AIDA ENGINEERING,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The quarter resulted in declines in both revenue and earnings, with the most notable feature being the decline in Operating Income exceeding the magnitude of the revenue decline. Revenue was ¥153.5B (-17.3% YoY), Operating Income was ¥4.6B (-63.9%), Ordinary Income was ¥8.0B (-42.6%), and Net Income was ¥4.8B (-48.6%). The primary factor was a reversal in operating leverage, as selling, general and administrative expenses increased 10.1% despite a substantial decline in press machinery sales.

Factors Driving Performance Changes

【Revenue】Revenue was ¥153.5B, a 17.3% decrease YoY. Press machinery sales to external customers were ¥97.0B, down 27.7% from ¥134.1B in the previous year, making this the central factor behind the revenue decline. Meanwhile, service revenue was ¥41.8B, up 14.0% YoY, and its composition ratio increased from 19.8% to 27.2%. By region, revenue declined across all regions: Japan ¥79.6B (-24.6%), the Americas ¥38.8B (-21.3%), Europe ¥30.8B (-9.9%), China ¥17.6B (-39.8%), and Asia ¥20.1B (-6.2%).

【Profit and Loss】The gross profit margin improved to 22.7% from 21.7% in the same period of the previous year. However, SG&A expenses increased 10.1% YoY to ¥30.3B, causing the Operating Income margin to contract sharply from 6.8% to 3.0%. Non-operating income improved significantly YoY, mainly due to dividend income of ¥2.1B and interest income of ¥1.3B, supporting Ordinary Income of ¥8.0B. The effective tax rate was high at 39.8%, limiting the conversion of Profit Before Tax of ¥8.0B into Net Income of ¥4.8B. In conclusion, this was a decline in both revenue and earnings resulting from increased fixed-cost burdens without revenue growth.

Segment Analysis

By segment, Japan was the central contributor to the declines in both revenue and earnings, with revenue of ¥79.6B (-24.6%) and Operating Income of ¥1.8B (-64.0%). The Americas recorded revenue of ¥38.8B (-21.3%) and Operating Income of ¥1.2B (-25.8%). Europe recorded revenue of ¥30.8B (-9.9%) and Operating Income of ¥0.1B (-43.5%), with a thin profit margin of 0.4%. China performed relatively well, securing Operating Income of ¥1.0B and a profit margin of 5.7% despite a substantial revenue decline to ¥17.6B (-39.8%). Asia fell into an Operating Loss of ¥0.5B against revenue of ¥20.1B (-6.2%), resulting in widening profitability disparities among regions.

Key Financial Indicators

【Profitability】The Operating Income margin of 3.0% and Net Income margin of 3.2% both declined from 6.8% and 5.1%, respectively, in the same period of the previous year. ROE was 0.6% and ROIC was 0.5%, indicating that the Company has not been able to convert capital sufficiently into business profits.【Cash Quality】Net non-operating income of ¥3.4B was equivalent to 75.6% of Operating Income of ¥4.6B, indicating a high degree of dependence on income outside the core business.【Investment Efficiency】Work in process of ¥183.7B accounted for 57.7% of inventories of ¥318.4B. Together with raw materials of ¥56.8B and finished goods of ¥77.9B, the accumulation of working capital is weighing on capital efficiency.【Financial Soundness】The Equity Ratio was 69.4%, the current ratio was 285.7%, and cash and deposits were ¥377.6B, indicating a solid financial base. Interest-bearing debt remained limited relative to total capital.

Cash Flow Analysis

As cash flow statement data has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥377.6B, slightly down from ¥385.2B in the same period of the previous year. Current assets were ¥860.9B and current liabilities were ¥301.4B, maintaining the current ratio at a high level of 285.7%. Inventories, centered on work in process of ¥183.7B, accounted for 25.5% of total assets, confirming that a substantial amount of funds remains tied up in projects under production. Accounts receivable were ¥124.3B, down from ¥150.9B in the previous year, indicating progress in receivables collection. However, the persistently high level of inventories continues to constrain improvements in funding efficiency. Investment securities increased 18.9% YoY to ¥126.3B, indicating that part of surplus funds has been allocated to securities investments.

