MORITA HOLDINGS CORPORATION FY2027 Q1 Earnings Report

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Executive Summary

In Q1 of the fiscal year ending March 2027, Revenue increased while Operating Income declined, as deteriorating profitability in the Firefighting Vehicles (Ambulance) segment weighed on overall profits. Revenue was ¥188.5B (¥182.6B in the same period last year, YoY+3.2%), Operating Income was ¥5.4B (¥13.8B last year, YoY-60.8%), and Ordinary Income was ¥6.9B (¥15.4B last year, YoY-54.9%). Net Income attributable to owners of the parent was ¥7.5B (¥7.7B last year, YoY-2.2%), representing a significantly smaller decline, primarily due to temporary support from a ¥5.2B gain on liquidation of a subsidiary, recorded as extraordinary income.

Factors Behind Earnings Changes

【Revenue】The Firefighting Vehicles (Ambulance) segment, at ¥97.5B (51.7% composition ratio, YoY+16.5%), led the Company-wide increase in Revenue. Environmental Vehicles also increased Revenue to ¥28.1B (up +5.0%), while Disaster Prevention declined to ¥54.1B (down -9.7%) and Industrial Machinery declined to ¥10.3B (down -26.1%), resulting in divergent performance among the segments.

【Profit and Loss】The gross profit margin declined by 3.4pt to 27.9% from 31.3% in the same period last year, while the SG&A ratio increased by 1.3pt to 25.1% from 23.7%. Consequently, the Operating Income margin contracted by 4.6pt to 2.9% from 7.5%. The primary factor was the Firefighting Vehicles segment falling into an Operating Loss of ¥1.0B (compared with Operating Income of ¥1.2B in the same period last year). Disaster Prevention also recorded lower profit of ¥4.9B (YoY-50.8%), and there was no change in the leading earnings contributor. Ordinary Income remained at ¥6.9B as non-operating income and expenses were broadly in line with the previous year. However, extraordinary income of ¥5.2B (a temporary factor) associated with the liquidation of a subsidiary lifted Profit Before Tax to ¥12.2B, resulting in Net Income of ¥7.5B, a modest YoY-2.2% decline. In conclusion, at the operating level, the Company recorded higher Revenue but lower profit without a Revenue decline, while the resilience of Net Income depended on temporary factors.

Segment Analysis

Among the four segments, Disaster Prevention remained the largest earnings contributor, with Operating Income of ¥4.9B (9.1% margin), although profit declined 50.8% YoY from ¥9.9B in the same period last year. Firefighting Vehicles (Ambulance), which accounts for 51.7% of the Revenue mix, fell into an Operating Loss of ¥1.0B (compared with +¥1.2B last year) despite a Revenue increase (+16.5%), making it the largest factor behind the deterioration in the profit mix. Industrial Machinery generated Revenue of ¥10.3B (-26.1%) and Operating Income of ¥1.1B (10.6% margin), maintaining the highest profit margin among the four segments. Environmental Vehicles generated Revenue of ¥28.1B (+5.0%) but remained low-profit, with Operating Income of ¥0.5B (1.8% margin). Segment profit totaled ¥5.47B, and after difference adjustments of -¥0.06B, including inventory adjustments, consolidated Operating Income was ¥5.40B.

Key Financial Metrics

【Profitability】The Operating Income margin declined by 4.6pt to 2.9% from 7.5% in the same period last year, with both the gross profit margin of 27.9% (31.3% last year) and the SG&A ratio of 25.1% (23.7% last year) contributing to the deterioration. The Net Income margin, based on Net Income attributable to owners of the parent, was 4.0%, broadly unchanged from 4.2% last year, but this was due to support from extraordinary income. 【Cash Quality】Operating Cash Flow (OCF) of ¥18.8B was approximately 2.5 times Net Income of ¥7.5B, indicating a favorable level of cash-generation capacity relative to profit. 【Investment Efficiency】ROE was 0.7% (quarterly basis, not annualized), EBITDA (Operating Income + depreciation and amortization) was ¥11.0B, and the EBITDA margin was 5.9%. 【Financial Soundness】The Equity Ratio was 71.2%, up 1.9pt from 69.3% last year, while the current ratio remained high at 292%. On the other hand, short-term borrowings increased to ¥18.8B from ¥9.1B last year, up YoY+107.5%, reflecting higher working capital requirements.

