Subaru Enterprise Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥21.22B
• Operating Income: ¥3.59B
• Net Income: ¥2.40B
• EPS: ¥117.36

Income Statement

Balance Sheet

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

Subaru Kogyo (9632) reported FY2026 Q3 (cumulative) consolidated results under JGAAP showing resilient profitability despite a modest top-line contraction. Revenue declined 2.8% YoY to 212.23, but operating income rose 1.5% YoY to 35.92, indicating effective cost control and margin expansion. Gross profit was 50.47, implying a gross margin of 23.8%, while SG&A expenses were 15.09, equating to 7.1% of sales and 29.9% of gross profit. The operating margin reached 16.9% (35.92/212.23), which is strong for a services-heavy portfolio and signals improved operating efficiency. Ordinary income climbed to 36.76 with a 17.3% ordinary margin, supported by minimal net non-operating items (income 0.57, expenses 0.04). Net income fell 36.7% YoY to 15.13, creating a disconnect with operating trends; this appears largely explained by a substantial share of profit attributable to non-controlling interests inferred from the bridge between profit before tax, taxes, and net income. Specifically, profit before tax was 36.23 and taxes were 12.27 (effective tax rate 33.9%), implying about 8.83 attributable to non-controlling interests, which suppressed owners’ profit. The company’s DuPont profile shows a net margin of 7.1%, asset turnover of 0.504x, and financial leverage of 1.17x, yielding an ROE of 4.2% for the period. Balance sheet strength is a clear positive: equity totals 361.38 (85.8% equity ratio by our calculation), liabilities are just 51.99, and cash and deposits of 121.48 exceed total liabilities, indicating a net cash position. Liquidity is robust with a current ratio and quick ratio at 535.5%, and working capital of 166.92. Book value per share is 2,800.34 JPY and EPS is 117.36 JPY for the period, with a calculated payout ratio of 70.4% (dividend data otherwise unreported). Cash flow statements and capex are unreported, limiting assessment of earnings-to-cash conversion and reinvestment intensity. Despite the strong operating margin, the drop in net income underscores the importance of ownership mix and minority interest dynamics within the consolidated group. Overall, Subaru Kogyo demonstrates solid operational execution, a fortress balance sheet, and low financial risk, but headline earnings are sensitive to non-controlling interests and tax. Near-term focus should center on sustainability of margins amid softer revenue, clarity on cash flow generation, and dividend policy relative to free cash flow. Data gaps (notably OCF, capex, and some line-item details) constrain precision in cash flow and dividend coverage analysis, so conclusions are based on available non-zero disclosures.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.1%
• asset_turnover: 0.504
• financial_leverage: 1.17
• calculated_ROE: 4.2%
• interpretation: ROE is driven primarily by healthy margins and very low leverage; asset turnover is moderate, consistent with an asset-rich, cash-heavy balance sheet. margin_quality:
• gross_margin: 23.8%
• SG&A_to_sales: 7.1%
• SG&A_to_gross_profit: 29.9%
• operating_margin: 16.9%
• ordinary_margin: 17.3%
• net_margin: 7.1%
• comments: Despite revenue declining 2.8% YoY, operating margin expanded, implying disciplined cost control and favorable mix. Non-operating items are small; the main divergence from operating to net stems from taxes and high minority interests. operating_leverage:
• revenue_trend: -2.8% YoY
• operating_income_trend: +1.5% YoY
• assessment: Positive operating leverage effects evident as costs flexed favorably against a lower revenue base. The ability to hold or expand margins in a down-revenue quarter suggests structural efficiency improvements or mix benefits.

Growth Assessment

revenue_sustainability: Revenue of 212.23 declined 2.8% YoY, indicating some softness in demand or portfolio activity. Given the company’s service-oriented mix, recurring elements may offer baseline stability, but short-term momentum appears subdued. profit_quality: Operating income grew despite lower sales, evidencing robust cost discipline and potentially improved pricing or mix. Non-operating contributions are minimal; however, minority interest impact materially reduces profit attributable to owners. outlook: Near-term growth depends on top-line stabilization, maintaining elevated operating margins, and managing the ownership mix’s effect on bottom-line. Without cash flow and capex data, visibility on reinvestment-led growth is limited.

