MINEBEA MITSUMI Inc. FY2027 Q1 Earnings Report

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Executive Summary

Against the backdrop of growth in the core precision components and semiconductor-related businesses, the Company reported higher revenue and profit, with Revenue, Operating Income, and Net Income all posting double-digit increases. Revenue was ¥4,265.7B (+16.3% YoY), Operating Income was ¥263.1B (+50.9%), Profit Before Tax was ¥298.1B (+91.2%), and Net Income attributable to owners of the parent (hereinafter, “Net Income”) was ¥213.0B (+95.5%; quarterly profit including non-controlling interests was ¥211.9B, +94.7%). The primary drivers of profit growth were an improvement in the gross profit margin (18.7%, +1.8pt YoY) and an expansion in financial income (¥67.4B, +447.7% from ¥12.3B in the same period of the previous year). Growth in profit at the Precision Technologies Business and Semiconductor & Electronics Business provided the main impetus, while the Access Solutions Business became a drag on the earnings mix as Operating Income nearly disappeared (¥0.7B, -97.4%).

Factors Affecting Performance

【Revenue】Revenue increased 16.3% YoY to ¥4,265.7B, with all segments recording higher sales. By composition, Semiconductor & Electronics was the largest segment at 31.5% (¥1,342.2B, +14.5%), followed by Motor, Lighting & Sensing at 29.2% (¥1,245.2B, +20.1%), Access Solutions at 19.8% (¥844.6B, +7.0%), and Precision Technologies at 19.2% (¥820.5B, +23.7%). Translation differences arising from foreign operations amounted to +¥136.9B (△¥24.9B in the same period of the previous year), suggesting that yen depreciation in foreign-currency translation may have supported part of the increase in Revenue.

【Profit and Loss】Operating Income was ¥263.1B (+50.9% YoY), with expanded operating leverage supported by improvements in both the gross profit margin, at 18.7% (+1.8pt), and the SG&A ratio, at 12.2% (-0.3pt). Meanwhile, other expenses increased sharply to ¥31.4B from ¥2.4B in the same period of the previous year, somewhat reducing the increase in profit. By segment, Precision Technologies was the largest contributor at ¥191.2B (+34.1%, 23.3% margin), while Semiconductor & Electronics posted a significant recovery to ¥60.0B (+168.4%, 4.5% margin), and Motor, Lighting & Sensing also grew to ¥75.7B (+58.4%, 6.1% margin). In contrast, Access Solutions declined sharply to ¥0.7B (-97.4%, 0.1% margin), becoming a factor limiting the pace of profit growth. The expansion in financial income (+447.7%) also lifted Profit Before Tax to ¥298.1B (+91.2%), while Net Income increased substantially to ¥213.0B (+95.5%). In conclusion, the Company recorded higher Revenue and profit during the quarter.

Segment Analysis

The reported segments consist of four categories—Precision Technologies, Motor, Lighting & Sensing, Semiconductor & Electronics, and Access Solutions—plus Other. Precision Technologies recorded Revenue of ¥820.5B (+23.7%) and Operating Income of ¥191.2B (+34.1%, 23.3% margin), making it the largest contributor to Company-wide profit, with a notably high margin. Motor, Lighting & Sensing posted Revenue of ¥1,245.2B (+20.1%) and Operating Income of ¥75.7B (+58.4%, 6.1% margin, +1.5pt YoY), reflecting improved profitability. Semiconductor & Electronics recorded Revenue of ¥1,342.2B (+14.5%) and Operating Income of ¥60.0B (+168.4%, 4.5% margin, +2.6pt YoY), indicating a significant recovery in earnings. Access Solutions increased Revenue to ¥844.6B (+7.0%), but Operating Income fell sharply to ¥0.7B (-97.4%, 0.1% margin, -3.4pt YoY), meaning that profit nearly disappeared despite higher sales. The Other category recorded Revenue of ¥13.2B (+52.3%), while its Operating Loss widened to ¥6.5B from a loss of ¥4.5B in the same period of the previous year. Company-wide adjustments, including common corporate expenses, were -¥57.9B, narrowing from -¥61.2B in the same period of the previous year and contributing to the increase in Operating Income.

