NOHMI BOSAI LTD. FY2027 Q1 Earnings Report

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Executive Summary

The results indicate that the Company has clearly entered a phase of improving profitability, with both revenue growth and a return to operating profitability progressing simultaneously. Revenue was ¥299.0B (¥256.8B in the same period of the previous year, +16.4%), while operating income was ¥10.1B, marking a return to profitability from the ¥2.2B operating loss recorded in the same period of the previous year. Ordinary income increased substantially to ¥12.2B (¥0.5B in the previous year). Net income attributable to owners of the parent was ¥4.5B, also representing a return to profitability from the ¥1.0B loss in the same period of the previous year. The primary drivers were revenue growth across all segments, particularly the Fire Protection Systems and Fire Alarm Systems businesses, together with an improvement in the gross profit margin.

Factors Affecting Earnings

【Revenue】Revenue increased across all segments: Fire Protection Systems ¥103.4B (+19.5%, 34.6% of company-wide revenue), Fire Alarm Systems ¥102.1B (+5.9%, 34.2%), Maintenance and Inspection ¥66.2B (+7.1%, 22.1%), and Other ¥28.8B (+121.1%, 9.6%), with all segments showing growth. In particular, growth in Fire Protection Systems and the Other category (including space and defense-related businesses, among others) drove the increase in revenue.

【Profit and Loss】The gross profit margin improved by +4.2pt to 33.2% (29.0% in the previous year), while the SG&A expense ratio remained largely flat at 29.8% compared with the previous year. Consequently, the improvement in gross profit translated directly into higher operating income. As a result, the operating margin improved by +4.2pt to 3.4% (▲0.8% in the previous year). By segment, Fire Protection Systems was the key contributor, with segment income of ¥20.1B (+161.8%, 19.5% margin), while Fire Alarm Systems also remained solid at ¥10.1B (+25.1%, 9.9% margin). Maintenance and Inspection was the only segment to post a decline in profit, at ¥4.5B (▲29.3%, 6.9% margin). Ordinary income expanded to ¥12.2B, supported by ¥2.3B in non-operating income (including ¥0.9B in dividends received and ¥0.8B in equity-method investment gains and losses). However, income taxes and other taxes amounted to ¥7.7B, resulting in a high effective tax rate of 63.2% and a notable decline from pretax income of ¥12.1B to net income of ¥4.5B. Overall, the Company posted higher revenue and higher profit.

Segment Analysis

Fire Protection Systems generated revenue of ¥103.4B (+19.5%) and operating income of ¥20.1B (+161.8%), with a 19.5% margin, making it the primary driver of company-wide profitability. Fire Alarm Systems followed with revenue of ¥102.1B (+5.9%), operating income of ¥10.1B (+25.1%), and a 9.9% margin, representing double-digit profit growth. Maintenance and Inspection, etc. recorded higher revenue of ¥66.2B (+7.1%), but operating income declined to ¥4.5B (▲29.3%), with its margin falling to 6.9%, making it the only segment among the four to experience deteriorating profitability. The Other category (including parking-lot traffic control, meteorological disaster prevention, and related businesses) posted revenue of ¥28.8B (+121.1%) and operating income of ¥2.0B, with a 7.0% margin. Although small in scale, it showed significant growth. The gap in margins between segments has widened, with Fire Protection Systems at 19.5% versus Maintenance and Inspection at 6.9%; improving the profitability of Maintenance and Inspection remains a key challenge for raising the company-wide margin.

Key Financial Indicators

【Profitability】The operating margin improved by 4.2pt to 3.4%, from ▲0.8% in the same period of the previous year, while the gross profit margin also increased by 4.2pt to 33.2% (29.0% in the previous year). The net profit margin based on net income attributable to owners of the parent improved to 1.5% (▲0.4% in the previous year). 【Cash Flow Quality】Income taxes and other taxes of ¥7.7B were deducted from pretax income of ¥12.1B, resulting in a high effective tax rate of 63.2% and significantly widening the decline from ordinary income to net income. 【Investment Efficiency】ROE based on equity attributable to owners of the parent was only 0.3% on a quarterly basis (negative in the same period of the previous year), while quarterly asset turnover, measured as revenue relative to total assets, remained low at 0.17x. 【Financial Soundness】The equity ratio increased to 78.9% (76.2% in the previous year), the current ratio was 372.7%, and interest-bearing debt was ¥0.18B, representing a virtually debt-free capital structure. The financial foundation is therefore strong.

