MIURA (6005) FY2027 Q1 Earnings Report

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Executive Summary

Revenue increased in all regions, securing higher sales, while the growth in SG&A expenses exceeded sales growth, causing the rate of operating income growth to slow. Revenue was ¥58.34B (+11.1% YoY), and operating income was ¥3.69B (+5.1%), resulting in an operating margin of 6.3%, down from 6.7% in the same period of the previous year. Meanwhile, net income rose sharply by 46.1% YoY to ¥4.58B, driven by an increase in equity-method investment gains and an improvement in net financial income and expenses. Final profit growth significantly outpaced operating-stage profit growth, indicating a high degree of reliance on factors outside the core business.

Factors Affecting Earnings

【Revenue】Revenue was ¥58.34B (+11.1% YoY), with Japan at ¥29.79B (+11.5%), the Americas at ¥22.42B (+12.2%), and Asia and Other at ¥6.12B (+5.6%), representing increases in all regions. The regional composition was Japan 51.1%, the Americas 38.4%, and Asia and Other 10.5%, with Japan and the Americas driving growth.

【Profit and Loss】Gross profit was ¥22.58B (gross margin 38.7%), down 42bp from 39.1% in the same period of the previous year, while SG&A expenses increased to ¥19.36B (+14.3%), exceeding the sales growth rate. As a result, operating income was limited to ¥3.69B (+5.1%), and the operating margin contracted by 36bp to 6.3% from 6.7% in the same period of the previous year. Meanwhile, equity-method investment gains increased to ¥1.84B (¥1.30B in the same period of the previous year), and net financial income and expenses improved to net income of ¥0.25B, comprising financial income of ¥0.70B and financial expenses of ¥0.46B. Consequently, profit before tax was ¥5.78B (+24.5%) and net income was ¥4.58B (+46.1%). The gap between operating income growth of 5.1% and final profit growth of 46.1% is substantial; although the company achieved higher revenue and profit, the substance of profit growth is supported by factors outside the core business.

Segment Analysis

Japan generated revenue of ¥29.79B (+11.5%), operating income of ¥3.24B (+10.2%), and a profit margin of 10.9%, with profit growth accompanying higher revenue and driving overall profit. The Americas recorded higher revenue of ¥22.42B (+12.2%), but operating income declined by 0.7% to ¥1.49B, and the profit margin fell to 6.7% from 7.5% in the same period of the previous year. Asia and Other posted revenue of ¥6.12B (+5.6%), while operating income declined sharply by 22.8% to ¥0.21B, with the profit margin falling from 4.8% to 3.5%. The contribution of higher revenue to profit is concentrated in Japan, while profitability deteriorated in both overseas regions despite revenue growth.

Key Financial Indicators

【Profitability】The operating margin was 6.3%, down 36bp from 6.7% in the same period of the previous year, while the gross margin also declined by 42bp to 38.7%. Meanwhile, the net profit margin was 7.8%, exceeding the operating margin due to improvements in equity-method investment gains and net financial income and expenses. Annualized ROE was 7.4%, explained by DuPont decomposition as a net profit margin of 7.8% × total asset turnover of 0.495x × financial leverage of 1.91x; the low asset turnover is the primary factor suppressing the ROE level. 【Cash Flow Quality】Operating cash flow was 1.17x net income, indicating sound cash support for earnings, although it decreased by 31.9% YoY. 【Investment Efficiency】Annualized ROIC remained limited to 4.7%, indicating room for improvement in earnings efficiency relative to invested capital, including substantial intangible assets (26.6% of total assets) and equity-method investments. 【Financial Soundness】The equity ratio improved to 52.1% from 51.0% in the same period of the previous year, while the current ratio was 228.2% and cash and cash equivalents were ¥66.90B, indicating sound short-term liquidity.

Cash Flow Analysis

Operating cash flow was ¥5.34B, representing coverage of 1.17x net income of ¥4.58B, and cash conversion of earnings itself was sound. However, OCF declined by 31.9% from ¥7.85B in the same period of the previous year, primarily because inventories increased by ¥6.78B, indicating greater investment in inventory than the ¥5.63B increase in the same period of the previous year. Although the decrease in trade receivables generated a cash inflow of ¥12.49B, the ¥2.96B decrease in trade payables and the increase in inventories partially offset this inflow. Contract liabilities increased by ¥2.48B, with advance receipts and progress in orders supporting OCF. Investing cash flow was limited to -¥0.13B, including capital expenditures of ¥1.35B, securing free cash flow of ¥5.21B. Financing cash flow was -¥7.93B, primarily due to dividend payments of ¥4.85B, and cash and cash equivalents at period-end amounted to ¥66.90B. Overall, cash generation remains sound, but the level of working capital, including inventories and trade receivables, is a key focus from a capital efficiency perspective.

