FANUC CORPORATION FY2027 Q1 Earnings Report

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Executive Summary

In Q1 of FY2026, orders expanded sharply, led primarily by the core Robot and Robo Machine businesses, resulting in strong earnings with wider year-on-year increases in both revenue and profit. Revenue was ¥2,310.3B (+17.7% YoY), Operating Income was ¥534.9B (+26.1%), Ordinary Income was ¥681.9B (+32.3%), and Net Income attributable to owners of the parent was ¥509.8B (+34.7%). The pattern of revenue and profit growth, with higher growth rates for profit items, has continued. The Operating Income margin improved to 23.2%, up 1.6pt from 21.6% in the same period of the previous year, as higher revenue contributed to the absorption of fixed costs. Orders increased substantially to ¥2,819B (+36.9%), and the full-year earnings forecast was revised upward.

Factors Affecting Earnings

【Revenue】Revenue of ¥2,310.3B increased +17.7% year on year. By product category, revenue increased across all categories: Robo Machine +22.8%, FA +15.5%, Robot +18.7%, and Services +13.0%. The key drivers were the recovery in FA demand in China and India, solid Robot demand in the Americas and China, and improved factory operating rates. Orders also increased substantially to ¥2,819B (+36.9%), with particularly notable growth in Robo Machine (+98.3%) and FA (+63.8%), confirming an improvement in leading indicators.

【Profit and Loss】Operating Income of ¥534.9B (+26.1%) grew faster than revenue, and the Operating Income margin improved to 23.2% from 21.6% in the previous year. SG&A expenses were ¥376.0B, or 16.3% of revenue; their growth was contained relative to revenue growth of +17.7%, resulting in positive operating leverage. Ordinary Income of ¥681.9B (+32.3%) exceeded Operating Income by ¥147B, supported by equity-method investment income of ¥113.7B, up from ¥66.9B in the previous year, and an increase in interest income to ¥22.5B. Net Income attributable to owners of the parent of ¥509.8B (+34.7%) reflects the deduction of income taxes and other taxes of ¥162.8B, representing an effective tax rate of 23.9%, from Ordinary Income. No extraordinary gains or losses were identified, and the approximately 25% gap between Ordinary Income and Net Income was primarily attributable to the tax burden. In conclusion, the company achieved higher revenue and profit.

Segment Analysis

As the Company discloses its results as a single business segment, this analysis instead uses revenue trends by product category—FA, Robot, Robo Machine, and Services. Robot represented the largest share of revenue at ¥961B, or 41.6% of total revenue, and is positioned as the core business. However, while Robot contributed to the year-on-year revenue increase at +18.7%, it turned somewhat soft on a quarter-on-quarter basis, declining 12.1%. In terms of contribution to the increase in revenue, Robo Machine (¥417B, +22.8%) and FA (¥574B, +15.5%) showed relatively strong growth. Both categories also expanded sharply in terms of orders, with Robo Machine up +98.3% and FA up +63.8%, serving as leading indicators that should support revenue in the subsequent periods. Since segment-level operating profit and loss is not disclosed, the improvement in company-wide Operating Income of ¥535B is presumed to have been primarily driven by improved factory operating rates and the absorption of fixed costs resulting from higher revenue.

Key Financial Indicators

Profitability: ROE was 2.7% on a quarterly basis, equivalent to approximately 2.0% in the same period of the previous year; the Operating Income margin was 23.2%, compared with 21.6% in the previous year.

Investment efficiency: Capital expenditures were ¥74B versus depreciation and amortization of ¥112B, resulting in a capital expenditures-to-depreciation ratio of 0.66x, below 1.0x. Capital expenditures were substantially restrained from the previous fiscal year’s level, suggesting that the Company is in a phase of improving the efficiency of existing assets rather than making new investments. At the same time, research and development expenses were maintained at ¥108B, indicating that development investment remains a priority.

Financial soundness: The Equity Ratio was 90.6%, compared with 89.2% in the previous year, while the current ratio was 734%, compared with 689% in the previous year. Both indicators improved from the previous year, and the financial foundation has become even stronger.

Cash Flow Analysis

As detailed figures from the cash flow statement are outside the disclosed scope, this analysis focuses on capital expenditures, depreciation and amortization, and movements in cash balances. Capital expenditures were ¥74B, below depreciation and amortization of ¥112B, indicating that the Company is prioritizing improved operating efficiency of existing equipment over increasing its asset base during the period. Cash and deposits remained almost flat at ¥7,214.7B, compared with ¥7,180.7B in the previous year. Inventories declined slightly to ¥1,266.2B, down 1.7% year on year, while accounts receivable and notes receivable declined 2.5% to ¥1,451.7B. No sharp deterioration in working capital was identified. Cash generation assessment: Standard, with ample cash on hand and restrained investing and financing activities.

