NISSEI ASB MACHINE CO.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

The cumulative Q3 period can be characterized as a strong earnings period, with higher revenue and profit accompanied by a steady improvement in profit margins, indicating progress in strengthening the earnings structure. Revenue was ¥359.8B (+9.8% YoY), Operating Income was ¥101.7B (+20.2%), Ordinary Income was ¥104.0B (+20.3%), and Net Income attributable to owners of the parent was ¥72.4B (+19.5%), with all metrics recording double-digit growth in revenue and profit. The Operating Income margin improved by +2.5pt to 28.3% (25.8% in the previous year), primarily due to an increase in the gross profit margin to 50.5% (48.0% in the previous year). By region, East Asia served as the earnings pillar, generating Operating Income of ¥66.6B and a margin of 29.7%, while the Americas saw profit remain largely flat despite higher revenue, highlighting variations in profitability among regions.

Factors Affecting Earnings

【Revenue】Consolidated Revenue was ¥359.8B, an increase of +9.8% YoY. By region, Europe (+26.7%) and the Americas (+19.5%) were the main growth drivers, while South and West Asia (+5.2%) and East Asia (+3.8%) recorded relatively moderate growth. Contract liabilities (advance receipts) increased by +54.0% YoY to ¥73.4B, suggesting that order fulfillment is progressing ahead of revenue recognition and indicating a substantial future revenue-recognition pipeline.

【Profit and Loss】Operating Income increased by +20.2% YoY to ¥101.7B, exceeding the rate of revenue growth. The Operating Income margin improved by +2.5pt to 28.3% (25.8% in the previous year), primarily due to the increase in the gross profit margin to 50.5% (48.0% in the previous year). The SG&A expense ratio was largely unchanged at 22.3% (22.2% in the previous year), indicating that cost discipline was maintained. Ordinary Income was ¥104.0B (+20.3%), while non-operating income and expenses remained modest, including interest income of ¥2.1B and foreign exchange losses of ¥0.3B; consequently, the contribution above Operating Income was limited. Net Income attributable to owners of the parent was ¥72.4B (+19.5%), after deducting income taxes and other taxes of ¥31.5B (effective tax rate of approximately 30.3%). By segment, East Asia led overall growth with Operating Income of ¥66.6B and YoY growth of +31.8%, while the Americas recorded almost flat Operating Income (-0.3%) against revenue growth of +19.5%. In conclusion, the Company achieved higher revenue and profit.

Segment Analysis

Against total segment profit of ¥127.4B (South and West Asia: ¥28.2B, East Asia: ¥66.6B, Europe: ¥12.0B, and the Americas: ¥20.6B), consolidated Operating Income was ¥101.7B after deducting the adjustment for corporate expenses and other items of △¥25.7B. East Asia generated Revenue of ¥224.4B (+3.8%) and Operating Income of ¥66.6B (+31.8%), securing the highest profitability among all segments with a margin of 29.7% and playing a central role in profit growth. South and West Asia recorded Revenue of ¥205.8B (+5.2%) and Operating Income of ¥28.2B (+9.8%), with a balanced expansion reflected in its 13.7% margin. Europe recorded the highest growth rate, with Revenue increasing to ¥75.3B (+26.7%), while Operating Income rose to ¥12.0B (+15.7%), showing an improving margin of 16.0%. The Americas achieved significant Revenue growth of +19.5% to ¥135.0B, whereas Operating Income of ¥20.6B (-0.3%) remained almost flat. Its margin of 15.2% was relatively low compared with other regions, highlighting the segment’s difficulty in converting revenue growth into profit.

Key Financial Indicators

【Profitability】The Operating Income margin of 28.3% (25.8% in the previous year) and Net Income margin of 20.1% (18.5% in the previous year) both improved, driven by the increase in the gross profit margin to 50.5% (48.0% in the previous year). 【Cash Quality】Cash and deposits totaled ¥357.6B, accounting for 40.7% of total assets, indicating ample liquidity. However, accounts receivable increased to ¥114.8B (¥94.3B in the previous year, +21.7%), while inventories increased to approximately ¥195.0B in total, comprising raw materials of ¥82.1B, work in process of ¥79.5B, and finished goods of ¥33.3B (+10.1% YoY). This indicates that the accumulation of working capital is outpacing profit growth. 【Investment Efficiency】ROE was 11.1%, supported by a combination of a Net Income margin of 20.1%, total asset turnover of approximately 0.41x, and financial leverage of approximately 1.35x. While the improvement in the Net Income margin was the primary driver of the increase in ROE, total asset turnover has not improved sufficiently to match the pace of asset growth. 【Financial Soundness】The Equity Ratio was high at 73.9%, while long-term borrowings declined to ¥35.0B (¥46.2B in the previous year), indicating progress in reducing interest-bearing debt. Current assets of ¥688.3B compared with current liabilities of ¥155.2B provide a substantial liquidity buffer, and the financial foundation remains conservative.

