These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.
| Metric | Current Period | Year-Ago Period | YoY |
|---|---|---|---|
| Revenue | ¥6198.0B | ¥5721.9B | +8.3% |
| Operating Income | ¥381.5B | ¥270.3B | +41.1% |
| Profit Before Tax | ¥377.5B | ¥200.8B | +88.0% |
| Net Income | ¥276.2B | ¥156.5B | +76.5% |
| ROE | 3.6% | 2.1% | - |
In addition to price revisions and an improved product mix, lower raw material costs and foreign exchange effects combined to produce a results profile characterized by substantial operating income growth outpacing revenue growth. Revenue was ¥6,198.0B (+8.3% YoY), operating income was ¥381.5B (+41.1%), profit before tax was ¥377.5B (+88.0%), and consolidated net income was ¥276.2B (+76.5%). The operating margin improved to 6.2% from 4.7% in the previous year, an improvement of +1.4pt, with earnings growth substantially exceeding revenue growth. This was the defining characteristic of the current results.
【Revenue】Revenue increased 8.3% to ¥6,198.0B. The core Tires segment, which accounts for 86.2% of the business mix, led overall growth at +9.4%, followed by Sports at +3.1% and Industrial and Other Products at -2.6%. Price revisions and an improved product mix in Tires were the primary drivers of revenue growth.
【Profit and Loss】The gross margin improved to 31.3% from 29.1% in the previous year, an improvement of +2.2pt, supported by the penetration of price revisions and lower raw material and transportation costs. Meanwhile, the SG&A ratio rose to 24.9% from 24.1%, an increase of +0.8pt, partially offsetting the gross margin improvement. As a result, the operating margin improved by +1.4pt to 6.2% from 4.7% in the previous year. Financial income of ¥56.9B and financial expenses of ¥61.8B were broadly balanced, and the impact of non-operating income and expenses was minor. Profit before tax was ¥377.5B (+88.0%), while consolidated net income was ¥276.2B (+76.5%) after an effective tax rate of 26.8%. The results can be characterized as revenue and earnings growth led by improvements in the profitability structure on both the pricing and cost fronts, as earnings growth substantially exceeded revenue growth.
Segment-level operating income and loss were not disclosed. Based solely on revenue composition, Tires accounted for an overwhelming share at ¥5,344.4B (86.2% of the mix, YoY +9.4%). Sports generated ¥666.8B (10.8% of the mix, YoY +3.1%), while Industrial and Other Products generated ¥186.8B (3.0% of the mix, YoY -2.6%). Both segments recorded slower growth than Tires. The business portfolio is highly concentrated in Tires, resulting in a structure in which consolidated performance has significant sensitivity to tire demand and pricing trends.
【Profitability】The operating margin was 6.2%, improving +1.4pt from 4.7% in the previous year. The consolidated net profit margin was 4.5%, improving +1.8pt from 2.7% in the previous year. 【Cash Quality】Operating cash flow (OCF) was 1.36 times consolidated net income (¥375.4B ÷ ¥276.2B), indicating adequate cash backing for earnings. However, days inventory outstanding (DIO) was approximately 300 days, days sales outstanding (DSO) was approximately 122 days, and days payables outstanding (DPO) was approximately 155 days, resulting in a cash conversion cycle (CCC) of approximately 267 days and significant working capital accumulation. 【Investment Efficiency】ROE was 3.6% (based on consolidated net income for the period and equity at period-end), improving +1.4pt from 2.2% in the year-ago period. EPS was ¥98.40 (¥54.66 in the previous year, +80.0%), and BPS was ¥2,869.52 (¥2,724.44 in the previous year). 【Financial Soundness】The equity ratio was 49.9%, nearly unchanged from 49.0% in the previous year and remaining at a sound level. Total liabilities/equity improved slightly to 0.95x from 0.98x in the previous year.
Operating cash flow was ¥375.4B, down -46.8% from ¥705.8B in the previous year. Operating cash flow before changes in working capital totaled ¥569.4B, exceeding consolidated net income, but an increase in inventories had a negative impact of ¥462.1B, becoming a factor depressing OCF. An increase in trade payables provided partial relief at +¥82.8B. Investing cash flow was -¥450.6B, of which capital expenditures of -¥418.9B accounted for the majority, indicating an acceleration of growth and replacement investment. Financing cash flow was +¥33.1B, with increased funding through short-term borrowings and other sources offsetting dividend payments of -¥110.3B. Free cash flow, combining OCF and investing cash flow, was -¥75.2B, indicating that dividend payments could not be fully covered by internally generated cash alone, while cash and cash equivalents remained at ¥986.9B. Normalization of inventory levels will be key to future cash flow improvement.
