Quick View
| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥2908.8B | ¥2511.2B | +15.8% |
| Operating Income | ¥102.7B | ¥22.5B | +356.4% |
| Ordinary Income | ¥110.0B | ¥27.1B | +305.8% |
| Net Income | ¥54.8B | ¥17.3B | +217.5% |
| ROE | 3.0% | 1.0% | - |
Executive Summary
Cumulative results for the first three quarters showed increases in both revenue and profit, with expanding demand for the automotive-related business and improved profitability significantly boosting performance. Revenue was ¥2,908.8B (+15.8% YoY), Operating Income was ¥102.7B (+356.4%), Ordinary Income was ¥110.0B (+305.8%), and Net Income was ¥54.8B (+217.5%). However, extraordinary losses of ¥33.4B, including an impairment loss of ¥28.4B associated with the business conversion of the Shonan Plant, were recorded, compressing Profit Before Tax from Ordinary Income.
Factors Affecting Performance
【Revenue】Revenue increased 15.8% YoY to ¥2,908.8B. The core automotive-related segment led overall performance with revenue of ¥2,861.9B, representing 98.4% of the total, an increase of 16.4% compared with the same period of the previous year. Meanwhile, the equipment maintenance, information processing, and personnel dispatch segments each declined from the previous year, indicating a structure in which expansion of the core business offset contraction in peripheral businesses.
【Profit and Loss】Operating Income rose 356.4% YoY to ¥102.7B, and the Operating Margin improved significantly from the previous year to 3.5%. Against a structure comprising a gross margin of 5.4% and an SG&A ratio of 1.9%, the primary factor appears to have been improved manufacturing profitability resulting from higher revenue. Ordinary Income amounted to ¥110.0B after adding ¥8.4B in non-operating income, including ¥2.9B in interest income. However, extraordinary losses of ¥33.4B, comprising an impairment loss of ¥28.4B and a loss on disposal of fixed assets of ¥4.9B associated with the business conversion of the Shonan Plant, compressed Profit Before Tax to ¥77.0B. Net Income was ¥54.8B (+217.5%), resulting in increases in both revenue and profit.
Segment Analysis
The automotive-related segment recorded revenue of ¥2,861.9B and segment profit of ¥98.7B, accounting for approximately 96.5% of consolidated Operating Income of ¥102.3B before adjustments. Profit margins were actually higher in the peripheral businesses, at 10.9% for personnel dispatch, 6.3% for information processing, and 3.7% for equipment maintenance, compared with 3.5% for the automotive-related business. However, the peripheral businesses are small in scale, with combined revenue accounting for approximately 1.6% of consolidated revenue, and consolidated performance is therefore largely determined by trends in the automotive-related business.
Key Financial Indicators
【Profitability】The Operating Margin of 3.5% and Net Profit Margin of 1.9% both improved from the previous year, but their absolute levels remain low, reflecting the low-margin structure indicated by the 5.4% gross margin. ROE was 3.0%; the DuPont decomposition of a 1.9% Net Profit Margin, total asset turnover of 1.11x, and financial leverage of 1.45x also indicates that the low Net Profit Margin is the primary constraint on ROE.【Cash Flow Quality】Operating Cash Flow (OCF) was not disclosed. However, impairment losses of ¥28.4B and losses on disposal of fixed assets of ¥4.9B, both non-cash items, were recorded against Net Income of ¥54.8B, meaning that a certain divergence may arise between accounting profit and cash earnings power.【Investment Efficiency】Interest income of ¥2.9B was the main component of non-operating income, while interest expense of ¥0.3B was negligible, indicating a high level of interest coverage.【Financial Soundness】The Equity Ratio of 68.8%, Current Ratio of 216.8%, and Debt-to-Equity Ratio of 0.45x all indicate a high level of financial safety.
Cash Flow Analysis
Although the statement of cash flows was not disclosed, funding trends can be confirmed from changes in the balance sheet. Cash and deposits stood at ¥766.8B, increasing from ¥708.8B at the end of the previous year, indicating a stable accumulation of funds. Meanwhile, accounts receivable were ¥764.0B, compared with ¥756.0B in the previous year-end, remaining at approximately the same level. DSO was calculated at 72 days on an annualized basis, making trends in the collection period during the revenue expansion phase a point requiring attention. Accounts payable were ¥390.7B, down from ¥428.3B in the previous year, indicating that the funding benefit from trade payables has decreased from the previous year. The fact that impairment losses of ¥28.4B and losses on disposal of fixed assets of ¥4.9B, both non-cash items, were recorded against Net Income of ¥54.8B should be considered when assessing the relationship between profit and cash generation.
