Fuji Die (6167) FY2026 Q3 Earnings Report

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Executive Summary

Cumulative results for FY2026 Q3 secured increases in revenue and operating income, but net income declined due to a higher tax burden and deterioration in non-operating income and expenses. Revenue was ¥12.69B (+2.9% YoY), operating income was ¥0.43B (+24.1%), ordinary income was ¥0.45B (+3.1%), and net income was ¥0.27B (-2.1%). The benefit from higher operating income driven by improved gross profit margins was effectively offset at the bottom line by the reversal of the prior-year subsidy income and an increase in the effective tax rate (39.4% versus approximately 26.7% in the previous year).

Factors Affecting Performance

【Revenue】Revenue increased 2.9% YoY to ¥12.69B. Although disclosure of segment information has been omitted because the Company operates a single business (Wear-Resistant Tools-Related Business), gradual demand expansion in the existing business appears to have contributed. Progress against the full-year forecast of ¥17.67B was 71.8%, slightly below the standard Q3 progress rate of 75%.

【Profit and Loss】Gross profit was ¥3.23B, with the gross profit margin improving to 25.4% from 24.8% in the same period of the previous year. SG&A expenses were ¥2.80B (+3.0% YoY), with growth contained at approximately the same level as revenue, resulting in a significant increase in operating income to ¥0.43B (+24.1%). The operating margin improved to 3.4% from 2.8% in the same period of the previous year. Meanwhile, non-operating income declined to ¥0.05B due to the reversal of ¥0.066B in subsidy income recorded in the previous year, and a foreign exchange loss of ¥0.01B was also incurred, limiting ordinary income growth to +3.1%. The effective tax rate rose to 39.4% from approximately 26.7% in the previous year, resulting in a decline in net income to ¥0.27B (-2.1% YoY). Non-recurring gains and losses consisted only of a ¥0.002B gain on the sale of fixed assets, and their impact on net income was immaterial. Overall, the Company achieved higher revenue and operating-stage profit, but net income declined due to the increased tax burden.

Segment Analysis

The Company Group operates a single segment, the Wear-Resistant Tools-Related Business, and disclosure of segment information has been omitted.

Key Financial Indicators

【Profitability】The operating margin was 3.4%, improving by approximately 0.6pt from 2.8% in the same period of the previous year, while the net profit margin edged down to 2.2% from 2.3%. The gross profit margin improved to 25.4% from 24.8% in the same period of the previous year, indicating progress in improving the profitability of the cost structure.【Cash Flow Quality】Annualized DIO was 108 days and the CCC was 126 days, both lengthy. Work in process of ¥1.93B accounted for 51.8% of total inventories, indicating significant capital tied up in the manufacturing and inventory stages.【Investment Efficiency】Annualized ROE was 1.8% and annualized ROIC was 2.7%, both at low levels. The total asset turnover ratio of 0.68x was the primary factor suppressing capital efficiency.【Financial Soundness】With an equity ratio of 79.6%, a current ratio of 397.3%, interest-bearing debt of ¥0.02B, and cash and deposits of ¥6.99B, the financial foundation is extremely robust.

Cash Flow Analysis

Although individual data from the cash flow statement were not provided, an analysis of cash movements based on balance sheet trends indicates that cash and deposits remained broadly flat, increasing from ¥6.95B at the end of the same period of the previous year to ¥6.99B. Work in process increased from ¥1.74B to ¥1.93B, while finished goods inventory increased from ¥0.25B to ¥0.37B, indicating greater funds tied up in the manufacturing and inventory stages. Accounts payable declined from ¥1.62B to ¥1.13B, potentially adding to the working capital burden through the reduction of trade payables. Annualized CCC of 126 days and DIO of 108 days indicate that earnings are converted into cash relatively slowly, suggesting that the improvement in operating income has not yet translated sufficiently into stronger cash-generation capacity.

