Mitsubishi Logisnext Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥317.74B
• Operating Income: ¥8.04B
• Net Income: ¥-696M
• EPS: ¥-6.66

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

Verdict: A weak FY2026 Q2 with margins compressed and bottom line slipping into a small loss, pressured by higher financing costs and likely one-off charges. Revenue declined 3.3% YoY to 3,177.4, with operating income down 48.0% YoY to 80.4 and ordinary income down 59.5% to 50.0. Operating margin fell to 2.5% from roughly 4.7% a year ago, a compression of about 217 bps. Gross margin held at 24.0%, but SG&A at 681.8 (21.5% of sales) limited operating leverage. Non-operating headwinds were pronounced: interest expense of 38.5 offset most non-operating income (10.6), dragging ordinary income to 1.6% margin. Profit before tax was just 17.7, implying additional special losses/adjustments below ordinary income, and the effective tax rate was an elevated 139.3%, driving net income to -7.1. Interest coverage is only 2.09x, indicating reduced cushion against higher borrowing costs. Leverage is heavy with total liabilities/equity at 3.15x (net debt about 1,311, vs equity 1,219), and ROIC of 1.6% is below cost-of-capital benchmarks. Liquidity is acceptable (current ratio 149.9%, quick 108.4%), but sits near the 1.5x comfort threshold. Cash generation quality cannot be assessed due to unreported cash flow data, creating uncertainty on working capital dynamics. Inventories of 783.3 (24.6% of sales) and receivables of 934.5 suggest meaningful capital tied up in the operating cycle. EPS turned negative on a basic basis (-6.66 JPY), highlighting earnings fragility; the large gap with diluted EPS likely reflects data timing or instrument effects. Forward-looking, the combination of soft demand, higher interest burden, and weak ROIC points to a focus on cost control, pricing/mix, and balance sheet discipline. Any recovery will require restoring operating margin and normalizing below-the-line items (tax/specials) while containing financing costs. Without OCF data, dividend capacity and capex headroom remain unclear. Overall, the quarter signals cyclical and financial headwinds that need decisive operational and capital structure responses.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-0.2%) × 0.628 × 4.15 ≈ -0.6% (matches reported). The biggest driver of the deterioration is the net profit margin turning slightly negative, driven by margin compression at the operating level (operating margin ~2.5% vs ~4.7% prior, ~-217 bps) and heavier below-the-line pressure (interest expense 38.5 and very high effective tax rate of 139%). Asset turnover at 0.628 appears modest for an industrial company and did not offset the margin slump. Financial leverage is high (assets/equity 4.15x), which amplifies outcomes but currently magnifies the negative margin into a negative ROE. Business reasons: softer revenue (-3.3% YoY), elevated SG&A intensity (21.5% of sales), and materially higher financing burden suppressed ordinary income; additional non-recurring losses and/or tax items pushed PBT and NI lower. Sustainability: the interest burden is likely persistent near-term unless deleveraging occurs or rates decline; the extraordinary/tax items appear one-off, but visibility is low. Concerning trend: operating deleverage is evident (operating income -48% vs revenue -3.3%), indicating cost absorption issues; SG&A growth vs revenue cannot be quantified, but SG&A ratio is high and a key watchpoint.

Growth Assessment

Top line contracted 3.3% YoY to 3,177.4, suggesting softer demand or shipment timing in core forklift/logistics equipment markets. Operating profit fell 48.0% YoY to 80.4, significantly outpacing the sales decline, indicating negative operating leverage and/or pricing/mix pressure. Ordinary income dropped 59.5% to 50.0 as interest expense rose to 38.5, consuming a large share of EBIT. Net income turned to a small loss (-7.1), impacted by a 139.3% effective tax rate and likely special losses between ordinary income and PBT. Profit quality skewed weak given the magnitude of non-operating drag; recurring operating margin needs to recover toward prior-year levels to stabilize earnings. With ROIC at 1.6% (well below 5% warning threshold), incremental growth investment must be more selective until returns improve. Outlook hinges on cost-down, price realization, footprint/productivity gains, and working capital normalization; any easing in financing costs would help, but management action on debt and SG&A intensity is more controllable.

