RICOH LEASING COMPANY,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥170.89B
• Operating Income: ¥11.11B
• Net Income: ¥8.28B
• EPS: ¥203.00

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

Ricoh Leasing (TSE:8566) delivered solid top-line growth in FY2026 Q2, with revenue of ¥170.9bn, up 11.2% year over year, indicative of robust origination and asset growth in its leasing/financing portfolio. Despite this, operating income declined 2.6% YoY to ¥11.1bn, signaling margin pressure and/or higher operating costs and credit-related expenses. Net income fell more sharply by 24.4% to ¥6.26bn, suggesting non-operating headwinds (e.g., taxes, minority interests, valuation impacts) weighed more than operating trends. Gross profit was ¥23.94bn, implying a gross margin of 14.0%, while operating margin stood at 6.5%, a contraction versus revenue growth. The DuPont decomposition shows a net margin of 3.66%, asset turnover of 0.120x, and financial leverage of 5.92x, yielding an ROE of 2.59% for the period. For a financial services/lease company, the low asset turnover is structurally consistent with a balance-sheet-intensive model, while leverage is a key ROE driver. Interest expense was modest at ¥67m and interest coverage is very strong at about 166x, indicating conservative funding costs in the quarter. Liquidity appears ample with a current ratio of 3.45x and working capital of ¥795.0bn, though lease companies’ current/non-current classifications can differ from manufacturers. Solvency metrics show total liabilities of ¥1.142tn versus equity of ¥241.4bn, implying a debt-to-equity ratio of 4.73x and an equity-to-asset ratio around 16.9% based on reported totals. Ordinary income exceeded operating income (¥11.39bn vs. ¥11.11bn), so non-operating items were net positive, yet the sharp drop in net income points to heavier tax/minority interest drag or one-offs. Using net income and reported income tax, the implied effective tax burden appears elevated relative to profit trends, even though an “effective tax rate” is shown as 0.0% in the summary metrics (the 0.0% should be treated as undisclosed rather than zero). Cash flow statements were not disclosed in this dataset (all zeros), limiting an assessment of operating cash conversion and free cash flow. Dividend data were also not disclosed (DPS and payout shown as 0.00), so distribution policy cannot be inferred from this release. EPS of ¥203.00 is consistent with the net result, but share count data were not provided, preventing cross-checks of per-share metrics. Overall, the quarter shows healthy asset growth but weaker profitability conversion, with strong funding resilience and liquidity. The key debate centers on margin durability and credit costs in a rising-asset environment, alongside tax and minority interest effects that compressed bottom-line growth. Given the data limitations on cash flows and dividends, conclusions on cash-based earnings quality and payout sustainability must remain cautious.

Profitability Analysis

ROE decomposes to 2.59% = 3.66% net margin × 0.120x asset turnover × 5.92x leverage. The low asset turnover is typical for a leasing balance sheet, making margin and leverage the primary ROE levers. Operating margin of 6.5% (¥11.1bn OI on ¥170.9bn revenue) declined despite double-digit revenue growth, indicating negative operating leverage in the period—likely from higher SG&A, elevated credit costs/provisions, or mix effects with lower-yield assets. Gross margin at 14.0% suggests pricing/spread pressure or higher cost of funds embedded in cost of sales; however, reported interest expense (¥67m) is minimal at the non-operating line, so most funding costs are likely included above operating income under JGAAP lease accounting. Ordinary income (¥11.39bn) slightly exceeded operating income, implying net positive non-operating contributions (e.g., equity-method income, other non-operating income). The steep drop in net income (−24.4% YoY) relative to a modest decline in operating income suggests heavier tax/minority interest or non-recurring items affected the bottom line. Interest coverage is very strong at ~166x, underscoring low sensitivity to interest cost in this quarter. Overall margin quality appears pressured, with top-line growth not fully translating to operating profit, and bottom-line sensitivity elevated due to below-the-line items.

Growth Assessment

Revenue growth of 11.2% YoY to ¥170.9bn points to strong business volume and asset expansion. However, operating income decreased 2.6% YoY, indicating revenue growth did not translate into proportional operating profit—suggesting pricing pressure, higher operating costs, or higher credit costs amid growth. Net income declined 24.4% YoY, highlighting that non-operating and tax/minority items were material headwinds; this gap raises questions on the repeatability of the net result. Gross profit of ¥23.94bn and operating income of ¥11.11bn imply that incremental margins weakened, a sign of limited operating leverage in the quarter. With ordinary income (¥11.39bn) above operating, non-operating drivers were supportive, but not enough to offset tax/minority impacts at the net level. Sustainability of revenue growth will depend on origination quality, yields on new assets, and credit cost normalization. Profit quality hinges on maintaining spreads, controlling credit costs, and managing funding costs in a changing interest environment. Near-term outlook is mixed: strong demand supports revenue, but margin restoration and control of below-the-line drags are needed to stabilize net income growth.

