TAMURA CORPORATION FY2027 Q1 Earnings Report

Quick View

Executive Summary

Despite higher revenue, operating income declined, while the sharp increase in net income was primarily attributable to a temporary boost from extraordinary income, including gains on the sale of investment securities. Revenue was ¥32.78B (+13.5% YoY), operating income was ¥1.13B (-3.7%), ordinary income was ¥1.10B (+19.4%), and net income attributable to owners of the parent was ¥3.04B (+1137.4%). The main drivers of revenue growth were the strong growth of ElectronicChemicalsFASystems (+31.6%) and the solid expansion of the core ElectronicComponents business (+6.9%); however, operating income declined as the gross margin fell 1.1pt to 24.5%. The sharp increase in net income was driven by ¥2.19B in extraordinary income, including ¥1.52B in gains on the sale of investment securities, which accounted for approximately 67% of pre-tax income of ¥3.29B and was strongly temporary in nature.

Factors Affecting Earnings

【Revenue】Revenue was ¥32.78B, representing a 13.5% YoY increase. ElectronicChemicalsFASystems led company-wide growth with revenue of ¥11.57B (+31.6%), while the core ElectronicComponents business, which accounted for 64.5% of the revenue mix, also remained solid at ¥21.15B (+6.9%). In contrast, InformationEquipment contracted to ¥0.09B (-71.2%), leaving the business at a limited scale.

【Profit and Loss】Operating income declined to ¥1.13B (-3.7%), primarily because the gross margin fell to 24.5% from 25.6% in the prior-year period, a decline of 1.1pt. The SG&A ratio also declined slightly to 21.0% from 21.5%, a decrease of 0.5pt, but this was insufficient to offset the deterioration in the gross margin. Accordingly, the operating margin declined to 3.5% from 4.1%, a decrease of 0.6pt. Ordinary income increased to ¥1.10B (+19.4%), aided by the reduction in non-operating expenses, including a decrease in foreign exchange losses from ¥0.165B in the prior-year period to ¥0.024B in the current period. Pre-tax income rose substantially to ¥3.29B (+258.4%), while net income increased to ¥3.04B (+1137.4%); however, this was due to the recognition of ¥2.19B in extraordinary income, including ¥1.52B in gains on the sale of investment securities. The divergence between ordinary income and net income is therefore primarily explained by this temporary factor. In conclusion, the quarter saw higher revenue but lower operating income, while the increase in final profit was largely attributable to extraordinary income.

Segment Analysis

The core ElectronicComponents business (Electronic Components-related Business) generated revenue of ¥21.15B, representing 64.5% of total revenue and a 6.9% YoY increase, while operating income rose 19.9% to ¥1.04B. Its margin improved to 4.9% from 4.4% in the prior-year period, resulting in higher revenue, higher profit, and improved profitability. ElectronicChemicalsFASystems (Electronic Chemicals and Equipment-related Business) led company-wide growth with revenue of ¥11.57B, representing 35.3% of total revenue and a 31.6% YoY increase; however, operating income declined 19.8% to ¥0.61B and the margin fell to 5.3% from 8.7%, indicating deteriorating profitability despite higher revenue. InformationEquipment (Information Equipment-related Business) contracted to ¥0.09B (-71.2%), while its operating loss narrowed to ¥0.27B, representing an 8.6% improvement in the loss compared with the prior year, and its margin remained structurally negative at -296.7%. Against total segment operating income of ¥1.38B, company-wide operating income was limited to ¥1.13B. The difference, an adjustment of -¥0.25B, consists of company-wide expenses such as future development research costs and core system renewal expenses incurred by headquarters, and widened from the prior-year adjustment of -¥0.16B.

Key Financial Indicators

【Profitability】The operating margin was 3.5%, down 0.6pt from 4.1% in the prior-year period, while the gross margin was 24.5%, down 1.1pt from 25.6%. The net profit margin rose to 9.3%, but this was primarily due to the boost from extraordinary income and does not indicate an improvement in recurring earnings power. ROE was 4.7%. 【Cash Quality】Cash and deposits were ¥17.92B, down 5.5% from ¥18.95B in the same period of the prior year. Based on annualized revenue and cost of sales, accounts receivable days were estimated at approximately 89 days, inventory turnover days at approximately 37 days, and accounts payable days at approximately 45 days, resulting in a calculated cash conversion cycle of approximately 82 days. Raw materials represented the largest component of inventory at ¥14.13B, and changes in inventory levels could affect future cash-generation capacity. 【Investment Efficiency】Total asset turnover improved to 0.25x from 0.22x in the prior-year period, while the equity ratio improved to 49.7% from 47.4%. 【Financial Soundness】Long-term borrowings increased 28.3% YoY to ¥11.60B, while short-term borrowings declined to ¥17.48B from ¥19.08B and the current portion of long-term borrowings declined to ¥2.21B from ¥4.85B, indicating progress in extending the maturities of interest-bearing debt.

Cash Flow Analysis

Cash and deposits were ¥17.92B, down ¥1.03B (-5.5%) from ¥18.95B in the same period of the prior year. Investment securities were ¥4.11B, down 16.4% from ¥4.92B, suggesting cash movements associated with the ¥1.52B gain on the sale of investment securities recognized in extraordinary income. Short-term borrowings declined from ¥19.08B to ¥17.48B, while long-term borrowings increased 28.3% from ¥9.04B to ¥11.60B, and the current portion of long-term borrowings decreased from ¥4.85B to ¥2.21B, indicating efforts to extend debt maturities. Inventories increased from ¥9.64B to ¥10.14B, with raw materials in particular rising from ¥12.34B to ¥14.13B, suggesting that increased working capital may have constrained cash generation. Retained earnings increased ¥2.40B from ¥20.82B to ¥23.22B, reflecting increased retention of current-period earnings.