Quality of Earnings

It should be noted that earnings for the quarter were highly dependent on factors outside the core business and therefore differ from recurring earnings power. Of non-operating income of ¥3.9B, dividend income of ¥2.1B and interest income of ¥1.3B were the primary components, together representing more than 75% of Operating Income of ¥4.6B. Special gains and losses consisted solely of a gain on the sale of fixed assets of ¥0.03B, with a limited impact on Profit Before Tax and limited one-time factors. Comprehensive Income was ¥24.4B, substantially exceeding Net Income of ¥4.8B, primarily due to unrealized valuation items consisting of ¥13.9B in valuation differences on other securities and ¥5.4B in foreign currency translation adjustments. Accordingly, the increase in Comprehensive Income does not indicate a substantive improvement in the earnings power of business activities, and the divergence between Net Income and Comprehensive Income warrants attention.

Earnings Forecast and Guidance

The full-year earnings forecast is Revenue of ¥800.0B (+1.7% YoY), Operating Income of ¥57.0B (+0.2%), and Ordinary Income of ¥60.0B (+4.6%). Progress rates for the quarter were 19.2% for Revenue, 8.0% for Operating Income, 13.4% for Ordinary Income, and 11.3% for Net Income (¥4.8B against forecast Net Income of ¥43.0B), all below the simple 25% run rate. The weakness in Operating Income progress is particularly pronounced, and achievement of the full-year plan presupposes a recovery in revenue scale and a substantial improvement in profit margins during the second half. No revision to the earnings forecast has been made as of the end of the quarter.

Shareholder Returns

The full-year dividend forecast is ¥39.00 per share, unchanged from the previous year’s actual result. Based on forecast EPS of ¥79.13, the Payout Ratio is 49.3%, which is within a sustainable range based solely on the dividend criterion. While the financial base of cash and deposits of ¥377.6B and an Equity Ratio of 69.4% supports the capacity to pay dividends, the Net Income progress rate was only 11.3% as of the end of the quarter, and the Payout Ratio may fluctuate depending on achievement of the full-year plan. No revision to the dividend forecast has been made for the quarter.

Risk Factors

1. Press machinery sales volatility risk: Press machinery sales to external customers were ¥97.0B, down 27.7% YoY. The business structure is susceptible to fluctuations in customers’ capital investment cycles and acceptance timing.

2. Working capital accumulation risk: Work in process of ¥183.7B accounted for 57.7% of inventories of ¥318.4B, resulting in substantial funds being tied up in the execution of long-term projects. If project delays or specification changes occur, additional costs and accumulation risks may become apparent.

3. Regional profitability disparities: Asia recorded an Operating Loss of ¥0.5B, and Europe’s Operating Income margin was only 0.4%, while China secured an Operating Income margin of 5.7% despite declining revenue. Differences in earnings power among overseas sites may affect the pace of recovery in consolidated profitability.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin were below the industry median, placing the Company at a low level of profitability within the industry during the quarter.

Growth and Capital Efficiency

The Revenue growth rate was substantially below the industry median, and the decline in revenue stood out while many peers recorded revenue growth.

※Source: Company analysis

Key Points from the Earnings Results

1. Although the gross profit margin improved to 22.7%, the Operating Income margin declined to 3.0% due to higher SG&A expenses. Balancing recovery in revenue scale with fixed-cost absorption will be a key focus going forward.

2. Service revenue increased 14.0% YoY and its composition ratio rose, indicating strengthening of the aftermarket revenue base to offset the cyclicality of equipment sales.

3. The persistently high working capital ratio, with work in process accounting for 57.7%, and the back-end-loaded plan, with an Operating Income progress rate of 8.0%, indicate that project progress management will be an important point of observation in achieving the full-year target.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,365–¥1,443 at ±1% for the Cost of Equity, and ¥1,397–¥1,407 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 (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

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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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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