SYSMEX (6869) FY2027 Q1 Earnings Report

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Executive Summary

The first quarter recorded increases in both revenue and profit, driven by revenue growth across all regions, with the pace of growth accompanied by profit improvement. Revenue was ¥130.67B (+23.6% YoY), Operating Income was ¥14.82B (+39.5%), Profit Before Tax was ¥14.11B (+79.2%), and profit attributable to owners of the parent for the quarter was ¥8.69B (+90.9%). The Operating Margin improved to 11.3% from 10.1% in the same period of the previous year, primarily due to a decline in the SG&A ratio (32.6% versus 36.2% in the prior year), while the gross margin declined slightly to 50.7% from 51.5%. The shift from a foreign exchange loss in the same period of the previous year to a foreign exchange gain in the current period also contributed to the growth in Profit Before Tax and Net Income.

Factors Affecting Performance

【Revenue】Revenue increased substantially to ¥130.67B (+23.6% YoY). By region, Headquarters posted ¥25.43B (+49.6%), the Americas posted ¥39.21B (+37.2%), EMEA posted ¥42.38B (+24.7%), and AP posted ¥10.31B (+15.5%), while China declined to ¥13.34B (-22.6%), acting as a headwind to overall company growth.

【Profit and Loss】Operating Income was ¥14.82B (+39.5% YoY), and the Operating Margin improved to 11.3% from 10.1% in the prior year. Although the gross margin declined to 50.7% from 51.5%, the decline in the SG&A ratio to 32.6% from 36.2% and the resulting progress in fixed-cost absorption were the primary drivers of profit growth. Profit Before Tax was ¥14.11B (+79.2%), supported by the shift from a foreign exchange loss of ¥1.51B in the same period of the previous year to a foreign exchange gain of ¥0.79B in the current period. Although the company achieved increases in both revenue and profit, attention should be paid to the inclusion of temporary foreign exchange factors in the quality of earnings.

Segment Analysis

Headquarters was the highest-profit segment, with Revenue of ¥25.43B (+49.6%), Operating Income of ¥6.44B (+189.0%), and a 25.3% margin, accounting for approximately 43% of total company profit. The Americas posted Revenue of ¥39.21B (+37.2%), Operating Income of ¥2.59B (+223.7%), and a 6.6% margin, representing the highest rate of profit growth. EMEA showed steady growth, with Revenue of ¥42.38B (+24.7%), Operating Income of ¥3.70B (+63.7%), and an 8.7% margin. In contrast, China was the only segment to record declines in both revenue and profit, with Revenue of ¥13.34B (-22.6%), Operating Income of ¥0.95B (-42.9%), and a 7.1% margin. AP recorded higher Revenue of ¥10.31B (+15.5%), but Operating Income declined to ¥1.06B (-31.0%) and the margin fell to 10.3% from 17.2%, making the decline in profitability despite revenue growth a key point of focus.

Key Financial Metrics

【Profitability】The Operating Margin improved to 11.3% from 10.1% in the same period of the previous year, while the gross margin declined to 50.7% from 51.5%. Profit growth was primarily driven by fixed-cost absorption resulting from the lower SG&A ratio (32.6% versus 36.2% in the prior year). Research and development expenses were ¥7.21B, equivalent to 5.5% of Revenue (6.1% in the prior year), as revenue growth outpaced the increase in R&D expenses.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥35.59B, approximately 4.1 times Net Income of ¥8.62B. The primary factors were Profit Before Tax of ¥14.11B, depreciation and amortization of ¥12.03B, and a ¥17.69B decrease in operating receivables. The decrease in operating receivables includes a temporary uplift, and caution is therefore required when assessing recurring cash-generation capacity.【Investment Efficiency】ROE (annualized) was 7.1%, a level explained by the combination of the Net Profit Margin, asset turnover, and financial leverage.【Financial Soundness】The Equity Ratio was 65.0%, down from 71.4% in the same period of the previous year, reflecting the procurement of ¥50.0B in long-term borrowings and the repurchase of treasury shares amounting to ¥22.88B. The debt level nevertheless remains low.

Cash Flow Analysis

Cash flow from operating activities was ¥35.59B, an increase of +275.0% YoY, demonstrating cash-generation capacity substantially exceeding Net Income of ¥8.62B. In addition to Profit Before Tax of ¥14.11B and depreciation and amortization of ¥12.03B, working-capital factors, particularly the ¥17.69B decrease in operating receivables, contributed to this result. This factor should be evaluated separately as a temporary uplift. Inventories increased by ¥4.71B, while trade payables decreased by ¥0.77B; both represented cash outflows in relation to OCF. Cash flow from investing activities was an outflow of ¥18.59B, primarily comprising capital expenditures of ¥6.31B and acquisitions of subsidiaries and businesses of ¥7.84B. Free cash flow was ¥17.00B. Cash flow from financing activities was a positive ¥12.03B, mainly due to ¥5.00B in long-term borrowings, resulting in a structure in which borrowings supplemented the combined dividend payment of ¥11.81B and treasury-share repurchases of ¥22.88B. Cash and cash equivalents increased substantially YoY to ¥113.63B at the end of the period.

