AIRMAN (6364) FY2026 Q3 Earnings Report

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Executive Summary

This earnings result shows profit growth exceeding revenue growth, confirming an improvement in profitability. Revenue was ¥427.9B (+3.8% YoY), Operating Income was ¥56.8B (+12.1%), Ordinary Income was ¥62.5B (+10.7%), and Net Income attributable to shareholders of the parent was ¥43.5B (+11.3%). The Operating Margin improved to 13.3% from the previous year, supported by the absorption of fixed costs through revenue growth and improved profitability. Non-operating income included a foreign exchange gain of ¥3.3B, with some market-related factors contributing to the growth in Ordinary Income.

Factors Affecting Earnings

【Revenue】Revenue was ¥427.9B, up +3.8% YoY. By segment, ConstructionMachinery generated ¥348.0B (81.3% of total), while IndustrialMachinery generated ¥79.8B (18.7%), with the core construction machinery field driving revenue.

【Profit and Loss】Operating Income was ¥56.8B (+12.1% YoY), and the Operating Margin improved to 13.3% from the previous year. The company maintained a gross margin of 27.3% while controlling the SG&A expense ratio at 14.0%, resulting in positive operating leverage. Ordinary Income was ¥62.5B (+10.7%), with non-operating income of ¥6.6B, including a foreign exchange gain of ¥3.3B, contributing to the increase. Extraordinary loss of ¥0.3B (loss on disposal of fixed assets) was a temporary factor with a negligible impact. Net Income was ¥43.6B (+11.3%). In conclusion, the company achieved both revenue and profit growth.

Segment Analysis

ConstructionMachinery (Construction Machinery) generated Revenue of ¥348.0B, Operating Income of ¥56.4B, and a profit margin of 16.2%, making it the core segment accounting for 81.3% of company-wide revenue. IndustrialMachinery (Industrial Machinery) generated Revenue of ¥79.8B, Operating Income of ¥15.2B, and a profit margin of 19.1%, demonstrating higher profitability than construction machinery on a standalone segment basis. Both segments secured double-digit profit margins, indicating sound profitability across the overall business portfolio.

Key Financial Indicators

【Profitability】The Operating Margin of 13.3% and Net Profit Margin of 10.2% both improved from the previous year. The structure in which a gross margin of 27.3% is absorbed by an SG&A expense ratio of 14.0% supports earning power.【Cash Quality】Accounts receivable were ¥220.9B, equivalent to 51.6% of revenue. The long collection cycle ties up working capital and represents an issue for capital efficiency going forward.【Investment Efficiency】ROE was 9.9%. Relative to the high level of profitability, the total asset turnover ratio is comparatively low, leaving room for improvement in asset efficiency.【Financial Soundness】With an equity ratio of 65.2%, current assets of ¥482.0B, and current liabilities of ¥122.2B, the financial foundation is extremely stable.

Cash Flow Analysis

Although the company does not disclose a cash flow statement, its funding trends can be inferred from changes in the balance sheet. Cash and deposits declined to ¥163.8B from ¥192.5B in the previous year, while accounts receivable increased to ¥220.9B and investment securities rose to ¥53.9B. Retained earnings increased by ¥36.3B to ¥365.6B, indicating continued accumulation of net income. Interest-bearing debt was ¥74.5B, consisting primarily of long-term borrowings, with low dependence on short-term funding. The fact that the pace of growth in accounts receivable exceeded the growth in the cash balance suggests that the expansion of working capital is absorbing funds relative to profit growth.

Quality of Earnings

The core source of recurring earnings is Operating Income of ¥56.8B. Of the ¥6.6B in non-operating income, the ¥3.3B foreign exchange gain has a non-recurring nature because it depends on market fluctuations. The ¥0.3B extraordinary loss (loss on disposal of fixed assets) had a negligible impact on Net Income and may reasonably be treated as a temporary factor. Comprehensive income was ¥51.9B, exceeding Net Income of ¥43.6B, primarily due to a ¥10.3B increase in the valuation difference on available-for-sale securities. This divergence reflects the fair-value measurement of shares and other holdings and must be distinguished from the cash-generation capacity of the core business. The fact that the pace of growth in accounts receivable exceeded revenue growth indicates that attention should be paid to the speed of cash conversion of earnings from an accrual perspective.

Earnings Forecast and Guidance

The full-year company forecast is Revenue of ¥550.0B (+1.2% YoY), Operating Income of ¥69.2B (+7.1%), and Ordinary Income of ¥70.0B (+2.5%). The cumulative Q3 progress rates were 77.8% for Revenue, 82.0% for Operating Income, and 89.3% for Ordinary Income, all exceeding the standard progress benchmark of approximately 75%. Because the excess progress in Ordinary Income includes the contribution from foreign exchange gains, it is appropriate to evaluate performance primarily based on progress in Operating Income. The company plan assumes a full-year Operating Margin of 12.6%, a conservative setting below the cumulative actual result of 13.3%.

Shareholder Returns

The Q2 dividend was ¥20 per share, and the full-year forecast is an annual dividend of ¥60. Based on the Q2 results, a year-end dividend of ¥40 is expected. The annual Payout Ratio against forecast full-year Net Income of ¥48.7B is approximately 33.7%, indicating a conservative dividend burden relative to the level of earnings. Cash and deposits of ¥163.8B exceed interest-bearing debt of ¥74.5B, indicating substantial capacity to pay dividends.

Risk Factors

1. Risk of delayed collection of accounts receivable: Accounts receivable were ¥220.9B, equivalent to 51.6% of revenue. A longer collection cycle could affect working capital and funding efficiency.

2. Foreign exchange risk: The ¥3.3B foreign exchange gain included in Ordinary Income is equivalent to 5.9% of Operating Income. Changes in the foreign exchange environment could reverse the upward effect on Ordinary Income.

3. Cyclical demand risk: The core ConstructionMachinery segment, which accounts for 81.3% of revenue, is linked to trends in construction and capital investment. Demand fluctuations could affect fixed-cost absorption and profit margins.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

The company’s Operating Margin and Net Profit Margin both exceed the industry median, indicating an advantageous level of profitability within the industry.

Growth and Capital Efficiency

Although the revenue growth rate slightly exceeds the industry median, it does not reach the upper bound of the IQR and is at a standard level.

Source: Company compilation

Key Points from the Earnings Results

1. Revenue growth was +3.8%, versus Operating Income growth of +12.1%, and the Operating Margin improved from the previous year. The defining feature of these results is that profitability improved more rapidly than revenue increased.

2. The full-year progress rates were 82.0% for Operating Income and 89.2% for Net Income, exceeding standard progress levels. However, because the high progress rates for Ordinary Income and Net Income include the contribution from foreign exchange gains, it is useful to distinguish them from underlying progress in Operating Income.

3. Accounts receivable reached 51.6% of revenue. The extent to which working capital has expanded relative to the pace of profit growth will be an important consideration in evaluating future cash-generation capacity.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥1,670–¥1,768 at Cost of Equity ±1%; ¥1,716–¥1,722 at ω±0.1.

Notes:

• Since Net Income progress against the full-year forecast (89%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a range of up to +10% (because companies running ahead of forecast progress tend to exceed their forecasts; adjustments may be excessive for businesses with strong seasonality).
• Net assets as of the quarter-end have been used (there is a timing gap relative to the full-year forecast).

(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 price or a recommendation of any specific investment action, and does not predict or guarantee future stock prices.)

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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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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