Quality of Earnings

The improvement in operating income during the current period was attributable to recurring factors—namely, a higher gross profit margin and control of SG&A expenses—with limited reliance on temporary factors. Non-recurring gains consisted only of a ¥0.002B gain on the sale of fixed assets, making its contribution to net income of ¥0.27B extremely small. Meanwhile, non-operating income declined from ¥0.066B in subsidy income recorded in the previous year to ¥0.004B in the current period, while a ¥0.013B foreign exchange loss was incurred among non-operating expenses. These non-recurring fluctuations weighed on ordinary income growth. In addition, the increase in the effective tax rate to 39.4% prevented the improvement at the operating stage from being fully reflected in profit after tax, resulting in a decline in net income YoY. Comprehensive income was ¥0.21B, below net income of ¥0.27B, primarily due to the deterioration in foreign currency translation adjustments (-¥0.09B). Overall, the quality of operating-stage earnings is high, but the divergence arising from the tax burden and comprehensive income warrants attention.

Earnings Forecast and Guidance

The full-year Company forecasts are revenue of ¥17.67B (+6.5% YoY), operating income of ¥0.60B (+22.9%), and ordinary income of ¥0.70B (+16.1%), with no revisions made during the current quarter. Progress rates were 71.8% for revenue and 71.7% for operating income, slightly below the standard 75%, while ordinary income at 64.6% and net income at 59.6% were further below that benchmark. In Q4, the Company will need to record revenue of ¥4.98B, operating income of ¥0.17B, ordinary income of ¥0.25B, and net income of ¥0.19B. In particular, improvement in non-operating income and expenses and the tax burden at the ordinary income and net income levels will be the focal points for achieving the plan.

Shareholder Returns

The full-year Company dividend forecast is ¥40.0 per share, with no revision to the dividend forecast during the current quarter. The Q2 dividend was ¥0 per share, indicating a structure in which the annual dividend is concentrated at the fiscal year-end. Based on the average number of shares outstanding during the period of 19,808,346 shares, the forecast total dividend is approximately ¥0.79B, resulting in an estimated payout ratio of approximately 172% against forecast full-year net income of ¥0.46B. This payout ratio is calculated by dividing dividends alone by net income and differs from the total return ratio, which includes share buybacks. Although the payout ratio exceeds 100%, financial capacity consisting of retained earnings of ¥19.17B and cash and deposits of ¥6.99B supports the continuation of dividends for the time being. Treasury shares increased by ¥0.28B from the end of the same period of the previous year, while net assets decreased 4.2% from ¥20.75B at the end of the same period of the previous year to ¥19.89B.

Risk Factors

1. Business concentration risk: The Company operates a single segment, the Wear-Resistant Tools-Related Business, creating a structure in which fluctuations in capital investment and production trends in customer industries can directly affect revenue and capacity utilization.

2. Inventory and working capital risk: Annualized DIO of 108 days, CCC of 126 days, and a work-in-process ratio of 51.8% (¥1.93B) indicate stagnation in inventory and the manufacturing process, creating a risk that inventory may be difficult to monetize when demand fluctuates.

3. Earnings progress and tax burden risk: Progress rates for ordinary income and net income against the full-year forecasts are 64.6% and 59.6%, respectively, substantially below the standard Q3 progress rate of 75%. If the elevated effective tax rate of 39.4% (approximately 26.7% in the previous year) persists, it may affect achievement of fourth-quarter earnings targets.

Industry Benchmark (For Reference; Company Analysis)

Key Takeaways from the Earnings Results

1. The operating margin improved to 3.4% from 2.8% in the same period of the previous year, confirming improved profitability through a higher gross profit margin and control of SG&A expenses. However, net income declined 2.1% YoY due to the higher effective tax rate and deterioration in non-operating income and expenses.

2. Annualized DIO of 108 days, CCC of 126 days, and a work-in-process ratio of 51.8% represent clear challenges in manufacturing and working capital efficiency. Progress in reducing inventory will be key to improving cash efficiency going forward.

3. The 59.6% progress rate for net income against the full-year forecast and the estimated payout ratio of approximately 172% are important points of focus in assessing fourth-quarter earnings progress and the sustainability of shareholder returns.

Theoretical Share Price (Reference Value)

Sensitivity: ¥801–¥845 at ±1% for the cost of equity, and ¥817–¥827 at ±0.1 for ω.

Notes:

• Because 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).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(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. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.

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