High levels of interest-bearing debt, rising interest rates, and risk of breaching financial covenants
First written in FY2021. 11 of 16 entries say "Worsened", first in FY2022-Q3. Latest entry: 2026-09-14.
AB&Company moved to the "Worse" side of this theme in 2023, 2 years after the typical company in this theme (2021).
The whole theme swung hardest in 2025: 23 of 75 companies on the "Worse" side.
13 other companies' latest entry also says "Worsened".
- FY2026-H1WorsenedAnnual report
「Maintain the leverage ratio at no more than 4.0 and at a positive level at each fiscal year-end. / Maintain the debt service coverage ratio at 1.05 or higher at each fiscal year-end.」
The new ¥1,100 million borrowing is subject to financial covenants, and maintenance requirements relating to the leverage ratio, debt service coverage ratio, net assets and consolidated ordinary profit were disclosed. Borrowings increased by ¥599 million from the end of the previous fiscal year, while finance costs rose 48.8% year on year to ¥138 million. - FY2025WorsenedAnnual report
「As of the end of the eighth consolidated fiscal year, the company reported interest-bearing debt of ¥13,477 million, representing an interest-bearing debt ratio of 49.8%. Interest on ¥6,995 million of borrowings from financial institutions is subject to periodic review linked to market interest rates.」
Interest-bearing debt increased from ¥12,036 million in the previous fiscal year to ¥13,477 million, and the interest-bearing debt ratio was 49.8%. The company also disclosed a negative ¥132 million impact on pretax income from a 1% rise in interest rates, while risks related to financial covenants and restrictions on acquisitions and capital investment continue. - FY2025-H1WorsenedAnnual report
「Current liabilities decreased by ¥164 million from the end of the previous consolidated fiscal year to ¥5,424 million. This was mainly due to decreases of ¥110 million in trade and other payables, ¥55 million in contract liabilities, ¥30 million in income taxes payable related to tax payments, and ¥217 million in other current liabilities related to consumption tax payments and bonus payments, offset by increases of ¥205 million in current borrowings and ¥43 million in current lease liabilities, among other factors. Non-current liabilities increased by ¥572 million from the end of the previous consolidated fiscal year to ¥11,258 million. This was mainly due to a ¥610 million increase in non-current borrowings, partly offset by a ¥52 million decrease in non-current lease liabilities, and a ¥14 million increase in non-current provisions, among other factors.」
Current borrowings increased by ¥205 million and non-current borrowings by ¥610 million, increasing the borrowing balance from the end of the previous consolidated fiscal year. Finance costs also rose 9.4% year on year to ¥92 million, confirming increases in both borrowing exposure and finance costs. - FY2024-Q2WorsenedAnnual report
「Current liabilities increased by ¥15 million from the end of the previous consolidated fiscal year to ¥5,158 million. This was mainly due to a ¥23 million decrease in trade and other payables, a ¥209 million increase in current borrowings and a ¥57 million increase in current lease liabilities, among other factors. Non-current liabilities increased by ¥459 million from the end of the previous consolidated fiscal year to ¥11,094 million. This was mainly due to a ¥340 million increase in non-current borrowings and an ¥82 million increase in non-current lease liabilities, among other factors.」
Current borrowings increased by ¥209 million and non-current borrowings by ¥340 million, increasing the borrowing balance from the end of the previous fiscal year. Finance costs also rose 25.2% year on year to ¥84 million, confirming increases in both borrowing exposure and finance costs. - FY2024-Q1WorsenedAnnual report
「Current liabilities decreased by ¥204 million from the end of the previous consolidated fiscal year to ¥4,938 million. This was mainly due to an ¥84 million decrease in trade and other payables, a ¥208 million increase in current borrowings, an ¥18 million increase in current lease liabilities and a ¥343 million decrease in current income taxes payable related to tax payments, among other factors. Non-current liabilities increased by ¥1,143 million from the end of the previous consolidated fiscal year to ¥11,778 million. This was mainly due to a ¥1,013 million increase in non-current borrowings, a ¥110 million increase in non-current lease liabilities and a ¥19 million increase in non-current provisions, among other factors.」