Financial Health

liquidity:

• current_ratio: 535.5%
• quick_ratio: 535.5%
• cash_and_deposits: 121.48
• working_capital: 166.92
• comment: Ample liquidity with cash exceeding total liabilities; near-term obligations are well covered. solvency:
• total_assets: 421.23
• total_equity: 361.38
• total_liabilities: 51.99
• equity_ratio_calculated: 85.8%
• debt_to_equity: 0.14x
• comment: Extremely strong solvency and low leverage; financial risk is minimal. capital_structure:
• owners_equity: 360.29
• retained_earnings: 331.75
• capital_stock: 13.31
• comment: Equity base is dominated by retained earnings, reflecting accumulated profitability and conservative financing.

Cash Flow Quality

earnings_quality: Operating profit strength suggests underlying earnings quality is solid, but lack of OCF disclosure prevents validation of cash conversion. FCF_analysis: Free cash flow cannot be assessed as operating cash flow and capex are unreported. The net cash position provides a buffer, but recurring FCF generation remains unverified in this period. working_capital: With current assets of 205.25 versus current liabilities of 38.33, the company exhibits a large working capital surplus; however, receivables and inventory details are unreported, limiting deeper analysis.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 70.4% against EPS of 117.36 JPY; actual DPS is unreported. A payout above 70% may be manageable given the net cash balance, but it leaves less room if earnings volatility persists. FCF_coverage: Unassessable due to unreported OCF and capex; cash on hand likely covers near-term dividends, but structural coverage by FCF cannot be confirmed. policy_outlook: Given strong balance sheet and historically conservative capitalization, the company could prioritize stable dividends; however, the high minority interest drag on owners’ profit and unknown FCF profile introduce caution.

Risk Assessment

Business Risks:

• Revenue softness (-2.8% YoY) may signal demand headwinds or cyclical exposure.
• Margin resilience could face pressure if mix tailwinds fade or input costs rise.
• Dependence on consolidated subsidiaries where ownership mix affects owners’ earnings.

Financial Risks:

• High payout ratio relative to owners’ net income could constrain reinvestment if FCF is weaker than earnings.
• Earnings sensitivity to minority interests reduces predictability of EPS.
• Data limitations (unreported cash flows and debt details) impede monitoring of cash generation and obligations.

Key Concerns:

• Large non-controlling interest allocation inferred (~8.83) materially suppresses net income to owners.
• Lack of OCF/FCF disclosure prevents assessment of dividend sustainability from cash generation.
• Top-line decline despite strong margins raises questions about growth durability.

Investment Implications

Key Takeaways:

• Strong operating margin (16.9%) and cost control offset softer revenue.
• Exceptional balance sheet with 85.8% equity ratio and net cash (cash 121.48 > total liabilities 51.99).
• ROE at 4.2% is restrained by low leverage and minority interest drag despite healthy operating economics.
• Net income decline (-36.7% YoY) is primarily mix/ownership driven rather than operational deterioration.
• Visibility on cash conversion and capex is limited due to unreported cash flow data.

Metrics to Watch:

• Revenue trajectory and same-store/segment growth indicators.
• Operating margin sustainability and SG&A ratio trends.
• Owners’ share of profit (impact from non-controlling interests).
• OCF and FCF once disclosed; capex intensity and maintenance vs. growth split.
• Dividend announcements vs. payout ratio and cash balance evolution.

Relative Positioning: Relative to domestic service and facility-operation peers, Subaru Kogyo exhibits superior balance sheet strength and above-average operating margin, but lower reported ROE due to minimal leverage and significant minority interest allocation.

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