TOLI Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥52.29B
• Operating Income: ¥1.40B
• Net Income: ¥713M
• EPS: ¥18.73

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

TOLI Co., Ltd. (7971) delivered a solid FY2026 Q2 (cumulative) performance with revenue of ¥52.3bn, up 10.3% YoY, indicating resilient demand across its interior materials portfolio. Gross profit was ¥13.7bn, translating to a gross margin of 26.1%, supportive of improved mix and/or pricing discipline against input cost pressures. Operating income rose 38.2% YoY to ¥1.40bn, outpacing sales growth and signaling positive operating leverage. Ordinary income of ¥1.71bn exceeded operating income by ¥0.31bn, suggesting a meaningful contribution from non-operating gains or financial income. Net income climbed 58.3% YoY to ¥1.09bn, with EPS of ¥18.73, implying roughly 58.2m shares outstanding based on disclosed EPS and net profit (approximation due to unreported share count). DuPont analysis shows a net margin of 2.08%, asset turnover of 0.549x, and financial leverage of 1.93x, yielding an ROE of 2.21% for the period, which remains modest despite improvement. EBITDA was ¥2.80bn (5.4% margin), indicating still-thin profitability but improving cost absorption as volumes recover. Liquidity is sound with a current ratio of 161% and working capital of ¥20.0bn, while solvency appears comfortable with debt-to-equity of 0.93x and interest coverage of 43.7x. Operating cash flow of ¥1.32bn exceeded net income (OCF/NI = 1.21), a positive indicator of earnings quality. However, several items are unreported (equity ratio, cash balance, investing cash flow, shares outstanding), which limits depth of analysis on capital intensity and FCF. The effective tax rate shown as 0.0% in the calculated metrics is not reliable given disclosed tax expense of ¥0.43bn; a rough proxy using ordinary income implies ~25% tax, though differences between ordinary income and taxable income may exist. Dividend information shows DPS and payout at 0.00, which likely reflects the absence of an interim update rather than a definitive full-year policy. Overall, TOLI is demonstrating improving profitability and cash conversion, aided by operating leverage and non-operating contributions, with a balance sheet that supports ongoing operations. That said, absolute margins and ROE remain low, underscoring the importance of continued pricing, mix improvements, and cost control. Inventory levels (¥9.85bn) appear manageable at 18.7% of current assets, but working-capital discipline remains key in a construction/end-market-linked cycle. The outlook hinges on sustaining demand in renovation and non-residential segments, stability in raw material/energy costs, and execution on SG&A efficiency. Data limitations prevent a full assessment of FCF and dividend capacity; monitoring capex and cash balances upon full disclosures will be crucial.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.08% (NI ¥1.09bn / Revenue ¥52.29bn)
• asset_turnover: 0.549x (Revenue ¥52.29bn / Assets ¥95.22bn)
• financial_leverage: 1.93x (Assets ¥95.22bn / Equity ¥49.32bn)
• calculated_ROE: 2.21% for the period (consistent with provided DuPont) margin_quality: Gross margin at 26.1% supports a recovery narrative, likely reflecting better pricing/mix versus raw materials and logistics costs. Operating margin is 2.68% (¥1.399bn / ¥52.292bn), up meaningfully YoY given operating income growth of +38.2% against +10.3% revenue growth. Ordinary margin is 3.27%, indicating supportive non-operating items (approx. ¥0.31bn above operating profit). Net margin is 2.08%; the gap from ordinary income is consistent with tax and other below-the-line items. operating_leverage: Revenue grew 10.3% YoY while operating income rose 38.2% YoY, evidencing positive operating leverage from fixed-cost absorption and SG&A efficiency. EBITDA margin of 5.4% vs. operating margin of 2.7% suggests notable D&A burden (¥1.40bn D&A), typical for manufacturing with capital intensity; ongoing scale benefits will be important to lift EBIT margins.

Growth Assessment

revenue_sustainability: Double-digit top-line growth (+10.3% YoY) implies healthy end-market conditions in non-residential and renovation channels and/or realized pricing. Sustainability depends on construction activity, refurbishment demand, and competitive dynamics in floor/wall coverings. profit_quality: Operating profit growth outpaced sales, aided by margin expansion and non-operating income. Interest expense is minimal (¥32m), and interest coverage is strong (43.7x), underscoring low financial drag. The net profit step-up (+58.3% YoY) is supported by core improvements and the non-operating line. outlook: Key to sustaining momentum will be price-cost balance as raw materials and energy stabilize, continued mix upgrade, and SG&A control. If volumes hold and cost inputs remain benign, further incremental margin expansion is plausible; however, absolute margins remain low, and cyclical exposure to construction demand introduces volatility.

