MITSUBISHI MOTORS CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.26T
• Operating Income: ¥17.25B
• Net Income: ¥44.93B
• EPS: ¥-6.90

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

Mitsubishi Motors (7211) reported FY2026 Q2 (cumulative) consolidated results under JGAAP showing a sharp profitability contraction despite relatively stable top-line. Revenue was ¥1,261.3bn (-3.5% YoY), while operating income fell 81.0% YoY to ¥17.3bn, compressing operating margin to 1.37%. Gross profit was ¥283.1bn, implying a gross margin of 22.4%, but operating expenses absorbed most of the gross profit expansion potential, resulting in weak EBITDA of ¥53.7bn (4.3% margin). Ordinary income was ¥15.8bn, slightly below operating income due to net non-operating expense (~¥1.4bn) despite interest expense of ¥3.4bn, indicating some offsetting non-operating income. The period closed with a net loss of ¥9.2bn (net margin -0.73%), driven by tax expense of ¥23.0bn against modest pre-tax profit, likely reflecting deferred tax valuation effects, jurisdictional mix, or non-deductible items under JGAAP. DuPont-derived ROE was -1.02%, reflecting negative net margin, asset turnover of 0.584x, and financial leverage of 2.38x. Liquidity remains adequate with a current ratio of 138.6% and quick ratio of 112.1%, underpinned by working capital of ¥387.2bn. The balance sheet appears resilient: total assets were ¥2,158.8bn against equity of ¥907.8bn, implying an equity ratio of about 42.1% (the reported equity ratio field shows 0%, which appears to be undisclosed rather than zero). Operating cash flow was positive at ¥59.6bn, outpacing EBITDA slightly, suggesting non-cash charges and/or a working capital release supported cash generation despite the net loss. Investing cash flow and cash & equivalents were not disclosed (shown as 0), limiting assessment of capital intensity and liquidity buffers. Financing cash flow was a net outflow of ¥98.4bn, suggesting debt repayment and/or shareholder returns, though dividends and share data were not disclosed. The sharp drop in operating income versus a mild revenue decline indicates pronounced negative operating leverage, likely from mix, pricing/incentives, supply-chain costs, or FX headwinds. Relative to domestic auto peers, the 1.4% operating margin is low, and the sudden deterioration increases execution risk into 2H. Overall, the company maintains acceptable liquidity and moderate leverage, but earnings quality is mixed given tax-driven divergence between pre-tax profitability and bottom line. Data gaps (investing CF, cash balance, dividend details, share count) constrain full evaluation of capital allocation and per-share metrics. Outlook hinges on restoring margin via pricing, mix, and cost control, stabilizing tax effects, and maintaining disciplined working capital.

Profitability Analysis

ROE_decomposition: DuPont ROE = Net margin (-0.73%) × Asset turnover (0.584x) × Financial leverage (2.38x) = -1.02%. The negative ROE is driven primarily by the negative net margin despite decent asset turnover and moderate leverage. margin_quality: Gross margin was 22.4% (¥283.1bn/¥1,261.3bn), but operating margin compressed to 1.37% as SG&A and other operating costs absorbed most of the gross profit, indicating weak cost absorption and/or pricing pressure. EBITDA margin was 4.3%, low for scale auto OEMs, signaling limited cushion from D&A. Net margin of -0.73% was heavily impacted by tax expense of ¥23.0bn despite modest ordinary income, suggesting one-offs such as deferred tax valuation adjustments or non-deductible items. operating_leverage: Revenue declined 3.5% YoY while operating income declined 81.0% YoY, evidencing severe negative operating leverage. The sensitivity implies high fixed-cost burden and/or unfavorable mix and FX. Ordinary income (¥15.8bn) below operating income (¥17.3bn) indicates net non-operating headwinds (~¥1.4bn) including interest expense (¥3.4bn).

Growth Assessment

revenue_sustainability: Top-line decline of 3.5% YoY suggests volume/mix or regional softness, possibly compounded by FX and pricing discipline in select markets. Without segment/geographic disclosure, sustainability is uncertain, but inventory levels (¥266.2bn) relative to activity do not indicate pronounced overstocking at this stage. profit_quality: The divergence between ordinary income and net loss is driven by taxes and likely special items; pre-tax income implied at ~¥13.8bn (net -¥9.2bn + tax ¥23.0bn), with extraordinary losses of roughly ¥2.0bn versus ordinary income. Earnings quality is therefore constrained by below-the-line and tax effects rather than core operations alone. outlook: Recovery requires restoring operating margin via cost normalization (materials/logistics), mix improvement (SUV/EV/PHEV), disciplined incentives, and FX tailwinds. Stabilization of tax items is critical to convert operating profits into net profits. Given the 1H shortfall, 2H execution risk is elevated; guidance and order backlog (not disclosed) will be key to assess momentum.