Quality of Earnings

Ordinary Income of ¥681.9B exceeded Operating Income of ¥534.9B by ¥147.0B. This difference was attributable to non-operating income of ¥152.8B, equivalent to 6.6% of revenue, including equity-method investment income of ¥113.7B and interest income of ¥22.5B. Equity-method investment income and interest income are relatively susceptible to market conditions and interest-rate trends, and should not necessarily be regarded as sources of earnings as stable as Operating Income. The gap of approximately 25% between Ordinary Income and Net Income attributable to owners of the parent of ¥509.8B was primarily attributable to income taxes and other taxes of ¥162.8B, representing an effective tax rate of 23.9%; no extraordinary gains or losses were identified. Comprehensive income was ¥810.4B, including ¥796.7B attributable to owners of the parent, exceeding Net Income of ¥509.8B by ¥287B. Other comprehensive income (OCI), including valuation differences on securities of ¥141.3B and foreign currency translation adjustments of ¥85.2B, was the key contributor. The gap between Net Income and Comprehensive Income is large in the current period. This difference reflects unrealized gains in balance sheet valuations and does not represent recurring earnings power, which warrants attention.

Earnings Forecast and Guidance

Progress against the full-year forecasts—Revenue of ¥9,481.0B, Operating Income of ¥2,180.0B, and Ordinary Income of ¥2,712.0B—was 24.4% for Revenue, 24.5% for Operating Income, and 25.1% for Ordinary Income. All were within ±1pt of the standard progress level of 25% for Q1, indicating an on-track start. The earnings forecast was revised during the quarter, with the full-year outlook raised in light of the sharp increase in orders of +36.9%. Although the order backlog itself was not disclosed, orders during the quarter of ¥2,819B exceeded Revenue of ¥2,310.3B, representing a favorable level as a leading indicator of demand.

Shareholder Returns

There was no revision to the dividend forecast for the current quarter. However, the Company stated that it would disclose the dividend amounts for the end of Q2 and the fiscal year-end of the next period, FY2026, once disclosure becomes possible; no confirmed amounts have been provided at this time. The dividend paid in the same period of the previous year was ¥51.33 per share. The Payout Ratio cannot be calculated because a confirmed full-year dividend forecast has not been disclosed. However, the strong financial foundation, reflected in an Equity Ratio of 90.6% and a current ratio of 734%, provides one reference point indicating the Company’s capacity to secure funds for dividends.

Catalysts

【Short Term】Attention will focus on order trends from Q2 onward, particularly the sustainability of growth in Robo Machine and FA; developments in the gap between the assumed exchange rate of ¥152.37 per USD for the full year and actual exchange rates; and the impact on sales of new product exhibitions held at the Central Technical Center, which was newly established in May.

【Long Term】Key areas to monitor over the medium to long term include progress toward the commercialization of physical AI-related technologies through collaboration with Google and NVIDIA, broader deployment of FANUC Smart Digital Twin, and strengthening the earnings base of IoT and lifetime maintenance services under the concept of the “factory that never stops.”

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

The Company is well above the industry median, placing its profitability among the highest within the manufacturing sector. The Net Profit Margin is on a consolidated basis.

Growth and Capital Efficiency

The Company’s growth rate is nearly three times the industry median, representing a high pace of revenue growth within the industry.

※Source: Compiled by the Company

Risk Factors

1. Foreign exchange risk: The actual exchange rate for Q1 was ¥159.49 per USD, while the full-year assumption was set at ¥152.37, reflecting an appreciation of the yen. If the deviation from the assumed rate persists, it could affect earnings from the second half onward.

2. Demand cyclicality risk: Orders increased across all product categories and regions; however, demand related to FA and Robots is closely linked to the capital investment cycle, and changes in economic conditions in China, Europe, and the United States could affect order trends.

3. Quality cost risk: The provision for product warranties was ¥93.2B, equivalent to 4.0% of Q1 Revenue. Trends in quality-related expenses therefore require monitoring.

Key Takeaways from the Earnings Results

1. The Operating Income margin was 23.2%, improving 1.6pt from 21.6% in the same period of the previous year. The fact that SG&A growth was contained relative to revenue growth of +17.7%, resulting in positive operating leverage, is a structural factor supporting margin improvement during a period of revenue growth.

2. Ordinary Income exceeded Operating Income by ¥147B. Equity-method investment income and interest income, the primary contributors to this difference, have high sensitivity to market conditions and interest rates and differ in nature from operating earnings power. The fact that the growth rates of Ordinary Income and Net Income, +32.3% and +34.7%, respectively, exceeded Operating Income growth of +26.1% should be evaluated with the contribution of non-operating factors in mind.

3. Orders expanded at +36.9% year on year, outpacing Revenue growth, with particularly notable increases in Robo Machine (+98.3%) and FA (+63.8%). This also formed the backdrop to the upward revision of the full-year earnings forecast and serves as a leading indicator of demand.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson 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: ¥2,122–¥2,249 at ±1% for the cost of equity, and ¥2,181–¥2,189 at ±0.1 for ω.

Notes:

• 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 on the high side.

(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 through an integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. It does not recommend investment in any specific security. 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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