Nippon Light Metal Holdings Company,Ltd. FY2027 Q1 Earnings Report

Quick View

Executive Summary

The first quarter of the fiscal year ending March 2027 recorded increases in both revenue and earnings, with particularly significant improvement in profitability. Revenue was ¥1663.3B (¥1370.9B in the same period last year, YoY+21.3%), Operating Income was ¥105.7B (¥52.1B, YoY+102.8%), and Ordinary Income was ¥99.2B (¥42.6B, YoY+132.7%). Quarterly Net Income attributable to owners of the parent was ¥61.6B (¥21.2B, YoY+190.3%), representing the highest growth rate among the three indicators. The Operating Income margin improved to 6.4% from 3.8% in the same period last year, a 2.6pt improvement, primarily due to higher revenue and earnings in the core Alumina & Chemicals and Ingot segment, as well as cost absorption resulting from a lower SG&A ratio.

Factors Affecting Performance

【Revenue】Revenue of ¥1663.3B increased 21.3% year on year. By segment, Alumina & Chemicals and Ingot recorded the largest growth, with revenue of ¥891.2B (+38.3%), driving the overall result. Sheet & Extruded Products also increased revenue to ¥489.6B (+26.8%), while Foil, Powder & Paste rose to ¥313.8B (+12.4%). Processing Products & Others was the only segment to record a decline in revenue, at ¥428.0B (-1.5%).

【Profitability】Operating Income was ¥105.7B (+102.8%), with an Operating Income margin of 6.4% (3.8% in the prior year). Although the gross margin declined to 18.3% from 20.6%, a 2.3pt decrease, the SG&A ratio improved to 12.0% from 13.3%, and cost efficiencies boosted Operating Income. Ordinary Income was ¥99.2B (+132.7%) after reflecting non-operating expenses, including interest expenses of ¥6.4B and a net deduction of ¥6.5B. As no extraordinary gains or losses were recorded, Profit Before Tax remained at the same level as Ordinary Income. Consolidated Net Income after deducting ¥27.4B in income taxes was ¥71.8B, while Quarterly Net Income attributable to owners of the parent, excluding ¥10.2B attributable to non-controlling interests, was ¥61.6B (+190.3%). Both revenue and earnings increased.

Segment Analysis

Three of the four segments recorded increases in both revenue and earnings, while Processing Products & Others declined in revenue and fell into the red, widening the profitability gap between segments. The largest segment, Alumina & Chemicals and Ingot, generated revenue of ¥891.2B (+38.3%) and Operating Income of ¥68.8B (+106.8%, margin of 7.7%), accounting for more than half of total Company profit and serving as the primary driver of earnings growth. Sheet & Extruded Products recorded revenue of ¥489.6B (+26.8%) and Operating Income of ¥20.4B (+208.6%, margin of 4.2%), showing substantial earnings growth. Foil, Powder & Paste recorded revenue of ¥313.8B (+12.4%) and Operating Income of ¥29.4B (+34.6%, margin of 9.4%), maintaining the highest margin among the four segments. Processing Products & Others recorded an Operating Loss of ¥3.7B against revenue of ¥428.0B (-1.5%), compared with Operating Income of ¥4.3B in the same period last year, and its shift into the red has been a factor weighing on the Company-wide profit margin.

Key Financial Indicators

【Profitability】The Operating Income margin was 6.4%, improving 2.6pt from 3.8% in the same period last year. Basic EPS increased substantially to ¥100.05 (¥34.51 in the prior year, YoY+189.9%). ROE was 2.6% on a quarterly basis.【Cash Quality】Cash and deposits were ¥385.0B. Of ¥7.1B in non-operating income, dividends received accounted for ¥2.0B, indicating that recurring income was the main component.【Investment Efficiency】Revenue represented 29.3% of total assets of ¥5677.7B on a quarterly basis, indicating an improvement in asset efficiency from the prior year alongside revenue growth.【Financial Soundness】The current ratio was 200.7% and the quick ratio was 167.7%, ensuring ample liquidity. Interest coverage, calculated as Operating Income divided by interest expenses, was 16.4x, indicating strong resilience to interest burdens. The Equity Ratio was 48.1%, nearly unchanged from 48.2% in the same period last year, with no significant change in the capital structure.

