AMADA (6113) 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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AI Financial Analysis

Executive Summary

Amada delivered a strong FY2027 Q1 profit recovery, led by higher sales and substantial operating-margin expansion. Revenue increased 29.7% year on year to ¥100.21bn. Operating income rose 84.0% to ¥7.43bn, materially outpacing revenue growth. Net income attributable to owners more than doubled to ¥5.47bn, and basic EPS rose to ¥17.63 from ¥8.47. The gross margin was 42.0%, down approximately 67bp from 42.6% a year earlier, indicating that higher sales volume was not accompanied by gross-margin expansion. However, the operating margin improved 219bp to 7.4% from 5.2%. This improvement was driven by SG&A growing 19.0%, substantially below revenue growth, reducing the SG&A-to-sales ratio to 34.8% from 38.0%. Net margin improved 194bp to 5.5% from 3.5%. Profit before tax of ¥7.67bn exceeded operating income because finance income of ¥0.96bn exceeded finance costs of ¥0.79bn and equity-method income added ¥0.07bn. Operating cash flow was very strong at ¥15.09bn, equivalent to 2.76x reported net income. Cash conversion nevertheless benefited materially from a ¥23.31bn reduction in receivables, while inventory increased ¥12.44bn. Free cash flow was ¥13.61bn, comfortably positive after ¥0.47bn of capital expenditure. The balance sheet remains conservatively capitalized, with a 70.1% equity ratio and debt/capital of 13.0%. The reported annualized ROE was 4.1%, still below the usual 8% minimum benchmark despite the quarterly earnings rebound. Management maintained its full-year guidance, implying that the Q1 result is broadly consistent with a recovery but does not yet establish a basis for extrapolating the Q1 profit-growth rate. The principal operational issue is working-capital intensity, with annualized DSO of 124 days, DIO of 269 days and a 315-day cash conversion cycle. Forward performance will depend on sustaining fixed-cost absorption in the core sheet-metal business, converting inventory into shipments, and narrowing the loss in Electronics Process.

Profitability Analysis

The reported annualized DuPont ROE is 4.1%, decomposed into a 5.5% net profit margin, 0.525x asset turnover and 1.41x financial leverage. Low leverage is appropriate for the company's balance-sheet strength, but it means future ROE improvement must primarily come from margins and asset utilization rather than financial engineering. The largest year-on-year change was operating profitability: operating income increased 84.0% versus revenue growth of 29.7%, lifting the operating margin by 219bp to 7.4%. The key business driver was operating leverage, as SG&A increased 19.0%, below sales growth, and the SG&A ratio fell by roughly 322bp. Gross margin decreased by approximately 67bp, so the earnings improvement was not driven by production gross-margin expansion; it instead reflects better absorption of period costs and revenue scale. Net margin improved 194bp to 5.5%, supported by the operating recovery and a small positive net finance contribution. The five-factor analysis shows a normal tax burden of 0.714 and an interest burden of 1.032, confirming that interest costs are not constraining earnings. The core Sheet Metal Solutions segment generated ¥55.30bn of revenue and ¥5.53bn of operating income, with revenue up 19.5% and segment profit up 152.7%; its margin expanded to 8.7% from 4.1%. Joining Technologies reported revenue of ¥8.44bn, up 37.1%, and operating income of ¥1.08bn, up 527.3%, producing the highest reported segment margin at 12.8%. Cutting Fabricator & Grinding Technologies posted revenue of ¥9.85bn, down 1.0%, and operating income of ¥0.86bn, down 15.8%, with an 8.7% margin. Advanced Forming Solutions increased revenue 34.9% to ¥10.31bn and operating income 178.5% to ¥1.23bn, for an 11.9% margin. Electronics Process recorded ¥7.73bn of revenue and a ¥1.47bn operating loss; this segment was newly consolidated from the prior interim period and is the main drag on group profitability. Other operations contributed ¥2.92bn of revenue, down 2.7%, and ¥0.21bn of operating income, down 5.1%.