Financial Health

Liquidity is adequate but not abundant: current ratio 149.9% (near the 1.5x comfort line) and quick ratio 108.4% are acceptable. No explicit warning for current ratio (<1.0) is triggered. Maturity profile: short-term loans of 419.4 are covered by cash of 191.4 plus receivables of 934.5 and other current assets, indicating limited near-term mismatch risk, though reliance on refinancing remains. Solvency/leverage: total liabilities/equity is high at 3.15x (warning), and interest coverage is weak at 2.09x vs a 5x comfort benchmark. Long-term loans stand at 1,083.1; net debt is approximately 1,311.2 (interest-bearing debt of ~1,502.6 less cash 191.4), implying net debt/equity ~1.08x. Equity stands at 1,218.7 with book value per share around 1,141.7 JPY. No off-balance sheet obligations were reported; disclosures are limited.

Cash Flow Quality

Operating cash flow was unreported, so OCF/Net Income and free cash flow cannot be assessed. As such, we cannot confirm whether the earnings shortfall is mitigated by working capital release or whether inventory/receivables built up. Interest expense of 38.5 indicates a meaningful cash burden that must be serviced by OCF; with EBIT at 80.4, cushion is modest. Without OCF and capex, sustainability of funding for capex and dividends is unclear. Potential indicators to monitor include inventory levels (783.3), receivables (934.5), and payables (613.4) for any signs of working capital strain or quarter-end optimization. No direct signs of manipulation can be concluded given missing cash flow detail.

Dividend Sustainability

Dividend data were not disclosed this quarter. The calculated payout ratio of -361% is not meaningful due to negative net income and absent DPS data. With NI negative and OCF unreported, coverage of any dividend by free cash flow cannot be evaluated. Given weak profitability (operating margin 2.5%, ROIC 1.6%) and elevated interest burden, maintaining or growing dividends would likely require either near-term earnings recovery or use of balance sheet capacity; the latter is constrained by leverage. Policy outlook is uncertain pending visibility on H2 recovery and cash generation.

Risk Assessment

Business Risks:

• Demand softness in forklifts/logistics equipment leading to negative operating leverage (revenue -3.3% YoY; operating income -48.0%).
• Pricing/mix pressure and cost inflation compressing operating margin (~2.5% vs ~4.7% prior).
• Execution risk on SG&A control given high SG&A ratio (~21.5% of sales).
• Potential one-off losses impacting PBT (gap between ordinary income 50.0 and PBT 17.7).
• Industry-specific: exposure to cyclical capex in warehousing, e-commerce logistics, and manufacturing end-markets.

Financial Risks:

• High leverage: total liabilities/equity 3.15x (warning) and net debt/equity ~1.08x.
• Weak interest coverage at 2.09x, sensitive to further rate increases or earnings dips.
• Elevated effective tax rate (139.3%) creating volatility in net income.
• Working capital intensity: inventories 783.3 and receivables 934.5 tie up cash amid lower profitability.
• Refinancing risk on short-term loans of 419.4 if credit conditions tighten.

Key Concerns:

• ROIC at 1.6% well below the 5% warning threshold, indicating poor capital efficiency.
• Negative net income (-7.1) despite positive operating income, due to non-operating and tax headwinds.
• Limited visibility on cash flow metrics (OCF/FCF unreported), constraining assessment of dividend and capex capacity.

Investment Implications

Key Takeaways:

• Margin compression is the core issue: operating margin ~2.5% vs 4.7% prior (-217 bps).
• Interest burden (38.5) and extraordinary/tax items pushed NI negative despite positive EBIT.
• Leverage is elevated (3.15x liabilities/equity), with thin interest coverage (2.09x).
• Liquidity is adequate (current 149.9%, quick 108.4%) but leaves limited buffer for shocks.
• ROIC at 1.6% underscores the need for profitability and asset turn improvements.

Metrics to Watch:

• Operating margin trajectory and SG&A ratio in H2.
• Interest coverage and progress on debt reduction/refinancing costs.
• Working capital turns: inventory and receivables vs sales.
• Effective tax rate normalization and any special gains/losses below ordinary income.
• OCF and FCF once disclosed, including capex and dividend coverage.

Relative Positioning: Within Japanese industrial/logistics equipment peers, the company currently screens weaker on profitability (low-single-digit operating margin, negative ROE), capital efficiency (ROIC 1.6%), and financial flexibility (high liabilities/equity and sub-3x interest coverage), while liquidity is acceptable but not strong. Recovery depends on restoring operating leverage and easing non-operating drags.

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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