Current borrowings increased by ¥208 million and non-current borrowings by ¥1,013 million. Finance costs also rose 10.0% year on year to ¥43 million, confirming simultaneous increases in borrowing exposure and finance costs. - FY2023Declining interest-bearing debt ratio alongside rising debt balanceAnnual report
「As of the end of the sixth consolidated fiscal year, the company reported interest-bearing debt of ¥11,644 million, representing an interest-bearing debt ratio of 47.8%. Interest on ¥5,004 million of borrowings from financial institutions is subject to periodic review linked to market interest rates.」
Interest-bearing debt increased from ¥11,355 million in the previous fiscal year, while the interest-bearing debt ratio declined from 49.3% to 47.8%; variable-rate borrowings were disclosed at ¥5,004 million. Risks related to covenants, acquisition restrictions and rising interest rates continue. - FY2023-Q3Declining borrowing balance alongside rising finance costsAnnual report
「Finance costs increased by ¥22 million from the previous third-quarter cumulative consolidated period to ¥93 million, up 31.4% year on year.」
Finance costs increased 31.4% year on year. Meanwhile, borrowings at period-end comprised ¥1,431 million of current borrowings and ¥5,105 million of non-current borrowings, with non-current borrowings down ¥675 million from the end of the previous consolidated fiscal year and total borrowings also lower. The company recorded the coexistence of a declining balance and rising costs in the context of high interest-bearing debt and interest-rate risk. - FY2022WorsenedAnnual report
「As of the end of the fifth consolidated fiscal year, the company reported interest-bearing debt of ¥11,355 million, representing an interest-bearing debt ratio of 49.3%. Interest on ¥5,545 million of borrowings from financial institutions is subject to periodic review linked to market interest rates, and a rise in market interest rates could affect the Group's results and financial condition.」
Interest-bearing debt increased from ¥9,290 million to ¥11,355 million, while the interest-bearing debt ratio rose from 48.0% to 49.3%. In addition to variable-rate borrowings, financial covenants and restrictions on acquisitions and capital investment, borrowing exposure related to acquisition financing has increased. - FY2022-Q3WorsenedAnnual report
「This agreement was entered into to raise funds for the acquisition of shares in 株式会社BELLTREE and 株式会社KESHIKI. / Facility amounts: ¥200 million, ¥605 million and ¥279 million / Financial covenant: maintain the borrower's standalone balance-sheet net assets at each fiscal year-end at no less than 80% of the corresponding amount at the end of the fiscal year immediately preceding the relevant fiscal year.」
Although long-term borrowings had declined through the end of the third quarter, a syndicated loan totaling ¥1,084 million was drawn in connection with the acquisition on 31 August, creating new borrowing exposure subject to financial covenants including a net asset maintenance requirement. - FY2022-Q2MitigatedAnnual report
「Finance costs decreased by ¥5 million from the previous second-quarter cumulative consolidated period to ¥47 million, down 10.8% year on year. The decrease was due to lower interest expense resulting from a reduction in the outstanding balance of borrowings.」
Finance costs decreased 10.8% year on year due to a reduction in the outstanding balance of borrowings. The carrying amount of long-term borrowings also decreased from ¥5,901 million at the end of the previous consolidated fiscal year to ¥5,570 million, indicating that the interest-bearing debt exposure continues to contract. - FY2022-Q1MitigatedAnnual report
「Finance costs decreased by ¥5 million from the previous consolidated fiscal year to ¥24 million, down 19.7% year on year. The decrease was due to lower interest expense resulting from a reduction in the outstanding balance of borrowings.」
The company explained that interest expense declined as the outstanding balance of borrowings decreased, indicating that its interest-bearing debt exposure had contracted from the end of the previous fiscal year. However, there was no material change in risks such as financial covenants. - FY2021First statedAnnual report
「As of the end of the fourth consolidated fiscal year, the company reported interest-bearing debt of ¥9,290 million, representing an interest-bearing debt ratio of 48.0%.」
The company identifies variable-rate borrowings of ¥5,239 million, financial covenants, and restrictions on acquisitions and capital investment as specific exposures.