Mitsuboshi Belting Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥45.87B
• Operating Income: ¥4.60B
• Net Income: ¥6.09B
• EPS: ¥137.45

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

Mitsuboshi Belting (5192) delivered stable topline and operating performance in FY2026 Q2, with revenue up 0.9% year over year to ¥45.87bn and operating income up 1.1% to ¥4.60bn, indicating resilient core demand in key segments such as automotive power transmission belts and industrial conveyor solutions. Gross profit reached ¥14.18bn, translating to a gross margin of 30.9%, which is solid for a rubber/industrial components manufacturer and suggests reasonable pricing discipline and input cost management. Ordinary income of ¥5.08bn exceeded operating income, implying positive net non-operating contributions (e.g., financial income or FX), albeit details are not disclosed. Despite steady operating performance, net income fell 36.5% YoY to ¥3.87bn, pointing to factors below the operating line and/or tax-related effects; the tax charge of ¥2.30bn looks elevated relative to operating/ordinary profit. The DuPont bridge shows a net margin of 8.44%, asset turnover of 0.351x, and financial leverage of 1.33x, producing an ROE of 3.94%, which is modest and primarily constrained by low asset turnover rather than leverage. The balance sheet remains very strong: equity is ¥98.31bn against total assets of ¥130.72bn, implying an equity ratio around 75% (the reported 0.0% equity ratio reflects non-disclosure, not zero). Liquidity is ample with a current ratio of 355% and a quick ratio of 278%, underscoring conservative working capital and a sizable cash/receivables buffer relative to obligations. Leverage is low, with total liabilities/ equity at 0.33x and interest expense of only ¥24m, yielding an interest coverage of roughly 191x—virtually no near-term financial strain. Inventory of ¥16.80bn appears proportionate to sales and provides operational flexibility; however, no cash flow statement is disclosed, limiting assessment of working capital cash conversion. Reported EBITDA and depreciation are undisclosed (zero placeholders), preventing an EBITDA-based lens and capex visibility; consequently, free cash flow cannot be evaluated from the provided data. Dividend information is not disclosed, so payout policy and cash returns cannot be assessed this quarter. Overall, the core business shows stable profitability and a fortress-like balance sheet, but the sharp YoY decline in net income highlights below-the-line volatility (taxes and/or extraordinary items) that bears monitoring. Outlook hinges on auto production volumes, industrial capex trends, FX, and raw material costs; with modest leverage and strong liquidity, Mitsuboshi is well-positioned to navigate cyclical fluctuations. Data limitations (notably cash flow and dividend disclosures) temper confidence in cash generation and capital allocation analysis for the period.

Profitability Analysis

ROE decomposition indicates profitability is driven more by margins than leverage: Net margin 8.44% × asset turnover 0.351 × leverage 1.33 = ROE 3.94%. The margin profile is sound at the gross level (30.9% GPM), suggesting input cost control and pricing resilience; operating margin of roughly 10.0% (¥4.60bn/¥45.87bn) is stable YoY given +1.1% OI vs. +0.9% revenue. Ordinary income exceeding operating income implies supportive non-operating items (e.g., FX or investment income), but the subsequent decline in net profit points to tax and/or extraordinary swings; implied tax burden appears elevated (taxes ¥2.30bn), suppressing net margin YoY. Operating leverage appears modestly positive: small revenue growth translated into slightly higher operating profit, indicating cost discipline and/or mix improvements. Given undisclosed depreciation, we cannot distinguish between gross and operating margin drivers attributable to D&A; however, the high interest coverage (191x) confirms negligible financial drag. The margin quality looks adequate for a niche engineered components supplier, with limited reliance on leverage to generate equity returns. Further ROE enhancement would require either higher turnover (asset efficiency) or sustained improvement in operating margin through mix and pricing.

Growth Assessment

Topline growth of +0.9% YoY to ¥45.87bn signals stable demand across end-markets, likely supported by steady automotive production and maintenance-driven industrial demand. Operating income growth of +1.1% YoY slightly outpaced sales, consistent with neutral-to-positive operating leverage and controlled overheads. The sharp -36.5% YoY decline in net income to ¥3.87bn indicates non-linearities below operating profit—potentially higher tax load, minority interests, or extraordinary losses/gains normalization; details are not disclosed. Ordinary income at ¥5.08bn above operating income suggests that core profitability was augmented by non-operating factors, but these did not translate into net profit growth due to tax/other items. Absent cash flow and segment disclosures, sustainability of growth is inferred from stable margins and low financial leverage rather than proven cash conversion. Near-term growth outlook remains tied to auto build rates, replacement/aftermarket demand, industrial capex cycles, and FX; a stable gross margin indicates manageable input costs, though rubber/chemicals price swings remain a risk. Without capex data, we cannot assess capacity expansion or technology investments, so medium-term growth visibility is limited.

