TOBU RAILWAY CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥35.58B
• Net Income: ¥25.49B
• EPS: ¥121.68

Income Statement

Balance Sheet

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

For FY2026 Q2 (cumulative) under JGAAP on a consolidated basis, Tobu Railway (90010) reported operating income of ¥35.6bn, down 7.5% YoY, and net income of ¥24.0bn, down 5.2% YoY. Ordinary income was ¥33.7bn, indicating a still-solid core profit base after non-operating items. Interest expense was ¥3.0bn, implying robust interest coverage of roughly 11.8x (operating income ÷ interest expense), a comfortable buffer for a capital-intensive railway and real estate operator. Total assets stood at ¥1,783.5bn and total equity at ¥583.4bn, implying a leverage multiple (assets/equity) of 3.06x and a derived equity ratio of about 32.7% despite the reported equity ratio field being zero due to disclosure limitations. The balance sheet shows negative working capital of ¥261.9bn with a current ratio of 40.3%, consistent with the sector’s structural short-term funding model, but it warrants monitoring for refinancing and liquidity management. Income tax expense was ¥11.1bn; using net income plus tax as a proxy for pre-tax income suggests an estimated effective tax rate near 31–32%, within a normal range. The decline in operating income appears modest, suggesting some resilience across rail, real estate, and leisure segments, although we lack revenue and segment breakdowns to pinpoint drivers. With ordinary income fairly close to operating income, non-operating drag (including interest) appears contained. The debt-to-equity ratio of 2.04x reflects a moderate-to-high leverage profile typical for private railways with large fixed asset bases and development portfolios. Cash flow items (OCF/ICF/FCF) and revenue were not disclosed in this dataset (zeros denote non-disclosure), limiting insight into earnings-to-cash conversion and capex intensity this period. Dividend information is unreported in this snapshot (DPS and payout shown as zero indicate missing data, not a true zero), so dividend sustainability cannot be concluded from the provided fields alone. On profitability, we cannot compute ROE or margins through DuPont due to missing revenue, but half-year net income to assets of ~1.35% suggests annualized returns still below pre-pandemic peak levels for the sector. Liquidity is tight on a current ratio basis, but structural, and interest coverage remains healthy. Key uncertainties include demand normalization in rail and leisure, inbound tourism trajectory, fare revision potential, and real estate market conditions. Overall, the company remains profitable with solid coverage metrics and a balanced capital structure for the sector, but limited disclosure in this snapshot constrains a full cash flow and dividend assessment.

Profitability Analysis

ROE_decomposition: Full DuPont cannot be completed due to undisclosed revenue and reported zeros. Financial leverage is 3.06x (Assets ¥1,783.5bn / Equity ¥583.4bn). Net profit margin and asset turnover are not computable from provided data. Estimated half-year return on assets (NI/Assets) is ~1.35% (¥24.0bn / ¥1,783.5bn), implying low-to-mid single-digit annualized ROA and a modest implied ROE when applying leverage, subject to seasonality and H2 performance. margin_quality: Operating income was ¥35.6bn (-7.5% YoY) and ordinary income ¥33.7bn, indicating limited non-operating drag. Interest expense of ¥3.0bn is manageable relative to operating income. Estimated effective tax rate is ~31–32% (¥11.1bn / [¥24.0bn + ¥11.1bn]), a normal range, implying limited tax noise. Gross margin, EBITDA margin, and net margin cannot be assessed due to missing revenue and D&A disclosure. operating_leverage: The 7.5% YoY decline in operating income versus a 5.2% decline in net income suggests some cost control and/or non-operating support, but without revenue it is difficult to gauge volume/mix effects. Given the high fixed-cost nature of rail, operating leverage remains a structural factor; small changes in passenger volumes can move margins meaningfully.

Growth Assessment

revenue_sustainability: Revenue is undisclosed in this dataset. Sector context implies revenue tied to rail passenger demand recovery, tourism/inbound dynamics, and real estate leasing stability. Lack of revenue detail limits visibility into ticket, hotel/leisure, and retail trends. profit_quality: Ordinary income (¥33.7bn) closely tracks operating income (¥35.6bn), indicating earnings are primarily operating-driven with manageable financing costs. The YoY decline in operating income is modest, implying underlying demand remains resilient, but without segment data the breadth of recovery cannot be confirmed. outlook: Key swing factors through FY2026 include commuter and leisure ridership normalization, inbound tourism to Tobu destinations (e.g., Nikko/Asakusa corridor), fare revision potential, energy cost trajectories, and real estate occupancy/rents. A stable interest burden supports earnings visibility, but macro slowdown or weaker inbound would cap growth.

