SUZUKI CO.,LTD. FY2026 FY Earnings Report

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Executive Summary

The company delivered a high-quality set of results, driven by its core Parts Business, with increases in both revenue and earnings accompanied by improved margins. Revenue was ¥404.4B (up +21.4% YoY), Operating Income was ¥55.6B (up +29.5%), Ordinary Income was ¥58.3B (up +38.5%), and Net Income was ¥42.5B (up +30.8%). The Operating Margin improved to 13.7% from 12.9% in the previous year, reflecting not only higher revenue but also improved pricing and product mix, as well as enhanced cost absorption.

Factors Affecting Results

【Revenue】Revenue was ¥404.4B, representing an increase of +21.4% YoY. By segment, the core Parts segment led growth, generating ¥308.2B (76.2% of total revenue, YoY +24.1%), followed by Machinery and Appliances at ¥74.5B (up +10.7%) and Die at ¥24.4B (up +8.4%). Rental was ¥3.7B (up +0.9%), remaining almost flat. Against a backdrop of broad-based demand expansion, the company’s reliance on the Parts Business has increased further.

【Profit and Loss】Operating Income was ¥55.6B (YoY +29.5%), while the gross margin improved to 21.2% (approximately 20.8% in the previous year), and the SG&A ratio is also trending downward at 7.4%. In non-operating items, the company recorded a foreign exchange gain of ¥1.6B, driving Ordinary Income to ¥58.3B (YoY +38.5%). Non-recurring items consisted of gains of ¥0.7B and losses of ¥0.4B, resulting in a net gain of only +¥0.2B, indicating a limited impact from temporary factors. Net Income was ¥42.5B (YoY +30.8%); the primary factors behind the difference from Ordinary Income were income taxes of ¥16.0B and Net Income attributable to non-controlling interests of ¥5.1B, rather than structural special factors. Revenue and earnings increased.

Segment Analysis

Parts generated revenue of ¥308.2B (YoY +24.1%) and Operating Income of ¥59.0B (YoY +25.5%), maintaining the highest profitability among all segments with a margin of 19.2% and serving as the central source of consolidated Operating Income. Machinery and Appliances recorded revenue of ¥74.5B (YoY +10.7%) and Operating Income of ¥8.7B (YoY +17.8%), with earnings growth exceeding revenue growth and a margin of 11.7%. Die posted revenue of ¥24.4B (YoY +8.4%) and Operating Income of ¥3.4B (YoY +33.6%), representing a substantial earnings increase and a clear improvement in profitability. Rental recorded revenue of ¥3.7B (YoY +0.9%) and Operating Income of ¥0.9B (YoY -12.5%); although its margin remains high at 24.1%, the segment is small in scale. The revenue mix is highly concentrated in Parts, meaning that supply-demand and price fluctuations in this business have a significant impact on consolidated results.

Key Financial Indicators

【Profitability】The Operating Margin improved to 13.7% from 12.9% in the previous year, while the Net Profit Margin also rose to approximately 10.5% (Net Income of ¥42.5B / Revenue of ¥404.4B). ROE was 12.8%, primarily reflecting improved margins accompanying higher revenue. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥69.1B, exceeding 1.6 times Net Income of ¥42.5B, indicating strong cash backing for earnings. 【Investment Efficiency】The Equity Ratio was high at 69.1%, indicating a conservative capital structure. Property, plant and equipment reached ¥178.1B, while capital expenditures of ¥27.8B were almost in line with depreciation and amortization of ¥27.2B, suggesting a focus on replacement investment. 【Financial Soundness】Current assets of ¥239.7B compared with current liabilities of ¥122.5B resulted in a current ratio of approximately 195%, while long-term borrowings were limited to ¥0.8B, indicating low reliance on debt. Overall, the company maintained high levels of both profitability and financial soundness.

Cash Flow Analysis

Operating Cash Flow was ¥69.1B (up +25.6% YoY), exceeding Net Income of ¥42.5B and indicating good earnings quality. Investing Cash Flow was negative ¥34.4B, primarily reflecting capital expenditures of ¥27.8B, demonstrating the continuation of both growth investment and replacement investment. Financing Cash Flow was negative ¥26.2B, apparently centered on dividend payments and debt repayments. As a result, free cash flow was positive at ¥34.6B, indicating that the company is capable of adequately funding investment and shareholder returns through internal resources. Meanwhile, accounts receivable increased by ¥15.4B and inventories increased by ¥8.4B, while the ¥16.5B increase in accounts payable partially offset these increases. Consequently, the conversion rate from the OCF subtotal of ¥81.5B to actual OCF was somewhat constrained. The increase in working capital accompanying higher revenue is a common trend during a business expansion phase, and future developments in the collection cycle will require monitoring.

