Fuji Die (6167) FY2027 Q1 Earnings Report

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Executive Summary

The first quarter of FY2027 was characterized by simultaneous revenue growth and a significant improvement in profit margins, clearly demonstrating a recovery from the low profitability level recorded in the same period of the previous year. Revenue was ¥5.05B (+22.4% YoY), Operating Income was ¥0.62B (+252.4%), Ordinary Income was ¥0.63B (+284.0%), and Net Income was ¥0.44B (+262.3%). As SG&A expenses increased by only approximately 1.1% against the increase in revenue, fixed-cost absorption progressed, and the Operating Income margin expanded to 12.2% from approximately 4.2% in the same period of the previous year.

Factors Affecting Performance

【Revenue】Revenue was ¥5.05B, representing a +22.4% increase YoY. The Company operates a single segment, the Wear-Resistant Tools-Related Business, and does not disclose a breakdown by segment; however, an increase in orders driven by recovering demand is believed to have led the revenue growth.

【Profit and Loss】Gross profit was ¥1.56B, with a gross margin of 30.9%, improving by 4.1pt from 26.8% in the same period of the previous year. While revenue increased by 22.4%, SG&A expenses were ¥0.94B, up only approximately 1.1% from ¥0.93B in the same period of the previous year. As a result of effective operating leverage, Operating Income reached ¥0.62B (+252.4% YoY). Non-operating income and expenses resulted in a gain of ¥0.013B, including a foreign exchange gain of ¥0.004B, but the amounts were small; therefore, the increase in Ordinary Income to ¥0.63B was primarily attributable to improvement in the core business. No extraordinary gains or losses were recorded, and the impact of temporary factors on Net Income of ¥0.44B was limited. Overall, the quarter delivered both revenue growth and profit growth.

Segment Analysis

The business segments of the Company’s Group consist solely of the Wear-Resistant Tools-Related Business, and segment information has been omitted because it is not material.

Key Financial Indicators

【Profitability】The Operating Income margin was 12.2%, improving by approximately 8.0pt from approximately 4.2% in the same period of the previous year, while the Net Income margin also rose to 8.8%, up approximately 5.8pt from approximately 3.0% in the same period of the previous year. The gross margin was 30.9%, up 4.1pt from 26.8% in the same period of the previous year.【Cash Quality】Annualized inventory days were 151 days, and the annualized cash conversion cycle (CCC) was 176 days. Work in process of ¥2.58B accounted for 44.5% of total inventory of ¥5.78B.【Investment Efficiency】Annualized ROE was 8.7%, and total asset turnover was 0.784x, indicating that the improvement was led by profitability, with limited dependence on asset efficiency or leverage.【Financial Soundness】The Equity Ratio was 78.4%, the current ratio was 362.3%, and the debt-to-equity ratio was 0.28x, indicating a conservative capital structure and strong capacity to meet short-term obligations.

Cash Flow Analysis

Although the cash flow statement has not been directly disclosed, an analysis of fund movements based on changes in the balance sheet shows that cash and deposits were ¥4.98B, a decrease of ¥2.16B (-30.2%) YoY. Meanwhile, inventories increased, primarily raw materials of ¥2.85B and work in process of ¥2.58B, while trade accounts payable were ¥1.10B (+58.4% YoY), and trade payables including electronically recorded obligations also increased. These developments suggest an expansion in the scale of production and procurement in response to revenue growth. At the same time, they were accompanied by an extension in the working capital burden, with inventory days of 151 days and a CCC of 176 days. The fact that profit growth takes time to convert into cash is therefore important in monitoring fund movements. Investment securities increased 71.9% YoY to ¥0.44B, also confirming some expansion in investment activities.

Earnings Quality

The increase in profit during the quarter resulted from improvement in the core business without reliance on extraordinary gains or losses, and earnings quality is considered high. Both extraordinary gains and extraordinary losses were effectively zero, and the majority of Ordinary Income of ¥0.63B consisted of Operating Income of ¥0.62B. Non-operating income of ¥0.02B comprised small items such as dividend income and foreign exchange gains, and its quantitative impact was limited. On the other hand, raw materials and work in process expanded alongside revenue growth. From an accrual perspective, the high profit margin for the quarter was recorded without corresponding cash conversion of inventory, as indicated by inventory days of 151 days and a work-in-process ratio of 44.5%. Monitoring this trend is therefore important when assessing earnings sustainability through the full year.