Quality of Earnings
Operating Income of ¥102.7B and Ordinary Income of ¥110.0B indicate the business’s recurring earnings power, while extraordinary losses of ¥33.4B, comprising an impairment loss of ¥28.4B and a loss on disposal of fixed assets of ¥4.9B, must be distinguished as temporary factors associated with the conversion of the Shonan Plant to service-parts production. These extraordinary losses were equivalent to approximately 60% of Net Income of ¥54.8B and primarily explain the divergence between Ordinary Income and Net Income. Non-operating income of ¥8.4B was approximately 0.3% of revenue and primarily comprised interest income of ¥2.9B; no temporary non-operating items that would distort earnings quality were identified. Since OCF was not disclosed, quantitative assessment of accruals—the difference between profit and cash—is limited. However, considering the magnitude of the non-cash impairment and disposal losses, the sharp increase in Net Income for the period can be interpreted as partly involving accounting factors, including the effect of the narrowed one-time loss burden compared with the previous year.
Earnings Forecast and Guidance
The full-year forecast is revenue of ¥4,027.0B, Operating Income of ¥135.0B, Ordinary Income of ¥142.0B, and Net Income of ¥65.0B. The cumulative Q3 progress rates were 72.2% for revenue, 76.1% for Operating Income, 77.4% for Ordinary Income, and 84.4% for Net Income. Compared with the standard progress rate of 75%, the profit-related indicators generally exceeded expectations. In particular, the advanced progress of Net Income suggests that the full-year forecast may already incorporate the occurrence of extraordinary losses. Operating Income of ¥32.3B is required in Q4, and given the recent quarterly progress, the hurdle for achieving the forecast does not appear excessively high.
Shareholder Returns
The annual dividend forecast is ¥13.0 per share. Of this amount, the Q2 dividend of ¥6.5 has already been paid, and the year-end dividend is expected to be equivalent to ¥6.5. Based on forecast EPS of ¥47.99, the Payout Ratio is approximately 27.1%; based on cumulative EPS for the current period of ¥40.48, it is approximately 32.1%. On a full-year forecast basis, however, the ratio calculated using Net Income of ¥65.0B against the total dividend amount is approximately 16.1%. No share repurchases were confirmed, and shareholder returns consist solely of dividends. Given the financial foundation represented by an Equity Ratio of 68.8% and a Current Ratio of 216.8%, this dividend level does not appear to impose an excessive financial burden.
Risk Factors
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Business concentration risk: The automotive-related segment accounts for 96.5% of segment profit, and consolidated performance is highly dependent on production trends and model mix in the core business.
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Risk of temporary losses associated with plant conversion: Extraordinary losses of ¥33.4B, including an impairment loss of ¥28.4B, were recorded during the current period in connection with the conversion of the Shonan Plant to service-parts production. The utilization rate and profitability after the conversion will affect the stability of future earnings.
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Risk associated with the profitability structure: With a gross margin of 5.4% and an Operating Margin of 3.5%, the Company has a low-margin structure below the industry median of approximately 8.6% and 6.4%, respectively. If its ability to pass through cost increases is limited, profits may come under pressure.
Industry Benchmark (For Reference; Compiled by the Company)
Industry Benchmark (manufacturing)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.5% | 8.6% (4.3%–12.7%) | −5.1pt |
| Net Profit Margin | 1.9% | 6.4% (2.8%–10.3%) | −4.5pt |
The Company’s profitability indicators are below the industry median, placing it at a disadvantage within the industry in terms of profitability due to its thin gross margin structure.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 15.8% | 3.3% (-2.1%–8.9%) | +12.5pt |
The Revenue Growth Rate significantly exceeds the industry median, placing the Company at an advantage within the industry in terms of growth.
※Source: Compiled by the Company
Key Points from the Earnings Results
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Revenue increased 15.8% and Operating Income increased 356.4%, reflecting a significant improvement in business profitability from the same period of the previous year, centered on the automotive-related business. Full-year progress rates also exceeded standard levels, at 76.1% for Operating Income and 77.4% for Ordinary Income, indicating solid profit progress.