Earnings Quality

Current-period earnings were primarily generated by recurring income from the core business, and earnings quality can be assessed as favorable. Of the ¥3.0B in non-operating income, the ¥1.6B foreign exchange gain was the largest component. Even including dividend income of ¥0.3B and other items, non-operating income remained small relative to revenue, indicating a high reliance on core earnings. Extraordinary income of ¥0.7B (including a ¥0.5B gain on the sale of investment securities) and extraordinary losses of ¥0.4B (including impairment losses of ¥0.1B and losses on disposal of fixed assets of ¥0.3B) were both small in scale. Their net impact on Net Income was limited, and there was no material earnings uplift from temporary factors. The gap between Ordinary Income of ¥58.3B and Net Income of ¥42.5B was attributable to income taxes of ¥16.0B (an effective tax rate of approximately 27%) and Net Income attributable to non-controlling interests of ¥5.1B, rather than unusual adjustment items. Comprehensive income was ¥68.0B, substantially exceeding Net Income of ¥42.5B, primarily due to a ¥21.8B increase in valuation difference on securities. Valuation gains associated with market fluctuations boosted comprehensive income and should therefore be distinguished from the core business’s cash-generating capacity.

Earnings Forecast and Guidance

For the next full fiscal year, the company forecasts Revenue of ¥431.5B (YoY +6.7%), Operating Income of ¥60.3B (YoY +8.5%), Ordinary Income of ¥60.7B (YoY +4.2%), and EPS of ¥277.22. Compared with the current-period growth rates in Revenue and Operating Income (+21.4% and +29.5%, respectively), the next-period forecast assumes a significant deceleration in growth and is based on normalization from the current period’s high growth. The fact that the projected growth rate for Ordinary Income (+4.2%) is below that for Operating Income (+8.5%) suggests that non-operating income, including the foreign exchange gain recorded in the current period, may not continue at the same level in the next period.

Shareholder Returns

The annual dividend for the current period was ¥105 (interim dividend of ¥45 and year-end dividend of ¥60), resulting in a Payout Ratio of 40.2%. The Payout Ratio declined from 44.2% in the previous year despite Net Income growth of +30.8%, as earnings growth exceeded dividend growth. For the next period, the company forecasts an increase in the dividend to ¥112, indicating a policy of gradual dividend increases. Share repurchases were ¥0.0B, an immaterial amount, making dividends the primary form of shareholder return. Against OCF of ¥69.1B and free cash flow of ¥34.6B, total dividends of approximately ¥15B are adequately covered, and there is little concern regarding the sustainability of shareholder returns.

Risk Factors

1. Segment concentration risk: Parts accounts for 76.2% of Revenue (¥308.2B), creating a structure in which consolidated results are susceptible to supply-demand and pricing trends in this business.

2. Increase in working capital: Accounts receivable increased by ¥15.4B and inventories increased by ¥8.4B, while actual OCF was limited to ¥69.1B compared with the OCF subtotal of ¥81.5B. Collection and inventory management during the revenue growth phase will be key challenges going forward.

3. Risk of a reversal in non-operating income: The ¥1.6B foreign exchange gain boosted Ordinary Income in the current period, but this contribution may diminish or reverse from the next period onward depending on foreign exchange movements. The fact that the projected growth rate for next-period Ordinary Income (+4.2%) is below the Operating Income forecast (+8.5%) is consistent with this risk.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The company’s Operating Margin and Net Profit Margin both substantially exceed the industry median and are positioned within the upper range.

Growth and Capital Efficiency

The Revenue Growth Rate substantially exceeded the industry median of 3.3%, indicating a high level of growth within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. In addition to higher revenue and earnings, the Operating Margin improved to 13.7% from 12.9% in the previous year, establishing a structure in which the high margin of the Parts segment (19.2%) drives consolidated profitability.

2. The increase in accounts receivable and inventories accompanying higher revenue, and the resulting constraint on the OCF conversion rate, warrant monitoring as indicators of the effectiveness of working capital management during the business expansion phase.

3. Although the next-period forecast anticipates higher revenue and earnings, the growth rates are expected to decelerate significantly, with the forecast premised on normalization from the current period’s foreign exchange gains and other non-operating income, as well as from the current period’s high growth.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,390–¥2,529 at Cost of Equity ±1%; ¥2,452–¥2,466 at ω±0.1.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI through analysis of 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 advisor.

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