IBIDEN CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

For Q1 of the fiscal year ending March 2027, revenue and profits increased against the backdrop of higher profitability in the Electronics Business, resulting in strong earnings in which profit growth outpaced revenue growth. Revenue was ¥123.22B (¥97.46B in the same period of the previous year, YoY +26.4%), operating income was ¥26.88B (¥17.64B, YoY +52.4%), ordinary income was ¥27.47B (¥17.41B, YoY +57.8%), and net income attributable to owners of the parent was ¥17.92B (¥12.73B, YoY +40.8%). In addition to higher revenue, both the gross margin and the SG&A expense ratio improved, expanding the operating margin to 21.8% (18.1% in the previous year). However, the increase in the effective tax rate from 24.5% to 31.9% restrained net income growth relative to the growth in operating income and ordinary income.

Factors Affecting Earnings

【Revenue】Revenue increased across all segments, with the core Electronics segment, which accounted for 60.1% of total segment revenue, posting the strongest growth of +37.7%. Ceramics accounted for 18.9% of the composition and increased revenue by +24.3%, while Other Businesses accounted for 21.0% and increased revenue by +9.2%. The structure in which strong growth in Electronics is driving overall top-line growth (+26.4%) is clear.

【Profitability】Gross profit was ¥44.87B (gross margin of 36.4%, +0.4pt from 35.98% in the previous year), while the SG&A expense ratio was 14.6% (-3.3pt from 17.89% in the previous year). Since SG&A expenses grew more slowly than revenue (+26.4%), operating leverage took effect. As a result, the operating margin expanded to 21.8% (+3.7pt). Ordinary income grew faster than operating income (+57.8%), also benefiting from non-operating income and expenses, including a net contribution of +¥0.59B from dividend income of ¥0.41B and foreign exchange gains of ¥0.39B. However, as the effective tax rate increased from 24.5% to 31.9%, net income growth (+40.8%) fell below growth in profit before tax (+55.6%). Revenue and profit increased.

Segment Analysis

Electronics generated operating income of ¥21.375B, representing 79.7% of total segment profit, and maintained a high margin of 27.6% (approximately flat from 28.1% in the same period of the previous year). It is the core business, showing double-digit growth in both revenue and profit. Ceramics generated operating income of ¥3.22B (12.0% of total segment profit for the period), with a margin of 13.2%; profit growth of +53.6% year on year was recorded, and the margin also improved from the equivalent of 8.6% in the previous year. Other Businesses, including construction, construction materials, and synthetic resin processing, generated operating income of ¥2.24B (8.3% of total segment profit) and posted profit growth of +49.0%, despite a relatively low margin of 8.3%. Although all segments recorded higher revenue and profit, the profit composition remains highly dependent on Electronics, creating a structure in which supply-demand and pricing trends in that business significantly influence company-wide performance.

Key Financial Indicators

【Profitability】The operating margin improved to 21.8% (+3.7pt from 18.1% in the previous year), the gross margin improved to 36.4% (+0.4pt from 35.98%), and the net margin attributable to owners of the parent improved to 14.5% (+1.5pt from 13.06%).【Cash Flow Quality】Operating cash flow (OCF) was ¥95.89B, reaching 5.4 times net income attributable to owners of the parent of ¥17.92B, indicating that cash-generation capacity is expanding at a faster pace than profit.【Investment Efficiency】ROE was 3.1% (equivalent to 2.3% in the previous year), an improvement on a quarterly basis, although total asset turnover remained low, leaving room for improvement in asset efficiency.【Financial Soundness】The equity ratio declined to 54.9% (57.3% in the previous year) as total assets expanded. However, cash and deposits accumulated to ¥373.37B (+26.3% year on year), maintaining a high level of liquidity security.

Cash Flow Analysis

Operating cash flow was ¥95.89B, a substantial increase from ¥9.56B in the previous year, primarily due to a significant ¥73.58B increase in advances received. Inventories increased by ¥5.50B, restricting cash conversion, and trade receivables also increased by ¥2.68B, while accounts payable increased by ¥4.51B and supported cash flow. Investing cash flow was -¥16.13B, mainly comprising capital expenditures of ¥15.75B. Construction in progress (CIP) accumulated to ¥120.85B (+8.1% from ¥111.79B in the previous year), indicating that the investment phase is continuing. Financing cash flow was -¥3.30B, with dividend payments of ¥4.20B representing the main cash outflow. As a result, free cash flow was ¥79.76B, a substantial improvement from the equivalent of -¥13.73B in the previous year, securing cash well in excess of capital expenditures and dividends. However, given that the primary cause of the sharp increase in OCF was a temporary cash inflow from advances received, attention is required regarding the sustainability of cash flow when these funds are drawn down as revenue is recognized.

