TPR CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥90.34B
• Operating Income: ¥4.37B
• Net Income: ¥4.69B
• EPS: ¥74.76

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

TPR Co., Ltd. (TSE:6463) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability against a soft topline. Revenue declined 4.8% YoY to ¥90.3bn, reflecting cyclical softness likely tied to auto-related demand normalization and/or mix effects. Gross profit was ¥19.6bn, implying a gross margin of 21.7%, which remains solid for a capital-intensive components manufacturer. Operating income fell 9.2% YoY to ¥4.37bn, with an operating margin of 4.8%, indicating some operating deleverage as costs did not fully flex with lower volumes. Ordinary income rose to ¥6.77bn, well above operating income, suggesting meaningful non-operating gains (e.g., FX gains, equity-method and/or other financial income) offsetting modest interest expense of ¥0.17bn. Net income surged 48.0% YoY to ¥4.95bn, driven by the stronger non-operating line and possibly favorable extraordinary items or minority interest effects; this outperformance versus operating trends highlights a higher contribution from below-OP income. EBITDA was ¥10.79bn, yielding an 11.9% margin; the D&A burden of ¥6.41bn underscores capital intensity but also indicates healthy asset replacement and maintenance. On a DuPont basis, ROE calculates to 2.53%, based on a 5.48% net margin, 0.317x asset turnover, and 1.45x financial leverage—an equity-heavy, asset-intensive profile with low turnover dampening ROE despite conservative leverage. Liquidity appears robust: current ratio 233.8%, quick ratio 208.3%, and working capital of ¥85.6bn signal ample short-term coverage. Solvency looks sound with a debt-to-equity ratio of 0.48x and interest coverage of 26x, indicating manageable financial risk. Operating cash flow of ¥10.87bn represented 2.20x net income, evidencing strong cash conversion helped by working capital discipline and non-cash charges. However, key disclosures are missing: cash and equivalents, investing cash flow, dividends, shares outstanding, and equity ratio are shown as zero placeholders and should not be interpreted as actual values. Using reported totals, the economic equity ratio is approximately 68.8% (equity ¥195.8bn / assets ¥284.7bn), far from the reported 0.0% placeholder. Similarly, the displayed effective tax rate of 0.0% is not meaningful; with tax expense of ¥2.12bn and net income of ¥4.95bn, the implied pre-tax profit is roughly ¥7.07bn, suggesting a normalized effective tax rate around 30%. Overall, fundamentals indicate a conservatively financed, cash-generative business experiencing near-term top-line softness and operating margin pressure, offset by non-operating tailwinds. The quality of earnings this quarter is good on a cash basis but somewhat reliant on non-operating factors. Near-term outlook will hinge on demand elasticity in core end-markets, FX, and input cost trends. Data limitations constrain per-share and dividend analysis, so additional disclosures are needed for a complete assessment.

Profitability Analysis

ROE_decomposition: - Net profit margin: 5.48% (NI ¥4.953bn / Revenue ¥90.341bn); Asset turnover: 0.317x (Revenue ¥90.341bn / Assets ¥284.664bn); Financial leverage: 1.45x (Assets/Equity). Calculated ROE: 2.53%. The low asset turnover and conservative leverage cap ROE despite adequate margins. margin_quality: Gross margin 21.7% remains healthy, suggesting decent pricing and cost pass-through. Operating margin 4.8% is compressed versus gross margin, indicating SG&A/R&D and fixed-cost absorption pressures. Net margin uplift to 5.48% versus OP margin reflects sizable non-operating gains (ordinary income ¥6.77bn > OP income ¥4.37bn), which may be less recurring (e.g., FX). operating_leverage: Revenue declined 4.8% YoY while operating income fell 9.2% YoY, evidencing negative operating leverage and fixed-cost rigidity. EBITDA margin at 11.9% versus OP margin at 4.8% points to a meaningful D&A load (¥6.41bn), consistent with a capital-intensive base that can amplify leverage to volume recovery or further exacerbate deleverage if volumes soften.

Growth Assessment

revenue_sustainability: Topline contracted 4.8% YoY to ¥90.3bn, indicating cyclical or mix-driven softness. Without segment or geographic detail, sustainability is uncertain; reliance on autos and industrials implies sensitivity to global production schedules and FX. profit_quality: Net profit grew 48.0% YoY to ¥4.95bn despite lower operating profit, implying that non-operating items (likely FX or investment income) drove the upside. Cash realization is solid with OCF/NI at 2.20x, but repeatability of non-operating gains is less certain. outlook: If volumes stabilize and input costs ease, margins could recover via positive operating leverage, leveraging the existing fixed-cost base. Headwinds include potential demand moderation in autos, FX volatility impacting both revenue translation and non-operating lines, and persistent cost inflation. Near-term growth will be driven more by cost discipline and FX than by structural expansion absent new capacity or product mix improvements.