Financial Health

Liquidity is strong: current assets ¥77.29bn vs. current liabilities ¥21.77bn yields a current ratio of 355% and quick ratio of 278%, indicating ample short-term coverage. Working capital totals ¥55.52bn, providing flexibility to absorb supply chain or demand shocks. Solvency is robust with total liabilities of ¥32.38bn against equity of ¥98.31bn; debt-to-equity of 0.33x implies a conservative capital structure. Implied equity ratio is approximately 75% (equity/assets), despite the reported 0.0% being an undisclosed placeholder. Interest expense is minimal at ¥24m, and interest coverage of ~191x underscores negligible financial risk from borrowing costs. The company appears under-levered, allowing capacity to fund growth or buffer downturns if needed. Lack of cash flow data is a limitation for assessing internal funding capacity and covenant headroom, but balance sheet metrics alone indicate strong financial health.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed this period (zeros are placeholders), preventing direct assessment of cash conversion, capex needs, and free cash flow. Consequently, the provided OCF/Net Income ratio and FCF are not usable. Earnings quality must be inferred from accrual-based metrics: stable gross and operating margins, low interest burden, and manageable inventory relative to sales suggest earnings are not propped up by financial leverage. However, without OCF we cannot validate working capital cash release/absorption or the timing of tax/other payments driving the net income decline. Depreciation is undisclosed, so we cannot separate cash vs. non-cash components in operating profit nor estimate maintenance vs. growth capex. Overall, earnings quality appears reasonable on the income statement, but cash flow validation is not possible with the current disclosure.

Dividend Sustainability

Dividend data (DPS, payout, FCF coverage) is not disclosed for this period, so we cannot evaluate payout ratio or coverage from free cash flow. Balance sheet strength and low leverage would typically support dividend resilience, but absent OCF and capex data we cannot confirm cash generation sufficiency. Policy outlook cannot be inferred without management guidance or historical payout trends in this dataset. We therefore refrain from conclusions on dividend sustainability for FY2026 Q2.

Risk Assessment

Business Risks:

• Cyclical exposure to automotive production volumes and industrial capex cycles affecting demand for belts and conveyor systems
• Raw material price volatility (rubber, synthetic polymers, chemicals) impacting gross margin
• Foreign exchange fluctuations (USD, EUR, CNY) influencing revenues and non-operating gains/losses
• Competition from global belt manufacturers and potential pricing pressure in OEM and aftermarket channels
• Technological shifts (EV architectures, new materials) altering product mix and qualification cycles
• Supply chain disruptions affecting lead times and inventory requirements

Financial Risks:

• Earnings volatility from non-operating items and taxes, as evidenced by net income decline despite stable operating profit
• Working capital swings not assessable due to absent cash flow disclosure
• Potential extraordinary items or minority interest effects not visible in current dataset
• FX-related P/L sensitivity given ordinary income above operating income

Key Concerns:

• Sharp YoY decline in net income (-36.5%) driven by below-the-line factors; sustainability of normalized net margin is uncertain
• Lack of cash flow disclosure prevents confirmation of cash generation and free cash flow coverage
• Undisclosed depreciation and capex obscure the maintenance vs. growth investment profile

Investment Implications

Key Takeaways:

• Core operations are stable: revenue +0.9% YoY and operating income +1.1% YoY with a 30.9% gross margin
• ROE at 3.94% is constrained mainly by low asset turnover (0.351x) rather than leverage
• Balance sheet is very strong with ~75% equity ratio (implied) and interest coverage ~191x
• Net income decline (-36.5% YoY) highlights below-the-line volatility (taxes/extraordinary), a key focus area
• Cash flow and dividend data are undisclosed, limiting visibility on cash generation and capital returns

Metrics to Watch:

• Pre-tax income bridge and effective tax rate trend (ordinary-to-net reconciliation)
• Gross and operating margin trajectory vs. raw material costs and pricing
• Asset turnover improvement and inventory turns
• Cash flow from operations and free cash flow once disclosed
• Capex levels and depreciation (maintenance vs. growth)
• FX gains/losses and non-operating income components

Relative Positioning: Within Japan’s industrial components and auto parts suppliers, Mitsuboshi exhibits above-average balance sheet strength and low financial risk, with mid-tier margins and modest asset turnover; earnings are less leveraged than peers but more exposed to below-the-line volatility in the current period.

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