Growth Assessment

Revenue growth was broad across Sheet Metal Solutions, Joining Technologies and Advanced Forming Solutions, supporting the view that the Q1 recovery was not confined to a single legacy machine-tool category. Sheet Metal Solutions is the core business by operating-income contribution, accounting for ¥5.53bn of the group’s ¥7.43bn operating income. Its sharp profit expansion suggests meaningful operating leverage as sales recover. Joining Technologies and Advanced Forming Solutions also delivered revenue growth faster than the group average and materially higher segment margins than the group average. In contrast, Cutting Fabricator & Grinding Technologies saw modest revenue and profit declines, indicating uneven end-market conditions. Electronics Process is strategically relevant to the broadened portfolio but its ¥1.47bn operating loss dilutes consolidated returns and requires evidence of a path to profitability. Full-year guidance calls for revenue of ¥460.0bn, operating income of ¥48.0bn and net income attributable to owners of ¥34.0bn. Q1 progress is 21.8% for revenue, 15.5% for operating income and 16.1% for net income. Revenue progress is 3.2 percentage points below the standard 25% first-quarter run rate, while operating-income and net-income progress are 9.5 and 8.9 percentage points below, respectively. These shortfalls do not exceed the 10-percentage-point deviation threshold but imply that a meaningful proportion of annual earnings is expected in subsequent quarters. Full-year guidance implies 7.1% operating-income growth and 11.3% net-income growth, far below Q1 growth rates, which embeds prudence regarding demand, mix, currencies or cost normalization. The two-period consistency score of 2/10 indicates that the available history is insufficient to characterize growth as consistently repeatable.

Financial Health

Financial health is strong on reported balance-sheet measures. The equity ratio is 70.1%, total equity is ¥539.49bn and total liabilities are ¥223.54bn. Interest-bearing debt is ¥80.33bn, while cash and cash equivalents are ¥155.69bn, leaving the group in a net-cash position of approximately ¥75.36bn. Debt/capital of 13.0% is conservative, and the reported D/E ratio of 0.41x remains well below the 2.0x warning threshold. The current ratio is approximately 2.59x, based on current assets of ¥491.78bn and current liabilities of ¥189.80bn, well above the 1.0x warning level. Net working capital is approximately ¥301.98bn on the same balance-sheet definition. Short-term loans of ¥72.33bn represent 90.0% of total borrowings, which is the source of the refinancing-risk alert. This maturity concentration is a structural funding risk, although it is mitigated by cash equal to approximately 2.15x short-term loans and by the high equity base. The liquidity-stress alert citing cash/short-term debt of 0.00x is not supported by the reported cash balance and short-term-loan balance; the directly calculated ratio is approximately 2.15x. Goodwill of ¥31.15bn is only 5.8% of equity and 4.1% of assets, while intangible assets are 3.0% of assets, indicating limited balance-sheet dependence on acquired intangible values. No material off-balance-sheet obligation is identified in the provided financial statements.

Cash Flow Quality

Cash-flow quality was strong in Q1, with operating cash flow of ¥15.09bn versus net income of ¥5.47bn attributable to owners and an OCF/net-income ratio of 2.76x. The negative 1.3% accruals ratio is also consistent with cash realization exceeding accounting earnings. Free cash flow was ¥13.61bn after capital expenditures of ¥0.47bn. However, operating cash flow was significantly supported by a ¥23.31bn reduction in receivables. This collection benefit more than offset a ¥12.44bn inventory build and a ¥1.62bn decrease in payables. Inventory growth absorbs cash and is particularly important because annualized inventory days are elevated at 269 days. Annualized receivable days of 124 also exceed the alert threshold, notwithstanding the substantial Q1 receivables reduction. The annualized 315-day cash conversion cycle is long for a manufacturing business and signals that the balance-sheet intensity of the order-to-cash cycle remains high. The implied annualized payable days are approximately 78 days, so supplier credit partly funds the cycle but does not offset the extended inventory and receivable periods. There is no indication of weak cash earnings in the current quarter, but the working-capital release should not be assumed to recur at the same scale. Capital expenditure was only ¥0.47bn, or approximately 0.5% of Q1 revenue, which supported free cash flow but provides limited evidence on the level of maintenance and growth investment over a full year.

Dividend Sustainability

Full-year dividend guidance is ¥64.00 per share, against forecast EPS of ¥109.56, implying a dividend payout ratio of approximately 58.4%. This is within the stated 60% sustainability benchmark, albeit with limited headroom if earnings underperform guidance. Q1 cash dividends paid were ¥9.63bn, and share repurchases were ¥0.65bn. Free cash flow of ¥13.61bn covered dividends and buybacks of ¥10.29bn by approximately 1.32x during the quarter. Dividends alone were covered by Q1 free cash flow by approximately 1.41x. The Q1 dividend payment exceeded Q1 net income because it reflects the timing of shareholder distributions rather than a quarterly payout target. The balance sheet provides additional distribution capacity through net cash and a 70.1% equity ratio. The total return ratio should be assessed using dividends plus buybacks rather than the dividend-only payout ratio; based on the full-year dividend forecast, the ongoing buyback pace and earnings delivery will determine whether total shareholder returns remain within internally sustainable cash generation. Continued positive free cash flow and delivery against the ¥34.0bn full-year net-income forecast are the key conditions for maintaining the current policy.