Quality of Earnings

The current period’s profit growth includes both structural improvement from the lower SG&A ratio and a temporary factor, namely the shift from a foreign exchange loss of ¥1.51B in the same period of the previous year to a foreign exchange gain of ¥0.79B in the current period. The +79.2% growth in Profit Before Tax exceeded the +39.5% growth in Operating Income, primarily due to the reversal of foreign exchange factors. OCF reached approximately 4.1 times Net Income, indicating strong cash conversion; however, the primary driver was the ¥17.69B working-capital decrease in operating receivables, which should be distinguished from recurring earnings power. Comprehensive income was ¥15.21B, exceeding Net Income of ¥8.62B, primarily due to foreign currency translation adjustments for foreign operations of ¥6.58B. This difference reflects the impact of foreign exchange movements associated with the high proportion of overseas operations and should be recognized as separate from the underlying earnings power of the business.

Earnings Forecast and Guidance

The full-year company forecast calls for Revenue of ¥545.00B (+9.0% YoY) and Operating Income of ¥60.00B (+15.8%). First-quarter progress rates were 24.0% for Revenue and 24.7% for Operating Income, broadly in line with the standard quarterly progress rate of 25%. Q1 growth rates (Revenue +23.6%, Operating Income +39.5%) exceeded the growth rates in the full-year plan, although this difference includes the rebound from the foreign exchange loss recorded in the same period of the previous year. While the earnings forecast was revised during the quarter, there was no revision to the dividend forecast. Achievement of the full-year targets will depend on the degree of recovery in the China business, expense deployment in the second half, and foreign exchange trends.

Shareholder Returns

Dividend payments during the first quarter amounted to ¥11.81B. As this normally includes the previous fiscal year-end dividend, evaluating the Payout Ratio solely by comparison with current-period Net Income of ¥8.62B provides only a conservative reference value. Based on the company’s annual dividend forecast of ¥40.0 and forecast EPS of ¥60.89, the full-year forecast Payout Ratio is 65.7%. Treasury-share repurchases of ¥22.88B were conducted, bringing total quarterly shareholder returns, including dividends, to ¥34.69B, exceeding quarterly Free Cash Flow of ¥17.00B. This shortfall was covered by the procurement of ¥50.0B in long-term borrowings, indicating that internally generated funds alone did not cover current-period total shareholder returns; this requires monitoring. There was no revision to the dividend forecast, and the annual dividend policy of ¥40.0 remains unchanged.

Risk Factors

1. China business slowdown: Revenue in the China segment declined 22.6% YoY to ¥13.34B, while Operating Income declined 42.9% to ¥0.95B. Changes in medical demand, tendering and reimbursement conditions, and the competitive environment represent sources of uncertainty for company-wide growth.

2. Prolonged working-capital commitment: Inventories increased 11.7% YoY to ¥106.83B, while operating receivables also remained elevated at ¥158.79B. The current-period increase in OCF depended on a temporary decrease in operating receivables, making the working-capital burden during a renewed acceleration in growth an area requiring attention.

3. Structure of shareholder returns and financing: Combined dividends and treasury-share repurchases of ¥34.69B exceeded Free Cash Flow of ¥17.00B and were supplemented by the procurement of ¥50.0B in long-term borrowings. Long-term borrowings increased 157.4% YoY, and the sustainability of continued shareholder returns will depend on the trend in OCF.

Industry Benchmark (For Reference; Based on Company Research)

Profitability and Return

The Operating Margin exceeds the industry median, while the Net Profit Margin is slightly below the industry median, suggesting the impact of non-operating and non-core factors.

Growth and Capital Efficiency

The Revenue Growth Rate is substantially above the industry median, representing a high pace of growth within the industry.

※Source: Based on company research

Key Points from the Earnings Results

1. The first quarter recorded increases in both revenue and profit, with the Operating Margin improving to 11.3% from 10.1% in the same period of the previous year. The primary driver was a decline in the SG&A ratio exceeding the decline in the gross margin, indicating structural profitability improvement through fixed-cost absorption.

2. By region, the Americas, EMEA, and Headquarters led growth through increases in both revenue and profit, while China was the only segment to record declines in both revenue and profit, widening the performance gap among regions.

3. Large-scale treasury-share repurchases occurred concurrently with an increase in long-term borrowings. The decline in the Equity Ratio from 71.4% in the same period of the previous year to 65.0% as a result of changes in capital allocation should be recognized as a change in the financial structure.

Theoretical Share Price (Reference Value)

Sensitivity: ¥758–¥801 at ±1% for the Cost of Equity, and ¥778–¥779 at ±0.1 for ω.

Notes:

• As 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 difference relative to the full-year forecast.

(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 future share prices.)

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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 discretion and responsibility, after consulting with a professional adviser as necessary.

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