NICHIDAI (6467) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of FY2026, the most important point is that the decline in revenue accompanying the slowdown in demand amplified the fixed-cost burden, resulting in all of operating income, ordinary income, and net income falling into the red. Revenue was ¥81.5B (-5.4% YoY), operating income was ¥-3.1B (deteriorating from ¥0.8B in the previous year), ordinary income was ¥-2.7B (deteriorating from ¥1.2B in the previous year), and net income attributable to owners of the parent was ¥-4.2B (deteriorating from ¥0.1B in the previous year). The decline in revenue and gross profit margin in the Dies and Precision Parts segments failed to absorb SG&A expenses, which was the primary cause of the widening loss.

Factors Driving Earnings Changes

【Revenue】Revenue was ¥81.5B, down -5.4% YoY, with all three segments reporting lower revenue. Dies recorded ¥33.7B (-5.4%), Precision Parts ¥31.0B (-5.1%), and Filters ¥16.9B (-5.8%), indicating a broad-based slowdown in demand regardless of region or product. By region, Japan remained the core market at ¥50.8B but declined from the previous year, while Thailand increased to ¥20.1B, highlighting the decline in domestic demand.

【Profit and Loss】Gross profit was ¥13.7B, with a gross profit margin of 16.8%, down from 19.8% in the previous year, indicating that costs were not sufficiently reduced in response to the decline in revenue. SG&A expenses of ¥16.8B exceeded gross profit, causing operating income to fall into a loss of ¥-3.1B. Although non-operating income of ¥0.5B, including interest income and foreign exchange gains, partially offset the loss, ordinary income also fell into a loss of ¥-2.7B. After recording extraordinary losses of ¥0.3B, including losses on disposal of fixed assets, profit before tax was ¥-3.1B. With an additional corporate income tax burden of ¥1.1B, net income attributable to owners of the parent widened to ¥-4.2B. By segment, Dies and Precision Parts recorded ordinary losses of ¥-1.8B and ¥-1.2B, respectively, while Filters maintained a profit of ¥0.2B. In conclusion, the company experienced both lower revenue and lower profit.

Segment Analysis

The Dies segment recorded revenue of ¥33.7B (-5.4% YoY) and ordinary income of ¥-1.8B, deteriorating from ¥-0.4B in the previous year and posting the largest loss. Precision Parts recorded revenue of ¥31.0B (-5.1%) and ordinary income of ¥-1.2B, deteriorating from ¥-1.0B in the previous year; profitability worsened in both segments. Filters secured ordinary income of ¥0.2B despite revenue of ¥16.9B (-5.8%), making it the only profitable segment among the three, although its profit margin declined substantially from ¥1.6B in the previous year (profit margin: 1.4%). By region, revenue in Japan declined across Dies, Precision Parts, and Filters, while Thailand increased mainly in Precision Parts, creating a clear divergence among production and sales locations.

Key Financial Indicators

【Profitability】The operating margin deteriorated substantially to -3.8% (1.0% in the previous year), while the net profit margin declined to -5.2% (0.3% in the previous year). The gross profit margin also fell to 16.8% (19.8% in the previous year). 【Cash Flow Quality】Although OCF and other cash flow information have not been disclosed, accounts receivable of ¥20.5B, electronically recorded monetary claims of ¥7.7B, and work-in-process inventories of ¥7.9B remain tied up in working capital. Work-in-process inventories account for approximately 40% of inventories, a high level. 【Investment Efficiency】Annualized ROE was -5.2%, while total asset turnover was 0.581x, indicating declines in both asset efficiency and return on capital. 【Financial Soundness】The equity ratio was 75.8% (up from 73.2% in the previous year), and interest-bearing debt was approximately ¥10.1B, equivalent to only 7.2% of total assets. The current ratio exceeded 234%, indicating a conservative financial base.

Cash Flow Analysis

Although the cash flow statement has not been disclosed, cash trends can be confirmed from changes in the balance sheet. Cash and deposits were ¥18.3B, down ¥11.7B from ¥30.0B at the end of the previous fiscal year. While short-term borrowings also appear to have been reduced from ¥9.0B to ¥3.0B, working capital items such as accounts receivable, electronically recorded monetary claims, and work-in-process inventories remained at high levels. The accounts receivable turnover period was approximately 69 days on an annualized basis, suggesting that delayed cash collection amid losses may be affecting liquidity. Property, plant and equipment, which indicates capital investment trends, increased from the previous year to ¥58.8B, suggesting that cash outflows from investing activities were one factor behind the decline in cash balances.

