MIMAKI ENGINEERING CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In addition to higher revenue, gross profit improved, resulting in double-digit growth in operating income. The fact that profit expanded at a pace exceeding revenue growth indicates improvements in the cost structure and product mix. Revenue was ¥20.05B (¥19.41B in the previous year, +3.3%), operating income was ¥2.35B (¥1.93B, +21.6%), ordinary income was ¥2.28B (¥1.84B, +24.4%), and net income (net income attributable to owners of the parent) was ¥1.62B (¥1.32B, +22.7%). The primary factor behind the increase in profit was the improvement in the gross profit margin to 53.1% (49.7% in the previous year).

Factors Affecting Business Performance

【Revenue】Revenue increased to ¥20.05B, representing year-on-year growth of +3.3%. By region, JAPAN grew to ¥16.95B (+3.1%) and NorthAmerica increased to ¥6.69B (+17.4%), while Europe declined to ¥5.64B (-6.4%). JAPAN accounts for approximately 58% of company-wide revenue, indicating a high degree of regional concentration.

【Profit and Loss】The gross profit margin improved to 53.1% (49.7% in the previous year), while cost of sales of ¥9.41B decreased year on year. Although selling, general and administrative expenses increased to ¥8.29B (¥7.72B in the previous year), the benefit of gross profit improvement more than offset the increase, expanding the operating margin to 11.7% (10.0% in the previous year). Ordinary income was ¥2.28B after absorbing non-operating expenses, including ¥0.12B in interest expense, while net income was ¥1.62B after recording ¥0.67B in income taxes and other taxes. Extraordinary income consisted solely of a ¥0.01B gain on sales of property, plant and equipment, and the impact of one-time factors was limited. Revenue and profit both increased, with the primary driver of profit growth being margin improvement through cost control.

Segment Analysis

JAPAN is the core and highly profitable segment, with revenue of ¥16.95B (+3.1%), operating income of ¥2.41B (+38.7%), and a margin of 14.2%; it generates the majority of company-wide operating income. NorthAmerica recorded revenue of ¥6.69B (+17.4%) and operating income of ¥0.51B (+537.7%), representing a significant recovery from the previous year's low profitability, with its margin recovering to 7.6%. Europe posted revenue of ¥5.64B (-6.4%) and an operating loss of ¥0.10B (deteriorating from operating income of ¥0.04B in the previous year), making it the only loss-making segment, with a margin of -1.8%. While JAPAN and North America are driving company-wide profit growth, Europe's weak performance is capping the upside for the company-wide margin.

Key Financial Indicators

【Profitability】The operating margin was 11.7%, improving by +1.7pt from 10.0% in the previous year, while the net profit margin also expanded to 8.1% (6.8% in the previous year). The gross profit margin improved by +3.4pt to 53.1% (49.7% in the previous year), making gross profit improvement the primary driver of profit growth.【Cash Flow Quality】Inventories were ¥20.04B (23.2% of total assets), and accounts receivable were ¥12.83B; inventory and receivables are at levels significant enough to be considered sources of funds tied up in working capital.【Investment Efficiency】ROE was 3.9%, with the improvement in the net profit margin serving as an upward driver, while the total asset turnover ratio remained low, constraining asset efficiency.【Financial Soundness】The equity ratio was 47.9%, almost unchanged from 48.1% in the previous year, indicating a stable financial foundation.

Cash Flow Analysis

As no cash flow statement has been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits increased to ¥17.73B (¥16.37B in the previous year), indicating a trend toward increasing liquidity. Meanwhile, inventories rose to ¥20.04B, and funds continued to be tied up in inventory. Short-term borrowings increased to ¥19.02B (¥17.45B in the previous year), suggesting that rising working capital requirements are being addressed through short-term borrowing. Property, plant and equipment increased to ¥16.65B (¥15.38B in the previous year), reflecting progress in investment in buildings and land. Overall, the company is addressing funding requirements associated with investment activities and inventory accumulation through both short-term borrowings and increased cash holdings.