Financial Health

liquidity: Current ratio 233.8%, quick ratio 208.3%, working capital ¥85.56bn indicate strong short-term solvency. Inventories of ¥16.26bn look manageable relative to sales, though days metrics are not assessed due to period/reporting limitations. solvency: Debt-to-equity 0.48x and interest coverage 26.0x reflect conservative leverage and ample buffer against rate or earnings shocks. capital_structure: Total equity ¥195.81bn vs assets ¥284.66bn implies an economic equity ratio near 68.8% (reported 0% is an undisclosed placeholder). Leverage of 1.45x in the DuPont set confirms a balance sheet weighted toward equity funding, supporting resilience but constraining ROE.

Cash Flow Quality

earnings_quality: OCF of ¥10.87bn vs NI of ¥4.95bn (2.20x) indicates robust cash conversion, likely aided by non-cash D&A (¥6.41bn) and working capital inflows. This suggests earnings quality is solid in the period. FCF_analysis: Free cash flow cannot be reliably determined because investing cash flow is undisclosed (reported as zero placeholder). Given the capital intensity signaled by D&A, maintenance and strategic capex are likely material, so true FCF could be meaningfully below OCF. working_capital: Working capital is ample at ¥85.56bn. The strong quick ratio suggests limited dependency on inventory liquidation for liquidity. Without detailed working capital movement, the sustainability of OCF uplift from WC changes cannot be confirmed.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥74.76, but DPS is undisclosed (reported 0.00 is a placeholder). Consequently, payout ratio cannot be assessed from the provided data despite the displayed 0.0%. FCF_coverage: With investing cash flows undisclosed and FCF not observable, dividend coverage from FCF cannot be evaluated this quarter. policy_outlook: Absent dividend policy disclosure, we cannot infer adjustments. If historical policy targets stable or progressive dividends, current OCF strength and low leverage would support continuity, but confirmation requires actual DPS and capex data.

Risk Assessment

Business Risks:

• Demand volatility in automotive and industrial end-markets, affecting volumes and mix
• Negative operating leverage from fixed-cost base during downturns
• Input cost inflation (materials, energy) pressuring gross margins
• FX fluctuations impacting both operating results and non-operating items
• Supply chain disruptions affecting production schedules and inventory management

Financial Risks:

• Potential capex intensity reducing free cash flow in investment cycles
• Non-operating income volatility (e.g., FX gains/losses) driving earnings variability
• Concentration risk if customer base is narrow (not disclosed)
• Interest rate increases modestly affecting financing costs, albeit mitigated by low leverage

Key Concerns:

• Reliance on non-operating gains to support net income while operating profit declines
• Incomplete disclosures (cash balances, investing CF, DPS) limiting visibility on FCF and capital returns
• Low asset turnover dampening ROE despite strong balance sheet

Investment Implications

Key Takeaways:

• Topline down 4.8% YoY with operating income down 9.2% indicates negative operating leverage.
• Net income up 48.0% YoY, supported by non-operating gains; sustainability uncertain.
• Strong cash conversion: OCF/NI at 2.20x with sizable D&A underpinning cash flow.
• Balance sheet conservative: economic equity ratio ~68.8% and interest coverage 26x.
• Asset-intensive model with low asset turnover (0.317x) constrains ROE (2.53%).
• Liquidity robust: current ratio 234% and quick ratio 208%.
• Data gaps in investing CF, cash, and dividends limit FCF and capital return assessment.

Metrics to Watch:

• Operating margin trajectory and fixed-cost absorption as volumes normalize
• Non-operating income components (FX, equity-method, other) and volatility
• Capex and investing cash flows to gauge sustainable FCF
• Working capital movements (receivables, inventories) and OCF durability
• FX rates and raw material indices affecting gross margin
• Order trends and utilization in core auto-related lines
• Actual DPS and payout policy disclosures

Relative Positioning: Financially conservative with strong liquidity and low leverage relative to many auto components peers, but exhibits lower asset turnover and modest operating margins; earnings this quarter benefited more from non-operating items than core operations.

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