MIURA (6005) FY2026 Q3 Earnings Report

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Executive Summary

Profit growth outpaced revenue growth, resulting in a high-quality earnings performance accompanied by improved margins. Revenue was ¥1880.6B (+7.3% YoY), Operating Income was ¥217.3B (+24.9% YoY), Profit Before Tax was ¥269.1B (+31.6% YoY), and Net Income was ¥200.6B (+42.4% YoY). In addition to improved gross margins, the rate of SG&A expense growth remained below the revenue growth rate, resulting in operating leverage. Furthermore, growth in equity-method investment income supported the increase in final profit.

Factors Driving Earnings Fluctuations

【Revenue】Revenue increased 7.3% YoY to ¥1880.6B. Progress against the full-year forecast of ¥2665.0B was 70.6%, slightly below the standard 75% progress level; however, contract liabilities (advances received) accumulated to ¥276.6B (+11.4% YoY), providing support for forward demand.

【Profit and Loss】Operating Income was ¥217.3B (+24.9% YoY), and the Operating Income margin improved by approximately 1.6pt YoY to 11.6%. SG&A expenses were ¥518.4B, an increase of +3.0% YoY, below the revenue growth rate, and operating leverage from the absorption of fixed costs contributed to profit growth. Equity-method investment income increased 65.8% YoY to ¥47.8B, boosting Profit Before Tax. Net Income was ¥200.6B (+42.4% YoY), representing profit growth that exceeded the increase in Operating Income. The Company achieved both revenue and profit growth, and the quality of profit growth was generally favorable.

Key Financial Indicators

【Profitability】The Operating Income margin improved by approximately 1.6pt YoY to 11.6%, while the Net Income margin improved by approximately 2.7pt YoY to 10.7%. ROE (annualized) was 11.6%, with the improvement in the Net Income margin serving as the primary driver of the increase.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥246.6B, equivalent to 1.22 times Net Income of ¥200.6B, confirming cash generation exceeding accounting profit. Meanwhile, inventories increased 22.0% YoY to ¥482.9B and represented a cash outflow factor of ¥70.6B in OCF.【Investment Efficiency】Investments in equity-method affiliates increased 8.8% YoY to ¥556.7B, while equity-method investment income of ¥47.8B accounted for 17.8% of Profit Before Tax. Goodwill and intangible assets were ¥1235.2B, accounting for 27.1% of total assets and representing a constraint on asset efficiency.【Financial Soundness】The Equity Ratio improved to 50.5% from 46.4% in the same period of the previous year. Current assets were ¥1886.4B versus current liabilities of ¥872.9B, indicating a substantial liquidity buffer.

Cash Flow Analysis

OCF increased 55.0% YoY to ¥246.6B, demonstrating cash generation exceeding Net Income of ¥200.6B. In addition to profit growth, the decrease in trade receivables of ¥55.4B contributed to the increase, while the ¥70.6B increase in inventories acted as a cash outflow. Investing Cash Flow (ICF) was an outflow of ¥71.2B, primarily comprising capital expenditures of ¥32.7B and net deposits into time deposits. Financing Cash Flow (FCF) was an outflow of ¥211.7B, mainly due to repayments of long-term borrowings of ¥106.2B and dividend payments of ¥77.5B. Free Cash Flow was ¥175.4B, with a conversion ratio to OCF of approximately 71%, a level sufficient to fund investment and shareholder returns internally.

Quality of Earnings

Profit Before Tax of ¥269.1B exceeded Operating Income of ¥217.3B by ¥51.8B, with equity-method investment income of ¥47.8B being the primary factor behind the difference. This item increased 65.8% YoY, and the growing dependence on earnings from investees outside consolidated operating activities should be noted as a characteristic of the earnings structure. Financial income of ¥15.8B exceeded financial expenses of ¥11.8B, with net financial income contributing to earnings. OCF was ¥246.6B, or 1.22 times Net Income of ¥200.6B, indicating favorable cash conversion of earnings. However, inventories continue to increase, and future inventory valuation and working capital requirements may influence the quality of earnings.

Earnings Forecast and Guidance

The full-year forecast is Revenue of ¥2665.0B, Operating Income of ¥306.0B (+20.8% YoY), and EPS of ¥234.57 based on the Net Income forecast. Q3 cumulative progress was 70.6% for Revenue and 71.0% for Operating Income. Both were slightly below the standard 75% progress level; however, profit progress exceeded revenue progress, with margin improvement offsetting the difference in progress.

Shareholder Returns

The full-year dividend forecast is ¥67, comprising an expected year-end dividend of ¥37 against an interim dividend of ¥30. The dividend has shown a trend of consecutive increases (previous-year dividend of ¥24 → forecast of ¥67), and the Payout Ratio calculated based on forecast full-year Net Income and the average number of shares is approximately 29.3%, leaving substantial capacity relative to the guideline of approximately 60%. Against cumulative Q3 dividend payments of ¥77.5B, Free Cash Flow of ¥175.4B provides 2.26 times coverage, with the source of dividends supported by cash and cash equivalents of ¥538.8B and retained earnings of ¥1941.3B. No share repurchases were conducted, and shareholder returns are evaluated primarily on the basis of dividends.

Risk Factors

1. Working capital accumulation: Inventories increased 22.0% YoY to ¥482.9B, substantially exceeding the revenue growth rate of +7.3%. The conversion of inventory into sales and the risk of inventory write-downs may affect future OCF.

2. Dependence on equity-method investment income: Equity-method investment income was ¥47.8B, accounting for 17.8% of Profit Before Tax, and increased 65.8% YoY. Fluctuations in the performance of investees have a relatively significant impact on consolidated Net Income.

3. Scale of goodwill and intangible assets: Goodwill and intangible assets were ¥1235.2B, accounting for 27.1% of total assets and 53.3% of total equity. The monetization of investment and acquisition assets is an important monitoring point in evaluating asset efficiency and return on capital.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Company’s Operating Income margin and Net Income margin exceed the industry median, placing its profitability in a favorable position within the industry.

Growth and Capital Efficiency

The Revenue growth rate also exceeds the industry median, indicating a relatively high level of revenue growth within the industry.

※Source: Compiled by the Company

Key Earnings Highlights

1. The Operating Income margin improved by approximately 1.6pt YoY to 11.6%, and operating leverage from keeping SG&A expense growth below the revenue growth rate supported profit growth.

2. OCF was 1.22 times Net Income, confirming that recent earnings were supported by cash generation. Meanwhile, inventories increased 22.0% YoY, and the conversion of inventory into sales will influence future working capital trends.

3. The full-year Operating Income forecast is ¥306.0B, and progress toward the Net Income forecast was generally on track as of the Q3 cumulative period. The earnings data confirms that growth in equity-method investment income contributed to the increase in final profit.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,121–¥2,248 at ±1% in the cost of equity, and ¥2,178–¥2,190 at ω±0.1.

Notes:

• Net assets as of the quarter-end were used (there is a time lag relative to the full-year forecast).

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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

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