Cash Flow Analysis

As a cash flow statement has not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits increased by ¥53.6B (+16.2%) to ¥385.0B from ¥331.4B in the same period last year, strengthening available liquidity. Meanwhile, accounts receivable and notes receivable declined by ¥90.8B (-5.9%) to ¥1446.8B from ¥1537.6B in the same period last year, indicating progress in collections. Inventories, however, increased by ¥33.8B (+6.8%) to ¥531.8B from ¥497.98B, suggesting a modest buildup in inventory levels. Short-term borrowings increased by ¥79.3B (+14.5%) to ¥626.97B from ¥547.69B, suggesting that part of working capital requirements is being funded through short-term borrowing. Construction in progress declined by ¥30.6B (-30.5%) to ¥69.74B from ¥100.35B, indicating progress in completing capital projects and transferring them to the relevant fixed-asset accounts.

Earnings Quality

No extraordinary gains or losses were recorded during the quarter, and Ordinary Income of ¥99.2B was equal to Profit Before Tax of ¥99.2B, indicating that recurring operating results were the primary component of earnings. Dividends received accounted for ¥2.0B of ¥7.1B in non-operating income, with no income of a temporary nature included. Comprehensive Income was ¥94.0B (¥81.5B attributable to owners of the parent), representing a gap of approximately ¥19.9B from Quarterly Net Income attributable to owners of the parent of ¥61.6B. This gap resulted from positive contributions from valuation difference on securities of +¥19.6B and foreign currency translation adjustments of +¥7.4B, offset by negative contributions from adjustments related to retirement benefits of -¥2.6B and deferred hedge gains or losses of -¥1.4B. Fluctuations in OCI driven by market conditions were the primary factor.

Earnings Forecasts and Guidance

The Q1 progress rates against the Company’s full-year forecasts (Revenue of ¥6900.0B, Operating Income of ¥330.0B, Ordinary Income of ¥310.0B, and Net Income attributable to owners of the parent of ¥170.0B) were 24.1% for Revenue, 32.0% for Operating Income, 32.0% for Ordinary Income, and 36.3% for Net Income. Compared with the simple quarterly allocation benchmark of 25%, Revenue was progressing at approximately a standard pace, while the profit items were clearly ahead of schedule at 32–36%, indicating that profitability improvements are progressing ahead of plan. The Company also revised its earnings and dividend forecasts during the quarter, which should be noted as a change from the initial plan.

Shareholder Returns

The Company announced a full-year dividend forecast of ¥110.00 per share and revised its dividend forecast during the quarter. The Payout Ratio against full-year forecast EPS of ¥275.98 is approximately 39.9% (¥110.00/¥275.98). Given that earnings are progressing ahead of schedule, current coverage can be considered adequate.

Risk Factors

1. Decline in gross margin: The gross margin was 18.3%, down 2.3pt from 20.6% in the same period last year. Despite the increase in revenue, the cost ratio rose, and the impact of trends in raw material and energy costs, as well as the time lag in passing through prices, on profit margins should be closely monitored.

2. Profitability gap between segments: Processing Products & Others fell into the red, recording an Operating Loss of ¥3.7B against revenue of ¥428.0B (-1.5%). The overall profit structure is therefore being driven by earnings growth in the other segments. Improvement in this segment’s profitability will affect the stability of Company-wide earnings.

3. Working capital and short-term funding conditions: Inventories increased 6.8% year on year, while short-term borrowings increased 14.5%. Accounts receivable declined 5.9%, indicating progress in collections, but the increase in inventory levels and reliance on short-term borrowings are points to monitor from a cash management perspective.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Both the Company’s Operating Income margin and Net Income margin are below the industry median, placing its profitability in the middle to lower range within the industry.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeds the industry median, placing the Company’s revenue growth pace among the higher performers in the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. Full-year progress rates for the profit items were 32–36%, exceeding the Revenue progress rate of 24.1%, indicating that profitability improvements are progressing ahead of plan.

2. While the gross margin declined 2.3pt year on year, the improvement in the SG&A ratio (-1.3pt) offset the decline and lifted the Operating Income margin. Changes in the cost structure are therefore affecting the earnings profile.

3. The shift of Processing Products & Others into the red has been absorbed by earnings growth in the other three segments, but the widening profitability gap between segments warrants attention as a change in the Company-wide earnings structure.

Theoretical Share Price (For Reference)

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

Sensitivity: ¥4,014–¥4,246 at ±1% in the cost of equity capital, and ¥4,117–¥4,134 at ±0.1 in ω.

Notes:

• Net Income is substantially compressed relative to Operating Income due to tax burdens, acquisition-related expenses, non-controlling interests, and other factors (Net Income ÷ Operating Income 52%). This figure reflects that compression at face value; if these factors are temporary, underlying earnings power may be higher.
• Because forecast ROE is below the cost of equity capital, 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.
• 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 figure is not a forecast or guarantee of the future share price)

---

This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings release 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.

---End of Report---