Tokyo Kisen Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.81B
• Operating Income: ¥37M
• Net Income: ¥257M
• EPS: ¥3.16

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

Tokyo Kisen (TSE: 91930) delivered FY2026 Q2 consolidated results marked by solid top-line growth but very thin profitability and a sharp decline in bottom-line earnings. Revenue rose 14.0% year on year to ¥6.812 billion, indicating healthy demand in core tugboat and port services. Despite this, operating income was essentially flat at ¥37 million, implying minimal operating leverage and cost pressures that offset the revenue increase. Gross profit of ¥848 million translated to a gross margin of 12.4%, which is modest for asset-intensive marine services and suggests fuel, crew, and maintenance costs remained elevated. Ordinary income reached ¥184 million, well above operating income, indicating a meaningful contribution from non-operating items (e.g., interest/dividend income, equity-method gains, or other non-core gains) that partially masked weak core profitability. Net income was ¥31 million, down 85.9% YoY, implying the presence of sizable extraordinary losses or other below-the-line impacts under JGAAP, despite a reported negative income tax (tax credit). The DuPont profile is weak: a net margin of 0.46%, asset turnover of 0.219x, and financial leverage of 1.28x yield a low ROE of 0.13%. Balance sheet strength is a key positive: total equity of ¥24.288 billion against total assets of ¥31.049 billion implies an equity ratio near 78% (the dataset’s 0.0% equity ratio appears undisclosed), and debt-to-equity stands at a conservative 0.27x. Liquidity is strong with a current ratio of 325.7% and working capital of ¥7.575 billion, providing ample near-term flexibility. Interest coverage is thin at 1.4x, reflecting subdued EBIT rather than high leverage. Cash flow statements and cash balances were not disclosed in the dataset (zeros reflect unreported), limiting assessment of earnings-to-cash conversion and capital intensity this period. The reported EBITDA is shown as zero because depreciation and amortization were not disclosed; this constrains typical operating cash proxy analysis for a fleet-based business. Dividend disclosure indicates DPS of ¥0 and a 0% payout ratio, which is consistent with earnings protection but does not inform future policy without cash flow data. Overall, Q2 shows demand resilience but substantial margin compression and a heavier reliance on non-operating income, alongside a very strong balance sheet. Near-term priorities include restoring operating margins through pricing, fuel pass-through, and utilization, while clarifying the drivers of extraordinary items and the outlook for capital expenditures. Data limitations (notably OCF, capex, depreciation, and cash) are material and temper confidence in cash-based inferences.

Profitability Analysis

ROE is 0.13% via DuPont: Net Profit Margin 0.46% × Asset Turnover 0.219 × Financial Leverage 1.28. The margin is the primary drag; asset turnover is low but typical for asset-heavy marine services, and leverage is modest. Gross margin at 12.4% indicates elevated direct costs (fuel, crew, repairs/drydock) relative to revenue. Operating margin is about 0.5% (¥37m OI on ¥6,812m sales), highlighting minimal operating leverage despite 14% revenue growth. The gap between operating income (¥37m) and ordinary income (¥184m) suggests non-operating gains were significant; core operating quality is therefore weak this quarter. Interest expense of ¥27.2m versus EBIT implies thin coverage (1.4x), leaving little room for further margin compression. Reported negative tax suggests tax credits/loss carryforwards or extraordinary effects; it does not change the underlying weak pre-tax profitability. EBITDA and EBITDA margin are not assessable due to undisclosed depreciation/amortization; for a fleet operator, true operating profitability could be substantially lower on an economic basis when including maintenance capex needs. Overall, profitability is constrained by cost inflation and likely timing of maintenance, with negative operating leverage in the quarter.

Growth Assessment

Revenue growth was +14.0% YoY to ¥6.812bn, indicating stable-to-strong tug/job volumes and/or pricing. However, operating income was flat at ¥37m, demonstrating that incremental revenue did not translate into proportional profit, pointing to cost pass-through limitations or higher opex. Net income declined 85.9% YoY to ¥31m, likely reflecting extraordinary losses or below-the-line items in addition to weak operating margins. Ordinary income at ¥184m signals some support from non-operating sources, which may not be structurally repeatable. Sustainability of revenue appears reasonable given port activity, but profit sustainability is uncertain unless cost recovery (fuel surcharges, tariff revisions) improves. Near-term outlook hinges on utilization, crew cost trends, bunker fuel dynamics, and maintenance/overhaul timing. If non-operating gains normalize and cost controls improve, incremental margin could recover; absent that, earnings growth will lag revenue growth. Lack of cash flow and capex data constrains visibility into capacity additions or fleet upgrades that might influence growth. Overall, the quarter shows top-line momentum but low-quality profit growth with heavy reliance on non-core items.

