Fuji Die Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

The current period saw increases in both revenue and earnings, with structural improvements in both the gross margin and the SG&A ratio driving profit growth at a pace significantly exceeding revenue growth. Revenue was ¥50.5B (¥41.2B in the same period of the previous year, +22.4%), Operating Income was ¥6.2B (¥1.8B in the previous year, +252.4%), Ordinary Income was ¥6.3B (¥1.6B in the previous year, +284.0%), and Net Income was ¥4.4B (¥1.2B in the previous year, +262.3%). The Operating Margin improved significantly to 12.2% from approximately 4.2% in the previous year, driven by price revisions, an improved product mix, and higher capacity utilization.

Factors Affecting Performance

【Revenue】Revenue was ¥50.5B, up +22.4% year on year. As the Company operates a single segment (Wear-Resistant Tools-Related Business), business-level breakdowns have not been disclosed, but higher capacity utilization and expanding demand appear to have been the primary drivers of revenue growth.

【Profit and Loss】Against Cost of Sales of ¥34.9B, Gross Profit was ¥15.6B, and the Gross Margin of 30.9% improved significantly from approximately 26.8% in the previous year. SG&A expenses were ¥9.4B (SG&A ratio of 18.6%, compared with approximately 22.5% in the previous year), increasing at a pace below revenue growth and resulting in strong operating leverage. Operating Income was ¥6.2B (+252.4%), while Ordinary Income was ¥6.3B (+284.0%), indicating a low dependence on non-operating income and expenses (non-operating income of ¥0.2B and non-operating expenses of ¥0.0B); the source of earnings growth was almost entirely the core business. No extraordinary gains or losses were recorded. The ¥1.9B difference between Ordinary Income of ¥6.3B and Net Income of ¥4.4B was attributable to income taxes and other taxes, with no special tax-related factors identified. In conclusion, the Company achieved increases in both revenue and earnings, characterized by multi-stage margin expansion resulting from improvements in pricing, product mix, and capacity utilization.

Segment Analysis

The Company operates as 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 12.2%, a significant improvement from approximately 4.2% in the previous year, while the Net Profit Margin was 8.8% (approximately 2.9% in the previous year). The Gross Margin was 30.9%, improving from approximately 26.8% in the previous year, and, together with the decline in the SG&A ratio to 18.6% (approximately 22.5% in the previous year), confirms multi-stage margin improvement.【Cash Flow Quality】Non-operating income was ¥0.2B and non-operating expenses were ¥0.0B, both small in scale. Accordingly, the majority of profit was generated by the core business; however, cash and deposits were ¥49.8B, down from the previous year, suggesting that increases in inventories and accounts receivable may have affected cash management.【Investment Efficiency】ROE was 2.2%. Despite the improvement in the Net Profit Margin, the Total Asset Turnover Ratio remained low, with revenue of ¥50.5B against total assets of ¥257.9B, indicating room for improvement in capital efficiency.【Financial Soundness】The Equity Ratio was 78.4%, and net assets of ¥202.2B against total assets of ¥257.9B indicate a solid capital base. Current assets of ¥151.7B substantially exceeded current liabilities of ¥41.9B, indicating strong short-term payment capacity.

Cash Flow Analysis

As no cash flow statement has been disclosed, cash flow trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥49.8B, a decrease of ¥21.5B from ¥71.3B in the previous year. This may reflect an accumulation of working capital, including accounts receivable and notes receivable of ¥29.5B, raw materials of ¥28.5B, and work in process of ¥25.8B. The expansion of procurement and production activities accompanying revenue growth may have absorbed cash. Meanwhile, accounts payable and notes payable increased to ¥11.0B, suggesting that part of procurement settlement was supported by supplier credit. The decline in cash on hand despite earnings growth suggests that cash generation from operating activities may not have kept pace with the increase in working capital. Trends in the reduction of inventories and accounts receivable will therefore be key factors in assessing cash efficiency going forward.