Financial Health

liquidity: Current ratio 161% (CA ¥52.73bn / CL ¥32.76bn) and quick ratio 130.9% indicate ample short-term liquidity. Working capital totals ¥19.97bn, with inventories at ¥9.85bn (18.7% of current assets). Cash and equivalents are unreported in this dataset, limiting precision on immediate liquidity buffers. solvency: Debt-to-equity of 0.93x (Total liabilities ¥45.69bn / Equity ¥49.32bn) suggests moderate leverage. Interest expense is low (¥32m), with operating interest coverage of 43.7x and EBITDA-based coverage of ~87.6x, indicating comfortable debt service capacity. capital_structure: Assets of ¥95.22bn are funded 52% by equity and 48% by liabilities (implied), with leverage (assets/equity) at 1.93x. The reported equity ratio of 0.0% is an unreported placeholder and should not be interpreted as zero.

Cash Flow Quality

earnings_quality: OCF of ¥1.32bn exceeds NI of ¥1.09bn (OCF/NI = 1.21), supportive of earnings quality and indicative of either healthy collections or manageable working-capital needs. FCF_analysis: Investing cash flow is unreported (shown as 0), and capex is not disclosed; therefore, true free cash flow cannot be determined. D&A is ¥1.40bn, suggesting ongoing maintenance/investment needs; without capex data, FCF coverage and sustainability cannot be robustly assessed. working_capital: Inventories at ¥9.85bn look reasonable relative to current assets; however, receivables and payables are not disclosed. The positive OCF implies working-capital deployment is under control this period, but monitoring inventory turnover and DSO/DPO upon fuller disclosure remains important.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% with DPS 0.00, likely reflecting the absence of an interim dividend disclosure rather than a definitive full-year stance. With EPS of ¥18.73 for the half, any payout assessment requires full-year guidance or historical policy context (not provided here). FCF_coverage: Free cash flow is unreported due to missing investing cash flow/capex details; thus, FCF coverage of dividends cannot be evaluated. OCF is positive and above NI, which is supportive, but capex requirements are the key unknown. policy_outlook: Without disclosed DPS policy for FY2026 and FCF visibility, dividend sustainability cannot be concluded. If earnings momentum and cash conversion persist with moderate capex, capacity for dividends would improve; confirmation awaits full-year disclosures.

Risk Assessment

Business Risks:

• Exposure to construction and renovation cycles in Japan (volume volatility).
• Raw material and energy price fluctuations (e.g., PVC, chemicals, backing materials).
• Competitive pricing pressure in interior materials leading to margin compression.
• Demand sensitivity in non-residential sectors (offices, commercial facilities).
• Supply chain/logistics disruptions affecting delivery times and costs.

Financial Risks:

• Thin operating margins and modest ROE (2.21%) limit cushion against shocks.
• Working-capital intensity and potential inventory obsolescence risk.
• Unreported cash position introduces uncertainty around immediate liquidity.
• Potential increases in interest rates or borrowing needs, albeit current interest burden is low.
• Capex needs (unreported) could pressure free cash flow if elevated.

Key Concerns:

• Sustainability of recent operating leverage if sales growth moderates.
• Visibility on capex and investing cash flows to assess FCF and dividend capacity.
• Reliability of tax rate metrics given discrepancies and unreported items.

Investment Implications

Key Takeaways:

• Revenue up 10.3% YoY with operating income up 38.2% YoY indicates improving operating leverage.
• Gross margin at 26.1% and EBITDA margin at 5.4% show progress but remain modest in absolute terms.
• ROE at 2.21% remains low; further margin and asset efficiency gains are needed.
• Liquidity and coverage ratios are comfortable (current ratio 161%, interest coverage 43.7x).
• OCF/NI of 1.21 signals supportive earnings quality.
• Several critical cash flow and capital metrics are unreported, constraining FCF and dividend assessments.

Metrics to Watch:

• Operating margin and ordinary margin trajectory.
• Price-cost spread versus raw material and energy inputs.
• Inventory turnover and overall working-capital days.
• Capex and investing cash flows (for FCF calculation).
• OCF/NI ratio sustainability.
• Equity ratio (true figure) and net debt position once cash is disclosed.

Relative Positioning: Within Japanese interior materials peers, TOLI shows improving profitability and leverage on growth but still operates with thin margins and low ROE. Balance sheet strength and coverage are supportive, yet cash flow and capex visibility lag due to disclosure gaps.

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