The majority of earnings consisted of recurring operating business income, with limited impact from one-time factors. Outside operating income, financial income of ¥56.9B and financial expenses of ¥61.8B were recorded, resulting in a minor net burden of -¥4.9B. Equity in earnings of affiliates was +¥0.9B, a small amount. The effective tax rate was 26.8% (income taxes of ¥101.3B ÷ profit before tax of ¥377.5B), a normal level. Comprehensive income was ¥517.1B, exceeding consolidated net income of ¥276.2B by ¥240.9B, primarily due to a positive contribution of ¥235.8B from foreign currency translation adjustments. There was also a ¥232.9B gap between comprehensive income attributable to owners of the parent of ¥491.6B and net income attributable to owners of the parent of ¥258.65B, reflecting the effect of yen depreciation in increasing equity. Since OCF did not fall materially below the earnings level before changes in working capital, earnings quality from an accrual perspective can generally be assessed as sound.
The first-half progress rates against the full-year forecasts (revenue of ¥13,300B, operating income of ¥890.0B, and net income attributable to owners of the parent of ¥550.0B) were 46.6% for revenue, 42.9% for operating income, and 47.0% for net income. Compared with the standard 50% progress benchmark, operating income was particularly approximately 7pt below the benchmark, likely reflecting temporary cost burdens associated with the increase in the SG&A ratio and inventory build-up. The Company revised its earnings forecast during the quarter (with no revision to the dividend forecast). Given the seasonality weighted toward the second half, including the winter tire selling season, the progress of SG&A control and inventory normalization in the second half will be important points to monitor in assessing achievement of the full-year plan.
The interim dividend was ¥42, representing a +20.0% increase from ¥35 in the year-ago period. The full-year dividend forecast is ¥84, implying a forecast payout ratio of 40.1% based on forecast full-year EPS of ¥209.25. Share repurchases were virtually nonexistent (-¥0.0B), making dividends the primary component of shareholder returns. First-half free cash flow was -¥75.2B, meaning dividend payments of ¥110.3B could not be fully covered by internally generated cash alone. However, given the financial base of a 49.9% equity ratio and cash and cash equivalents of ¥986.9B, the improvement in cash flow accompanying inventory normalization in the second half will determine dividend cash coverage and requires monitoring.
Deterioration in working capital efficiency: Inventories increased by +¥513.6B (+17.2%) from the previous year, and the cash conversion cycle extended to approximately 267 days. Persistently high inventory levels could create risks of future discounting and inventory write-downs, as well as pressure on free cash flow.
Raw material and foreign exchange volatility risk: The improvement in the gross margin depends to a certain extent on lower raw material costs and favorable foreign exchange effects. A reversal in market conditions for natural rubber, crude oil, and other commodities, or in foreign exchange rates, could pressure the gross margin.
Slower operating leverage due to higher SG&A expenses: SG&A expenses increased +11.9% year on year (from ¥1,379.2B to ¥1,543.8B), exceeding revenue growth of +8.3%, while the SG&A ratio rose +0.8pt to 24.9%. If this trend continues, the benefits of gross margin improvement may not be fully reflected in operating income.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.2% | 9.7% (5.4%–23.7%) | -3.5pt |
| Net Profit Margin | 4.5% | 5.4% (1.3%–20.1%) | -0.9pt |
Both the operating margin and net profit margin are below the industry median, placing profitability somewhat toward the lower end of the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.3% | 10.6% (-3.4%–25.4%) | -2.3pt |
Revenue growth also slightly lags the industry median but remains within the IQR and is not an extreme underperformance.
※Source: Compiled by the Company
While the gross margin improved +2.2pt year on year, leading to an operating margin of 6.2% (+1.4pt YoY), the SG&A ratio rose +0.8pt. The balance between sustaining gross margin improvement and controlling SG&A expenses will determine future margin trends.
Inventories increased +¥513.6B (+17.2%), resulting in free cash flow of -¥75.2B. Although OCF was maintained at 1.36 times consolidated net income, normalization of working capital is an important point to monitor for second-half cash flow generation.
Full-year progress was 46.6% for revenue, 42.9% for operating income, and 47.0% for net income, with operating income particularly below the standard 50% progress benchmark. Given the seasonality weighted toward the second half, the progress of performance toward the full-year plan will be a key evaluation factor.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥2,711 |
| base | ¥2,770 |
| bull | ¥2,827 |
| Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥2,870 |
| Adjusted Forecast EPS | ¥230.8 |
| Cost of Equity r | 9.27% (10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Residual Income Persistence Coefficient ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 40.1% |
| Forecast EPS Confidence Adjustment | ×1.103 (based on the historical guidance achievement rate of peer companies in the same industry) |
| Implied PBR / PER |
Sensitivity: 2,694円〜2,850円 at ±1% for the cost of equity, and 2,767円〜2,772円 at ±0.1 for ω.
Notes:
(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee future share prices)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific issue. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and after consulting a professional as necessary.
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| 0.97x / 12.0x |