AIDA ENGINEERING,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The Company reported lower revenue and earnings, primarily due to a slowdown in press machine sales, with the decline in Operating Income particularly pronounced. Revenue was ¥15.35B (-17.3% YoY), Operating Income was ¥0.46B (-63.9%), Ordinary Income was ¥0.80B (-42.6%), and Net Income was ¥0.48B (-48.6%). Although the gross margin improved to 22.7%, the Operating Margin declined to 3.0% due to higher SG&A expenses.

Factors Affecting Performance

【Revenue】Revenue was ¥15.35B, down -17.3% YoY. The primary factor was a 27.7% YoY decline in core press machine sales to ¥9.70B. This business accounts for 63.2% of total Company revenue, and the slowdown in demand weighed on overall performance. Meanwhile, service revenue increased 14.0% YoY to ¥4.18B, with its composition ratio rising from 19.8% to 27.2%. By region, revenue declined across all regions: Japan (¥7.96B, -24.6%), Americas (¥3.88B, -21.3%), China (¥1.76B, -39.8%), Europe (¥3.08B, -9.9%), and Asia (¥2.01B, -6.2%).

【Profit and Loss】Operating Income was ¥0.46B (-63.9% YoY), and the Operating Margin fell substantially to 3.0% from 6.8% in the previous year. Although the gross margin improved to 22.7%, SG&A expenses increased 10.1% YoY to ¥3.03B, resulting in fixed-cost burdens that exceeded the benefit from the gross margin improvement. Ordinary Income was ¥0.80B, supported by ¥0.39B in non-operating income, including ¥0.21B in dividend income and ¥0.13B in interest income; nevertheless, it declined 42.6% YoY. Extraordinary gains and losses were immaterial, and their impact on Net Income was limited. In conclusion, the Company reported lower revenue and earnings.

Segment Analysis

Japan recorded revenue of ¥7.96B (-24.6% YoY) and Operating Income of ¥0.18B (-64.0%), representing a significant earnings decline despite being the largest profit-contributing segment. Americas reported revenue of ¥3.88B (-21.3%) and Operating Income of ¥0.12B (-25.8%). China recorded the largest revenue decline at ¥1.76B (-39.8%), but maintained the highest profit margin at 5.7%. Asia reported revenue of ¥2.01B (-6.2%) and an Operating Loss of ¥0.05B, becoming the only loss-making segment among the five segments. Europe recorded revenue of ¥3.08B (-9.9%) and Operating Income of ¥0.01B (-43.5%), resulting in a profit margin of only 0.4%. With revenue declining in all regions, deterioration in Asia’s earnings is a concern in terms of the regional composition of profits.

Key Financial Metrics

【Profitability】The Operating Margin of 3.0% and Net Profit Margin of 3.1% both declined from the previous year (6.8% and 5.1%, respectively). ROE was 2.2%, decomposed into a Net Profit Margin of 3.1%, Total Asset Turnover of 0.49x, and Financial Leverage of 1.44x.【Cash Flow Quality】Non-operating income of ¥0.39B was equivalent to 85.6% of Operating Income of ¥0.46B, indicating a high degree of reliance on financial income, including ¥0.21B in dividend income. Comprehensive Income was ¥2.44B, substantially exceeding Net Income of ¥0.48B, primarily due to ¥1.39B in valuation differences on securities and ¥0.54B in foreign currency translation adjustments.【Investment Efficiency】ROIC was approximately 2%, below the cost of capital. Work in process of ¥18.37B accounted for more than half of inventories, presenting an asset-efficiency challenge.【Financial Soundness】The Equity Ratio was 69.4%. Interest-bearing debt was limited to ¥4.28B against cash and deposits of ¥37.76B, while the Current Ratio was approximately 286%, indicating ample liquidity.

Cash Flow Analysis

Although individual data from the Statement of Cash Flows has not been disclosed, changes in the balance sheet provide insight into cash trends. Cash and deposits were ¥37.76B, slightly down from ¥38.52B in the previous year. Accounts receivable and notes receivable decreased from ¥15.09B in the previous year to ¥12.42B, indicating progress in collections, while work in process remained elevated at ¥18.37B, largely unchanged from ¥18.60B in the previous year. Contract liabilities (advances received) were ¥16.41B, a slight 0.7% increase YoY, indicating continued funding secured through customer advances. Interest-bearing debt was relatively small at ¥2.78B in short-term debt and ¥1.50B in long-term debt, for a total of ¥4.28B, placing limited pressure on the financing structure.