Quality of Earnings

The ¥4.58B increase in net income cannot be explained by the 5.1% growth in operating income alone; it was primarily driven by equity-method investment gains of ¥1.84B (+41.5% YoY) and the shift in net financial income and expenses to net income of ¥0.25B, compared with net expenses of ¥0.17B in the same period of the previous year. Equity-method investment gains represented 40.3% of net income and 50.0% of operating income, indicating a structure with a high degree of dependence on the performance of affiliated companies. Meanwhile, OCF was 1.17x net income, and accruals—the divergence between profit and cash—were limited, with no indication that accounting profit is excessively dependent on non-cash items. However, if inventories continue to increase, the divergence between OCF and profit may widen in the future; therefore, continued monitoring of working capital trends is necessary when assessing earnings quality.

Earnings Forecast and Guidance

The full-year forecast is revenue of ¥284.50B, operating income of ¥32.60B (+5.4% YoY), and profit attributable to owners of the parent of ¥28.50B, with no revisions during the quarter. Q1 progress rates were 20.5% for revenue, 11.3% for operating income, and 16.1% for profit attributable to owners of the parent (Q1 actual EPS of ¥39.61 compared with the company’s forecast EPS of ¥246.30). All were below the simple 25% progress benchmark, with the delay in operating income progress particularly significant. While the trend of profit growth in Japan is continuing, improving profitability in the Americas and Asia and Other will be key to achieving the plan in the second half.

Shareholder Returns

The company’s full-year dividend forecast is ¥74.00, and the payout ratio based on forecast EPS of ¥246.30 is 30.0%, a sustainable level. Dividend payments during the quarter were ¥4.85B, up from ¥4.29B in the same period of the previous year, and were covered by free cash flow of ¥5.21B. No share repurchases were conducted during the quarter; shareholder returns are evaluated based on the payout ratio.

Risk Factors

1. Deterioration in working capital efficiency: Inventories increased by ¥7.09B (+17.3%) from the end of the previous fiscal year, partially offsetting the cash inflow from the decrease in trade receivables. Inventory accumulation is a factor weighing on OCF, and the pace of inventory sales going forward will be a key focus.

2. Declining profitability in overseas segments: In the Americas, revenue increased by 12.2%, while operating income declined by 0.7% and the profit margin fell from 7.5% to 6.7%. In Asia and Other, revenue increased by 5.6%, while operating income declined by 22.8% and the profit margin fell from 4.8% to 3.5%. The challenge is whether overseas expansion will be accompanied by improved profitability.

3. Dependence on earnings outside the core business: Equity-method investment gains accounted for 40.3% of net income, while improvements in net financial income and expenses also boosted final profit. The gap between operating income growth of 5.1% and net income growth of 46.1% is substantial, creating a structure in which changes in the performance of affiliated companies and foreign exchange and interest rate trends can readily affect final profit.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The operating margin is below the industry median, but the net profit margin exceeds the median, with non-core earnings factors boosting the net profit margin relative to the industry.

Growth and Capital Efficiency

The revenue growth rate exceeds the industry median and indicates strong growth near the upper end of the IQR.

※Source: Company compilation

Key Points from the Earnings Results

1. Although revenue growth continued across all regions, the operating margin contracted to 6.3% because the decline in the gross margin (-42bp) and the increase in SG&A expenses (+14.3%) exceeded the revenue growth rate (+11.1%). Improving profitability in the core business will be the focus going forward.

2. The substantial increase in final profit (+46.1%) was largely attributable to equity-method investment gains and improvements in net financial income and expenses, with a notable gap from operating income growth (+5.1%). To assess the sustainability of profit growth, it is important to examine operating-stage profitability trends together.

3. OCF decreased by 31.9% YoY, primarily due to the increase in inventories, but the OCF-to-net-income ratio remained at 1.17x, maintaining cash support. Future trends in inventory levels will determine the company’s cash-generating capacity.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,251–¥2,385 at ±1% for the cost of equity, and ¥2,311–¥2,323 at ±0.1 for ω.

Note:

• Net assets as of the end of the quarter are used (there is a timing difference from 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 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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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