PLATZ (7813) FY2026 Q2 Earnings Report

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Executive Summary

Cumulative results for Q2 FY2026 showed declines in both revenue and earnings. The primary cause of the decline in operating income was an increase in SG&A expenses that exceeded the benefit from the improved gross margin. Revenue was ¥4.01B (¥4.06B in the previous year, YoY -1.3%), operating income was ¥0.05B (¥0.08B in the previous year, YoY -32.9%), ordinary income was ¥0.08B (¥0.11B in the previous year, YoY -22.0%), and net income was ¥0.07B (¥0.08B in the previous year, YoY -12.4%). Although the gross margin improved to 32.0% (29.7% in the previous year) due to a reduction in the cost of sales, SG&A expenses increased 9.1% year on year, raising the SG&A ratio to 30.6% and reducing the operating margin to 1.4%.

Factors Driving Earnings Changes

【Revenue】Revenue was ¥4.01B, down 1.3% year on year. The Company operates as a single segment comprising the electric beds business for medical and nursing care, and demand trends within this business are directly reflected in consolidated performance. Progress against the full-year plan of ¥8.80B was 45.6%, slightly below the standard 50%.

【Profit and Loss】The gross margin improved by approximately 2.3pt to 32.0% due to the decrease in the cost of sales. However, this benefit was offset by a 9.1% year-on-year increase in SG&A expenses, leaving operating income at ¥0.05B (down 32.9% year on year). Ordinary income was supported by non-operating income, including ¥0.03B in equity in earnings of affiliates, but declined 22.0% year on year. Net income also decreased 12.4% year on year. As revenue declined while the operating margin deteriorated, the results can be characterized as a decline in both revenue and earnings.

Segment Analysis

The Company operates as a single segment comprising the electric beds business for medical and nursing care and does not disclose results by segment.

Key Financial Metrics

【Profitability】The operating margin was 1.3% and the net margin was 1.7%, both declining from the same period of the previous year, indicating weakening core-business profitability. Annualized ROE was 4.3% and ROIC was 2.8%, also representing low levels in terms of capital efficiency.【Cash Flow Quality】Operating cash flow (OCF) was negative ¥0.08B, and the OCF/net income ratio was negative 1.2x against net income of ¥0.07B, indicating that earnings had not been converted into cash. The primary factors were a ¥0.14B increase in inventories and a ¥0.08B increase in trade receivables, which were not offset by the ¥0.07B increase in accounts payable.【Investment Efficiency】Capital expenditures were ¥0.05B and depreciation and amortization was ¥0.06B, resulting in a CapEx/depreciation and amortization ratio of 0.85x. Investments during the period appear to have focused primarily on maintenance and replacement. Free cash flow was negative ¥0.28B.【Financial Soundness】The equity ratio was 48.8%, the current ratio was 224.0%, and the quick ratio was 179.7%, indicating sufficient short-term liquidity. However, interest-bearing debt was ¥1.67B while EBITDA remained approximately ¥0.12B, resulting in a high Debt/EBITDA ratio of approximately 14x. The short-term debt ratio was also high at 48.0%.

Cash Flow Analysis

OCF was negative ¥0.08B and continued to fall below net income of ¥0.07B. The causes were a ¥0.14B increase in product inventories and a ¥0.08B increase in trade receivables, which were not offset by the ¥0.07B increase in trade payables. Investing cash flow was negative ¥0.19B and included ¥0.05B in capital expenditures as well as the acquisition of investment securities and other items. Free cash flow, calculated as the sum of OCF and investing cash flow, was negative ¥0.28B, with the funding shortfall being covered by positive financing cash flow of ¥0.11B, including proceeds from long-term borrowings. As a result, cash and cash equivalents decreased by ¥0.16B to ¥1.57B at the end of the period. The lack of progress in cash conversion of earnings is a factor warranting close monitoring of inventory and receivables management.

