TOHBU NETWORK CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.20B
• Operating Income: ¥181M
• Net Income: ¥-42M
• EPS: ¥38.68

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

Tobu Network Co., Ltd. (9036) delivered a resilient FY2026 Q2 (cumulative) performance with operating leverage despite top-line pressure. Revenue fell 4.8% YoY to ¥5,197 million, yet operating income rose 26.0% YoY to ¥181 million, indicating effective cost control and/or mix improvements. Ordinary income reached ¥238 million and net income surged 182.1% YoY to ¥218 million, supported by a very light tax burden in the period. Net profit margin improved to 4.19%, contrasting with soft gross margin of 10.9%, suggesting that SG&A discipline and non-operating gains (or lower financing/other costs) contributed materially to bottom-line expansion. EBITDA was ¥491.9 million with a 9.5% margin, highlighting a sizeable depreciation burden of ¥310.9 million typical for asset-intensive logistics. The DuPont profile shows low leverage (financial leverage 1.21x) and modest asset turnover (0.207x), producing a calculated ROE of 1.05% for the period. Liquidity is strong: current ratio and quick ratio are both 382.8%, and working capital stands at ¥4,402.7 million, underscoring ample short-term coverage. The balance sheet appears conservative with total liabilities of ¥4,372 million against total equity of ¥20,754 million, implying low gearing (debt-to-equity 0.21x). Interest expense is minimal at ¥7.2 million, with an interest coverage ratio of 25.2x, reflecting low financial risk. Operating cash flow of ¥411.2 million exceeded net income (OCF/NI 1.89x), a positive signal on earnings quality for the half-year. Revenue headwinds likely reflect softer freight demand and/or pricing normalization, but the sharp improvement in operating and net income indicates successful cost initiatives and potentially favorable fuel or subcontracting cost trends. The near-zero effective tax rate reported for the period likely will not persist, so net profitability could normalize as tax effects revert. Key disclosures such as investing cash flows, cash and equivalents, equity ratio, dividends, and share counts are not provided in the dataset (zeros denote non-disclosure), which constrains full-cycle cash flow and per-share analyses. Dividend details are not available, and payout metrics cannot be assessed reliably without confirmed free cash flow and policy disclosures. Overall, the company exhibits solid financial health and good cash conversion this period, though sustainability hinges on demand recovery, cost conditions, and normalization of tax rates.

Profitability Analysis

ROE decomposition (DuPont): Net margin 4.19% × asset turnover 0.207 × financial leverage 1.21 ≈ ROE 1.05%, indicating that current ROE is constrained primarily by low asset turnover rather than leverage. Operating margin (operating income of ¥181m on ¥5,197m revenue) is approximately 3.5%, improving YoY despite revenue decline, pointing to operating leverage from cost optimization. Gross margin is 10.9%, relatively thin for logistics, but improved profitability below gross profit suggests SG&A efficiencies and limited non-operating drag. EBITDA margin at 9.5% versus operating margin at 3.5% highlights a large non-cash depreciation burden (¥310.9m), consistent with an asset-heavy fleet and facility base. Interest coverage is robust at 25.2x, indicating financing costs are not an earnings constraint. The spread between gross margin and operating margin implies tight cost control on fixed overhead amid volume softness. The jump in net income (+182.1% YoY) relative to operating income (+26.0% YoY) signals material contribution from a lower tax burden and possibly ordinary income factors; this may not be recurring. Overall, profitability quality is better at the operating and cash levels than the net level due to likely temporary tax effects.

Growth Assessment

Revenue decreased 4.8% YoY to ¥5,197m, indicating softer activity or pricing in core logistics operations. Despite this, operating income rose 26.0% YoY, suggesting successful cost actions and/or improved lane/mix management. Ordinary income outpaced operating income at ¥238m, implying supportive non-operating balance (e.g., financial income or other), though specifics are undisclosed. Net income growth of 182.1% YoY is not sustainable absent similar operating and tax dynamics; the reported near-zero effective tax rate is unlikely to persist. EBITDA of ¥491.9m provides a buffer for capex and fleet renewal, but investing cash flows are not disclosed, limiting visibility on reinvestment intensity and future capacity growth. Asset turnover of 0.207x is modest, indicating that growth will depend on either higher utilization, pricing power, or asset-light expansion. Near-term outlook hinges on freight demand normalization, driver availability, cost pass-through (fuel surcharges), and regulatory constraints on working hours. Given declining sales but improved profit metrics, sustainability depends on maintaining cost discipline and securing mix/pricing improvements as volumes recover.