Financial Health

Total assets ¥31.049bn, total equity ¥24.288bn, total liabilities ¥6.467bn. Based on reported totals, the implied equity ratio is approximately 78% (the dataset’s 0.0% equity ratio appears undisclosed). Debt-to-equity is 0.27x, pointing to conservative leverage. Current assets ¥10.93bn vs current liabilities ¥3.356bn yield a current ratio of 325.7% and working capital of ¥7.575bn, indicating strong liquidity. Quick ratio mirrors the current ratio due to undisclosed inventories. Interest coverage is thin at 1.4x owing to low EBIT, not balance sheet stress. The capital structure appears robust and capable of absorbing volatility; however, sustained low operating margins could pressure coverage metrics if borrowing increases for capex. Absent disclosed cash, we cannot evaluate cash buffers, but the overall solvency profile is strong.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed in the dataset (zeros denote unreported), preventing assessment of OCF/NI and FCF beyond the placeholder ratios provided. Earnings quality cannot be triangulated to cash without OCF and working capital movements. Depreciation and amortization are undisclosed; hence EBITDA as a cash proxy is unavailable. For an asset-heavy fleet operator, maintenance capex typically approximates or exceeds depreciation over time; without capex data, true FCF cannot be inferred. Working capital appears ample (¥7.575bn), but period-to-period movements and their impact on OCF are unknown. The large gap between operating income and ordinary/net income suggests reliance on non-operating and extraordinary items; cash conversion of these items may differ from core operations. In sum, cash flow quality is indeterminable this quarter due to missing disclosures, and conclusions must be deferred until OCF and capex are available.

Dividend Sustainability

Annual DPS is reported as ¥0 with a payout ratio of 0%. With net income at ¥31m and no cash flow data, we cannot assess FCF coverage. Given the strong equity base and low leverage, the balance sheet could support dividends in principle, but weak operating profitability and thin coverage argue for prudence until margins improve. Absent clarity on maintenance capex and OCF, a sustainable payout framework cannot be modeled. Policy outlook likely remains conservative, prioritizing fleet upkeep and financial flexibility over distributions until earnings normalize.

Risk Assessment

Business Risks:

• Fuel price volatility and effectiveness/timing of surcharge pass-through
• Crew wage inflation and labor availability in maritime operations
• Maintenance/drydock timing risk leading to cost spikes and downtime
• Demand cyclicality tied to port calls, import/export volumes, and industrial activity
• Regulatory and safety compliance costs in port and tug operations
• Weather and incident risk affecting utilization and costs
• Customer concentration and tariff negotiation risk

Financial Risks:

• Thin operating margin and low interest coverage (1.4x) amid cost pressure
• Earnings reliance on non-operating income and extraordinary items
• Potential future capex cycle requiring incremental debt, pressuring coverage
• Limited visibility due to undisclosed cash flows and depreciation
• Tax volatility given negative tax in the period

Key Concerns:

• Operating leverage failed to materialize despite 14% revenue growth
• Significant drop in net income (-85.9% YoY) suggests extraordinary losses or below-the-line drag
• Cash flow and capex data are not disclosed, obscuring FCF and dividend capacity
• Gross margin is modest at 12.4%, indicating cost pass-through challenges

Investment Implications

Key Takeaways:

• Top-line growth is solid, but core operating profitability is weak and highly sensitive to costs
• Ordinary income outperformance vs operating income reflects non-operating support that may not be durable
• Balance sheet is strong with low leverage and high liquidity, providing resilience
• Interest coverage is thin; sustained low EBIT would be a constraint if capex or borrowing increases
• Limited cash flow disclosure constrains visibility on earnings quality and FCF

Metrics to Watch:

• Operating margin recovery (target >2% as a milestone for improved operating leverage)
• Fuel cost trends and surcharge pass-through rates
• Utilization rates/job counts and tariff revisions in core ports
• Non-operating income composition and sustainability
• Capex guidance, drydock schedule, and depreciation disclosure
• OCF and FCF when disclosed; OCF/NI and FCF/Net Income ratios

Relative Positioning: Compared to domestic marine service peers, Tokyo Kisen’s balance sheet appears stronger with lower leverage and ample liquidity, but profitability in this quarter is weaker and more dependent on non-operating items; improving core margins is key to closing the performance gap.

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