Key Financial Metrics

【Profitability】The Operating Income margin improved to 6.2% from 4.7% in the same period of the previous year, an increase of +1.4pt, while the Net Income margin, based on income attributable to owners of the parent, improved to 5.0% from 2.9%, an increase of +2.0pt. The gross profit margin was 18.7% (+1.8pt), and the SG&A ratio was 12.2% (-0.3pt), confirming an improvement in the cost structure accompanying higher Revenue, or operating leverage.【Cash Quality】Operating Cash Flow (OCF) was ¥474.6B, approximately 2.2 times Net Income attributable to owners of the parent (¥213.0B), indicating strong cash support for earnings. However, an increase in inventories (+10.6% from the end of the previous fiscal year) was a factor weighing on OCF.【Investment Efficiency】ROE, calculated on a quarterly basis as quarterly Net Income divided by average equity attributable to owners of the parent, was 2.3%. Capital expenditures of ¥294.9B represented 6.9% of Revenue and were approximately 1.6 times depreciation and amortization expenses of ¥187.4B, indicating a phase in which capacity expansion and replacement investments are preceding.【Financial Soundness】The Equity Ratio was 49.2%, down -0.3pt from 49.5% at the end of the previous fiscal year. Total interest-bearing debt was ¥4,894.2B (net interest-bearing debt of ¥2,476.4B), while interest coverage, measured by EBIT / financial expenses, was approximately 8.1x, indicating a sound level of financial resilience.

Cash Flow Analysis

OCF increased 103.8% to ¥474.6B from ¥232.9B in the same period of the previous year. In addition to the increase in Profit Before Tax (+91.2%), a decrease in trade receivables (+¥301.3B) and an increase in trade payables (+¥170.2B) contributed positively, while an increase in inventories (-¥370.6B) acted as an offsetting factor. Investing Cash Flow was -¥306.7B, with the investment deficit widening mainly due to capital expenditures of ¥294.9B (+63.7% from ¥180.2B in the same period of the previous year). Free Cash Flow was ¥167.9B, a substantial increase from ¥42.8B in the same period of the previous year, securing cash generation exceeding dividend payments of ¥100.4B. Financing Cash Flow was -¥58.6B, compared with positive Financing Cash Flow of +¥385.5B in the same period of the previous year, primarily due to an increase in short-term borrowings (+¥515.2B). In the current period, the increase in short-term borrowings was limited to ¥61.9B, while dividend payments (-¥100.4B) and other items exceeded this amount, resulting in negative Financing Cash Flow. Cash and cash equivalents at the end of the period were ¥2,417.8B, an increase of +¥142.6B from the beginning of the period, including foreign-currency translation adjustments of +¥33.4B.

Earnings Quality

Profit growth in the current quarter was led by the expansion in Operating Income (+50.9%), and cash support was strong, with OCF reaching approximately 2.2 times Net Income attributable to owners of the parent (¥213.0B). However, the sharp increase in financial income (¥67.4B, +447.7% from ¥12.3B in the same period of the previous year; interest income was ¥63.2B, a substantial increase from ¥7.9B in the same period of the previous year) contributed to the increase in Profit Before Tax. This is a volatile item affected by market conditions and interest-rate levels and therefore requires attention. Other expenses also increased sharply to ¥31.4B from ¥2.4B in the same period of the previous year, weighing on Operating Income. Comprehensive Income attributable to owners of the parent was ¥377.9B, a difference of ¥164.9B from Net Income of ¥213.0B. The main causes of the difference were foreign-currency translation adjustments (+¥136.9B) and valuation differences on financial assets measured at fair value through other comprehensive income (+¥31.8B). Both are valuation-related factors associated with foreign-exchange and market fluctuations and should be distinguished from recurring operating earnings power.