Quality of Earnings

The current period’s earnings were strongly dependent on the core business, indicating relatively high earnings quality. Non-operating income was ¥0.2B, equivalent to approximately 0.3% of revenue, and the contribution from non-core income such as dividend income and foreign exchange gains was limited. Both extraordinary gains and extraordinary losses were zero, and no increase or decrease in profit attributable to temporary factors was observed. The ¥1.9B difference between Ordinary Income of ¥6.3B and Net Income of ¥4.4B was attributable to income taxes and other taxes, with no unusual fluctuations in the effective tax rate identified. Comprehensive Income was ¥5.6B, exceeding Net Income of ¥4.4B by ¥1.2B in valuation difference on securities. Broader changes in corporate value, including fluctuations in asset values, were therefore somewhat higher.

Earnings Forecast and Guidance

Progress against the full-year forecast was 20.7% for revenue, with current-period revenue of ¥50.5B against a forecast of ¥244.0B; 73.6% for Operating Income, with ¥6.2B against a forecast of ¥8.4B; and 68.7% for Ordinary Income, with ¥6.3B against a forecast of ¥9.2B. Compared with a simple one-quarter benchmark of 25%, revenue progress was somewhat below target, while earnings progress was substantially ahead, indicating that earnings growth in the current period is progressing ahead of the full-year plan. This difference may suggest that the full-year plan incorporates higher expenses and inventory adjustment costs in the second half, or that the effects of improved capacity utilization and product mix in the first half exceeded the assumptions made at the time of planning. The earnings forecast was revised during the quarter, while the dividend forecast was not revised.

Shareholder Returns

The full-year dividend forecast is ¥40.00 per share, resulting in a Payout Ratio of approximately 126% against the full-year forecast EPS of ¥31.67. The current Payout Ratio exceeds current-period Net Income, implying reliance on retained earnings and cash on hand as funding sources. Although the Company has a solid capital base, with an Equity Ratio of 78.4% and net assets of ¥202.2B, cash and deposits have declined from the previous year. Progress in earnings and working capital trends in the second half will therefore be important considerations in assessing dividend sustainability. The dividend forecast was not revised during the quarter.

Risk Factors

1. Expansion of working capital: Increases in working capital exceeding the pace of revenue growth were observed, including accounts receivable and notes receivable of ¥29.5B, raw materials of ¥28.5B, and work in process of ¥25.8B. Cash and deposits were ¥49.8B, down -30.2% year on year, suggesting that cash generation may be lagging behind earnings growth.

2. Low capital efficiency: ROE was 2.2%, while revenue was ¥50.5B against total assets of ¥257.9B, leaving the Total Asset Turnover Ratio at a low level. Although the Net Profit Margin is improving, structurally low capital efficiency may persist if asset efficiency does not improve correspondingly.

3. High Payout Ratio: Against the full-year dividend forecast of ¥40.00 per share, full-year forecast EPS is ¥31.67, resulting in a Payout Ratio of approximately 126%. The earnings level alone does not cover the dividend, requiring support from cash on hand and earnings progress in the second half.

Industry Benchmark (Reference; Based on Company Research)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability exceeds the industry median and is positioned in the upper range of the IQR.

Growth and Capital Efficiency

The revenue growth rate is substantially above the industry median and represents a high-growth level exceeding the upper bound of the IQR.

※Source: Based on Company research

Key Points from the Financial Results

1. The current period confirmed multi-stage margin improvement, with an Operating Margin of 12.2% and a Net Profit Margin of 8.8%. Both the improvement in the Gross Margin (approximately +4pt year on year) and the decline in the SG&A ratio (approximately -4pt year on year) contributed. Whether this improvement was driven by higher capacity utilization or price pass-through will be a key focus in assessing sustainability in future quarters.

2. Progress against the full-year plan was 73.6% for Operating Income and 68.7% for Ordinary Income, substantially exceeding the revenue progress rate of 20.7%. Future points of focus will be whether the earnings improvement in the first half continues at a similar pace in the second half, or whether the higher expenses and inventory adjustments assumed in the Company’s plan for the second half actually materialize.

3. Accounts receivable and inventories increased at a faster pace than revenue, while cash and deposits declined from the previous year. The expansion of working capital behind the increases in both revenue and earnings requires continued monitoring in assessing cash flow quality.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.

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

Notes:

• Because Net Income progress against the full-year forecast (71%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within an upper limit of +10% (because companies progressing ahead of plan tend to exceed their forecasts; adjustments may be excessive for businesses with strong seasonality).
• 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 have been used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（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 disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional adviser as necessary.

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