MITSUBA Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥167.34B
• Operating Income: ¥9.94B
• Net Income: ¥7.42B
• EPS: ¥133.40

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

Mitsuba Co., Ltd. reported FY2026 Q2 consolidated results under JGAAP showing modest top-line and profit declines but overall resilient profitability and cash generation. Revenue decreased 2.0% YoY to ¥167.3bn, with operating income down 3.2% to ¥9.94bn and net income down 3.8% to ¥6.52bn. Despite the softening, margins remained stable: gross margin was 15.9%, operating margin approximately 5.9%, and net margin 3.9%, indicating disciplined cost control amid a challenging auto parts demand environment. The DuPont ROE of 5.58% reflects moderate profitability supported by reasonable asset utilization (asset turnover 0.505x) and notable financial leverage (2.84x). Ordinary income of ¥10.29bn outpaced operating income, implying supportive non-operating items or interest income offsets versus interest expense of ¥1.19bn. Cash generation was strong relative to earnings, with operating cash flow of ¥15.81bn equating to an OCF/Net Income ratio of 2.42x, suggesting robust cash conversion and/or working capital release. Liquidity appears sound, with a current ratio of 138% and a quick ratio of 132%; working capital stands at ¥58.37bn. Leverage is meaningful (Debt-to-Equity of 1.90x using total liabilities as a proxy), but interest coverage at 8.4x indicates comfortable debt service capacity at current earnings levels. The company reported an annual DPS of ¥0.00, implying a conservative stance on shareholder returns, likely to preserve balance sheet flexibility or fund strategic needs. Investing cash flow and cash balances were not disclosed in the dataset (zeros indicate unreported), limiting visibility into capex and free cash flow; thus, free cash flow cannot be reliably assessed from the provided data. The effective tax rate printed as 0.0% appears unreported; using disclosed tax expense of ¥1.64bn implies an estimated tax rate near 20% if referenced to pre-tax profit approximated from net income and tax expense. Inventory levels are modest relative to current assets, helping sustain a strong quick ratio and reducing near-term liquidity risk. Overall, Mitsuba demonstrates resilient operating efficiency and cash generation despite slight top- and bottom-line pressure. The medium ROE reflects margin discipline but also capital intensity and leverage dependence. Near-term priorities likely include maintaining margin pass-through to OEMs, managing input costs and FX, and calibrating capex to demand. Data gaps around investing cash flows, cash balances, and share data constrain a complete assessment of capital allocation and per-share metrics.

Profitability Analysis

ROE_decomposition: ROE 5.58% = Net profit margin 3.90% × Asset turnover 0.505 × Financial leverage 2.84. This reflects moderate profitability on sales, relatively low asset turns typical of capital-intensive auto parts, and a meaningful leverage multiplier. margin_quality: Gross margin 15.9% (¥26.62bn/¥167.34bn) indicates reasonable value-add after cost of sales. Operating margin ~5.9% (¥9.94bn/¥167.34bn) remains stable despite a 3.2% YoY decline in operating income, suggesting good cost containment. Ordinary margin ~6.2% (¥10.29bn/¥167.34bn) benefits modestly from non-operating items. Net margin 3.9% reflects tax and interest drag consistent with the capital structure. operating_leverage: Revenue fell 2.0% YoY while operating income declined 3.2% YoY, implying modest negative operating leverage. Cost structure appears reasonably flexible, limiting downside, but fixed-cost absorption pressure remains evident in a high fixed-asset/overhead business.

Growth Assessment

revenue_sustainability: Top line decreased 2.0% YoY to ¥167.3bn, indicating tempered demand or pricing pressure, likely tied to OEM production schedules and model mix. Asset turnover of 0.505x underscores the structural capital intensity and limits rapid growth without additional asset productivity gains. profit_quality: Net income declined 3.8% YoY to ¥6.52bn, slightly worse than revenue, consistent with mild negative operating leverage. However, operating margin and ordinary margin stability point to disciplined expense control and possibly improved non-operating contributions. outlook: Near-term growth hinges on OEM volume recovery, product mix (e.g., electric motor and actuator content per vehicle), FX effects (weaker JPY supportive for exports and translation), and raw material/input cost trends. Maintaining price pass-through to OEMs and capturing EV-related content opportunities are key to re-accelerating growth.