Earnings Forecast and Guidance

The full-year Company forecast is revenue of ¥24.40B (+39.9% YoY), Operating Income of ¥0.84B (+2.1%), and Ordinary Income of ¥0.92B (+4.1%). Q1 progress rates were 20.7% for revenue, 73.6% for Operating Income, and 68.7% for Ordinary Income, with the progress rates for Operating Income and Ordinary Income substantially exceeding the revenue progress rate. This means that the full-year forecast assumes profit margins from the second half onward will be significantly lower than in the current quarter, with a full-year forecast Operating Income margin of 3.4% compared with 12.2% in the current quarter. Accordingly, the high profitability of the current quarter cannot be simply extrapolated to the full year. The earnings forecast was revised during the quarter, and the validity of the profit margin assumptions for the second half will be a point for confirmation in future disclosures.

Shareholder Returns

The full-year dividend forecast is ¥40.0 per share, and no revision was made to the dividend forecast during the quarter. The Payout Ratio against forecast full-year EPS of ¥31.67 is approximately 126.3%, meaning that the dividend amount exceeds forecast Net Income. Based on the average number of shares outstanding during the period of 19.579 million shares, total annual dividends are calculated at approximately ¥0.78B, exceeding forecast full-year Net Income of ¥0.62B. Cash and deposits of ¥4.98B, retained earnings of ¥19.12B, a low debt-to-equity ratio of 0.28x, and ample liquidity support the Company’s financial capacity to pay dividends at this level. However, if a Payout Ratio exceeding 100% continues, the capacity to build retained earnings will decline.

Risk Factors

1. Inventory and work-in-process accumulation risk: Annualized inventory days were 151 days and annualized CCC was 176 days, while work in process of ¥2.58B accounted for 44.5% of total inventory of ¥5.78B. If delays in the production process or changes in demand occur, this could lead to funds being tied up or inventory valuation losses.

2. Deviation from full-year profit margin assumptions: The Q1 Operating Income margin was 12.2%, compared with a full-year forecast Operating Income margin of 3.4%. The validity of the profitability assumptions toward the second half needs to be confirmed. The Operating Income progress rate of 73.6% substantially exceeds the revenue progress rate of 20.7%.

3. Concentration in a single business: The Company operates a single segment, the Wear-Resistant Tools-Related Business. Trends in capital investment in specific customer industries and fluctuations in demand for resources and materials may directly affect performance. Fluctuations in raw material prices and energy costs are also factors that may affect the maintenance of the 30.9% gross margin.

Industry Benchmark (For Reference; Based on Company Research)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Company’s Operating Income margin and Net Income margin exceed the industry median and are at levels placing the Company in the upper tier of the industry.

Growth and Capital Efficiency

The revenue growth rate substantially exceeds the industry median, representing a high level of growth within the industry.

※Source: Based on Company research

Key Points from the Financial Results

1. Revenue increased +22.4%, while Operating Income increased +252.4%, resulting in an approximately 8.0pt YoY improvement in the Operating Income margin. Fixed-cost absorption from revenue growth was the primary factor, indicating a structure of both revenue growth and profit growth.

2. Inventory days of 151 days, CCC of 176 days, and a work-in-process ratio of 44.5% are key points to monitor when evaluating the sustainability of earnings improvement and cash efficiency. It is also relevant that increases in trade accounts payable and electronically recorded obligations partially offset the working capital burden.

3. The Q1 Operating Income progress rate was high at 73.6%, but the full-year forecast Operating Income margin of 3.4% is substantially below the current quarter’s 12.2%. The Payout Ratio under the full-year dividend forecast is approximately 126.3%, and the consistency between earnings growth and capital allocation will attract attention in future disclosures.

Theoretical Share Price (Reference Value)

Sensitivity: ¥839–¥885 at ±1% for the cost of equity, and ¥857–¥865 at ±0.1 for ω.

Notes:

• Since the progress of Net Income against the full-year forecast (71%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies ahead of schedule tend to exceed forecasts; adjustments may be excessive for businesses with strong seasonality).
• Since 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 gap relative to the full-year forecast).
• Since 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 financial results 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 financial results data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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