Earnings Quality

The increase in profit for the period was attributable to improved recurring earning power at both the operating and ordinary income levels, while the impact of extraordinary gains and losses was limited. Non-operating income was ¥1.88B, including dividend income of ¥0.41B and foreign exchange gains of ¥0.39B, while non-operating expenses were ¥1.29B, including interest expenses of ¥0.22B. Together, these provided a net earnings uplift of ¥0.59B. Extraordinary losses were ¥0.94B, of which ¥0.91B represented losses on disposal of fixed assets, a temporary factor equivalent to approximately 5% of net income. OCF of ¥95.89B reached 5.4 times net income attributable to owners of the parent of ¥17.92B, indicating generally high cash-based earnings realization. However, its composition was heavily dependent on the working-capital timing factor of increased advances received, so the recurring contribution from business earnings should be distinguished from the cash flow uplift. In addition, between profit before tax and net income, the increase in the effective tax rate from 24.5% in the previous year to 31.9% acted to compress profit growth.

Earnings Forecast and Guidance

Q1 progress against the full-year earnings forecast was 22.4% for revenue (¥123.22B/¥550.00B), 21.2% for operating income (¥26.88B/¥127.00B), and 21.6% for ordinary income (¥27.47B/¥127.00B), all below the simple one-quarter progress benchmark of 25%. The full-year forecast anticipates substantial revenue and profit growth of +32.1% for revenue and +104.7% for operating income, while the growth recorded as of Q1—revenue +26.4% and operating income +52.4%—was more moderate. The significant increase in advances received (+¥73.58B) and the accumulation of CIP suggest that revenue recognition for projects and the commencement of production capacity utilization are planned for the second half, indicating that the forecast may be weighted toward the second half. The earnings forecast and dividend forecast were revised during the quarter.

Shareholder Returns

Dividend payments during the quarter were ¥4.20B, up from ¥2.80B in the same period of the previous year. Share repurchases were virtually zero (-¥0.004B), meaning that dividends constituted the core of shareholder returns for the period. The company conducted a 2-for-1 stock split effective January 1, 2026, and plans to conduct another 2-for-1 stock split effective October 1, 2026. As a result, annual dividends for the fiscal years ending March 2026 and March 2027 have not been disclosed because they cannot be calculated on a simple basis. In addition, the interim dividend for the fiscal year ending March 2026 includes a commemorative dividend of ¥10. Although a revision to the year-end dividend forecast and a change in the dividend policy have been announced in connection with the stock split, the company states that there is no substantive revision to the dividend forecast. Dividend payments of ¥4.20B are well covered by free cash flow of ¥79.76B, and dividend sustainability appears high based on cash-generation capacity.

Risk Factors

1. Segment concentration risk: The Electronics Business accounts for 60.1% of total segment revenue and 79.7% of segment profit, creating a structure in which company-wide performance is heavily dependent on supply-demand and pricing trends in that business. If the growth rate of the business (+37.7% revenue growth) slows, the impact on company-wide performance would be relatively significant.

2. Cash flow dependence on advances received: The sharp increase in OCF to ¥95.89B was primarily due to a ¥73.58B increase in advances received, making the contribution from timing factors substantial. When these advances are subsequently drawn down as revenue is recognized, OCF growth may temporarily slow.

3. Risk associated with the utilization of large-scale investments (CIP): Construction in progress accumulated to ¥120.85B (+8.1% year on year), representing 11.4% of total assets. Capital expenditures of ¥15.75B were below depreciation and amortization of ¥17.59B. The timing of project utilization and yields may affect future fixed-cost absorption and returns on invested capital.

Industry Benchmark (For Reference; Based on Company Research)

Key Takeaways from the Earnings Results

1. Profit growth, with operating income increasing by +52.4%, exceeded revenue growth of +26.4%, expanding the operating margin to 21.8% (+3.7pt). In addition to the improvement in gross margin (+0.4pt), the decline in the SG&A expense ratio (-3.3pt) contributed to the result, indicating that higher margins and expansion in the Electronics Business are driving improved company-wide profitability.

2. OCF surged to ¥95.89B, up +902.8% year on year, securing free cash flow of ¥79.76B. Although the company generated cash well in excess of capital expenditures and dividends, the primary driver of the increase was advances received, a working-capital item. Accordingly, the subsequent trend in cash flow as these funds are utilized will be a key monitoring point.

3. Q1 progress against the full-year forecast was 22.4% for revenue and 21.2% for operating income, below the simple one-quarter progress benchmark of 25%. The full-year plan may therefore be weighted toward the latter half, assuming revenue recognition and the benefits of increased production in the second half.

Theoretical Share Price (Reference Value)

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

Sensitivity: ¥1,961–¥2,077 at ±1% for the cost of equity, and ¥2,016–¥2,018 at ±0.1 for ω.

Notes:

• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used; there is a timing difference relative to the full-year forecast.
• Since 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 predict 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 summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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