Cash Flow Analysis

As individual figures from the statement of cash flows have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits increased by ¥32.9B to ¥357.6B (¥324.7B in the previous year), confirming the accumulation of funds in line with profit growth. Meanwhile, accounts receivable increased to ¥114.8B (¥94.3B in the previous year, +21.7%), and total inventories increased to approximately ¥195.0B (¥177.1B in the previous year, +10.1%), suggesting that cash generation from operating activities may have increased at a slower pace than profit. Contract liabilities (advance receipts) rose substantially by +54.0% to ¥73.4B (¥47.6B in the previous year), providing support for cash management through the future pipeline of receipts and revenue recognition. Property, plant and equipment increased by +13.6% to ¥166.7B (¥146.7B in the previous year), indicating continued capital investment, while long-term borrowings declined to ¥35.0B (¥46.2B in the previous year), reflecting ongoing debt repayments. Against the backdrop of ample cash on hand and high financial soundness, as evidenced by an Equity Ratio of 73.9%, the Company appears to have secured funding for investment and shareholder returns.

Quality of Earnings

The increase in profit for the current period was supported by improvements in both the gross profit margin and Revenue at the operating level. Dependence on non-operating and extraordinary gains and losses was limited, and the overall quality of earnings was high. Non-operating income was ¥3.5B, including dividend income of ¥0.3B and other non-operating income of ¥1.1B, while non-operating expenses were ¥1.2B, including interest expenses of ¥0.2B and foreign exchange losses of ¥0.3B. Accordingly, net non-operating income and expenses remained within a recurring range of approximately +¥2.3B. Extraordinary gains and losses were negligible, consisting solely of a loss on disposal of fixed assets of ¥0.01B, with little evidence that temporary factors boosted profit. After deducting income taxes and other taxes of ¥31.5B (effective tax rate of approximately 30.3%) from Ordinary Income of ¥104.0B, Net Income was ¥72.4B. The tax burden ratio was largely unchanged from the previous year (effective tax rate of approximately 29.9%). Comprehensive income was ¥90.7B, exceeding Net Income of ¥72.4B by +¥18.3B. The primary factor was foreign currency translation adjustments of +¥15.8B, which reflect valuation effects from translating overseas subsidiaries into yen and should therefore be distinguished from the underlying earnings power of the core business.

Earnings Forecasts and Guidance

Progress against the full-year plan (Revenue of ¥500.0B, Operating Income of ¥130.0B, Ordinary Income of ¥131.0B, and Net Income of ¥91.0B) was 72.0% for Revenue, 78.2% for Operating Income, 79.4% for Ordinary Income, and 79.6% for Net Income. Compared with the simple nine-month progress benchmark of 75%, Revenue was slightly below the benchmark, while each profit level exceeded it, indicating steady progress toward the plan in terms of profitability. There were no revisions to either the full-year earnings forecast or the dividend forecast, and management maintained its initial plan.

Shareholder Returns

The full-year dividend forecast remains ¥240, with no revisions. The Payout Ratio based on the Company’s forecast EPS of ¥607.03 is approximately 39.5%. As no dividend was paid in the first half, the annual dividend policy is centered on the year-end dividend. Given the financial foundation of cash and deposits of ¥357.6B and an Equity Ratio of 73.9%, together with the high earnings power represented by an Operating Income margin of 28.3%, no significant constraints on funding the planned dividend are apparent. No information regarding share buybacks has been disclosed, and shareholder returns appear to be centered on dividends.

Risk Factors

1. Changes in working capital efficiency: Accounts receivable increased to ¥114.8B (+21.7% YoY), while total inventories increased to approximately ¥195.0B (+10.1% YoY), creating a potential lag in cash conversion relative to the growth in Revenue and profit.

2. Profitability of the Americas segment: While Revenue continued to grow strongly to ¥135.0B (+19.5%), Operating Income of ¥20.6B (-0.3%) remained almost flat, indicating continued difficulty in converting higher Revenue into profit.

3. Impact of foreign exchange fluctuations: The primary cause of the +¥18.3B divergence between Comprehensive Income and Net Income was foreign currency translation adjustments of +¥15.8B. In addition, foreign exchange losses of ¥0.3B were recorded, indicating that fluctuations in the yen exchange rate affect both profit and loss and net asset valuation.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin were substantially above the industry median, placing the Company among the industry’s higher-profitability companies.

Growth and Capital Efficiency

The Revenue growth rate also exceeded the industry median, placing the Company among the industry’s leading group in both profitability and growth.

※Source: Compiled by the Company

Key Takeaways from the Results

1. The gross profit margin improved by +2.5pt to 50.5% (48.0% in the previous year), while the Operating Income margin also improved by +2.5pt to 28.3% (25.8% in the previous year), indicating strengthening earnings power from both pricing and cost perspectives. East Asia served as the earnings pillar, generating Operating Income of ¥66.6B and a margin of 29.7%.

2. Progress against the full-year plan was 72.0% for Revenue, compared with 78.2% for Operating Income, 79.4% for Ordinary Income, and 79.6% for Net Income. Profitability was therefore ahead of Revenue, progressing at a pace above the simple nine-month benchmark of 75%.

3. While contract liabilities (advance receipts) increased by +54.0% YoY, accounts receivable (+21.7%) and inventories (+10.1%) also increased. Developments in working capital during the expansionary phase of orders and production will therefore remain an ongoing point of focus in future earnings results.

Theoretical Stock Price (Reference Value)

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

Sensitivity: ¥4,859–¥5,143 at ±1% for the cost of equity, and ¥4,982–¥5,021 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are 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 on the high side.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future stock price)

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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 benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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