Quality of Earnings

Ordinary income of ¥0.08B exceeded operating income of ¥0.05B, with the difference attributable to non-operating income such as ¥0.03B in equity in earnings of affiliates and foreign exchange gains. Non-operating income of ¥0.04B exceeded non-operating expenses of ¥0.01B, primarily interest expenses, resulting in ordinary income being supported to a certain extent by earnings outside the core business. Comprehensive income was ¥0.18B, substantially exceeding net income of ¥0.07B. The primary factors behind the difference were ¥0.05B in other comprehensive income related to equity-method affiliates and a ¥0.06B change in deferred hedge gains or losses. These items reflect market conditions and valuation changes and do not indicate recurring earnings power. Given that OCF was below net income, the period’s accounting earnings should also be assessed cautiously in terms of cash-generation capacity.

Earnings Forecast and Guidance

Progress against the full-year company plan was 45.6% for revenue, 13.5% for operating income, 19.3% for ordinary income, and 25.1% for net income. While revenue was progressing broadly in line with the standard pace, profit items were substantially below the 50% level, which would indicate a first-half concentration. The Company expects full-year revenue to increase 4.5%, operating income to increase 118.0%, and ordinary income to increase 77.1%, implying a substantial improvement in profitability in the second half. No revisions were made to the earnings forecast or dividend forecast during the quarter. Maintaining the gross margin and improving SG&A efficiency in the second half will be key to achieving the plan.

Shareholder Returns

The dividend at the end of Q2 was ¥0 per share, while the full-year dividend forecast is ¥24.0 per share. Based on forecast full-year net income of ¥0.275B and the average number of shares outstanding during the period, the forecast payout ratio is approximately 29.5%, meaning that the dividend level itself is not high relative to accounting earnings. However, OCF for the interim period was negative ¥0.08B and free cash flow was negative ¥0.28B, indicating that dividends and investments could not be funded solely with internal funds. Cash and deposits of ¥1.57B and the high current ratio support near-term dividend-paying capacity, but dividend sustainability depends on achieving the full-year earnings plan and normalizing working capital.

Risk Factors

1. Inventory accumulation and sell-through risk: Product inventories were ¥0.83B, up 25.3% year on year. Inventory accumulation amid a 1.3% decline in revenue entails the risk of deteriorating inventory turnover and inventory write-downs.

2. High leverage and weak cash conversion: EBITDA remains low relative to interest-bearing debt of ¥1.67B, resulting in a high Debt/EBITDA ratio of approximately 14x. In addition, the OCF/net income ratio was negative 1.2x, indicating that earnings had not been converted into cash. The short-term debt ratio was also 48.0%, a level at which refinancing burdens warrant attention.

3. Delayed fixed-cost absorption: SG&A expenses increased 9.1% year on year, raising the SG&A ratio amid declining revenue. The operating margin fell to 1.4%, and achieving the substantial earnings growth plan for the second half will require progress in absorbing fixed costs.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability is substantially below the industry median and ranks toward the lower end even within the manufacturing sector.

Growth and Capital Efficiency

Growth also falls substantially below the industry median, contrasting with peers that are on an upward revenue-growth trend.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Although the gross margin improved to 32.0%, the increase in SG&A expenses offset this benefit, causing the operating margin to decline to 1.4%. The focus for earnings improvement is progress in fixed-cost absorption.

2. OCF was negative ¥0.08B and free cash flow was negative ¥0.28B, with increases in inventories and trade receivables placing pressure on cash flows. Cash conversion of earnings will be a key area to monitor going forward.

3. Progress against the full-year operating income plan was only 13.5%, with substantial profitability improvement planned for the second half. Achieving the plan presupposes both a recovery in revenue and improved SG&A efficiency.

Theoretical Share Price (Reference Value)

Sensitivity: ¥889–¥940 at cost of equity ±1%; ¥913–¥915 at ω±0.1.

Notes:

• Goodwill amortization of ¥7.6 per share is added back to earnings (as a non-cash expense and to enhance comparability with IFRS companies).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing mismatch with the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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