Financial Health

liquidity: Current ratio 138.3% and quick ratio 132.0% indicate solid short-term coverage. Working capital of ¥58.37bn provides a buffer to production and receivables cycles. Cash and equivalents were not disclosed in the dataset. solvency: Total liabilities/Equity is 1.90x, with financial leverage (Assets/Equity) of 2.84x. Interest coverage is 8.4x (Operating income/Interest expense), supportive of ongoing debt service. Equity base of ¥116.89bn underpins solvency, though leverage is a key variable to monitor. capital_structure: Total assets are ¥331.63bn against total liabilities of ¥222.65bn. The reported equity ratio of 0.0% is unreported in this dataset; based on assets and equity provided, an implied equity ratio would be roughly 35%, but we defer to official disclosures for the precise figure.

Cash Flow Quality

earnings_quality: OCF of ¥15.81bn versus net income of ¥6.52bn yields OCF/NI of 2.42x, signaling strong cash realization and/or favorable working capital movement. EBITDA of ¥17.89bn and depreciation/amortization of ¥7.95bn support the cash conversion profile. FCF_analysis: Investing cash flow is unreported; therefore, free cash flow cannot be reliably derived. The presented 'Free Cash Flow: 0' reflects missing data rather than actual zero. Financing cash outflow of ¥22.46bn implies debt repayment, dividends, or other financing uses, but specifics are not available. working_capital: Quick ratio of 132% and modest inventories of ¥9.68bn relative to current assets suggest efficient inventory management. Positive working capital of ¥58.37bn provides operational resilience, though changes in receivables/payables are not detailed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported as ¥0.00 and payout ratio 0.0%, indicating no dividend for the period. With net income positive, the absence of payouts points to a conservative capital allocation stance. FCF_coverage: FCF coverage cannot be assessed due to unreported investing cash flows; the displayed 0.00x should not be interpreted as actual coverage. Without capex data, dividend capacity analysis remains incomplete. policy_outlook: Given leverage and the apparent focus on balance sheet strength and cash preservation, the company may prioritize deleveraging and strategic investment over distributions in the near term. Any reinstatement of dividends would likely depend on clearer visibility of sustainable FCF and leverage targets.

Risk Assessment

Business Risks:

• OEM production volatility impacting volumes and operating leverage
• Price pressure from automaker customers and contract negotiations
• Raw material and logistics cost fluctuations affecting gross margin
• Product mix shifts tied to electrification and platform changes
• Foreign exchange volatility (JPY) affecting translation and competitiveness
• Geopolitical and supply chain disruptions in key sourcing/production regions

Financial Risks:

• Meaningful leverage (Liabilities/Equity ~1.90x) increasing sensitivity to earnings downturns
• Refinancing and interest rate risk despite current 8.4x interest coverage
• Working capital swings typical of automotive supply chains
• Limited visibility on capex and liquidity due to unreported investing CF and cash balance

Key Concerns:

• Slightly negative operating leverage with revenue softness
• Dependence on leverage to deliver mid-single-digit ROE
• Data gaps around cash, capex, and equity ratio limiting full assessment

Investment Implications

Key Takeaways:

• Resilient margins with modest YoY declines in revenue and profit
• Strong cash conversion (OCF/NI 2.42x) supports operational flexibility
• Adequate liquidity and interest coverage despite meaningful leverage
• Dividend suspended, indicating capital preservation priorities
• Data limitations on investing cash flows constrain FCF evaluation

Metrics to Watch:

• Revenue trajectory versus OEM production schedules
• Operating and ordinary margins, and price pass-through effectiveness
• Capex and investing cash flows to gauge FCF and capacity expansion
• Net debt and interest coverage as rates and refinancing evolve
• Working capital efficiency (DSO/DPO/DI) and OCF sustainability
• FX impacts on revenue and margins

Relative Positioning: Within Japanese auto parts suppliers, Mitsuba shows mid-tier profitability with stable margins and healthy cash conversion, offset by capital intensity and leverage reliance; visibility on capex and cash balances is currently limited due to unreported items.

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