Financial Health

Total assets are ¥1.429tn, liabilities ¥1.142tn, and equity ¥241.4bn, implying a leverage (liabilities/equity) of 4.73x and an equity-to-asset ratio near 16.9% based on provided totals. Liquidity is strong on reported figures: current assets ¥1.119tn vs. current liabilities ¥324.5bn, yielding a current and quick ratio of 3.45x and working capital of ¥795.0bn. For a leasing company, such liquidity cushions are positive, though current/non-current labels can differ from industrials. Interest expense is only ¥67m with operating income of ¥11.11bn, producing an interest coverage ratio ~166x—ample headroom to absorb funding cost volatility in the quarter. Capital structure reflects a typical leasing profile with meaningful leverage; absolute equity of ¥241.4bn provides a buffer against credit losses. Ordinary income exceeding operating income indicates some diversification of earnings sources, which can be supportive to solvency if recurring. Overall, balance sheet strength appears adequate, with robust liquidity and manageable leverage for the business model.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed in this dataset (reported as zero placeholders), so we cannot assess cash conversion or free cash flow. Consequently, the OCF/Net Income ratio of 0.00 and FCF of 0 should be treated as unavailable rather than actual values. Earnings quality must be inferred from the income statement: operating income fell despite strong revenue growth, which may reflect higher credit costs and/or operating expenses, potentially pressuring cash conversion if provisions and receivable build are elevated. Working capital is positive at ¥795.0bn, but changes in receivables/lease investment balances—key to cash use in a growth phase—are not disclosed here. Without CF data, we cannot determine whether net income is supported by operating cash inflows or whether growth is consuming cash. Monitoring future disclosures for OCF relative to net income and for capex/lease asset investment outlays will be critical to judge sustainable free cash generation.

Dividend Sustainability

Dividend data were not disclosed in this dataset (DPS and payout ratio shown as 0.00 are placeholders). EPS is ¥203.00, but without reported DPS and cash flow statements, we cannot evaluate payout ratio, free-cash-flow coverage, or alignment with any stated dividend policy. Given the decline in net income and lack of OCF/FCF data, visibility on dividend sustainability is limited from this release alone. Assessment should be revisited when actual DPS and cash flow figures are available.

Risk Assessment

Business Risks:

• Margin compression risk as revenue growth outpaces operating profit growth (6.5% operating margin vs. 14.0% gross margin).
• Credit cost risk tied to macro conditions and asset quality in the leasing/financing portfolio.
• Spread pressure from funding cost changes and competitive pricing in new originations.
• Concentration risk in certain asset classes or customer segments (not disclosed here).
• Regulatory/accounting changes affecting lease recognition and earnings volatility.

Financial Risks:

• Leverage at 4.73x liabilities/equity increases sensitivity to credit losses.
• Tax and minority interest impacts drove a larger decline in net income (−24.4% YoY) than operating income (−2.6%), adding bottom-line volatility.
• Cash flow visibility is low due to undisclosed OCF/FCF, limiting analysis of cash-based earnings quality.
• Potential funding market volatility, even though interest coverage is currently very strong (~166x).

Key Concerns:

• Disconnect between double-digit revenue growth (+11.2% YoY) and declining operating income (−2.6% YoY).
• Sharp decline in net income (−24.4% YoY), implying significant below-the-line drags.
• Insufficient disclosure on cash flows and dividends in this dataset, constraining payout and FCF assessment.

Investment Implications

Key Takeaways:

• Top-line growth is robust at +11.2% YoY to ¥170.9bn, indicating healthy origination/asset growth.
• Operating margin compressed to 6.5%, with operating income down 2.6% YoY despite revenue growth.
• Net margin is 3.66% and ROE is 2.59%, with leverage (5.92x in DuPont) a key ROE driver.
• Interest coverage is very strong (~166x), underscoring funding cost resilience this quarter.
• Balance sheet shows ¥241.4bn equity and 4.73x liabilities/equity, consistent with a leasing model.
• Cash flow and dividend data are undisclosed here, limiting assessment of cash conversion and payout capacity.

Metrics to Watch:

• Operating margin trajectory and spread/yield on new originations.
• Credit costs and asset quality indicators (NPLs, write-offs, provision ratios).
• Ordinary-to-net income bridge (tax rate, minority interests, one-offs).
• OCF relative to net income and FCF once disclosed.
• Funding mix and cost of funds relative to asset yields.
• Equity ratio and leverage trends as assets grow.

Relative Positioning: Within Japan’s leasing/financial services peers, Ricoh Leasing shows strong revenue momentum and robust interest coverage, but weaker operating leverage and lower period ROE (2.59%) due to margin compression and heavier below-the-line impacts; balance-sheet leverage and liquidity are broadly in line with sector norms.

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