TOMY COMPANY,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥127.88B
• Operating Income: ¥11.73B
• Net Income: ¥8.45B
• EPS: ¥91.25

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

Takara Tomy (7867) delivered FY2026 Q2 consolidated results showing solid top-line growth and modest profit contraction, indicative of mixed operating leverage in the period. Revenue rose 5.9% year over year to ¥127.9bn, while operating income declined 5.1% to ¥11.7bn and net income fell 3.9% to ¥8.1bn. Gross profit was ¥48.4bn, implying a gross margin of 37.9%, which is healthy for the sector and suggests product and channel mix remained supportive. Operating margin stood at 9.2%, reflecting higher SG&A intensity or increased promotional spend relative to the prior year. Ordinary income of ¥11.8bn exceeded operating income by a small margin, indicating minor net non-operating gains despite ¥0.19bn of interest expense. The company’s DuPont ROE was 7.44%, decomposed as 6.35% net margin, 0.763x asset turnover, and 1.53x financial leverage, indicating returns are driven more by operating profitability than leverage. The balance sheet is conservative: total equity of ¥109.2bn against total assets of ¥167.6bn implies an equity ratio around 65%, despite the reported metric showing 0% (unreported), and a modest liabilities-to-equity of 0.54x. Liquidity is strong with a current ratio of 2.25x and a quick ratio of 1.85x, supported by ¥63.5bn of working capital. Cash flow was weak in the half: operating cash flow came in at -¥6.0bn versus positive net income, yielding an OCF/net income ratio of -0.74, consistent with a seasonal working capital build. Investing cash flow and cash balances are shown as zero in the dataset (unreported), preventing a clean free cash flow view; however, with negative OCF, underlying FCF likely trended negative in the half. Interest coverage is robust at ~60.5x, evidencing low financial risk from borrowing costs. The effective tax rate appears close to 29–30% when inferred from the reported income tax expense versus pre-tax income, despite a 0% placeholder in the dataset. Dividend data are unreported (DPS and payout shown as zero), so distribution policy and cash returns cannot be assessed from this dataset. Overall, the picture is of a company with good revenue momentum, pressured operating leverage, strong balance sheet resilience, and seasonally weak cash conversion through Q2, with the second half remaining critical for full-year earnings quality.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.35%
• asset_turnover: 0.763
• financial_leverage: 1.53
• calculated_ROE: 7.44%
• commentary: ROE of 7.44% is primarily driven by a healthy net margin and moderate asset turnover, with limited reliance on balance sheet leverage. margin_quality:
• gross_margin: 37.9% (GP ¥48.4bn on revenue ¥127.9bn)
• operating_margin: 9.2% (OI ¥11.7bn)
• ordinary_income_margin: 9.3% (OIrd ¥11.8bn)
• net_margin: 6.35% (NI ¥8.1bn)
• EBITDA_margin: 11.5% (EBITDA ¥14.7bn)
• tax_rate_inferred: ≈29–30% (¥3.43bn / ~¥11.55bn pre-tax)
• notes: Gross margin remains solid, but operating margin compression versus revenue growth suggests higher SG&A intensity or promotional activity. operating_leverage:
• assessment: Negative operating leverage in the period; revenue grew +5.9% YoY while operating income declined -5.1% YoY.
• drivers_commentary: Likely due to higher fixed cost absorption, marketing spend, or product/channel mix; ordinary income benefited slightly from non-operating items.

Growth Assessment

revenue_sustainability: Top-line growth of +5.9% YoY indicates solid demand. Sustainability will hinge on sell-through in the peak season and inventory normalization. profit_quality: Margin slippage at the operating level despite revenue growth suggests profit quality risks from cost discipline and mix. However, gross margin remains robust, supporting medium-term profitability if SG&A is managed. outlook: With a seasonally weighted second half, conversion of revenue into cash and stabilization of operating margin are key for maintaining full-year earnings trajectory.

Financial Health

liquidity:

• current_ratio: 224.6% (CA ¥114.4bn / CL ¥50.9bn)
• quick_ratio: 185.4%
• working_capital: ¥63.5bn
• commentary: Strong liquidity buffers provide resilience against seasonal working capital swings. solvency:
• equity_ratio_inferred: ≈65.2% (Equity ¥109.2bn / Assets ¥167.6bn)
• debt_to_equity: 0.54x (Total liabilities ¥59.4bn / Equity ¥109.2bn)
• interest_coverage: ≈60.5x (EBIT ¥11.7bn / Interest ¥0.19bn)
• commentary: Low leverage and high coverage indicate low solvency risk. capital_structure: Balance sheet is equity-heavy with moderate liabilities, providing flexibility to absorb cyclical swings and invest in growth.

Cash Flow Quality

earnings_quality: OCF/Net income at -0.74 signals weak cash conversion in H1, consistent with seasonal working capital investment. FCF_analysis: Investing cash flow is unreported (0 in dataset). With OCF negative, underlying FCF likely negative for the half; however, a second-half rebound could normalize full-year FCF if inventories and receivables unwind. working_capital: Inventories at ¥20.0bn (~15–16% of half-year sales) appear manageable; monitoring receivables and payables is important given the OCF shortfall.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported (zeros in dataset are placeholders). EPS is ¥91.25, but absent DPS, payout cannot be assessed. FCF_coverage: Not assessable due to unreported investing cash flows and negative OCF in the half; seasonal restoration of OCF in H2 would be required for comfortable coverage. policy_outlook: No dividend policy information available in the dataset; assessment deferred pending disclosure.

Risk Assessment

Business Risks:

• Seasonality and reliance on second-half sell-through to meet annual targets
• Hit-driven product cycles and potential for demand volatility
• Margin pressure from promotions, licensing costs, and channel mix
• Inventory management risk impacting cash conversion
• Potential FX exposure affecting overseas revenues and costs (if applicable)

Financial Risks:

• Negative OCF versus positive earnings in H1 creates near-term funding needs from balance sheet
• Working capital volatility affecting free cash flow
• Potential increase in interest costs if borrowing rises to bridge seasonal cash needs (though current interest burden is low)
• Data limitations on cash and investing flows reduce visibility

Key Concerns:

• Operating income decline despite revenue growth indicates weaker operating leverage
• OCF shortfall (¥-6.0bn) versus net income (¥8.1bn) highlights earnings-to-cash gap
• Limited visibility on FCF and dividends due to unreported items

Investment Implications

Key Takeaways:

• Revenue growth (+5.9% YoY) with resilient gross margin (37.9%)
• Operating margin compression to 9.2% and operating income -5.1% YoY
• ROE 7.44% driven primarily by operating profitability, not leverage
• Strong balance sheet: inferred equity ratio ~65% and liabilities/equity 0.54x
• Liquidity robust with current ratio 2.25x and quick ratio 1.85x
• OCF -¥6.0bn indicates seasonal working capital drag; cash conversion a key watchpoint
• Interest coverage ~60x mitigates financing risk even if rates rise modestly
• Dividend and FCF visibility limited due to unreported cash flow and DPS data

Metrics to Watch:

• Q3–Q4 OCF rebound and full-year FCF
• Inventory levels and days inventory on hand
• SG&A ratio and promotional intensity
• Gross margin trajectory and product/channel mix
• Receivables collection and working capital turns
• Ordinary income versus operating income gap (non-operating items)
• Effective tax rate normalization
• Any dividend policy or DPS guidance updates

Relative Positioning: Within consumer discretionary/toys, Takara Tomy shows moderate profitability and strong balance sheet resilience, offset by seasonal cash flow volatility and near-term margin pressure.

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