Risk Assessment

Business risks include Working-capital and demand risk: annualized DIO of 269 days, DSO of 124 days and a 315-day cash conversion cycle indicate a long manufacturing order-to-cash cycle. Excess inventory may require discounting, reduce production flexibility or lead to write-down risk if machine-tool demand weakens., Electronics Process execution risk: the segment generated a ¥1.47bn operating loss despite ¥7.73bn of revenue. Integration and turnaround execution are required for this business to become accretive to group margins., Cyclical capital-goods risk: Sheet Metal Solutions is the core earnings contributor, so customer capital-expenditure cycles, industrial production conditions, export demand and competitive pricing can materially affect consolidated earnings., Manufacturing input and supply-chain risk: the company remains exposed to raw-material, component, energy and logistics-cost volatility, as well as potential supply constraints that can pressure the already slightly lower gross margin., Foreign-exchange risk: overseas operations are indicated by ¥4.09bn of translation-related OCI in Q1, so currency movements can affect reported equity and may influence export competitiveness and earnings translation..

Financial risks include Refinancing-risk alert: 90.0% of interest-bearing debt is short term. The root cause is the ¥72.33bn short-term-loan balance relative to ¥80.33bn total borrowings. This is mitigated by ¥155.69bn of cash, but it leaves funding costs and facility availability more sensitive to credit-market conditions than a longer-dated debt profile., Liquidity-stress alert: the provided alert reports cash/short-term debt of 0.00x, but reported balances calculate to approximately 2.15x. Accordingly, the alert does not indicate an observable current liquidity shortfall; the relevant issue is debt maturity concentration rather than cash insufficiency., Capital-efficiency alert: reported ROIC of 3.4% is below the 5% warning threshold and annualized ROE is 4.1%. The root cause is modest profitability and low asset turnover relative to a large asset and equity base. This weakens the return profile despite conservative leverage., Dividend coverage risk: full-year dividend payout is approximately 58.4% of forecast EPS, leaving a narrower earnings buffer than a lower-payout policy if industrial demand softens..

Key concerns include High receivable-days alert: annualized DSO of 124 days is above the 60-day warning threshold. The Q1 receivables decline is favorable, but collections need to remain durable rather than reflect quarter-end timing., High inventory-days alert: annualized DIO of 269 days is far above both 90-day and 60-day warning thresholds. The ¥12.44bn Q1 inventory increase compounds the risk and should be monitored for order coverage, mix and obsolescence., Long cash-conversion-cycle alert: the annualized 315-day CCC materially exceeds the 120-day warning threshold. The high DSO and DIO are the underlying causes, increasing cash needs and downside sensitivity during a demand downturn., Margin sustainability: Q1 operating-margin improvement came from SG&A leverage while gross margin declined modestly. Sustained profitability requires continued volume support and eventual gross-margin stabilization., Guidance execution: Q1 operating-income progress of 15.5% is below the standard 25% first-quarter run rate, although not by more than 10 percentage points. Subsequent-quarter delivery is necessary to achieve the ¥48.0bn full-year operating-income target..

Investment Implications

Key takeaways include Q1 demonstrated a substantial earnings recovery: revenue grew 29.7%, operating income grew 84.0%, and the operating margin improved 219bp to 7.4%., Sheet Metal Solutions is the core earnings engine, contributing ¥5.53bn of operating income and showing significant operating leverage., Cash generation was robust, with ¥15.09bn of operating cash flow and ¥13.61bn of free cash flow, but receivable collection was a major contributor., Capital structure is conservative, with net cash of approximately ¥75.36bn, a 70.1% equity ratio and debt/capital of 13.0%., The main operational constraints are low annualized ROE/ROIC, exceptionally long working-capital days and the loss-making Electronics Process segment..

Metrics to watch include Sheet Metal Solutions revenue growth and segment margin, Electronics Process operating-loss trajectory and integration progress, Gross margin versus SG&A ratio, to distinguish pricing/product-mix improvement from fixed-cost leverage, Annualized DSO, DIO and cash conversion cycle, Inventory balance and subsequent inventory-to-revenue conversion, Operating-income progress toward the ¥48.0bn full-year forecast, Short-term debt balance, cash/short-term debt coverage and financing maturity profile, ROIC and annualized ROE improvement.

Regarding relative positioning, Amada combines a strong balance sheet, positive free cash flow and recovering operating leverage with returns on capital that remain below standard profitability benchmarks. Its financial resilience is stronger than that of a highly leveraged capital-goods peer, but its relative operating-quality profile is constrained by long working-capital cycles, an underperforming Electronics Process segment and a 3.4% reported ROIC.