing (if applicable)
• Limited operating leverage if sales growth slows, pressuring margins

Key Concerns:

• Sustainability of recent margin expansion amid competitive dynamics
• Visibility on investing cash flows and dividend policy due to disclosure gaps
• Sensitivity to macro conditions in housing and consumer sentiment

Investment Implications

Key Takeaways:

• Strong H1 profit momentum: revenue +6.2% YoY; operating income +46.3%; net income +79.0%
• Operating margin improved to ~7.1%, supported by better gross margin and cost control
• Robust liquidity (current ratio 254%, quick ratio 238%) and low leverage (liabilities/equity 0.43x)
• Cash conversion healthy (OCF/Net income 1.32x), indicating solid earnings quality
• ROE of 3.60% for the half-year; scope to improve if margin and turnover sustain
• Disclosure gaps on investing cash flows, cash balance, and dividends limit full FCF and payout analysis

Metrics to Watch:

• Operating margin trajectory and EBITDA margin sustainability
• Input cost indices (steel, energy) and pricing/mix retention
• Order trends in new housing vs. renovation and backlog visibility
• Working capital efficiency: receivables and inventory turnover
• Capex plans and investing cash flows (for FCF and dividend capacity)
• ROE progression (margin × turnover × leverage) on a full-year basis

Relative Positioning: Compared with domestic home equipment peers, Takara Standard exhibits a conservative balance sheet, strong liquidity, and improving margins, though overall ROE remains moderate; continued execution on mix, pricing, and cost discipline is key to closing the profitability gap with higher-ROE competitors.

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