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Extraordinary losses of ¥33.4B, including an impairment loss of ¥28.4B, were recorded in connection with the conversion of the Shonan Plant. Trends in utilization and profitability after the conversion will be key points for determining whether temporary losses recur in the future.
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The gross margin of 5.4%, Operating Margin of 3.5%, and ROE of 3.0% are below the industry median. Whether structural improvements in profitability and capital efficiency continue amid the revenue growth trend will be an important observation point in the earnings data.
This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary 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, after consulting with professionals as necessary.
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AI Financial Analysis
Executive Summary
FY2026 Q3 was a materially stronger earnings period for Nissan Shatai, driven by a sharp recovery in its core automotive-related business. Cumulative revenue rose 15.8% YoY to ¥290.9bn. Operating income increased 356.4% YoY to ¥10.3bn. Ordinary income increased 305.8% to ¥11.0bn. Net income increased 217.4% to ¥5.5bn. Gross margin expanded by 229bp YoY to 5.4%, from approximately 3.1% in the prior-year period. Operating margin expanded by 263bp to 3.5%, from approximately 0.9%. Net margin increased by 120bp to 1.9%, although it remained modest relative to the operating recovery. The automotive-related segment generated ¥286.2bn of external sales and ¥9.9bn of segment profit, accounting for the overwhelming majority of group earnings. The profit recovery reflected meaningful operating leverage, as SG&A expenses declined 2.2% YoY despite double-digit revenue growth. However, the business still operates on a thin gross-margin base, leaving profitability exposed to production volume, model mix, procurement costs and customer pricing. Reported net income was also reduced by ¥3.34bn of extraordinary losses, principally a ¥2.84bn impairment charge related to the conversion of the Shonan plant toward service-parts production. This impairment represents a portfolio and capacity-adjustment cost rather than a deterioration in underlying Q3 operating profitability, but it evidences restructuring risk in the production footprint. The balance sheet remains conservatively capitalized, with a 216.8% current ratio, ¥76.7bn of cash and deposits, and equity representing 68.8% of total assets. The full-year operating-income forecast of ¥13.5bn appears broadly attainable, with Q3 cumulative progress at 76.1% versus a standard 75% seasonal benchmark. Full-year net-income progress is already 84.4% of the ¥6.5bn forecast, although the final result will depend on whether further restructuring or non-recurring charges arise. The proposed full-year DPS of ¥13.0 implies a moderate 27.1% payout ratio against forecast EPS of ¥47.99. Overall, the quarter validates a substantial operational improvement, while the durability of the margin recovery and the consequences of manufacturing-footprint restructuring remain the principal issues to monitor.
Profitability Analysis
The reported annualized ROE is 4.1%, decomposed into a 1.9% net profit margin, 1.485x annualized asset turnover, and 1.45x financial leverage. The principal constraint on ROE is profitability rather than asset utilization or balance-sheet leverage: net margin remains below 2% despite the earnings rebound. The largest positive change was operating profitability, with operating income rising ¥8.0bn YoY versus a ¥39.8bn revenue increase. Gross margin improved to 5.4%, while SG&A/revenue fell to 1.9% from 2.2% a year earlier; SG&A declined by ¥0.22bn in absolute terms even as revenue increased by 15.8%. This demonstrates strong operating leverage and suggests that fixed overhead absorption improved substantially in the automotive business. Automotive-related segment margin rose to 3.45% from 0.71%, a 274bp improvement, and was the dominant source of the consolidated operating-profit increase. The 3.5% EBIT margin nevertheless triggers the low-operating-efficiency alert because it remains below the 5% benchmark and leaves limited protection against cost inflation or lower factory utilization. The low gross-margin alert has the same root cause: cost of sales consumed 94.6% of revenue, characteristic of contract-manufacturing economics but still a material sensitivity for earnings. The high-interest-burden alert, based on an interest burden of 0.75x, should be interpreted carefully. The reduction from EBIT of ¥10.27bn to pre-tax profit of ¥7.70bn was primarily caused by ¥3.34bn of extraordinary losses, rather than financing cost; interest expense was only ¥0.34bn and interest coverage was a very strong 302.1x. Accordingly, the alert identifies a weak EBT/EBIT conversion in this period, but it does not indicate debt-servicing pressure. The tax burden was normal at 0.712x, equivalent to a 28.8% effective tax rate. The earnings base is operationally improved, but sustainable ROE expansion requires a further and durable rise in gross and operating margins.
