TOAMI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.09B
• Operating Income: ¥104M
• Net Income: ¥-66M
• EPS: ¥11.80

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

TOAMI Co., Ltd. (TSE:5973) reported FY2026 Q2 consolidated results showing modest top-line growth but muted profit conversion and weaker cash generation. Revenue rose 6.1% YoY to ¥9.094bn, while operating income was flat at ¥104m, indicating limited operating leverage in the period. Gross profit of ¥1.199bn implies a gross margin of 13.2%, but the operating margin remained thin at about 1.1%, suggesting SG&A and other operating costs largely absorbed gross profit gains. Ordinary income exceeded operating income at ¥120m, implying some support from non-operating items, while interest expense was modest at ¥10m. Net income was ¥67m (EPS ¥11.80), translating to a net margin of 0.74% and a very low calculated ROE of 0.62%. DuPont decomposition points to modest leverage (assets/equity of 1.75x), low asset turnover (0.477x), and thin net margin as the key ROE constraints. Liquidity appears sound with a current ratio of 142.8% and a quick ratio of 131.8%, supported by positive working capital of ¥2.89bn. Solvency looks conservative based on the balance sheet: equity of ¥10.886bn versus total assets of ¥19.073bn implies an equity ratio around 57% (the reported 0% equity ratio is an undisclosed placeholder). Cash flow quality is a concern this half, with operating cash flow of -¥31.7m despite positive earnings, likely reflecting working capital outflows. Financing cash inflow of ¥469.6m offset the negative OCF, indicating reliance on external funding during the period; details of its composition are not disclosed. Capex and investing cash flows are undisclosed (reported as zero), limiting free cash flow assessment; consequently the reported FCF and DPS figures should be treated as not disclosed rather than true zeros. Interest coverage remains comfortable at 10.4x, in line with low absolute debt service needs. Inventory is modest at ¥742m (about 8% of H1 sales), which helps quick liquidity but the direction of inventory and receivables is not disclosed. Overall, TOAMI delivered stable profits amid cost headwinds, but weak operating leverage and negative OCF tempered the quality of earnings. Data limitations (undisclosed cash, investing CF, and equity ratio) constrain certain conclusions, and first-half seasonality should also be considered when inferring full-year trends.

Profitability Analysis

ROE_decomposition: ROE 0.62% = Net margin 0.74% × Asset turnover 0.477× × Financial leverage 1.75×. The primary drag is the thin net margin and low asset turnover; leverage is moderate and not a key driver. margin_quality: Gross margin 13.2% supports the business model, but operating margin near 1.1% indicates SG&A and other operating costs absorbed most of the gross profit. Ordinary margin (~1.32%) benefited modestly from non-operating items. Net margin at 0.74% is thin for a metal products manufacturer, leaving limited buffer against input cost volatility. operating_leverage: Revenue grew 6.1% YoY but operating income was flat, implying negative operating leverage in H1. Cost controls did not convert incremental sales into operating profit, suggesting higher fixed cost absorption or increased SG&A/logistics/utilities offsetting gross profit gains.

Growth Assessment

revenue_sustainability: Top-line growth of 6.1% YoY is steady. Without order backlog or segment disclosure, sustainability is uncertain; however, modest inventory relative to sales suggests no excessive stock build. profit_quality: Ordinary income exceeded operating income (¥120m vs. ¥104m), implying non-operating support. With interest expense only ¥10m, non-operating gains likely came from other income; sustainability is unclear. Thin operating margin reduces resilience to input price swings (e.g., steel wire). outlook: Assuming stable demand and partial easing of input cost pressures, margins could improve in H2 if operating leverage normalizes. However, the H1 flat operating profit despite higher sales tempers confidence in near-term profit acceleration.

Financial Health

liquidity: Current ratio 142.8% and quick ratio 131.8% indicate comfortable short-term liquidity. Working capital is ¥2.892bn. Cash balance is undisclosed (cash & equivalents reported as zero placeholder), so cash-specific metrics cannot be assessed. solvency: Total equity ¥10.886bn vs. assets ¥19.073bn implies an equity ratio around 57% (reported 0% is undisclosed). Interest coverage 10.4x suggests manageable debt burden. Debt-to-equity of 0.76x (as provided) indicates moderate leverage, though the exact debt composition is not disclosed under JGAAP line items provided. capital_structure: Leverage is moderate with a conservative equity base. Financing CF inflow of ¥469.6m in H1 indicates incremental funding (debt or other), but details are not disclosed.

Cash Flow Quality

earnings_quality: OCF/Net income is -0.47, signaling that accounting earnings did not convert to cash in H1, likely due to working capital outflows (receivables/inventories) or timing effects. This weakens earnings quality for the half. FCF_analysis: Investing CF is undisclosed (reported as zero), preventing a reliable Free Cash Flow calculation. Given negative OCF in H1, underlying FCF likely trended weak unless capex was unusually low. working_capital: Inventories are ¥742m (~8% of H1 sales), a reasonable level; however, receivables and payables movements are not disclosed. Negative OCF suggests net working capital consumed cash in the period.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed (zeros are placeholders). With EPS at ¥11.80 in H1, any dividend capacity depends on H2 earnings and cash generation. FCF_coverage: FCF is undisclosed; OCF was negative in H1, which would limit cash dividend capacity absent balance sheet utilization. Assessment requires full-year OCF and capex. policy_outlook: Without disclosure of dividend policy or historical DPS, sustainability cannot be concluded. A relatively strong equity base supports flexibility, but cash generation needs to normalize.

Risk Assessment

Business Risks:

• Input cost volatility (steel wire and metal materials) compressing margins
• Demand cyclicality in construction, infrastructure, and industrial end-markets
• Limited pricing power evidenced by thin operating margins
• Potential reliance on non-operating income to support ordinary profit
• Execution risk in cost control and productivity improvements

Financial Risks:

• Negative operating cash flow in H1 indicating working capital pressure
• Moderate leverage (D/E 0.76x) with increased financing inflow in H1
• Interest rate risk on floating-rate borrowings (composition undisclosed)
• Data gaps on cash balances and capex hinder visibility on FCF

Key Concerns:

• Flat operating income despite 6.1% revenue growth (weak operating leverage)
• Thin net and operating margins limiting buffer against shocks
• OCF/NI of -0.47 indicating poor cash conversion in the period

Investment Implications

Key Takeaways:

• Top-line up 6.1% YoY but profits flat; operating margin ~1.1%
• ROE low at 0.62% driven by thin margins and low asset turnover
• Liquidity solid (current ratio 143%, quick ratio 132%); implied equity ratio ~57%
• OCF negative (-¥31.7m), weakening earnings quality; financing inflow ¥469.6m
• Interest coverage healthy at 10.4x; leverage moderate (D/E 0.76x)
• Data limitations on cash, investing CF, DPS, and equity ratio constrain analysis

Metrics to Watch:

• Operating margin and SG&A-to-sales in H2
• OCF recovery and working capital days (receivables, inventories, payables)
• Input cost trends (steel) and pricing pass-through
• Capex and investing CF disclosures to assess FCF
• Ordinary vs. operating income mix (sustainability of non-operating gains)
• Leverage and interest coverage as financing conditions evolve

Relative Positioning: Within Japan’s metal products and wire mesh niche, TOAMI exhibits conservative balance sheet characteristics but below-average profitability and cash conversion versus typical mid-cap industrial peers; execution on cost control and working capital will be pivotal to narrow the gap.

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
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