KOMATSU (6301) FY2026 Q3 Earnings Report

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Executive Summary

The cumulative results for Q3 FY2025 represented declines in both revenue and earnings, as the stronger yen and lower construction equipment sales volumes pressured profit margins. Revenue was ¥2兆9,154.8B (-1.4% YoY), Operating Income was ¥4,190.1B (-10.1%), Profit Before Tax was ¥3,949.3B (-7.8%), and Net Income attributable to owners of the parent was ¥2,698.1B (-13.0%). The decline in Operating Income exceeding the rate of revenue decline reflects increased fixed-cost burdens and deteriorating profitability due to the stronger yen. The full-year company forecasts (Revenue of ¥3兆8,880B, Operating Income of ¥5,000B, and Net Income of ¥3,200B) remain unchanged.

Factors Affecting Results

【Revenue】Revenue declined 1.4% YoY to ¥2兆9,154.8B. In the core Construction, Mining & Utility Equipment segment, the positive impact of improved pricing was outweighed by the negative effects of the stronger yen and lower volumes, resulting in a 2.2% revenue decline. Meanwhile, Retail Finance and Industrial Machinery & Others recorded revenue growth, mitigating the overall decline.

【Profit and Loss】Operating Income declined 10.1% YoY to ¥4,190.1B, with the Operating Income margin falling to 14.4% from the previous year. Profit Before Tax declined 7.8% to ¥3,949.3B, while Net Income declined 13.0% to ¥2,698.1B. As the decline in Net Income exceeded that in Operating Income, the tax burden and other factors further reduced bottom-line earnings. No special one-time gains or losses were disclosed, and the earnings decline appears to have been primarily attributable to operating factors. In conclusion, the quarter recorded declines in both revenue and earnings.

Segment Analysis

The Construction, Mining & Utility Equipment segment, the largest segment by composition and the “core business,” led the overall earnings decline, with revenue of ¥2兆6,880B and segment profit of ¥3,626B (-14.7% YoY). The negative effects of the stronger yen and lower volumes exceeded the benefits of improved pricing. In particular, the decline in Asia (-29.3%) weighed on results, while North America (+9.0%) and Central and South America (+15.0%) remained solid.

Retail Finance recorded increases in both revenue and earnings, with revenue of ¥931B (+1.1%) and segment profit of ¥260B (+19.1%), supported by lower funding costs and asset growth. Industrial Machinery & Others posted substantial earnings growth, with revenue of ¥1,627B (+10.9%) and segment profit of ¥273B (+81.1%); its segment profit margin expanded to 16.8% from 10.3% in the previous year. The improvement in profit margins at the other two segments partially offset the decline in the profit margin of the core Construction, Mining & Utility Equipment segment.

Key Financial Indicators

Profitability: ROE (annualized) of 10.1%; Operating Income margin of 14.4% (down from approximately 15.8% in the previous year)
Financial soundness: Equity Ratio of 53.3% (down from 55.0% in the previous year)
Per-share indicators: Basic EPS of ¥295.82 (¥333.25 in the previous year, -11.2%); BPS of ¥3,728.07 (¥3,438.70 in the previous year)
Total assets were ¥63,079.3B and net assets were ¥35,456.9B. As asset growth exceeded capital accumulation, the Equity Ratio declined.

Cash Flow Analysis

Earnings Quality

The difference between Profit Before Tax (¥3,949.3B) and Net Income (¥2,698.1B) was primarily attributable to the tax burden, with the effective tax rate estimated at approximately 31.7%. Comparison with the same period of the previous year, when Profit Before Tax was ¥4,281.95B and Net Income was ¥3,100.68B, also indicates a tax burden structure at a similar level. The earnings decline in the current period appears to have been driven mainly by recurring operating factors. No specific disclosure was provided regarding non-operating income or expenses or extraordinary gains or losses, and no significant profit fluctuation attributable to temporary factors has been identified.

Earnings Forecasts and Guidance

The Q3 cumulative progress rates against the full-year forecasts were 75.0% for Revenue, 83.8% for Operating Income, and 84.3% for Net Income, with earnings progress exceeding the standard 75% benchmark. To achieve the full-year forecasts, Q4 Revenue of ¥9,733.2B and Operating Income of ¥809.9B will be required. This implies a Q4 Operating Income margin of approximately 8.3%, substantially below the 14.4% recorded for the Q3 cumulative period. The company expects full-year demand for major construction equipment to be in the range of ±0% to ▲5% and demand for mining equipment to be ▲10% to ▲15%. Its plan for the second half incorporates a pause in demand and higher costs and is therefore conservative.

Shareholder Returns

The full-year dividend forecast is ¥190 per share (¥83 interim dividend paid and ¥107 assumed year-end dividend). Based on the full-year Net Income forecast of ¥3,200B, the Payout Ratio is approximately 54.1%. No specific information regarding share repurchases was disclosed, and the return metric is therefore assessed based on the Payout Ratio. Assuming the earnings forecast is achieved, the current dividend level appears sustainable from an earnings perspective.

Catalysts

【Short Term】The focus will be on the achievement of the full-year forecasts in the Q4 results and the actual impact of additional U.S. tariffs, including the net impact assumed at ¥550B.

【Long Term】Key medium- to long-term areas of focus include the recovery trend in demand for major construction and mining equipment, the impact of further yen appreciation on profitability, and earnings stabilization through the maintenance of the parts and services (aftermarket) contribution.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Company’s Operating Income margin and Net Profit margin are substantially above the industry median, placing its profitability among the higher levels within the industry.

Growth and Capital Efficiency

The Revenue growth rate exceeds the industry median; however, it should be noted that the calculation period may differ from the current quarter’s XBRL results (-1.4% YoY).

※Source: Compiled by the Company

Risk Factors

1. Core business earnings decline risk: Segment profit in the Construction, Mining & Utility Equipment segment declined 14.7% YoY, as the stronger yen and lower volumes exceeded the benefits of improved pricing. If the slowdown in demand continues, profit margins may decline further through the burden of fixed costs.

2. Foreign exchange risk: The foreign exchange assumption for the second half is ¥140 to the U.S. dollar, which is set at a stronger-yen level than current rates. Any deviation between the assumption and actual rates could affect earnings.

3. Additional U.S. tariff risk: Although the plan is to reduce the net impact to ¥550B through the implementation of countermeasures, the impact could increase depending on changes in tariff rates and the scope of application.

Key Points in the Earnings Results

1. Earnings progress against the full-year forecasts (83.8% for Operating Income and 84.3% for Net Income) exceeds Revenue progress (75.0%), indicating that the company’s plan incorporates a decline in Q4 profitability (assumed at approximately 8.3%). The consistency between cumulative results and the plan will be verified through future results.

2. By segment, the core Construction, Mining & Utility Equipment segment led the earnings decline, while Retail Finance and Industrial Machinery & Others recorded increases in both revenue and earnings and improved profit margins. This confirms diversification in the earnings structure within the business portfolio.

3. Although the Equity Ratio declined from the previous year to 53.3%, the Company continues to maintain a high level of profitability within the industry. The Payout Ratio of approximately 54% is manageable assuming the earnings forecast is achieved.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,763–¥3,980 at ±1% for the cost of equity, and ¥3,866–¥3,874 at ±0.1 for ω.

Note:

• Net assets as of the end of the quarter 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 / These are mechanically calculated values based solely on publicly disclosed data and do not constitute forecasts of market prices or recommendations for specific investment actions, nor do they predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated through the integrated AI analysis of XBRL earnings release data and PDF earnings presentation materials. 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, after consulting with professionals as necessary.

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