KOBAYASHI YOKO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.26B
• Operating Income: ¥56M
• Net Income: ¥137M
• EPS: ¥6.98

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Disclaimer

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

AI Financial Analysis

Executive Summary

Kobayashi Yoko (8742) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥1,261.7 million, essentially flat year on year, indicating a pause in topline momentum. Operating income declined sharply to ¥56 million (-60% YoY), signaling material margin compression at the operating level, likely from higher SG&A or lower gross spread, though gross profit details were not disclosed. Ordinary income of ¥96 million exceeded operating income, suggesting meaningful support from non-operating items (e.g., financial income, equity method gains, or FX), partially cushioning operating weakness. Net income was ¥86 million (-36.5% YoY) with EPS of ¥6.98, a better outcome than operating trends due to the non-operating uplift. The implied operating margin is approximately 4.4% and net margin 6.8%, with EBITDA of ¥84.6 million indicating a 6.7% EBITDA margin. Cash generation was strong: operating cash flow reached ¥366.8 million, more than 4x net income, reflecting healthy earnings-to-cash conversion and likely working-capital release. Liquidity appears solid with current assets of ¥14.44 billion vs. current liabilities of ¥10.38 billion, yielding a current ratio of 139% and quick ratio of roughly 130%. The balance sheet is conservatively positioned: total equity is ¥10.02 billion against total assets of ¥21.82 billion, implying an equity ratio around 46% despite the disclosed equity ratio field being unreported. Leverage is moderate with liabilities-to-equity of about 1.11x, and interest burden is negligible (¥0.38 million interest expense) with coverage exceeding 100x on operating income. DuPont decomposition indicates a low asset turnover (0.058x) and modest net margin drive a low ROE of 0.86%, despite leverage of 2.18x. The decline in operating profit alongside flat revenue points to negative operating leverage and pressure on core profitability. Dividend was not declared (DPS ¥0), and payout is effectively zero; with free cash flow undisclosed, coverage cannot be assessed from the provided FCF metric. Overall, the quarter shows resilient cash flows and balance sheet strength but a deterioration in underlying operating performance. The reliance on non-operating income to bridge earnings is a watchpoint for quality. Data limitations include several items reported as zero due to non-disclosure, which constrain full margin and FCF analysis. Near-term focus should be on restoring operating margin, sustaining cash conversion, and clarifying capital allocation priorities given the net cash-like posture and no dividend.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.82% (NI ¥86m / Revenue ¥1,261.7m)
• asset_turnover: 0.058x (Revenue ¥1,261.7m / Assets ¥21,821m)
• financial_leverage: 2.18x (Assets ¥21,821m / Equity ¥10,021m)
• calculated_ROE: 0.86% (matches reported 0.86%)
• interpretation: Low asset turnover and modest margins cap ROE; leverage is not excessive and thus provides limited ROE lift. margin_quality:
• gross_margin: Not disclosed (gross profit field unreported).
• EBITDA_margin: 6.7% (EBITDA ¥84.6m / Revenue ¥1,261.7m)
• operating_margin: 4.4% (Operating income ¥56m / Revenue ¥1,261.7m)
• ordinary_margin: 7.6% (Ordinary income ¥96m / Revenue ¥1,261.7m)
• net_margin: 6.8% (Net income ¥86m / Revenue ¥1,261.7m)
• notes: Ordinary income exceeds operating income, indicating non-operating gains are supporting headline profitability; core margin has compressed significantly YoY. operating_leverage: Revenue was flat while operating income fell 60% YoY, evidencing negative operating leverage (fixed cost absorption pressure and/or reduced gross spread). Close monitoring of SG&A and unit margins is warranted.

Growth Assessment

revenue_sustainability: Topline was flat YoY at ¥1,261.7m, suggesting stable but subdued demand with limited pricing/volume growth. profit_quality: The gap between operating income (¥56m) and ordinary income (¥96m) indicates earnings reliance on non-operating components; sustainable profit growth will require recovery of operating margin. outlook: Near-term growth depends on restoring core profitability through cost control and margin discipline; absent margin recovery, earnings risk persists even if revenue remains stable.

Financial Health

liquidity:

• current_assets: ¥14,437.3m
• current_liabilities: ¥10,381.2m
• current_ratio: 139.1%
• quick_ratio: ≈130% (inventory ¥943.3m is modest relative to current assets)
• working_capital: ¥4,056.1m
• assessment: Ample near-term liquidity headroom. solvency:
• total_assets: ¥21,821.0m
• total_liabilities: ¥11,110.4m
• total_equity: ¥10,021.0m
• equity_ratio_implied: ≈45.9% (equity/assets; disclosed equity ratio metric not provided)
• debt_to_equity: 1.11x (liabilities/equity)
• interest_coverage: 148.5x (Operating income ¥56m / Interest expense ¥0.38m)
• assessment: Conservative capital structure with very light interest burden. capital_structure: Balanced, with roughly half of assets funded by equity. Leverage provides limited ROE enhancement but supports strong credit metrics.

Cash Flow Quality

earnings_quality: Strong. OCF of ¥366.8m is 4.27x net income, indicating robust cash conversion likely driven by working-capital inflows. FCF_analysis: Investing cash flow and capex were not disclosed (reported as zero), so free cash flow cannot be precisely derived; however, positive OCF implies capacity to fund investment and shareholder returns if capex is moderate. working_capital: Given inventory of ¥943.3m and strong OCF, the period likely benefited from receivables collection and/or inventory normalization. Sustaining this benefit may be challenging in subsequent periods.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0; payout 0%). With net income positive, the choice indicates a conservative stance or capital allocation toward internal needs. FCF_coverage: Not assessable from provided data as FCF is undisclosed; OCF strength suggests potential capacity if capex is modest. policy_outlook: Future distributions will depend on restoring operating earnings quality and confirming recurring cash generation; clarity on investment needs and capital policy would improve visibility.

Risk Assessment

Business Risks:

• Margin compression and negative operating leverage amid flat revenue.
• Dependence on non-operating income to bridge profitability volatility.
• Potential demand softness or limited pricing power given flat topline.
• Execution risk in cost control and working-capital management.
• Low asset turnover (0.058x) indicating capital intensity or underutilized assets.

Financial Risks:

• Earnings sensitivity to non-operating items (market-driven or one-off).
• Potential reversal of working-capital inflows that boosted OCF.
• Limited visibility on capex and investment needs due to undisclosed investing cash flows.

Key Concerns:

• Sustained decline in operating income despite stable sales.
• Quality of earnings skewed toward non-operating contributions.
• Unreported gross profit and investing cash flows constrain margin and FCF analysis.

Investment Implications

Key Takeaways:

• Core profitability weakened sharply (operating income -60% YoY) despite stable revenue.
• Ordinary and net income were supported by non-operating items, improving headline results versus operating trends.
• Cash generation is strong with OCF at ¥366.8m (4.27x NI), easing near-term funding needs.
• Balance sheet is solid with implied equity ratio around 46% and minimal interest burden.
• ROE is low at 0.86% due to weak margins and low asset turnover; leverage is moderate.

Metrics to Watch:

• Operating margin trajectory and SG&A ratio.
• Composition of ordinary income vs. operating income.
• Working-capital turns (receivables, payables, inventory) and OCF sustainability.
• Capex and investing cash flows to gauge true FCF.
• Revenue growth reacceleration and pricing power indicators.

Relative Positioning: Financially conservative with strong liquidity and cash conversion, but currently weaker on core operating profitability and capital efficiency versus peers that maintain stable operating margins and higher asset turnover.

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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