AMADA CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In Q1 of the fiscal year ending March 2027, revenue and earnings increased, driven by growth in the core sheet metal-related business and improved SG&A efficiency. Revenue was ¥1,002.1B (¥772.7B in the prior-year period, +29.7%), Operating Income was ¥74.3B (¥40.4B, +84.0%), Profit Before Tax was ¥76.7B (¥38.8B, +97.8%), and Net Income attributable to owners of the parent was ¥54.7B (¥27.2B, +101.2%). Operating Income and Net Income grew at a faster pace than revenue, with fixed-cost absorption accompanying revenue expansion and an improved SG&A ratio boosting profitability. Meanwhile, the ElectronicsProcess segment, which includes Vian Mechanics Co., Ltd., consolidated as a subsidiary in July 2025, recorded an operating loss, remaining an area with room for improvement in the overall profit margin.

Factors Driving Earnings Changes

【Revenue】Revenue was ¥1,002.1B, an increase of +29.7% year on year. The core SheetMetalSolutions business was the largest driver at ¥635.9B (63.5% of the total, +19.5%), while AdvancedFormingSolutions at ¥103.1B (+35.0%) and JoiningTechnologies at ¥84.4B (+37.1%) also posted substantial revenue growth. The newly consolidated ElectronicsProcess business contributed ¥77.3B and pushed up the revenue growth rate, while CuttingFabricatorAndGrindingTechnologies remained broadly flat at ¥98.5B (-1.0%).

【Profit and Loss】Gross profit was ¥420.6B, and the gross margin was 42.0%, slightly down from 42.6% in the prior-year period. The SG&A ratio improved by 3.12pt to 34.8% from 37.9%, while the Operating Income margin improved by 2.19pt to 7.4% from 5.2%. Financial income of ¥9.6B and financial expenses of ¥7.9B resulted in a net gain of +¥1.7B, an improvement from the prior-year period’s net loss (△¥2.1B), bringing Profit Before Tax to ¥76.7B (+97.8%). One-off items comparable to extraordinary gains and losses were limited, with other income of ¥3.7B and other expenses of ¥1.0B remaining small. After deducting income taxes of ¥22.3B (effective tax rate of 29.1%), Net Income attributable to owners of the parent was ¥54.7B (+101.2%), resulting in higher revenue and earnings.

Segment Analysis

SheetMetalSolutions generates approximately 74% of segment profit, and its earnings growth (¥55.3B, +152.7%, profit margin of 8.7%) drove company-wide profits. AdvancedFormingSolutions (¥12.3B, +178.5%, profit margin of 11.9%) and JoiningTechnologies (¥10.8B, +527.3%, profit margin of 12.8%) also posted substantial earnings growth, benefiting from expanding demand in the press and precision welding fields as well as improved cost efficiency. In contrast, CuttingFabricatorAndGrindingTechnologies recorded lower earnings of ¥8.6B (-15.8%), while ElectronicsProcess posted an operating loss of -¥14.7B (profit margin of -19.0%). As a new business established through consolidation as a subsidiary in July 2025, the costs associated with its initial ramp-up are weighing on the overall profit margin. The timing of ElectronicsProcess’s return to profitability will be a key focus for improving the balance among segments going forward.

Key Financial Indicators

【Profitability】The Operating Income margin was 7.4%, improving by 2.19pt from 5.2% in the prior-year period, while the Net Income margin attributable to owners of the parent also improved by 1.9pt to 5.4% from 3.5%. The gross margin declined slightly to 42.0% from 42.6%, but the 3.12pt improvement in the SG&A ratio more than offset this decline and lifted the Operating Income margin.【Cash Flow Quality】Operating Cash Flow (OCF) of ¥150.9B was approximately 2.8 times Net Income attributable to owners of the parent of ¥54.7B, indicating that current-period earnings were also supported by cash generation.【Investment Efficiency】ROE was 1.0% (quarterly actual), while the total asset turnover ratio was equivalent to 13.1%, indicating a slight improvement in asset efficiency following revenue expansion.【Financial Soundness】The Equity Ratio was 70.1%, up 0.7pt from 69.4% in the prior-year period. After deducting interest-bearing debt of ¥803.3B (the total of short-term borrowings of ¥723.3B and long-term borrowings of ¥80.0B) from cash and cash equivalents of ¥1,556.9B, net cash stood at approximately ¥753.6B, representing a robust level.

Cash Flow Analysis

Operating Cash Flow was ¥150.9B, up +16.0% from ¥130.1B in the prior-year period. From the subtotal of ¥245.5B, which included Profit Before Tax and depreciation and amortization, the company generated cash despite working-capital headwinds from an increase in inventories (△¥124.4B) and a decrease in trade payables (△¥16.2B), supported by cash inflows from the collection of accounts receivable and other items (+¥233.1B) and after income tax payments (△¥95.3B). Investing Cash Flow was △¥14.7B, with capital expenditures restrained at ¥4.7B compared with ¥16.2B in the prior-year period. Financing Cash Flow was △¥117.8B, with dividend payments of ¥96.3B and the repurchase of treasury shares of ¥6.5B being the primary cash outflows. As a result, free cash flow was positive at ¥136.1B, a level sufficient to cover shareholder returns. Cash and cash equivalents at the end of the quarter were ¥1,556.9B, an increase of +¥20.7B from the beginning of the period.

