Fujibo Holdings,Inc. FY2027 Q1 Earnings Report

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Executive Summary

For Q1 of the fiscal year ending March 2027, the Company achieved double-digit growth in both revenue and earnings, driven by expansion in its core Abrasives Business and Chemical Products Business. Revenue was ¥13.17B (¥11.25B in the same period of the previous year, YoY +17.0%), Operating Income was ¥2.48B (¥1.94B, YoY +28.2%), Ordinary Income was ¥2.60B (¥2.05B, YoY +26.6%), and Net Income attributable to owners of the parent was ¥1.74B (¥1.48B, YoY +17.7%). The Operating Income margin improved to 18.8% from 17.2% in the same period of the previous year, an improvement of +1.6pt, with operating leverage from higher revenue and an improved business mix contributing to enhanced profitability.

Factors Affecting Earnings

【Revenue】Revenue was ¥13.17B (YoY +17.0%), led by the Abrasives Business (49.3% of revenue, YoY +24.0%) and Chemical Products Business (34.8%, YoY +26.0%). Meanwhile, the Apparel Business posted lower revenue (10.5% of revenue, YoY -14.6%), restraining overall growth. The revenue contributions of the Abrasives Business and Chemical Products Business increased by +2.7pt and +2.5pt, respectively, from the same period of the previous year, indicating that the center of the business portfolio is shifting toward higher-margin segments.

【Profit and Loss】The gross profit margin improved to 36.2% from 36.0% in the same period of the previous year, an improvement of +0.2pt, while the SG&A ratio improved to 17.3% from 18.8%, a reduction of -1.5pt. Consequently, the Operating Income margin was 18.8% (17.2% in the same period of the previous year, +1.6pt). Ordinary Income increased largely in line with the growth in Operating Income, as non-operating income and expenses were broadly in line with the previous year (non-operating income of ¥0.16B and non-operating expenses of ¥0.04B). Net Income increased despite the recognition of a ¥0.05B loss on disposal of fixed assets (extraordinary loss and temporary factor), under an effective tax rate of 31.6% (25.9% in the same period of the previous year). Both Revenue and Operating Income exceeded the previous year, resulting in higher revenue and earnings.

Segment Analysis

The Abrasives Business recorded revenue of ¥6.50B (YoY +24.0%), Operating Income of ¥2.00B (YoY +35.0%), and a margin of 30.7% (up +2.5pt from 28.2% in the same period of the previous year), exceeding the Company-wide rates in both revenue and profit growth and serving as a core earnings pillar. The Chemical Products Business posted revenue of ¥4.58B (YoY +26.0%), Operating Income of ¥0.43B (YoY +21.2%), and a margin of 9.5% (down -0.3pt from 9.8%), achieving higher revenue and earnings, although its margin was largely flat. The Apparel Business recorded revenue of ¥1.38B (YoY -14.6%), Operating Income of ¥0.05B (YoY -63.4%), and a margin of 3.3% (down -4.3pt from 7.6%), resulting in lower revenue and earnings and widening the profitability gap between segments. Other Businesses posted slightly lower revenue of ¥0.71B (YoY -6.7%), while Operating Income improved to ¥0.003B (YoY +111.5%), approaching a level close to returning to profitability.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 18.8% from 17.2% in the same period of the previous year, an improvement of +1.6pt, while the Net Income margin remained largely flat at 13.2%, compared with 13.2% in the same period of the previous year.【Cash Flow Quality】Cash and deposits decreased by -9.2% to ¥8.66B from ¥9.54B in the same period of the previous year, while the Equity Ratio increased by +0.5pt to 72.5% from 72.0%, indicating that the Company continues to maintain a strong financial foundation.【Investment Efficiency】ROE (based on equity at the end of the period and quarterly results) improved to 3.3% from 2.9% in the same period of the previous year; however, this is a quarterly standalone level and should be assessed separately from a full-year evaluation.【Financial Soundness】Interest-bearing debt was minimal at ¥0.19B, consisting of ¥0.13B in short-term borrowings and ¥0.06B in long-term borrowings. Long-term borrowings decreased by -33.3% year on year, indicating that the Company continues to maintain a conservative financial structure close to a debt-free position.

