TOKYO BOARD INDUSTRIES CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.81B
• Operating Income: ¥-4M
• Net Income: ¥346M
• EPS: ¥-28.87

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Tokyo Board Industry Co., Ltd. (TSE:78150) posted FY2026 Q2 consolidated results under JGAAP showing a modest top-line contraction and near break-even operating performance amid elevated depreciation and financing burdens. Revenue was ¥3.814bn, down 4.4% YoY, reflecting softer demand and/or pricing in board-related products. Gross profit was ¥889.5m with a gross margin of 23.3%, indicating the core manufacturing spread remains positive despite a weaker sales environment. Operating income was essentially flat at a ¥4m loss, demonstrating cost discipline and/or pass-through effects offset by hefty depreciation (¥346.1m) that keeps reported EBIT subdued. EBITDA of ¥342.1m (9.0% margin) shows underlying cash earnings before non-cash charges remained positive. Ordinary income of ¥−59m and net income of ¥−74m indicate non-operating drag (notably interest expense of ¥39.0m) and the weight of depreciation, with EPS at ¥−28.87. DuPont analysis yields ROE of −3.18% driven by a modest negative net margin (−1.94%), low asset turnover (0.312x), and elevated financial leverage (5.24x). Liquidity is tight: the current ratio is 67.2%, the quick ratio 59.7%, and working capital is negative at ¥−2.324bn. Leverage is high with total liabilities of ¥10.124bn against equity of ¥2.33bn (implied equity ratio roughly 19.1%), and a debt-to-equity measure of 4.34x, leaving limited cushion for shocks. Despite the accounting loss, operating cash flow was strong at ¥1.112bn, implying material working-capital inflows and solid cash conversion in the period. Interest coverage is weak (−0.1x on EBIT), underscoring reliance on cash generation rather than earnings for debt service. Dividend data show DPS at ¥0 and payout at 0%, but zeros may reflect non-disclosure rather than an explicit suspension; policy clarity is needed. Several line items are unreported (e.g., investing cash flows, cash balance, equity ratio, share count), limiting precision on free cash flow and liquidity buffers; conclusions are therefore based on available non-zero datapoints and inferred calculations. Overall, the company is navigating a soft demand backdrop with resilient gross margin and positive EBITDA, but high depreciation, interest burden, and tight liquidity constrain near-term profitability and flexibility. Monitoring pricing, input costs, and working-capital dynamics will be key to sustaining OCF and stabilizing leverage through the remainder of the fiscal year.

Profitability Analysis

ROE_decomposition: ROE −3.18% = Net margin (−1.94%) × Asset turnover (0.312x) × Financial leverage (5.24x). The negative net margin is the primary drag, with low asset turnover typical for capital-intensive boards manufacturing further damping returns. Elevated leverage amplifies the small earnings deficit into a negative ROE. margin_quality: Gross margin of 23.3% indicates adequate product spread despite revenue decline. EBITDA margin of 9.0% suggests cash profits remain positive; however, heavy D&A (¥346.1m) erodes EBIT to approximately break-even (¥−4m). Ordinary loss (¥−59m) reflects financing and other non-operating costs, indicating margin pressure below the operating line. operating_leverage: A 4.4% revenue decline drove operating income to a slight loss, implying moderate operating leverage given near-break-even EBIT. Fixed-cost absorption (depreciation and overhead) remains a key swing factor; small volume/pricing changes can tip EBIT positive or negative.

Growth Assessment

revenue_sustainability: Revenue fell 4.4% YoY to ¥3.814bn, suggesting softer end-market demand or pricing. Given the industry’s sensitivity to construction activity and housing starts, demand visibility may be uneven near term. profit_quality: Positive EBITDA alongside a net loss indicates earnings are depressed by non-cash D&A and financing costs rather than core cash generation. Gross margin of 23.3% supports price-cost discipline, but the ordinary loss underscores vulnerability to interest expense. outlook: With stable gross spreads and cost control, incremental volume recovery or pricing actions could return EBIT to positive territory. However, elevated leverage and weak coverage constrain flexibility; maintaining strong OCF via working-capital management is critical to support the second half. External factors—energy/input costs and construction demand—remain key swing variables.