Earnings Quality

Current-period earnings were primarily generated by Operating Income of ¥74.3B. Financial income of ¥9.6B and financial expenses of ¥7.9B made only a limited net contribution of +¥1.7B, while other income of ¥3.7B and other expenses of ¥1.0B were also small, indicating low dependence on one-off items comparable to extraordinary gains and losses. Consolidated quarterly Net Income of ¥54.4B was exceeded by quarterly comprehensive income of ¥96.4B by ¥41.9B. The primary factor behind this difference was foreign currency translation adjustment arising from the translation differences of foreign operations (+¥40.9B), indicating that foreign-exchange factors, rather than business earnings, boosted comprehensive income. Operating Cash Flow (¥150.9B) substantially exceeded Net Income attributable to owners of the parent (¥54.7B), supporting an assessment of good earnings quality from an accrual perspective, namely the divergence between accrual-based and cash-based accounting.

Earnings Forecast and Guidance

The full-year plan calls for Revenue of ¥4,600B, Operating Income of ¥480B, and Net Income attributable to owners of the parent of ¥340B, with no revisions to either the earnings forecast or the dividend forecast. Q1 progress rates were 21.8% for Revenue, 15.5% for Operating Income, and 16.1% for Net Income, all below the 25% benchmark based on simple equal quarterly allocation. The company’s earnings typically tend to be weighted toward the second half of the fiscal year, and the reduction of losses at ElectronicsProcess and sustained demand in the core segments will be key to achieving the plan from the second half onward.

Shareholder Returns

The full-year dividend forecast is ¥64.00 per share, resulting in a Payout Ratio of approximately 58.4% based on the full-year EPS forecast of ¥109.56. Dividend payments in Q1 were ¥96.3B (broadly unchanged from ¥96.7B in the prior-year period), while treasury share repurchases were ¥6.5B (¥6.4B in the prior-year period); both were implemented within free cash flow of ¥136.1B. Total shareholder returns for the quarter, including dividends and treasury share repurchases, amounted to ¥102.8B. Given cash and cash equivalents of ¥1,556.9B and net cash of approximately ¥753.6B, the company’s capacity to fund shareholder returns remains sound.

Risk Factors

1. ElectronicsProcess segment losses: The segment recorded an operating loss of ¥14.7B on Revenue of ¥77.3B (profit margin of -19.0%). As a new segment consolidated through the company’s acquisition of a subsidiary in July 2025, losses during the initial integration phase are weighing on the overall profit margin.

2. Increase in inventories: Inventories were ¥1,714.8B (+8.7% from ¥1,577.5B in the prior-year period), accounting for 22.5% of total assets and representing a negative factor of △¥124.4B in the working-capital adjustment within Operating Cash Flow. Inventory trends may affect cash-generation capacity going forward.

3. Short-term concentration of interest-bearing debt: Short-term borrowings account for approximately 90% of interest-bearing debt of ¥803.3B, at ¥723.3B. Although the company’s financial position itself is conservative, with an Equity Ratio of 70.1% and net cash of approximately ¥753.6B, refinancing trends for short-term funding should be monitored.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin are slightly below the industry median, placing profitability in the middle to somewhat lower range within the industry.

Growth and Capital Efficiency

The Revenue growth rate is substantially above the industry median, representing a high pace of revenue growth within the industry.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The Operating Income margin improved by 2.19pt year on year to 7.4%. This improvement was driven by a 3.12pt improvement in the SG&A ratio, which more than offset the slight decline in the gross margin. The fact that fixed-cost absorption accompanying revenue expansion was the primary factor is an important point in understanding the earnings structure.

2. Operating Cash Flow of ¥150.9B, approximately 2.8 times Net Income attributable to owners of the parent, was secured, and free cash flow of ¥136.1B covered dividend payments and treasury share repurchases, indicating good earnings-to-cash conversion quality.

3. The ElectronicsProcess segment’s deficit (-¥14.7B) resulted from the newly consolidated business, and the timing of its return to profitability is a structural factor that will determine future improvement in the company-wide profit margin.

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 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: ¥1,523–¥1,609 at ±1% for the cost of equity, and ¥1,560–¥1,568 at ±0.1 for ω.

Notes:

• As 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 from the full-year forecast).

(Calculation model: Residual Income Model / Interest rate reference month: 2026-07 / 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 summary 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 responsibility, and, where necessary, after consulting with a professional.

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