Financial Health

liquidity: Current assets ¥176.8bn vs current liabilities ¥438.7bn yields a current ratio of 40.3% and negative working capital of ¥261.9bn. This is typical for private railways with predictable cash inflows, but it concentrates refinancing and short-term funding risk. Cash and equivalents are undisclosed. solvency: Total liabilities ¥1,192.4bn vs equity ¥583.4bn implies a debt-to-equity of 2.04x and an equity ratio of ~32.7% (derived from reported balances). These levels are within sector norms, providing a reasonable solvency cushion given regulated, tangible asset-heavy operations. capital_structure: Leverage (assets/equity) of 3.06x and interest expense of ¥3.0bn versus operating income of ¥35.6bn (coverage ~11.8x) indicate capacity to service debt. Continued access to long-term funding and staggered maturities remain important given negative working capital.

Cash Flow Quality

earnings_quality: OCF is undisclosed. With operating and ordinary income positive and interest coverage strong, earnings quality appears credible, but the absence of OCF prevents validation of cash conversion. FCF_analysis: Investing and financing CF are undisclosed; capex is typically significant for rail and real estate. Free cash flow cannot be assessed. Monitoring capex intensity vs. OCF generation will be key to evaluating structural FCF. working_capital: Negative working capital of ¥261.9bn reflects the sector’s model (deferred revenues, short-term liabilities). Without line-item movements, we cannot assess period-specific WC swings or their impact on cash.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are not disclosed in this dataset (zeros denote missing). Based on net income of ¥24.0bn for H1, capacity exists in principle, but payout policy cannot be inferred without board guidance and full-year earnings. FCF_coverage: FCF is undisclosed; therefore, cash coverage of dividends cannot be assessed. Sector capex needs can materially affect FCF and dividend headroom. policy_outlook: Historically, private railways target stable dividends, but sustainability hinges on OCF resilience, capex plans (rail maintenance, real estate development), and leverage targets. Await full-year guidance and official dividend resolutions.

Risk Assessment

Business Risks:

• Passenger demand volatility (commuter and leisure) and seasonality
• Inbound tourism fluctuations affecting rail, hotels, and leisure facilities
• Regulatory and fare revision constraints
• Energy and utility cost inflation affecting rail operations
• Natural disasters and weather events disrupting services and assets
• Real estate market softness impacting leasing and development profits
• Competitive pressures in retail/leisure and alternative transport modes

Financial Risks:

• Refinancing risk due to negative working capital and large capex needs
• Interest rate risk on floating-rate debt or future issuances
• Capital intensity leading to periods of weak FCF
• Asset impairment risk in real estate or leisure assets if demand softens
• Pension/employee benefit liabilities (sector common) potentially affecting cash

Key Concerns:

• Limited visibility on cash flows and capex due to undisclosed CF data
• Earnings sensitivity to passenger volumes given high fixed costs
• Dependence on macro recovery and inbound tourism for growth
• Potential margin pressure from energy/utility costs

Investment Implications

Key Takeaways:

• Operating income ¥35.6bn (-7.5% YoY) and net income ¥24.0bn (-5.2% YoY) indicate modest profit softening but continued profitability
• Interest coverage ~11.8x underscores manageable financing burden
• Derived equity ratio ~32.7% and D/E 2.04x align with sector norms
• Negative working capital (¥261.9bn) is structural but raises refinancing focus
• Cash flow and revenue not disclosed; limits assessment of cash conversion and segment trends

Metrics to Watch:

• Disclosed revenue and segment breakdowns (rail, real estate, leisure)
• Operating cash flow and free cash flow vs capex
• Passenger volume recovery, fare revisions, and inbound tourism indicators
• Energy cost trends and hedging, if any
• Net debt/EBITDA and interest coverage trajectory
• Dividend announcements, payout targets, and capital allocation

Relative Positioning: Within the Japanese private railway peer group (e.g., Tokyu, Seibu, Keio, Odakyu), Tobu exhibits a typical leverage and liquidity profile with solid interest coverage and a balanced asset base across rail and real estate; earnings recovery appears ongoing but visibility is constrained in this dataset by missing revenue and cash flow disclosures.

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