ALPS ALPINE CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The key point for Q1 of FY2027 was the shift in operating results from a profit in the previous year to a loss, despite revenue remaining essentially flat. Revenue was ¥237.89B, broadly in line with the previous year (-0.4% YoY), while operating income fell into the red at ¥-0.92B (¥3.73B in the previous year), causing the operating margin to deteriorate to -0.4% (1.6% in the previous year). Although ordinary income remained barely profitable at ¥0.11B (-91.3% YoY), this was attributable to non-operating income, including interest income, dividend income, and equity-method investment income, offsetting the operating loss. Net income attributable to owners of the parent increased in deficit to ¥-3.59B (¥-2.82B in the previous year). The primary causes of the decline in profitability were deteriorating profitability in the core Mobility Business and an increase in SG&A expenses exceeding revenue growth.

Factors Affecting Results

【Revenue】Revenue was ¥237.89B, essentially flat at -0.4% YoY. By segment, the core Mobility Business, which accounts for 62.3% of the composition, increased revenue to ¥148.18B (YoY +12.7%), while the Sensors and Communications Business increased revenue to ¥23.15B (YoY +16.8%). In contrast, the Components Business recorded a substantial revenue decline to ¥61.86B (YoY -25.5%). Increases and decreases across segments offset each other, leaving total revenue essentially flat.

【Profit and Loss】Operating income fell from a profit to a loss, at ¥-0.92B (¥3.73B in the previous year). The gross margin declined by 0.8pt to 15.8% (16.6% in the previous year), while the SG&A ratio increased by 1.1pt to 16.1% (15.0% in the previous year), placing pressure on profitability from both sides. The primary factor was a sharp expansion in the Mobility Business’s operating loss, from ¥-0.54B to ¥-3.09B. This was compounded by lower profit in the Components Business, which remained profitable at ¥2.73B (YoY -56.2%). Ordinary income barely remained profitable at ¥0.11B (¥1.27B in the previous year), as non-operating income of ¥1.96B, including interest income of ¥0.54B, dividend income of ¥0.52B, and equity-method investment income of ¥0.74B, offset the operating loss. After recording extraordinary losses of ¥0.36B, including a ¥0.32B loss on disposal and sale of property, plant and equipment, profit before income taxes was ¥-0.20B, while net income attributable to owners of the parent deteriorated to a loss of ¥-3.59B (¥-2.82B in the previous year). Although revenue was essentially flat, profit and loss deteriorated substantially, resulting in a performance characterized by no revenue growth and lower earnings, including a shift to an operating loss.

Segment Analysis

The Mobility Business (Module) is the core business, accounting for 62.3% of total revenue with sales of ¥148.18B (YoY +12.7%). However, its operating loss expanded sharply to ¥-3.09B (¥-0.54B in the previous year), resulting in a margin of -2.1%. This segment was the primary cause of the deterioration in consolidated operating results. The Components Business recorded revenue of ¥61.86B (YoY -25.5%) and operating income of ¥2.73B (YoY -56.2%; margin of 4.4%). Although it was the only profitable segment, profit declined due to weaker demand. The Sensors and Communications Business recorded revenue of ¥23.15B (YoY +16.8%) and an operating loss of ¥-0.50B (¥-2.14B in the previous year), representing a narrowing of the loss. Other Businesses recorded revenue of ¥7.62B (YoY +1.9%) and an operating loss of ¥-0.05B, shifting from a profit of ¥0.19B in the previous year to a loss. The company’s high concentration in its core business creates a structure that amplifies fluctuations in consolidated earnings.

Key Financial Indicators

【Profitability】The operating margin deteriorated to -0.4% (1.6% in the previous year), while ROE also deteriorated to -0.8%. 【Cash Quality】Inventories increased to ¥81.96B, up 23.2% YoY, while accounts receivable declined to ¥155.40B, down 7.7% YoY, and cash and deposits declined to ¥140.08B, down 8.8% YoY. 【Investment Efficiency】The total asset turnover ratio remained at approximately 0.30x, calculated by dividing revenue of ¥237.89B by total assets of ¥795.15B, indicating room for improvement in asset efficiency. 【Financial Soundness】The equity ratio declined slightly to 56.2% (57.1% in the previous year) but remained at a high level. The current ratio was approximately 195%, calculated by dividing current assets of ¥498.86B by current liabilities of ¥255.57B, indicating substantial short-term payment capacity.