Financial Health

liquidity: Current ratio 67.2% and quick ratio 59.7% indicate tight short-term liquidity and reliance on ongoing OCF to meet obligations. Working capital stands at ¥−2.324bn, highlighting dependence on payables/short-term debt financing. solvency: Total assets are ¥12.219bn versus total liabilities of ¥10.124bn and equity of ¥2.33bn, implying an equity ratio of about 19.1% (equity/assets) despite the reported 0.0% figure being undisclosed. Debt-to-equity of 4.34x points to high leverage and limited balance-sheet headroom. capital_structure: Financial leverage (5.24x per DuPont) and interest expense of ¥39.0m against negative EBIT yield weak interest coverage (−0.1x). The structure is skewed toward liabilities, making the company sensitive to interest rate and refinancing risks.

Cash Flow Quality

earnings_quality: Operating CF of ¥1.112bn versus net income of ¥−74m (OCF/NI −15.0x) suggests strong cash conversion driven by working-capital release and non-cash charges (notably D&A). This indicates accounting losses are not mirrored in cash terms this period. FCF_analysis: Investing CF is unreported (shown as 0), so free cash flow cannot be reliably computed. On a directional basis, positive OCF after maintenance capex would likely remain positive if capex is modest relative to D&A, but this cannot be confirmed without disclosed investing cash flows. working_capital: The sizeable OCF relative to EBITDA implies meaningful inflows from working-capital optimization (inventory/receivables). Sustainability of these inflows is uncertain; future periods may see normalization, potentially reducing OCF.

Dividend Sustainability

payout_ratio_assessment: Reported DPS is ¥0.00 with a payout ratio of 0.0%, which may reflect either a suspended dividend or undisclosed dividend data. Given negative net income, a cash payout would pressure coverage ratios. FCF_coverage: FCF coverage cannot be assessed due to undisclosed investing cash flows. While OCF is strong, the lack of capex data prevents conclusions on sustainable cash available for distribution. policy_outlook: Absent clear disclosure, assume a conservative stance on distributions until earnings recover and liquidity improves. Clarity on dividend policy, capex plans, and de-leveraging priorities will guide sustainability.

Risk Assessment

Business Risks:

• Demand cyclicality tied to housing starts and construction activity
• Input cost volatility (wood/recycled materials, energy, logistics) impacting gross margin
• Pricing power constraints in a competitive, commoditized board market
• Operational leverage from high fixed costs and depreciation
• Customer concentration and potential order timing volatility

Financial Risks:

• High leverage (debt-to-equity 4.34x) and low equity buffer (~19% implied equity ratio)
• Weak interest coverage (−0.1x EBIT basis) and sensitivity to interest-rate changes
• Tight liquidity (current ratio 67.2%, quick ratio 59.7%) and reliance on working-capital financing
• Potential OCF normalization if working-capital inflows reverse
• Refinancing risk if credit conditions tighten

Key Concerns:

• Sustaining positive OCF amid revenue softness and potential working-capital reversion
• Restoring positive operating income in the face of high D&A and financing costs
• Maintaining adequate liquidity given negative working capital and upcoming obligations

Investment Implications

Key Takeaways:

• Revenue declined 4.4% YoY to ¥3.814bn; gross margin remained healthy at 23.3%
• EBITDA margin of 9.0% contrasts with near-break-even EBIT due to heavy D&A (¥346.1m)
• Net loss of ¥74m translates to ROE of −3.18% under high leverage (5.24x)
• Operating cash flow was strong at ¥1.112bn, likely boosted by working-capital release
• Liquidity and solvency are tight: current ratio 67.2%, debt-to-equity 4.34x, implied equity ratio ~19%
• Interest coverage is weak (−0.1x), highlighting vulnerability to financing costs
• Data gaps (investing CF, cash balance, dividends, shares) constrain FCF and per-share analysis

Metrics to Watch:

• Volume/pricing trends and revenue trajectory in 2H
• Gross margin resilience versus input and energy costs
• Capex and investing cash flows to assess true FCF
• Working-capital movements (receivables, inventories, payables) and OCF sustainability
• Interest burden and refinancing terms; net debt evolution
• Operating income trajectory relative to depreciation (breakeven threshold)
• Liquidity buffers (cash on hand, undrawn facilities) and current ratio

Relative Positioning: Within Japan’s building materials/board segment, the company shows competitive gross spreads and positive EBITDA but sits toward the leveraged, liquidity-constrained end of the spectrum, making near-term performance more sensitive to demand and financing conditions than peers with stronger balance sheets.

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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