KOMORI (6349) FY2026 Q3 Earnings Report

Quick View

Executive Summary

Cumulative FY2026 Q3 results showed significant improvement in profitability, driven by revenue growth and substantial operating leverage. Revenue was ¥85.34B (+11.1% YoY), Operating Income was ¥6.94B (+108.1%), Ordinary Income was ¥7.99B (+104.8%), and Net Income was ¥5.35B (+83.7%). The primary driver of profit growth was improved earnings power in the core business, with the Operating Income margin expanding from approximately 4.3% in the same period of the previous year to 8.1%. Meanwhile, it should be noted that Net Income includes temporary extraordinary gains, such as gains on the sale of investment securities.

Factors Affecting Performance

【Revenue】Revenue of ¥85.34B represented an 11.1% YoY increase. By segment, Japan generated ¥64.05B (75.0% of the total), Europe ¥19.42B (22.8%), and North America ¥10.12B (11.9%; segment totals do not match consolidated revenue due to intersegment eliminations and other factors). While the core Japan Business is the main earnings pillar, Europe recorded a loss.

【Profit and Loss】Operating Income of ¥6.94B (+108.1% YoY) substantially exceeded the revenue growth rate, indicating that fixed-cost absorption progressed under a cost structure with a gross margin of 37.5% and an SG&A expense ratio of 29.4%. Ordinary Income was ¥7.99B (+104.8%), after adding ¥1.32B in non-operating income, including ¥0.43B in foreign exchange gains and ¥0.39B in dividend income. Net Income was ¥5.35B (+83.7%) and included ¥0.43B in extraordinary gains, including the temporary gain of ¥0.32B on the sale of investment securities, while the effective tax rate of 36.4% was a downward factor. Overall, the Company achieved both revenue and profit growth.

Segment Analysis

Japan, with Revenue of ¥64.05B and Operating Income of ¥8.07B (a margin of 12.6%), serves as the core earnings contributor. North America generated Revenue of ¥10.12B and Operating Income of ¥0.52B (a margin of 5.1%), achieving profitability, although its margin remains low. Europe generated Revenue of ¥19.42B but recorded an Operating Loss of ¥2.14B (a margin of -11.0%), thereby reducing the consolidated margin of 8.1%. The substantial variation in regional profitability indicates a structure in which improving the profitability of the European Business would directly contribute to raising the consolidated profit margin.

Key Financial Metrics

【Profitability】The Operating Income margin was 8.1% (an improvement equivalent to +379bp YoY), while the Net Income margin was 6.3%, the gross margin was 37.5%, and the SG&A expense ratio was 29.4%. Profit margins expanded as expense growth was contained relative to revenue growth. 【Cash Quality】Against Profit Before Tax of ¥8.42B, income taxes were ¥3.06B, resulting in an effective tax rate of 36.4%. As the figure includes ¥0.43B in extraordinary gains, including ¥0.32B in gains on the sale of investment securities, the difference between Ordinary Income and Net Income is primarily attributable to the tax burden and temporary extraordinary gains and losses. 【Investment Efficiency】ROE of 4.5% can be decomposed into a Net Income margin of 6.3%, total asset turnover of 0.472x, and financial leverage of 1.51x. The low level of asset turnover relative to the improvement in profitability is constraining capital efficiency. 【Financial Soundness】The Equity Ratio was 66.3%, Cash and Deposits were ¥40.40B, and interest-bearing debt was limited to ¥9.00B in corporate bonds and ¥0.08B in long-term borrowings. The Company maintained a conservative financial structure, with Current Assets of ¥125.88B substantially exceeding Current Liabilities of ¥46.18B.

Cash Flow Analysis

Because the disclosed figures from the statement of cash flows are not included, funding trends are analyzed based on changes in the balance sheet. Cash and Deposits decreased to ¥40.40B from ¥48.15B in the previous year, while current securities were trending upward at ¥11.74B, suggesting that a portion of funds may have been allocated to investment assets. Inventories increased to ¥22.48B (raw materials of ¥9.45B and work in process of ¥16.47B) from ¥21.23B in the previous year, and contract liabilities also expanded YoY to ¥18.10B, indicating that working capital is increasing alongside the expansion of order intake and production activities. While earnings growth is progressing, the accumulation of inventory and work in process is tying up funds, and future cash-generation capacity will depend on the pace of inventory reduction.