Cash Flow Analysis

Because the cash flow statement is not included in the data, funding trends are assessed based on changes in the balance sheet. Cash and deposits decreased by -9.2% to ¥8.66B from ¥9.54B in the same period of the previous year, while machinery, equipment and vehicles increased by +38.8% to ¥10.25B from ¥7.38B. This suggests that progress in capital investment affected the decline in cash balances. Inventories increased by +15.1% to ¥1.34B from ¥1.16B, indicating inventory buildup accompanying revenue growth. While accounts receivable and notes receivable were broadly flat at ¥8.77B, compared with ¥8.74B in the same period of the previous year (+0.4%), accounts payable and notes payable increased by +13.0% to ¥4.19B from ¥3.70B, indicating that the use of trade payables partially offset working capital requirements. Long-term borrowings decreased by -33.3% year on year to ¥0.06B, suggesting a conservative capital policy that continues to reduce interest-bearing debt.

Earnings Quality

Profit for the quarter was led by Operating Income, indicating good earnings quality. Non-operating income of ¥0.16B (1.2% of Revenue) primarily consisted of dividend income of ¥0.06B and was strongly recurring in nature, while non-operating expenses of ¥0.04B were immaterial. A ¥0.05B loss on disposal of fixed assets was recognized as an extraordinary loss and treated as a temporary factor. Although Net Income of ¥1.74B was approximately 33% below Ordinary Income of ¥2.60B, the primary causes were the increased tax burden associated with the effective tax rate of 31.6% (up from 25.9% in the same period of the previous year) and the extraordinary loss. Comprehensive Income was ¥1.99B, exceeding Net Income of ¥1.74B by +¥0.24B, primarily due to a ¥0.27B increase in valuation difference on available-for-sale securities.

Earnings Forecast and Guidance

Q1 progress against the full-year forecast (Revenue of ¥54.90B, Operating Income of ¥9.90B, Ordinary Income of ¥10.10B, and Net Income of ¥6.80B) was 24.0% for Revenue, 25.1% for Operating Income, 25.7% for Ordinary Income, and 25.6% for Net Income. Compared with the 25% benchmark for evenly distributed quarterly progress, Revenue was slightly below the benchmark, while all earnings indicators exceeded it. The increase in the revenue contribution of the high-margin Abrasives Business and the decline in the SG&A ratio supported progress. The Company revised its earnings forecast and dividend forecast during this quarter.

Shareholder Returns

The full-year dividend forecast is ¥84 per share, and the Payout Ratio based on forecast EPS of ¥201.63 is approximately 41.7%. However, the Company conducted a 3-for-1 stock split of its common shares effective April 1, 2026. The forecast dividend and forecast EPS for the current fiscal year ending March 2027 are based on the post-split basis, whereas the actual dividend of ¥75 for the previous fiscal year is based on the pre-split basis. Accordingly, the two figures cannot be compared on a simple basis.

Risk Factors

1. Business concentration risk: The Abrasives Business accounts for 49.3% of Revenue and 80.6% of Operating Income (¥2.00B/¥2.48B), meaning that demand trends in this business have a significant impact on Company-wide results.

2. Profitability gap between segments: The Apparel Business has deteriorated, with Revenue down YoY -14.6%, Operating Income down YoY -63.4%, and a margin of 3.3% (down -4.3pt from 7.6% in the same period of the previous year). The gap with other segments (Abrasives Business 30.7%, Chemical Products Business 9.5%) is a factor weighing on the Company-wide margin.

3. Increase in working capital: Inventories increased by +15.1% year on year to ¥1.34B, while accounts payable increased by +13.0% to ¥4.19B. Trends in inventories and trade payables during the revenue expansion phase may affect cash generation.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin substantially exceed the industry median, placing the Company in the upper tier of the industry in terms of profitability.

Growth and Capital Efficiency

The Revenue growth rate also exceeds the industry median and the upper quartile (14.6%), indicating that the pace of revenue growth is high within the industry.

Source: Compiled by the Company

Key Points from the Financial Results

1. The Abrasives Business margin improved to 30.7% from 28.2% in the same period of the previous year, an improvement of +2.5pt, contributing to the increase in the Company-wide Operating Income margin to 18.8% (up +1.6pt). Together with the increase in its revenue contribution, the structural shift in earnings toward the high-margin segment is a key characteristic.

2. Profitability in the Apparel Business declined, with Revenue down YoY -14.6% and a margin of 3.3% (down -4.3pt from 7.6% in the same period of the previous year), widening the profit margin gap between segments. Trends in this business may become a factor influencing the future trajectory of the Company-wide margin.

3. Financial soundness remains strong, with an Equity Ratio of 72.5% (72.0% in the same period of the previous year) and interest-bearing debt of ¥0.19B. Continued monitoring of changes in working capital, including increases in inventories and accounts payable, is useful.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type, explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,701–¥1,800 for Cost of Equity ±1%, and ¥1,745–¥1,756 for ω ±0.1.

Notes:

• Net assets as of the end of the quarter are used (there is a time lag relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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