Cash Flow Analysis

As the cash flow statement has not been disclosed, fund movements are analyzed based on changes in the balance sheet. Cash and deposits declined by ¥13.54B (-8.8%) from the end of the previous fiscal year to ¥140.08B. While inventories increased by ¥15.41B (+23.2%), accounts receivable declined by ¥12.97B (-7.7%) and accounts payable increased by ¥12.91B (+13.9%), suggesting that the buildup of inventories may have affected cash efficiency. Property, plant and equipment increased by ¥10.89B (+6.9%), indicating continued capital investment, while short-term borrowings increased by ¥7.51B (+20.3%), suggesting that working capital requirements and capital investment may have been partially financed with short-term funds.

Quality of Earnings

Operating results, which indicate recurring earning power, were a loss of ¥-0.92B. Ordinary income of ¥0.11B was achieved through the contribution of ¥1.96B in non-operating income, including interest income of ¥0.54B, dividend income of ¥0.52B, and equity-method investment income of ¥0.74B, resulting in a structure dependent on factors outside the core business. Extraordinary items amounted to a net loss of ¥-0.31B, comprising extraordinary income of ¥0.05B and extraordinary losses of ¥0.36B, including impairment losses of ¥0.03B and losses on disposal and sale of property, plant and equipment of ¥0.32B. Their impact on the overall net loss was limited. The gap of approximately ¥3.7B between ordinary income of ¥0.11B and net income attributable to owners of the parent of ¥-3.59B was substantial, mainly because income taxes and other taxes of ¥3.33B were recorded against profit before income taxes of ¥-0.20B. The fundamental causes of earnings deterioration were recurring factors: a decline in the gross margin and an increase in SG&A expenses.

Earnings Forecast and Guidance

The Q1 progress rate against the full-year plan was 22.8% for revenue (¥237.89B/¥1,045.00B), slightly below the simple progress benchmark of 25%. Against the full-year operating income plan of ¥48.50B, current-period operating income was a loss of ¥-0.92B, representing negative progress. Ordinary income was ¥0.11B against the full-year plan of ¥45.50B, resulting in an extremely low progress rate of 0.2%. Net income attributable to owners of the parent was ¥-3.59B against the full-year plan of ¥30.00B, also representing negative progress. The company forecasts full-year operating income growth of +15.4% and a -7.4% decline in ordinary income. However, as of Q1, substantial delays relative to the plan had emerged, making earnings improvement in the second half a prerequisite. No revisions had been made to the earnings or dividend forecasts as of the end of the quarter.

Shareholder Returns

The payout ratio calculated from the full-year company plan of EPS of ¥150.41 and DPS of ¥64.00 is approximately 42.6%, and no revision had been made to the dividend forecast as of the end of the quarter. Although a net loss was recorded in Q1, the dividend has been set based on the full-year earnings plan.

Risk Factors

1. Business concentration risk: The Mobility Business accounts for 62.3% of the revenue composition, and its operating loss of ¥-3.09B is weighing on consolidated operating results. The high dependence on a specific business creates a structure that amplifies fluctuations in performance.

2. Deterioration in working capital: Inventories increased by 23.2% YoY to ¥81.96B, while cash and deposits declined by 8.8% to ¥140.08B. The buildup of inventories may be placing pressure on cash efficiency.

3. Vulnerability of the earnings structure: The company is maintaining ordinary profitability by offsetting its operating loss with ¥1.96B in non-operating income. If the decline in core earning power continues, ordinary income could fall into the red depending on fluctuations in non-operating income.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability, as measured by both the operating margin and net profit margin, was substantially below the industry median. The company ranked among the lower performers in the industry due to its shift into the red.

Growth and Capital Efficiency

The revenue growth rate was also below the industry median, indicating an inferior level of growth.

Source: Compiled by the Company

Key Points from the Earnings Results

1. Operating income shifted from a profit of ¥3.73B in the previous year to a loss of ¥-0.92B, while the gross margin declined by 0.8pt and the SG&A ratio increased by 1.1pt simultaneously, indicating a change in the cost structure.

2. The Mobility Business’s operating loss expanded from ¥-0.54B in the previous year to ¥-3.09B. Improving the profitability of this business, which accounts for 62.3% of the revenue composition, will be the key to restoring consolidated earnings.

3. Q1 progress against the full-year plan was 22.8% for revenue, while both operating income and net income showed negative progress. Substantial earnings improvement in the second half will therefore be required to achieve the full-year plan.

Theoretical Share Price (Reference Value)

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

Sensitivity: ¥2,098–¥2,220 at ±1% for the cost of equity, and ¥2,153–¥2,160 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used; there is a timing gap relative to the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / 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. 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 and, where necessary, after consulting with a professional.