Quality of Earnings

Of the ¥7.99B in Ordinary Income, ¥1.32B in non-operating income comprised ¥0.43B in foreign exchange gains, ¥0.39B in dividend income, and ¥0.21B in interest income. All are factors outside the core business, and their recurrence depends on market conditions and the assets held. Extraordinary gains consisted of ¥0.32B in gains on the sale of investment securities and ¥0.12B in gains on the sale of fixed assets, for a net total of ¥0.43B, representing a temporary factor equivalent to approximately 8.0% of Net Income of ¥5.35B. Against Profit Before Tax of ¥8.42B, income taxes were ¥3.06B, resulting in a high effective tax rate of 36.4%; the tax burden coefficient constrained the conversion of Ordinary Income into Net Income. The growth in Operating Income (+108.1%) exceeded the growth in Net Income (+83.7%), indicating that core operating profit was the main driver of earnings growth. However, when viewed on a standalone Net Income basis, the underlying earnings power excluding the effects of temporary gains on asset sales and the tax burden should be evaluated with some discount.

Earnings Forecast and Guidance

The full-year Company forecasts are Revenue of ¥124.50B (+12.1% YoY), Operating Income of ¥9.10B (+27.8%), and Ordinary Income of ¥8.90B (+16.8%). Cumulative Q3 progress rates were 68.5% for Revenue, 76.2% for Operating Income, and 89.7% for Ordinary Income, with progress on the profit side exceeding revenue progress. The particularly high progress rate for Ordinary Income reflects the significant contribution of non-operating income and expenses, including foreign exchange gains and dividend income; Q4 therefore includes the risk of a reversal of these non-recurring factors. Calculated backward from the full-year forecast, the Q4 Operating Income margin is equivalent to approximately 5.5%, representing a planned decline from 8.1% for cumulative Q3. Profitability trends toward the fiscal year-end will therefore be a key focus.

Shareholder Returns

The Q2 dividend was ¥35.00 per share, while the full-year Company forecast dividend is ¥70.00 per share. Based on cumulative Q3 Net Income of ¥5.35B, a full-year dividend forecast of ¥70, and the number of shares outstanding after deducting treasury shares, the total full-year dividend is estimated at approximately ¥3.73B, resulting in an estimated Payout Ratio of approximately 58.3% against the full-year Net Income forecast of ¥6.40B. With Cash and Deposits of ¥40.40B and an Equity Ratio of 66.3%, the Company has a strong financial base and sufficient capacity to pay dividends. As no share repurchases have been confirmed, returns are evaluated based solely on the dividend Payout Ratio.

Risk Factors

1. Prolonged inventory and working capital cycle: Inventories of ¥22.48B (raw materials of ¥9.45B and work in process of ¥16.47B) have accumulated. Even taking into account the long manufacturing and delivery cycle typical of made-to-order production, the resulting working capital funding requirements should be monitored. During periods of demand fluctuation, this may affect inventory valuation and funding efficiency.

2. Regional variation in profitability: The Europe segment recorded an Operating Loss of ¥2.14B on Revenue of ¥19.42B (a margin of -11.0%), weighing on the consolidated profit margin. Demand trends and progress in improving profitability in Europe will affect consolidated earnings.

3. Non-recurring nature of non-operating and extraordinary gains and losses: Ordinary Income and Net Income include temporary and market-dependent items such as foreign exchange gains of ¥0.43B and gains on the sale of investment securities of ¥0.32B. If these items have low recurrence potential, earnings progress from Q4 onward may fluctuate.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Return

Profitability is broadly in line with the industry median. Both the Operating Income margin and Net Income margin are slightly below the industry median, but remain within the middle range of the industry.

Growth and Capital Efficiency

The Revenue growth rate is substantially above the industry median, representing a high pace of revenue growth within the industry.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. Revenue increased by 11.1%, while Operating Income increased by 108.1%, resulting in a substantial expansion of the Operating Income margin from the same period of the previous year. Profit growth exceeding revenue growth is noteworthy as evidence that the cost structure is improving.

2. ROE of 4.5% cannot be considered high within the industry. Compared with the improvement in the Net Income margin, the low total asset turnover is constraining capital efficiency. The structure indicates that working capital efficiency, including the accumulation of inventory, will be key to improving capital efficiency going forward.

3. The 89.7% progress rate for Ordinary Income against the full-year Company forecast includes contributions from non-operating income and expenses such as foreign exchange gains and dividend income. The difference from the core-business-based progress rate represented by Operating Income of 76.2% is a notable characteristic of the earnings results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,957–¥2,068 at ±1% for the Cost of Equity, and ¥2,003–¥2,016 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).
• As 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 value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

---

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 discretion and responsibility, after consulting with a professional as necessary.

---End of Report---