Cash Flow Analysis

Operating Cash Flow was ¥18.8B, down YoY-24.5% from ¥24.9B last year, but remained approximately 2.5 times Net Income of ¥7.5B, indicating that the quality of cash generation itself was favorable. In terms of working capital, progress in the collection of trade receivables generated a cash inflow of ¥168.7B, while an increase in inventories resulted in a cash outflow of ¥87.3B, with the two factors largely offsetting each other. Investing Cash Flow was -¥3.8B, mainly due to ¥2.7B in capital expenditures, while Financing Cash Flow was -¥5.0B, primarily due to ¥1.4B in dividend payments and other factors. Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was positive at ¥15.0B, indicating that funding capacity for dividends and investment remains secured for the time being.

Quality of Earnings

Against Ordinary Income of ¥6.9B, extraordinary income of ¥5.2B associated with the liquidation of a subsidiary lifted Profit Before Tax to ¥12.2B. Accordingly, it should be noted that a considerable portion of Net Income of ¥7.5B depended on temporary factors. Non-operating income of ¥2.9B consisted primarily of ¥1.2B in dividend income and ¥0.4B in foreign exchange gains, representing income of a recurring nature. Comprehensive Income was ¥21.1B, substantially exceeding Net Income of ¥7.5B. This was primarily due to a ¥19.6B increase in valuation differences on investment securities held, and therefore does not reflect the business’s recurring earnings power; the divergence from Net Income warrants attention.

Earnings Forecasts and Guidance

The full-year forecasts are Revenue of ¥1155.0B (YoY-0.9%), Operating Income of ¥145.0B (YoY-6.2%), Ordinary Income of ¥150.0B (YoY-0.3%), Net Income of ¥97.0B, EPS of ¥236.59, and annual dividends of ¥80. The Q1 progress rates were 16.3% for Revenue, 3.7% for Operating Income, 4.6% for Ordinary Income, and 7.8% for Net Income, all below the simple quarterly benchmark of one-fourth (25%). No revisions were made to the earnings forecasts this time; however, the dividend forecast was revised. Progress in recognizing earnings in the second half and improving the profitability of Firefighting Vehicles will be key to achieving the full-year plan.

Shareholder Returns

The full-year dividend forecast is ¥80 annually, representing a Payout Ratio of approximately 33.8% against forecast EPS of ¥236.59. The quarter’s Free Cash Flow of ¥15.0B exceeded the annualized dividend payment amount, and, taking into account ample cash and cash equivalents of ¥277.2B, there is little concern regarding the availability of funds for dividends. The dividend forecast was revised during the current quarter.

Risk Factors

1. Risk of deteriorating profitability in Firefighting Vehicles (Ambulance): This segment accounts for 51.7% of Company-wide Revenue and fell into an Operating Loss of ¥1.0B (compared with +¥1.2B last year), creating a structure in which earnings fluctuations in a single segment have a significant impact on overall performance.

2. Risk of accumulation of inventories, primarily work in process: Work in process increased 39.2% YoY to ¥195.5B, while the increase in total inventories (¥87.3B) was a cash outflow factor. Depending on the progress of deliveries and inspections, this may affect inventory valuation and working capital efficiency.

3. Risk of delays in progress toward the full-year plan: The progress rate for Operating Income was only 3.7%, and achieving the full-year forecast (YoY-6.2%) will require improved profitability in the second half.

Industry Benchmarks (For Reference; Company Analysis)

Both profitability metrics were below the industry median, with the Operating Income margin ranking toward the lower end of the industry.

The Revenue growth rate was also below the industry median, with the increase in Revenue below the mid-range within the industry.

Source: Compiled by the Company

Key Points from the Earnings Report

1. Of Net Income of ¥7.5B, extraordinary income of ¥5.2B (gain on liquidation of a subsidiary) was a contributing factor. The significant divergence from operating-level earnings power (Operating Income of ¥5.4B, YoY-60.8%) is an important point to consider when evaluating the quality of the earnings report.

2. Firefighting Vehicles (Ambulance), which accounts for 51.7% of the Revenue mix, fell into an Operating Loss. The recovery trend in this segment’s profitability will determine the improvement in the overall profit mix.

3. Inventories, primarily work in process, increased (+39.2%) while trade receivables declined substantially, indicating that differences in the timing of deliveries and inspections were reflected in changes in working capital.

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 five-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥2,497–¥2,644 at ±1% for the cost of equity, and ¥2,568–¥2,571 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing gap 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 / Interest Rate Reference Month: 2026-06 / This value does not predict 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 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 with professionals as necessary.

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