LOBTEX Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.78B
• Operating Income: ¥68M
• Net Income: ¥83M
• EPS: ¥17.79

Income Statement

Balance Sheet

Cash Flow Statement

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

Robtex (TSE:5969) posted modest top-line growth in FY2026 Q2 with revenue of ¥2,784m, up 0.3% YoY, but profitability compressed sharply. Gross profit reached ¥891m, translating to a solid gross margin of 32.0%, yet operating income fell 50.3% YoY to ¥68m, implying significant operating deleverage and/or higher SG&A. Operating margin stood at 2.4%, well below the gross margin, indicating overhead pressures rather than manufacturing cost erosion alone. Ordinary income of ¥74m was slightly above operating income, suggesting net non-operating gains of about ¥6m. Net income came in at ¥33m (-58.8% YoY), for a net margin of 1.19% and EPS of ¥17.79, evidencing additional below-the-line drag. DuPont decomposition yields ROE of 0.68%, driven by a thin net margin (1.19%), low asset turnover (0.315x), and moderate leverage (assets/equity 1.81x). The combination of flat sales and steep profit decline signals either cost inflation, unfavorable mix, or increased selling and administrative spend that has yet to be matched by revenue growth. Cash conversion was strong: operating cash flow was ¥262m, nearly 8x net income, indicating favorable working capital movements and accrual quality this period. Liquidity is robust with a current ratio of 255.7% and quick ratio of 191.6%, supported by substantial working capital of ¥3,506m. The balance sheet appears sound: total assets were ¥8,834m and equity ¥4,878m, implying an equity ratio around the mid-50% range by calculation, notwithstanding the reported 0% placeholder. Leverage looks contained, with debt-to-equity at 0.77x and interest coverage at 4.8x. Inventories stood at ¥1,443m within current assets of ¥5,758m, underscoring the importance of turnover discipline amid soft operating profits. No dividends were reported for the period (DPS and payout ratio shown as 0), and free cash flow cannot be conclusively assessed given unreported investing cash flows. Overall, the company remains financially resilient with strong liquidity and acceptable solvency, but earnings quality is mixed: healthy cash generation contrasts with pressure on operating margins. Near-term priorities appear to be restoring operating margin via cost control and mix improvement while sustaining cash discipline.

Profitability Analysis

ROE (DuPont) of 0.68% = Net margin 1.19% × Asset turnover 0.315 × Financial leverage 1.81. The depressed ROE is primarily margin-driven; asset efficiency and leverage are secondary contributors. Gross margin of 32.0% is healthy for industrial tools, but the drop from gross profit to operating profit (to 2.4% operating margin) indicates elevated SG&A or weaker absorption. EBITDA was ¥180m for an EBITDA margin of 6.5%, giving some cushion over operating income but still modest. Ordinary income exceeded operating income by roughly ¥6m, showing minor non-operating support. Interest expense of ¥14.1m versus EBITDA produces an interest coverage of 4.8x, adequate but with limited headroom if EBIT weakens further. The steep YoY decline in operating income despite flat revenue implies high operating leverage and possibly higher fixed costs or marketing/sales investments. Net income was further pressured below operating level, pointing to tax or other below-the-line items weighing on bottom line. Overall margin quality is mixed: manufacturing margin appears intact, but overhead and other costs curtailed operating profitability.

Growth Assessment

Revenue rose 0.3% YoY to ¥2,784m, suggesting steady but muted demand. The disconnect between flat sales and a 50.3% YoY drop in operating income indicates that the growth profile is not yet translating into earnings growth. Profit quality this quarter benefited from strong cash conversion (OCF/NI 7.94x), but earnings quality is constrained by low operating margin and sensitivity to cost levels. Given inventory of ¥1,443m, sustaining growth will require careful turnover management to avoid working capital drag if sales soften. The slight positive ordinary income versus operating income shows limited non-operating tailwinds, not a structural growth driver. Absent disclosure on backlog or order intake, sustainability of revenue growth is uncertain, but current results suggest price/mix or cost recovery efforts lagged. Outlook hinges on restoring SG&A efficiency, improving capacity utilization, and potential pricing to offset input costs. If margins recover even modestly, ROE should improve due to the leverage multiplier and stable asset base. Near-term, the company’s growth algorithm appears volume-stable but margin-sensitive.