Growth Assessment
Revenue growth was concentrated in the automotive-related segment, where external sales increased 16.4% YoY to ¥286.2bn. This segment represented 98.4% of consolidated external sales and generated ¥9.87bn of segment profit, making it the core business. Its segment profit increased 462.2% YoY, substantially outpacing revenue growth and indicating sharply improved production economics. Equipment-maintenance sales declined 21.6% to ¥0.71bn and segment profit fell 84.9% to ¥0.03bn. Information-processing sales declined 9.0% to ¥2.33bn and segment profit declined 29.2% to ¥0.15bn. Staffing sales declined 7.8% to ¥1.65bn, although segment profit increased 52.5% to ¥0.18bn. The non-automotive segments are comparatively small and do not offset the group’s dependence on automotive production activity. Against the full-year forecast, Q3 cumulative revenue progress is 72.2%, 2.8 percentage points below the standard 75% Q3 run-rate. Operating-income progress is 76.1%, 1.1 points above the standard run-rate, consistent with management’s forecast being broadly achievable if current manufacturing profitability is maintained. Ordinary-income progress is 77.4%, also above the standard run-rate. Net-income progress is 84.4%, materially above the 75% benchmark, but this should be assessed alongside the material Q3 impairment charge and any potential additional extraordinary items. The forecast calls for full-year revenue growth of 14.9% and operating-income growth of 162.2%, implying a lower incremental operating margin in Q4 than the cumulative Q3 level. This suggests that the company’s guidance embeds some prudence or anticipates less favorable fourth-quarter mix, utilization or costs.
Financial Health
Liquidity is strong, with current assets of ¥167.7bn against current liabilities of ¥77.3bn, producing a 216.8% current ratio and ¥90.3bn of working capital. The quick ratio is also 216.8%, indicating that liquidity is supported by cash and receivables rather than reliance on inventory liquidation. Cash and deposits of ¥76.7bn alone are almost equal to current liabilities. Total liabilities were ¥81.4bn, equal to 31.2% of total assets, while total equity was ¥179.8bn. The reported debt-to-equity ratio is 0.45x, well below the 2.0x warning threshold and consistent with a conservative capital structure. Non-current liabilities were only ¥4.1bn, limiting maturity-mismatch risk. Trade payables of ¥39.1bn declined by ¥3.76bn YoY, while trade receivables increased by ¥1.21bn to ¥76.4bn; this combination increases the amount of operating capital tied up with customers relative to supplier funding. Equity increased ¥3.24bn YoY, supported by retained earnings, while total assets declined ¥8.71bn. Property, plant and equipment remained substantial at ¥84.8bn, or 32.5% of assets, reflecting the capital-intensive manufacturing model. Intangible assets were only 0.6% of assets, indicating that the balance sheet is not dependent on a material intangible-asset base. Net defined-benefit liabilities were ¥1.28bn and are modest relative to equity.
Notable B/S Changes
Cash and deposits: +¥5.80bn (+8.2%) YoY to ¥76.68bn - strengthens immediate liquidity. Trade receivables: +¥1.21bn (+1.6%) YoY to ¥76.40bn - receivables expanded despite the elevated 72-day collection period, requiring monitoring of operating-capital efficiency. Trade payables: -¥3.76bn (-8.8%) YoY to ¥39.07bn - reduces supplier-financing support and contributes to a wider net operating-capital requirement. Property, plant and equipment: -¥1.95bn (-2.2%) YoY to ¥84.84bn - reflects asset-base reduction during a period including impairment charges. Construction in progress: +¥2.34bn (+35.5%) YoY to ¥8.94bn - indicates an elevated manufacturing investment pipeline despite the lower total PPE balance. Machinery: -¥2.38bn (-13.6%) YoY to ¥15.79bn - consistent with asset disposals, depreciation or impairment within the production footprint. Intangible assets: -¥0.44bn (-20.7%) YoY to ¥1.69bn - a notable reduction, though immaterial at 0.6% of total assets. Total liabilities: -¥11.95bn (-12.8%) YoY to ¥81.40bn - improves capitalization and supports the rise in the equity ratio to 68.8% from 65.4%.