Financial Health

liquidity: Current assets ¥1,391.1bn vs current liabilities ¥1,003.9bn yield a current ratio of 138.6% and quick ratio of 112.1% (ex-inventory). Working capital stands at ¥387.2bn, indicating adequate short-term coverage. solvency: Total liabilities ¥1,272.4bn vs equity ¥907.8bn imply a debt-to-equity of 1.40x and assets/equity leverage of 2.38x. While the reported equity ratio field is 0.0%, calculated equity ratio is ~42.1% (¥907.8bn/¥2,158.8bn), reflecting moderate solvency strength. capital_structure: Interest expense of ¥3.4bn with EBIT of ¥17.3bn implies interest coverage of ~5.0x, acceptable but with reduced headroom after the profit decline. Financing CF outflow of ¥98.4bn suggests net debt reduction and/or shareholder returns; precise mix is unclear due to missing breakdown.

Cash Flow Quality

earnings_quality: Operating CF of ¥59.6bn exceeds EBIT (¥17.3bn) and approximates EBITDA (¥53.7bn), indicating solid cash conversion supported by non-cash D&A and likely working capital inflows. The OCF/Net Income ratio (-6.46) is mechanically distorted by the net loss and tax effects, not necessarily indicative of weak cash earnings. FCF_analysis: Investing CF is undisclosed (shown as 0). Without capex details, free cash flow cannot be reliably determined; the reported FCF of 0 should be treated as not disclosed. Given positive OCF, FCF likely depends on capex intensity tied to product refresh, electrification, and tooling cycles. working_capital: Inventories are ¥266.2bn; with cost of sales at ¥1,024.3bn for the period, inventory-to-COGS is ~26%, not evidently excessive for an auto OEM mid-year, though days metrics cannot be derived precisely without period alignment. OCF outperformance vs EBITDA suggests some working capital release.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio fields are shown as 0, which should be treated as not disclosed. With a net loss in the period, a mechanical payout ratio would be non-meaningful. FCF_coverage: FCF coverage cannot be assessed as investing CF/capex is not disclosed and the provided FCF figure is a placeholder. Positive OCF suggests some capacity, but the sharp profit compression argues for prudence until earnings normalize. policy_outlook: Under JGAAP and typical OEM capital policies, dividends are anchored to sustainable earnings and balance-sheet capacity. Given negative net income in 1H and elevated execution risk, maintaining or adjusting dividends will depend on 2H recovery and cash balances (not disclosed).

Risk Assessment

Business Risks:

• High operating leverage: small revenue declines driving outsized profit contraction
• Input cost volatility (materials/logistics) and FX swings affecting pricing and margins
• Product mix and lifecycle risk, including EV/PHEV investment and competitiveness
• Regional demand softness and incentive intensity in key markets
• Supply-chain constraints and procurement risks

Financial Risks:

• Tax volatility and deferred tax valuation impacts leading to losses despite pre-tax profits
• Interest rate and refinancing risk, with reduced EBIT headroom (5.0x coverage)
• Working capital swings impacting cash generation
• Potential extraordinary losses under JGAAP affecting bottom line
• Limited visibility on capex and liquidity buffers due to undisclosed cash and investing CF

Key Concerns:

• Operating margin at 1.37% vs prior year’s much higher level (OI -81% YoY)
• Net loss of ¥9.2bn despite positive ordinary income
• Equity ratio field undisclosed; calculated ~42.1% mitigates but data gaps persist
• Investing CF and cash balance not disclosed, obscuring FCF and liquidity runway
• Dependence on 2H recovery to stabilize earnings and potential dividends

Investment Implications

Key Takeaways:

• Revenue decline was modest (-3.5% YoY) but profitability deteriorated sharply, indicating negative operating leverage.
• Net loss stems largely from tax and below-the-line effects despite positive operating and ordinary income.
• Liquidity and solvency are adequate (current ratio 1.39x; calculated equity ratio ~42%), providing some buffer.
• OCF positive and in line with EBITDA, but FCF unknown due to undisclosed investing CF/capex.
• Large financing outflow (¥98.4bn) suggests balance-sheet actions; clarity on dividends and debt movements is needed.

Metrics to Watch:

• Operating margin recovery and SG&A ratio trajectory
• Price/mix and incentive levels by region and model
• Capex and R&D cash outlays (when disclosed) to gauge FCF and electrification investment
• Tax rate normalization and deferred tax valuation adjustments
• Working capital trends (inventory and receivables) and OCF conversion
• Net debt/cash and cash & equivalents disclosure to assess liquidity headroom

Relative Positioning: Operating profitability (1.4% margin) trails major domestic peers, placing Mitsubishi Motors in a weaker earnings posture near term; balance-sheet strength is moderate, but execution on cost, mix, and tax normalization will determine catch-up potential.

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