Financial Health

Liquidity is strong: current ratio 255.7%, quick ratio 191.6%, and working capital of ¥3,506m. The balance sheet is conservative with total assets of ¥8,834m and equity of ¥4,878m, implying assets/equity of 1.81x and an estimated equity ratio around 55% (reported 0% likely an undisclosed placeholder). Debt-to-equity at 0.77x indicates moderate leverage. Interest coverage at 4.8x is acceptable, though declining EBIT could narrow coverage if not stabilized. Current assets of ¥5,758m versus current liabilities of ¥2,252m provide significant short-term cushion. Inventories are sizable at ¥1,443m; maintaining turnover is important for liquidity quality. Cash and equivalents were undisclosed (shown as 0), so cash buffer cannot be directly assessed, but liquidity ratios suggest ample coverage.

Cash Flow Quality

Operating cash flow of ¥262m significantly exceeded net income of ¥33m (OCF/NI 7.94x), indicating strong cash realization driven likely by working capital inflows and non-cash charges (depreciation ¥112m). EBITDA-to-OCF conversion appears healthy given the scale of OCF, supporting earnings quality this period. Investing cash flows were not disclosed (shown as 0), so free cash flow cannot be reliably calculated; the reported FCF of 0 should be treated as missing rather than true zero. Financing cash outflow of ¥183m suggests debt repayment, dividends, or other financing uses; with DPS reported as 0, this likely reflects net debt service or other financing activities. Working capital is ample; the key is whether inventory and receivables remain well-managed to sustain positive OCF if sales growth stays muted. Overall, cash flow quality is favorable in this half, but persistence depends on continued discipline in working capital and capex levels (unreported).

Dividend Sustainability

No dividends were reported for the period (DPS 0, payout 0%), and free cash flow is not assessable due to unreported investing cash flows. With net income at ¥33m and strong OCF of ¥262m, internal funding capacity appears adequate, but capital allocation priorities (capex, debt service) are not fully visible. The balance sheet’s moderate leverage and strong liquidity suggest capacity to resume or maintain dividends if policy permits and profitability stabilizes. In the absence of disclosed dividend policy and full-year guidance, dividend sustainability cannot be conclusively evaluated; current data imply a conservative stance pending earnings recovery.

Risk Assessment

Business Risks:

• Operating leverage risk: small revenue changes causing large swings in operating income
• Raw material cost volatility (e.g., steel) pressuring margins
• Demand cyclicality in industrial tools/end-markets
• Product mix and pricing power uncertainty amid competitive landscape
• Inventory management risk impacting cash conversion and obsolescence
• Supply chain and logistics cost fluctuations

Financial Risks:

• Compression of interest coverage if EBIT weakens further
• Potential working capital reversal if sales soften
• Limited visibility on capex needs due to undisclosed investing cash flows
• Tax and below-the-line items causing volatility in net income

Key Concerns:

• 50.3% YoY decline in operating income despite flat revenue
• Low net margin (1.19%) dragging ROE to 0.68%
• High dependence on SG&A efficiency and cost control to restore margins
• Unreported items (cash balance, investing CF, equity ratio) limiting full assessment

Investment Implications

Key Takeaways:

• Top-line stable (+0.3% YoY) but profitability under pressure; operating margin 2.4%
• ROE subdued at 0.68% driven by thin net margin
• Strong liquidity (current ratio 256%, quick ratio 192%) and moderate leverage (D/E 0.77x)
• OCF robust at ¥262m, indicating good cash conversion this half
• Non-operating items modest; core recovery hinges on SG&A and cost control

Metrics to Watch:

• Gross margin and SG&A-to-sales ratio
• Operating margin trajectory and interest coverage
• Inventory turnover and receivables days
• Order trends/pricing actions and input cost indices
• Capex and investing cash flows (to assess true FCF)
• ROE progression via margin recovery and asset turnover

Relative Positioning: Financially resilient balance sheet with strong liquidity and moderate leverage positions the company defensively versus peers, but current-period profitability and ROE are below typical sector medians, suggesting a near-term focus on margin repair rather than growth acceleration.

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
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