Earnings Forecast and Guidance

Progress against the full-year Company forecast, which was revised during the current quarter, was 25.2% for Revenue (¥4,265.7B / ¥16,900.0B), 21.9% for Operating Income (¥263.1B / ¥1,200.0B), and 24.5% for Net Income attributable to owners of the parent (¥213.0B / ¥870.0B). Compared with simple time progress of 25%, Revenue and Net Income were broadly on a standard pace, while Operating Income was somewhat behind. Meanwhile, the year-on-year outlook for the full-year forecast is +1.5% for Revenue and +15.4% for Operating Income, compared with a -12.2% decline in Net Income, indicating an earnings decrease. This contrasts with the +95.5% growth in Net Income during Q1. The divergence suggests that the Company may be anticipating a slowdown in profit growth over the full year or the reversal of temporary profit factors that occurred in the previous fiscal year. Actual performance from the second half onward will therefore be the focus in evaluating progress.

Shareholder Returns

The dividend policy targets a consolidated Payout Ratio of approximately 30%, and the full-year dividend forecast remains ¥60, with no revision. Based on the full-year forecast EPS of ¥216.64, the Payout Ratio is approximately 27.7%, within the policy range. Dividend payments during Q1 were ¥100.4B, at the same level as in the same period of the previous year, while Free Cash Flow of ¥167.9B covered approximately 1.7 times the dividend payments, securing dividend sustainability from a cash-generation perspective. Share repurchases amounted to only ¥0.01B, making dividends the primary component of shareholder returns.

Risk Factors

1. Deterioration in working capital (increase in inventories): Inventories increased to ¥432.9B (+10.6% from the end of the previous fiscal year), and the increase in inventories was also a negative factor of -¥370.6B in OCF. If inventory accumulation continues, monitoring of tied-up funds and the risk of inventory write-downs will be necessary.

2. Deterioration in the profitability of the Access Solutions Business: Operating Income in this business declined sharply to ¥0.7B from ¥27.3B in the same period of the previous year (-97.4%), and the margin fell to 0.1% from 3.5%. Profit nearly disappeared despite higher Revenue (+7.0%), becoming one factor behind the delay in full-year Operating Income progress, which was 21.9%.

3. Sensitivity to financial income and foreign-exchange fluctuations: Financial income, which contributed to the increase in Profit Before Tax, fluctuated significantly at ¥67.4B (+447.7% from ¥12.3B in the same period of the previous year). The difference between Comprehensive Income and Net Income of ¥164.9B was also attributable to foreign-currency translation adjustments (+¥136.9B). Including the fact that the full-year Net Income forecast is -12.2% YoY, the impact of market conditions and foreign-exchange fluctuations on performance should be monitored continuously.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Growth and Capital Efficiency

※Source: Compiled by the Company

Key Takeaways from the Results

1. The structure in which the high margin of the Precision Technologies Business (23.3%, Operating Income +34.1%) drives Company-wide profit growth remains intact. The business’s high earnings contribution is confirmed by the financial results as a factor supporting the Company-wide margin.

2. The Operating Income margin of the Access Solutions Business declined to 0.1%, with profit nearly disappearing despite higher Revenue. The deterioration in the business’s profitability is a numerical bottleneck behind the full-year Operating Income progress rate of 21.9%, which is slightly below the standard pace of 25%.

3. The full-year Net Income forecast indicates a year-on-year decline of -12.2%, while actual Q1 Net Income increased sharply by +95.5%, creating a clear divergence between the two. Together with inventory accumulation (+10.6% from the end of the previous fiscal year) and the volatility of financial income, this divergence should be monitored in future earnings results.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥2,342–¥2,481 at ±1% for the cost of equity, and ¥2,408–¥2,414 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end were used (there is a timing difference from the full-year forecast).

(Calculation model: Residual income model / Interest-rate reference month: 2026-07 / This figure does not forecast or guarantee future share prices)

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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 professionals as necessary.

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