Financial Health

Total assets are ¥25,149m against total liabilities of ¥4,372m and total equity of ¥20,754m, reflecting a conservative capital structure. The current ratio and quick ratio are both 382.8%, supported by current assets of ¥5,959.7m and current liabilities of ¥1,557.0m, indicating strong short-term liquidity. Working capital of ¥4,402.7m provides ample operational flexibility. Debt-to-equity is 0.21x, implying low leverage and limited solvency risk. Interest expense is minimal at ¥7.2m, with coverage of 25.2x, further de-risking the capital structure. The equity ratio is not disclosed in the data provided; however, the absolute levels of liabilities and equity indicate a high equity buffer. Cash and equivalents are not disclosed, so immediate liquidity composition cannot be assessed, though aggregate current assets are sufficient. Overall solvency and liquidity appear strong.

Cash Flow Quality

Operating cash flow of ¥411.2m exceeds net income of ¥218.0m (OCF/NI 1.89x), indicating strong cash conversion and low reliance on accruals in this period. EBITDA of ¥491.9m versus OCF of ¥411.2m suggests working capital movements and cash taxes/interest were manageable. Free cash flow cannot be derived as investing cash flows are not disclosed in the dataset (zero indicates non-disclosure). Depreciation of ¥310.9m is substantial, consistent with a capital-intensive fleet; without capex disclosure, maintenance vs. growth reinvestment sufficiency cannot be judged. Working capital specifics (receivables, payables, inventories) are largely undisclosed, but high current ratios imply adequate liquidity. Given the positive OCF and low interest burden, earnings quality appears solid at the operating cash level for the half-year.

Dividend Sustainability

Dividend per share, payout ratio, and free cash flow coverage metrics are not disclosed in the provided data (zeros denote non-disclosure). EPS is ¥38.68 for the period, and operating cash flow is robust, but without capex and investing cash flows, free cash flow and, consequently, dividend capacity cannot be reliably assessed. The balance sheet strength (low leverage, high liquidity) would typically support dividend stability, but formal policy, historical payout, and board guidance are not available in the dataset. Until investing cash flows and policy disclosures are provided, payout sustainability assessment remains indeterminate.

Risk Assessment

Business Risks:

• Freight demand volatility driven by macro conditions and industrial activity
• Fuel price fluctuations and effectiveness of fuel surcharge pass-through
• Driver shortage, wage inflation, and 2024 overtime regulation impacts on capacity and costs
• Customer concentration and pricing pressure from large shippers
• Competitive intensity in regional trucking and third-party logistics
• Capital intensity and need for ongoing fleet renewal and environmental compliance
• Potential disruptions from accidents, weather, and supply chain dislocations
• Regulatory changes related to safety, emissions, and labor

Financial Risks:

• Depreciation-heavy earnings profile requiring sustained capex to maintain asset base
• Potential normalization of tax rate from a very low current-period level
• Working capital seasonality affecting intra-year cash flows
• Interest rate risk limited but present on any floating-rate borrowings
• Asset turnover weakness dampening ROE despite low leverage

Key Concerns:

• Sustainability of margin gains amid declining revenue
• Visibility on capex and free cash flow due to non-disclosed investing cash flows
• Tax rate normalization risk to net income growth
• Ability to attract and retain drivers under tightening labor regulations

Investment Implications

Key Takeaways:

• Revenue declined 4.8% YoY to ¥5,197m, but operating income rose 26.0% YoY to ¥181m, evidencing strong cost control
• Net income increased 182.1% YoY to ¥218m, aided by a very low effective tax burden
• EBITDA margin of 9.5% and OCF/NI of 1.89x point to solid operating cash generation
• Balance sheet is conservative with debt-to-equity of 0.21x and interest coverage of 25.2x
• High liquidity (current and quick ratios at 382.8%) provides operational flexibility
• Asset turnover of 0.207x limits ROE (1.05%), emphasizing the need for utilization and pricing improvements

Metrics to Watch:

• Revenue trajectory by segment and volume/pricing mix
• Fuel cost trends and surcharge pass-through effectiveness
• Labor cost ratio and driver capacity utilization post-2024 regulatory changes
• Capex versus depreciation to gauge maintenance sufficiency and growth investment
• Operating cash flow versus net income and working capital movements
• Tax rate normalization and its impact on net margins
• Asset turnover and return on assets
• Leverage and interest coverage stability

Relative Positioning: Within domestic logistics peers, the company exhibits stronger liquidity and lower leverage than average, mid-to-low operating margins typical of trucking, and modest asset turnover that suppresses ROE; current-period profit outperformance stems more from cost discipline and tax effects than from top-line growth.

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