Cash Flow Quality
Dividend Sustainability
The company paid an interim DPS of ¥6.50 and forecasts a full-year DPS of ¥13.00. The interim dividend represented a 16.1% payout ratio against cumulative Q3 EPS. On the full-year forecast basis, the ¥13.00 DPS implies a 27.1% payout ratio relative to forecast EPS of ¥47.99. This is well below the 60% dividend-payout sustainability benchmark and provides substantial earnings retention. With equity of ¥179.8bn and retained earnings of ¥156.8bn, the capital base provides a substantial accounting buffer for the proposed distribution. Dividend capacity should nevertheless be assessed in the context of maintaining manufacturing assets and funding the Shonan-site transition, as the period included a material impairment associated with this restructuring.
Risk Assessment
Business risks include Automotive concentration risk: the automotive-related segment accounts for 98.4% of external sales and approximately 96.5% of aggregate segment profit, making earnings highly sensitive to vehicle-production volumes, customer programs and model mix., Low-margin manufacturing risk: gross margin was 5.4% and EBIT margin was 3.5%; small adverse changes in materials, labor, logistics, energy costs or customer pricing can have a disproportionate effect on profit., Production-footprint restructuring risk: the ¥2.66bn Shonan plant impairment connected with conversion to service-parts production indicates execution risk, possible further asset rationalization, and uncertainty over future utilization., Receivable-collection risk: the high-receivable-days alert is rooted in receivable days of 72, above the 60-day warning level. This is unfavorable for operating-capital efficiency and could delay cash conversion if customer payment timing weakens., Industry-specific risk: automotive suppliers and contract manufacturers face demand volatility from OEM production schedules, supply-chain interruptions, component shortages, raw-material cost movements, quality issues and changes in vehicle technology..
Financial risks include Extraordinary-item risk: extraordinary losses of ¥3.34bn equaled 60.9% of net income, triggering the high-one-time-items alert. The immediate impact is reduced EBT and net income despite strong operating recovery; further restructuring charges could make reported earnings volatile., Operating-profitability risk: the low-operating-efficiency alert is justified by a 3.5% EBIT margin, below the 5% concern threshold. While the margin improved sharply, it remains insufficiently robust to absorb a meaningful volume or cost shock., Gross-margin risk: the low-gross-margin alert is justified by a 5.4% gross margin. The improvement from the prior year is substantial, but the cost base remains high at 94.6% of sales., EBT-conversion risk: the 0.75x interest-burden measure is below the 0.80x warning level, but the current-period driver was principally extraordinary losses rather than interest expense. The impact is on reported profit volatility rather than debt-service capacity, given 302.1x interest coverage..
Key concerns include Whether the automotive segment can sustain its 3.45% segment margin after the current production and mix benefit., Whether the Shonan conversion produces further impairment, disposal, ramp-up or utilization costs., Whether receivable days improve from the 72-day level as revenue expands., Whether Q4 profitability meets the full-year target without reliance on unusually favorable operating conditions..
Investment Implications
Key takeaways include Revenue grew 15.8% YoY and operating income grew 356.4% YoY, reflecting a sharp recovery in core automotive profitability., Automotive-related segment profit increased to ¥9.87bn from ¥1.76bn, lifting segment margin by 274bp to 3.45%., The operating recovery was partly offset below the line by a ¥2.84bn impairment and ¥3.34bn total extraordinary losses., Liquidity and capitalization are strong, with a 216.8% current ratio, ¥76.7bn in cash and deposits, and 68.8% equity/assets., The full-year operating-income forecast is broadly in line with Q3 cumulative progress, while forecast dividend coverage appears conservative at a 27.1% payout ratio..
Metrics to watch include Automotive-related segment revenue, segment margin and production utilization, Gross margin and EBIT margin, Further Shonan-facility restructuring, impairment or asset-disposal charges, Receivable days and the balance between trade receivables and trade payables, Q4 revenue and operating-income delivery relative to the ¥402.7bn and ¥13.5bn full-year forecasts, Full-year DPS delivery relative to the ¥13.00 forecast.
Regarding relative positioning, Nissan Shatai combines a conservative balance sheet and strong liquidity with structurally thin manufacturing margins. The Q3 recovery materially improves its earnings profile, but relative performance remains primarily dependent on automotive production conditions and the company’s ability to preserve the recent margin expansion through its manufacturing-footprint transition.