Earnings Quality

The scale of non-operating and extraordinary gains and losses was small, and current-period profit was supported by improved profitability in the core business, indicating good earnings quality. Non-operating income was ¥0.09B, consisting primarily of ¥0.03B in interest income and ¥0.00B in dividend income, and was minor relative to revenue. Non-operating expenses were ¥0.16B, mainly comprising ¥0.12B in interest expense; ordinary income still achieved year-on-year growth of +24.4% after deducting financial costs from operating income. Extraordinary income consisted solely of a ¥0.01B gain on the sale of property, plant and equipment, and the contribution from one-time factors was limited. The difference between ordinary income of ¥2.28B and net income of ¥1.62B was primarily attributable to ¥0.67B in income taxes and other taxes, and the divergence remained within a normal range.

Earnings Forecast and Guidance

Progress against the full-year plan was 22.0% for revenue, at ¥20.05B/¥91.00B; 24.7% for operating income, at ¥2.35B/¥9.50B; and 26.6% for net income, at ¥1.62B/¥6.10B. Compared with the quarterly progress benchmark of 25%, revenue progress was somewhat slower, while profit progress was ahead of this pace, with the benefit of gross profit improvement contributing to profit generation in line with the plan. The full-year ordinary income forecast calls for a slightly conservative year-on-year decline of -3.5%, and consistency with first-half growth will depend on trends from the second half onward. No revisions were made to the earnings or dividend forecasts during the quarter.

Shareholder Returns

The dividend forecast for the fiscal year ending March 2026 is ¥55 per share annually, including a commemorative dividend of ¥5 in addition to the regular year-end dividend of ¥25, representing an increase from the previous year's annual dividend (total of the interim and year-end dividends). Based on projected full-year net income of ¥6.10B attributable to owners of the parent and approximately 28.96 million shares, calculated by deducting treasury shares from issued shares, total annual dividends are estimated at approximately ¥1.59B, resulting in a calculated payout ratio of approximately 26%. As no data on share repurchases has been disclosed, shareholder returns are evaluated based on the payout ratio. Considering the levels of cash and deposits and profits, dividend sustainability can be considered relatively high.

Risk Factors

1. Profitability of the European Business: The Europe segment recorded revenue of ¥5.64B (-6.4%) and an operating loss of ¥0.10B, with profit and loss deteriorating from operating income of ¥0.04B in the previous year. The segment is making a negative contribution to company-wide operating income, and disparities in regional profitability persist.

2. Working Capital Tied Up: Inventories were at a high level of ¥20.04B (23.2% of total assets), while accounts receivable reached ¥12.83B. The impact of inventory and receivables levels on capital efficiency warrants close attention when evaluating the relationship between profit and cash generation.

3. Dependence on Short-Term Funding: Short-term borrowings accounted for the majority of interest-bearing debt at ¥19.02B, increasing by +9.0% year on year. Short-term borrowings exceeded cash and deposits of ¥17.73B, making the funding structure an item requiring ongoing monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability exceeds the industry median and is positioned in the upper part of the range.

Growth and Capital Efficiency

The revenue growth rate is below the industry median, indicating a relatively moderate pace of revenue growth.

Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The improvement in the gross profit margin (53.1%, +3.4pt year on year) was the primary driver of double-digit profit growth, and the operating margin also expanded to 11.7%. The sustained improvement in margins is supporting the quality of this fiscal year's performance.

2. By region, JAPAN and North America are driving profit growth, while Europe has shifted to an operating loss. The disparity in regional profitability is limiting the ceiling for the company-wide margin.

3. Inventory and accounts receivable remain high, and dependence on short-term borrowings has also increased. The balance between profit growth and capital efficiency should be monitored continuously in future financial 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 type with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,644–¥1,743 at ±1% for the cost of equity, and ¥1,686–¥1,702 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter 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.

(Model used: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not forecast 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 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 professionals as necessary.

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