Cash Flow Analysis

As the statement of cash flows has not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥426.6B, an increase of ¥72.2B from ¥354.4B in the same period of the previous year. Accounts receivable and notes receivable were ¥445.4B, down ¥178.2B from ¥623.6B in the same period of the previous year, suggesting that progress in collecting receivables was one factor behind the accumulation of cash. Accounts payable and notes payable also declined to ¥47.1B from ¥62.6B in the previous year, a decrease of ¥15.5B, indicating that trade liabilities were reduced at the same time. Total assets were ¥1718.4B, down ¥99.7B from ¥1818.1B in the previous year, suggesting that asset efficiency is improving despite the Company being in a phase of revenue expansion.

Quality of Earnings

Profit for the quarter was derived largely from recurring operating activities, while extraordinary losses were limited to ¥0.1B. Non-operating income of ¥2.3B was diversified, centered on dividends received of ¥0.9B and equity-method investment gains and losses of ¥0.8B, and accounted for approximately 0.8% of revenue, indicating a limited contribution to ordinary income. The gap between ordinary income of ¥12.2B and net income attributable to owners of the parent of ¥4.5B was primarily attributable to the high tax burden resulting from the 63.2% effective tax rate. Taxes, rather than non-operating income or extraordinary gains and losses, determined the bottom line. Comprehensive income was ¥2.4B, slightly below consolidated net income of ¥4.5B, because adjustments related to retirement benefits of ▲¥3.5B had a negative impact. This was partially offset by foreign currency translation adjustments of (+¥0.7B) and valuation differences on securities of (+¥0.7B).

Earnings Forecast and Guidance

Q1 progress against the full-year forecast was 19.0% for revenue (¥1576.0B forecast), 5.3% for operating income (¥190.0B forecast), 6.1% for ordinary income (¥198.4B forecast), and 3.4% for net income (¥133.1B forecast attributable to owners of the parent). All were below the simple progress benchmark of 25%. Progress in operating income, ordinary income, and net income was significantly below revenue progress, suggesting that the plan assumes a concentration of large-project acceptance and revenue recognition in the second half of the fiscal year. Achieving the full-year plan will depend on maintaining the gross profit margin in the second half, improving the profitability of the Maintenance and Inspection business, and containing growth in company-wide expenses.

Shareholder Returns

The annual dividend forecast is ¥116 per share, implying a payout ratio of approximately 51.3% based on the Company’s EPS forecast of ¥226.12. The actual dividend in the same period of the previous year was ¥50 per share, and no revision has been made to the full-year dividend forecast. With a strong financial foundation comprising an equity ratio of 78.9%, interest-bearing debt of ¥0.18B, and cash and deposits of ¥426.6B, the Company has substantial financial capacity to maintain its dividend.

Risk Factors

1. Deterioration in the profitability of the Maintenance and Inspection business: Although revenue increased to ¥66.2B (+7.1%), operating income declined to ¥4.5B (▲29.3%), and the margin fell to 6.9%, making it the only source of profit decline among the four segments.

2. Persistently high effective tax rate: Income taxes and other taxes amounted to ¥7.7B against pretax income of ¥12.1B, resulting in an effective tax rate of 63.2%. Accordingly, improvements at the ordinary income level have not been sufficiently reflected in net income.

3. Second-half concentration of the full-year plan: While revenue progress was 19.0%, progress was only 5.3% for operating income, 6.1% for ordinary income, and 3.4% for net income. Progress is therefore lower at the profit levels, indicating a high degree of dependence on the recognition of large projects and profitability improvements in the second half.

Industry Benchmark (For Reference; Compiled by the Company)

※Source: Compiled by the Company

Key Takeaways from the Results

1. While the gross profit margin improved by +4.2pt YoY to 33.2%, the SG&A expense ratio remained flat. This confirms operating leverage, with the improvement in gross profit translating directly into a +4.2pt increase in the operating margin.

2. The gap in profitability between segments has widened. Fire Protection Systems, with a 19.5% margin, is driving company-wide profit, while Maintenance and Inspection, with a 6.9% margin and a ▲29.3% decline in profit, clearly faces profitability challenges.

3. Full-year progress was 19.0% for revenue but only 3.4%–6.1% at the profit levels, making the execution of large projects and the maintenance of profitability in the second half prerequisites for achieving the full-year plan.

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). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥2,292–¥2,422 at ±1% for the cost of equity, and ¥2,355–¥2,357 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end 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: 2026-07 / 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 release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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