Can Mattel pay its interest bill from operating profit?

Mattel, the US toymaker, grew revenue 10.5% to USD 1.1bn in Q2 2026 (April to June, USD), up from USD 1.0bn a year earlier. Operating profit went the other way. It fell 86.1% to USD 10.9m from USD 78.5m. Interest expense for the quarter was USD 31.8m, so operating profit covered it only 0.34×. The bottom line shows the same squeeze: a net loss of USD 18.2m, against a net profit of USD 53.4m in Q2 2025.

Interest cover drops when operating profit falls while the debt stays where it was. Interest is a fixed bill, but operating profit moves with every change in costs and prices. A shortfall has to be paid from cash, new borrowing or the owners. Cash stood at USD 524m, down 39.8% from USD 870m, and the equity ratio slipped to 31.4% from 34.8%. One quarter is not a trend, and I would not call it one. But in this quarter the interest bill was larger than the operating profit.