Earnings Quality

Of Ordinary Income of ¥0.80B, non-operating income of ¥0.39B primarily comprised ¥0.21B in dividend income and ¥0.13B in interest income, both of which are recurring financial income rather than temporary factors. Extraordinary gains and losses were immaterial, consisting of an extraordinary gain of ¥0.003B and an extraordinary loss of ¥0, with virtually no impact on Net Income. The ¥0.34B difference between Operating Income of ¥0.46B and Ordinary Income of ¥0.80B was primarily attributable to non-operating income, indicating that income outside the core business contributed to a certain extent to the increase in bottom-line profit. Comprehensive Income of ¥2.44B substantially exceeded Net Income of ¥0.48B, primarily due to valuation factors such as ¥1.39B in valuation differences on securities and ¥0.54B in foreign currency translation adjustments. These items should therefore be distinguished as temporary fluctuations associated with market conditions.

Earnings Forecast and Guidance

The full-year Company plan calls for Revenue of ¥80.00B (+1.7% YoY), Operating Income of ¥5.70B (+0.2%), and Ordinary Income of ¥6.00B (+4.6%). Progress rates for Q1 were 19.2% for Revenue, 8.0% for Operating Income, 13.4% for Ordinary Income, and 11.3% for Net Income, all below the simple progress benchmark of 25%. In particular, the 8.0% progress rate for Operating Income is substantially behind plan, requiring an accumulation of ¥5.24B in Operating Income over the remaining three quarters. The earnings forecast and dividend forecast were both unchanged as of this quarter.

Shareholder Returns

The full-year dividend forecast is ¥39.00 per share, unchanged from the previous fiscal year’s actual result. Based on the full-year EPS forecast of ¥79.13, the forecast Payout Ratio is 49.3%. The estimated annual dividend payment calculated using the average number of shares outstanding during the period of 54,350 thousand shares is approximately ¥2.12B, equivalent to approximately half of the full-year Net Income forecast of ¥4.30B. Treasury shares totaled 5,304 thousand shares, representing 8.9% of issued shares and providing flexibility in capital policy. There was no revision to the dividend forecast for the quarter.

Risk Factors

1. Slowdown in press machine demand: Press machine sales declined 27.7% YoY to ¥9.70B and accounted for 63.2% of total revenue. If customers continue to postpone capital expenditures, profits could be pressured through both lower revenue and reduced fixed-cost absorption.

2. Deterioration in Asia’s earnings: The Asia segment recorded an Operating Loss of ¥0.05B, deteriorating from a profit in the previous year. Revenue also declined 6.2% YoY, becoming a factor delaying the recovery of the regional earnings mix.

3. Elevated inventory and work in process: Work in process was ¥18.37B, accounting for 57.7% of total inventories. While this reflects the business’s characteristics of producing to individual orders, the risk of delayed acceptance inspections and deterioration in project profitability increases during periods of slowing demand.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Return

The Company’s profitability is below the industry median. In particular, its Operating Margin does not even reach the industry’s lower-quartile IQR of 4.2%.

Growth and Capital Efficiency

The Revenue Growth Rate was substantially below the industry median, with the Company reporting lower revenue while many of its peers were trending toward revenue growth.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. While the gross margin improved to 22.7% from the previous year, the Operating Margin declined to 3.0% as the SG&A ratio rose to 19.7%. This confirms a structure in which fixed-cost absorption has not kept pace with the contraction in the top line.

2. Service revenue increased 14.0% YoY, raising its share of total revenue to 27.2%. As a recurring revenue stream that mitigates fluctuations in sales of core press machines, this is a factor that should contribute to stabilizing the future revenue mix.

3. The financial structure—an Equity Ratio of 69.4%, cash and deposits of ¥37.76B, and interest-bearing debt of ¥4.28B—demonstrates high resilience even during periods of weaker performance. Meanwhile, the progress rate against the full-year Operating Income plan was low at 8.0%, making the degree of profitability recovery over the remaining quarters a key focus of the financial results.

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 quarter-end are used; there is a timing difference 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 based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmark is reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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