Earnings Quality

The primary factor supporting current-period net income of ¥3.04B was extraordinary income of ¥2.19B, consisting of a ¥1.52B gain on the sale of investment securities, a ¥0.67B gain on the sale of shares in a subsidiary, and other items. This temporary income represented approximately 67% of pre-tax income of ¥3.29B and approximately 72% of net income. Operating income, which reflects recurring earnings power, was ¥1.13B (-3.7% YoY), while ordinary income was ¥1.10B (+19.4%), in stark contrast to the sharp increases in pre-tax income and net income. Non-operating income of ¥0.25B consisted primarily of ¥0.06B in dividend income and was modest at 0.8% of revenue. Non-operating expenses of ¥0.28B were primarily composed of interest expense of ¥0.24B. The effective tax rate was low at 7.5% (income taxes of ¥0.25B / pre-tax income of ¥3.29B), apparently reflecting the impact of deferred taxes and other factors. Comprehensive income was ¥2.92B, below net income of ¥3.04B. Foreign currency translation adjustments of +¥0.26B made a positive contribution, while valuation differences on available-for-sale securities of -¥0.35B and adjustments related to retirement benefits of -¥0.07B had negative impacts. Fluctuations in realized and unrealized gains and losses therefore warrant attention when assessing earnings quality.

Earnings Forecast and Guidance

Progress against the full-year company plan was 25.2% for revenue (¥32.78B / ¥130.00B), 20.3% for operating income (¥1.13B / ¥5.60B), and 22.5% for ordinary income (¥1.10B / ¥4.90B). Progress at the operating and ordinary income levels was therefore slightly below the 25% benchmark for quarterly progress. Net income, however, was ¥3.04B / ¥4.50B, or 67.6%, substantially ahead of schedule, primarily due to the temporary boost from extraordinary income and therefore differing in nature from recurring earnings progress. As of the current quarter, no revisions had been made to the earnings or dividend forecasts. Recovery of the operating margin from the second half onward will be a key factor in achieving the full-year plan.

Shareholder Returns

The full-year dividend forecast is ¥16.00 per share, with no revision as of the current quarter. Based on the company’s forecast EPS of ¥56.55, the payout ratio is 28.3% (¥16.00 / ¥56.55), representing a conservative level. Given net assets of ¥65.18B and cash and deposits of ¥17.92B, there appear to be no significant constraints on securing funds for dividends. However, because the forecast net income of ¥4.50B is believed to include the effect of extraordinary income, the effective payout ratio based on recurring earnings power could be higher than the disclosed level, which requires monitoring.

Risk Factors

1. Segment profitability disparity: ElectronicChemicalsFASystems grew revenue by +31.6%, but operating income declined by -19.8% and its margin fell from 8.7% in the prior year to 5.3%. InformationEquipment continued to generate losses, with revenue of ¥0.09B, an operating loss of ¥0.27B, and a margin of -296.7%. The disparity in profitability among segments is weighing on company-wide earnings.

2. Increase in working capital: Inventories increased from ¥9.64B to ¥10.14B, while raw materials rose from ¥12.34B to ¥14.13B. If inventory accumulation continues relative to revenue growth of +13.5%, it could create risks to cash-generation capacity and supply-demand matching.

3. Changes in interest-bearing debt composition and interest burden: Long-term borrowings increased 28.3% from ¥9.04B to ¥11.60B, while interest expense was ¥0.24B, broadly unchanged from the prior year. Interest expense is relatively large compared with operating income of ¥1.13B; with the operating margin at 3.5%, resistance to interest-rate fluctuations requires monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The operating margin was substantially below the industry median, while the net profit margin exceeded the median, partly due to the impact of extraordinary income.

Growth and Capital Efficiency

The revenue growth rate exceeded the industry median, placing the company in a relatively favorable position in terms of growth.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Despite revenue growth of +13.5%, operating income declined by -3.7%, and the operating margin fell 0.6pt to 3.5%. The primary factor was the 1.1pt decline in the gross margin, which exceeded the 0.5pt decline in the SG&A ratio. The fact that revenue growth did not translate into higher operating income is an important consideration when assessing earnings quality.

2. Net income surged +1137.4% YoY, primarily due to ¥2.19B in extraordinary income, including gains on the sale of investment securities, a temporary factor accounting for approximately 67% of pre-tax income. There was a substantial divergence between ordinary income growth of +19.4% and net income growth; operating income and ordinary income are therefore appropriate benchmarks when assessing earnings repeatability.

3. Long-term borrowings increased +28.3%, while short-term borrowings and the current portion of long-term borrowings declined, indicating efforts to extend the maturities of interest-bearing debt. This is a neutral change from the perspective of financial structure stability, but the balance between interest expense and operating income will remain a monitoring point.

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: ¥748–¥791 for a ±1% change in the cost of equity, and ¥767–¥770 for a ±0.1 change in ω.

Notes:

• Because net income progress against the full-year forecast (68%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within a range of +10% (because companies progressing ahead of schedule tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below net assets per share.
• Net assets as of the end of the quarter are used; there is a timing difference relative to the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not forecast or guarantee the future share price)

---

This report is an earnings analysis document automatically generated by AI based on XBRL financial results data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional advisor.

---End of Report---