Isuzu Motors Ltd. :ISUZY-US: Earnings Analysis: Q4, 2017 By the Numbers : July 3, 2017

Isuzu Motors Ltd. reports financial results for the quarter ended March 31, 2017.

Highlights

  • Summary numbers: Revenues of USD 5,007.37 million, Net Earnings of USD 219.74 million.
  • Gross margins narrowed from 18.20% to 16.37% compared to the same period last year, operating (EBITDA) margins now 9.45% from 12.40%.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 5007.37 4350.93 4646.35 4007.72 4427.24
Revenue Growth (%YOY) 13.1 18.56 13.53 3.31 -0.73
Earnings (mil) 219.74 275.29 153.79 213.3 303.93
Earnings Growth (%YOY) -27.7 25.93 3.36 -25.66 4.38
Net Margin (%) 4.39 6.33 3.31 5.32 6.86
EPS 0.28 0.35 0.2 0.27 0.37
Return on Equity (%) 2.68 3.39 1.81 2.58 3.88
Return on Assets (%) 5.49 6.84 3.58 5.11 7.95

Access our Ratings and Scores for Isuzu Motors Ltd.

Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, ISUZY-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if ISUZY-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 15.09% and earnings by -20.18% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 18.20% to 16.37%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 12.40% to 9.45% in this time frame. For comparison, gross margins were 17.12% and EBITDA margins were 12.01% in the previous period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

ISUZY-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 60.15 days from 64.21 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 9.22% to 6.46% and (2) one-time items that contributed to a decrease in pretax margins from 9.42% to 5.75%

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Isuzu Motors Ltd.

Company Profile

Isuzu Motors Ltd. engages in the manufacture, sales and service of motor vehicles, internal combustion engines and components. Its products include trucks, busses, pick up trucks and sport utility vehicles, powertrain, and industrial and marine engines. The company was founded in 1916 and is headquartered in Tokyo, Japan.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of ISUZY-US.