Earnings Quality

While both operating income and ordinary income were negative, non-operating income was limited to small-scale items with a strongly non-recurring nature, such as interest income of ¥0.2B and foreign exchange gains of ¥0.1B, and does not represent a structural earnings source capable of offsetting inadequate profitability in the core business. The extraordinary loss of ¥0.3B was attributable to temporary factors such as losses on disposal of fixed assets and should not affect the assessment of recurring earning power. Corporate income taxes of ¥1.1B were recorded against a profit before tax loss of ¥3.1B, causing net income attributable to owners of the parent to widen to ¥-4.2B, exceeding the loss before tax. The tax burden amid losses further reduced earnings quality. Comprehensive income was ¥-4.7B, below net income (consolidated basis: ¥-4.1B), with foreign currency translation adjustments of ¥-0.5B being the primary cause of the difference.

Earnings Forecast and Guidance

Progress against the full-year forecast is challenging. Revenue progress was 72.4%, below the standard Q3 progress benchmark of 75%. Operating income was ¥-3.1B on a cumulative basis against a full-year forecast of ¥-2.0B, deteriorating at a pace 154.5% above the forecast loss. Ordinary income also reached ¥-2.7B against a full-year forecast of ¥-1.8B. Net income attributable to owners of the parent was ¥-4.2B on a cumulative basis against a full-year forecast of ¥-2.4B. Unless profitability improves substantially in Q4, achieving the full-year plan will be difficult. No revisions to the earnings forecast or dividend forecast had been announced as of this disclosure.

Shareholder Returns

The full-year dividend forecast is ¥6 per share, including an actual Q2 dividend of ¥2, and no revision to the dividend forecast was made in this disclosure. As net income is negative for the current period, the numerator of the payout ratio is negative, making a conventional payout ratio assessment difficult to apply. Given the financial base of cash and deposits of ¥18.3B and an equity ratio of 75.8%, there is room to fund dividends in the short term. However, as net income attributable to owners of the parent is also forecast to be negative for the full year, the dividend is expected to be paid without support from earnings. No disclosure regarding share buybacks has been made.

Risk Factors

1. Profitability deterioration risk: The operating margin was -3.8% and the gross profit margin declined to 16.8% from 19.8% in the previous year, indicating that fixed costs (SG&A expenses of ¥16.8B) cannot be absorbed during a period of declining revenue.

2. Working capital accumulation risk: Work-in-process inventories were ¥7.9B, accounting for approximately 40% of inventories, while the accounts receivable turnover period had lengthened to approximately 69 days. The tying up of funds amid losses could affect liquidity.

3. Risk of failing to achieve the full-year plan: As of the cumulative Q3, operating income, ordinary income, and net income had all exceeded the forecast loss amounts for the full year. Unless there is a substantial improvement in Q4, the company is highly likely to fall short of its plan.

Industry Benchmark (For Reference; Company Analysis)

Profitability and Returns

Both the operating margin and net profit margin are substantially below the industry median, placing profitability at the lower end of the industry.

Growth and Capital Efficiency

The revenue growth rate was also below the industry median, indicating relative underperformance within the industry in terms of growth.

※Source: Company compilation

Key Points from the Financial Results

1. Although the financial base is conservative, with an equity ratio of 75.8% and a current ratio exceeding 234%, the decline in core business profitability, reflected in an operating margin of -3.8% and ROE of -5.2%, is the central issue in evaluating the financial indicators.

2. The cumulative Q3 operating loss of ¥3.1B has already exceeded the full-year forecast loss of ¥2.0B, making the earnings trend in Q4 the key inflection point for achieving the full-year plan.

3. The persistently high work-in-process inventory ratio and lengthening accounts receivable collection period are key points to monitor in determining whether improved profitability will translate into actual cash generation.

Theoretical Share Price (Reference Value)

Sensitivity: ¥770–¥814 at ±1% for the cost of equity, and ¥780–¥799 at ±0.1 for ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value will be below book value per share.
• Net assets as of the quarter-end are used (there is a timing difference from 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 solely from 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 the future share price.)

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This report is an earnings analysis document automatically generated by AI through analysis of 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 responsibility, after consulting with a professional as necessary.

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