MIKUNI (7247) FY2026 Q3 Earnings Report

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Executive Summary

During the period, profit growth was driven by profitability improvements despite flat revenue, owing to an improved gross margin and reductions in SG&A expenses. Revenue was ¥755.2B (+0.0% YoY), Operating Income was ¥29.4B (+55.4%), Ordinary Income was ¥26.5B (+55.5%), and quarterly Net Income attributable to owners of the parent was ¥13.2B, representing a turnaround to profitability from a loss in the same period of the previous year. The gross margin improved by approximately 1.2pt to 16.0%, while SG&A expenses declined 2.1% YoY, which were the primary factors behind the increase in Operating Income. Meanwhile, the high effective tax burden of 46.9% weighed on earnings in the transition from Ordinary Income to Net Income.

Factors Affecting Business Performance

【Revenue】Consolidated Revenue was ¥755.2B, essentially flat (+0.0%) compared with the same period of the previous year. By segment, the core Mobility Business declined slightly to ¥622.1B (-0.3%), the Trading Business grew to ¥76.2B (+10.8%), and the Gas Techno Business decreased to ¥37.7B (-14.6%). Revenue composition was 82.4% for Mobility, 10.1% for Trading, and 5.0% for Gas Techno; the increase in revenue from the Trading Business partially offset the decline in the core business.

【Profit and Loss】Operating Income increased substantially to ¥29.4B (+55.4%), while Ordinary Income rose to ¥26.5B (+55.5%). The gross margin improved to 16.0% from 14.8% in the previous year, SG&A expenses declined 2.1% YoY to ¥91.3B, and the Operating Income margin expanded to 3.9% from 2.5%. In non-operating items, interest expenses of ¥5.2B and foreign exchange losses of ¥1.6B weighed on Ordinary Income, but the increase in profit at the operating level was largely maintained. Although an extraordinary loss of ¥1.4B, primarily consisting of a ¥1.1B loss on disposal and sale of fixed assets, was recorded as a temporary factor, the high corporate tax burden of ¥11.9B, equivalent to an effective tax rate of 46.9%, resulted in Net Income of ¥13.2B versus Ordinary Income of ¥26.5B, a 50.2% gap. In conclusion, the Company is experiencing profit growth without revenue growth while revenue remains flat—that is, a profit-growth-with-flat-revenue phase, rather than either profit growth accompanied by revenue growth or profit decline accompanied by revenue decline.

Segment Analysis

The Mobility Business recorded Revenue of ¥622.1B (-0.3% YoY), Operating Income of ¥20.4B (+43.4%), and a profit margin of 3.3% versus 2.3% in the previous year, making the largest contribution to profit growth as the core business generating 69.3% of consolidated Operating Income. The Trading Business recorded Revenue of ¥76.2B (+10.8%), Operating Income of ¥10.7B (+28.4%), and a profit margin of 14.1% versus 12.1% in the previous year, making it the most profitable of the three segments. The Gas Techno Business recorded Revenue of ¥37.7B (-14.6%) and an Operating Loss of ¥3.2B. Although the loss narrowed from an Operating Loss of ¥4.4B in the same period of the previous year, it remains a factor weighing on consolidated earnings. Profit margins ranked 14.1% for Trading, 3.3% for Mobility, and -8.4% for Gas Techno, indicating a significant profitability gap among the segments.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 3.9% from 2.5% in the previous year, while the Net Income margin was 1.8%. Annualized ROE was 4.4%, and the Equity Ratio was 35.5%, compared with 34.5% in the previous year, remaining broadly flat.【Cash Quality】There was a significant gap between Ordinary Income of ¥26.5B and Net Income of ¥13.2B, primarily due to the high effective tax burden of 46.9%. Of non-operating income of ¥5.0B, dividend income of ¥2.3B accounted for the majority; at 0.7% of Revenue, dependence on non-recurring income is limited.【Investment Efficiency】Basic EPS turned profitable at ¥39.33, compared with ¥-0.97 in the previous year, while BPS increased to ¥1,177.52 from ¥1,126.27.【Financial Soundness】Current assets of ¥637.5B versus current liabilities of ¥484.1B resulted in a current ratio of approximately 131.7%. Cash and deposits increased YoY to ¥39.2B, but dependence on short-term liabilities, including short-term borrowings of ¥231.1B, remains high.

Cash Flow Analysis

Although no cash flow statement has been disclosed, funding trends can be inferred from changes in the balance sheet. Cash and deposits increased by ¥21.6B to ¥39.2B from ¥17.6B in the same period of the previous year, improving on-hand liquidity. However, short-term borrowings increased by ¥44.9B to ¥231.1B from ¥186.2B in the same period of the previous year, indicating that part of the increase in cash was supported by additional borrowing. Long-term borrowings were ¥151.5B and remained broadly flat, with funding primarily reflecting an increase on the short-term side. Accounts receivable of ¥216.4B and inventories of ¥191.3B represent significant portions of current assets, and the impact of changes in working capital on future cash management warrants close monitoring.

Earnings Quality

Against Operating Income of ¥29.4B, net non-operating income and expenses amounted to a negative ¥2.9B, with interest expenses of ¥5.2B and foreign exchange losses of ¥1.6B being the primary downward factors. Of non-operating income of ¥5.0B, dividend income of ¥2.3B accounted for the majority, and dependence on non-recurring income was low at 0.7% of Revenue. Extraordinary income of ¥0.2B was offset by an extraordinary loss of ¥1.4B, including a ¥1.1B loss on disposal and sale of fixed assets; these items should be distinguished as temporary factors. In the transition from Ordinary Income of ¥26.5B to Net Income attributable to owners of the parent of ¥13.2B, the largest factor was the reduction caused by corporate income taxes and other taxes of ¥11.9B, equivalent to an effective tax rate of 46.9%. The fact that growth in Operating Income and Ordinary Income has not translated directly into growth in final profit is an important consideration in assessing earnings quality.

Earnings Forecasts and Guidance

Against the full-year Company plan (Revenue of ¥1,025.0B, Operating Income of ¥38.0B, Ordinary Income of ¥33.0B, EPS of ¥47.53, and dividend of ¥14.00), the progress rates through cumulative Q3 were 73.7% for Revenue, 77.5% for Operating Income, 80.4% for Ordinary Income, and 82.7% for profit attributable to owners of the parent. Revenue progress was slightly below the standard 75% progress expected through cumulative Q3, while progress for all profit measures exceeded that level. The effects of gross margin improvement and SG&A expense control were the background to the outperformance against the plan. To achieve the full-year targets, Q4 must generate Revenue of ¥269.8B, Operating Income of ¥8.6B, and Ordinary Income of ¥6.5B.

Shareholder Returns

The Q2 dividend was ¥6.00 per share, and the full-year dividend forecast is ¥14.00. Based on cumulative Q3 profit attributable to owners of the parent of ¥13.2B, the Payout Ratio is approximately 15.4%; based on the full-year planned profit of ¥16.0B, the Payout Ratio is approximately 29.4%. These figures represent the Payout Ratio based solely on dividends and do not include share repurchases. The planned Payout Ratio is substantially below 60% and, assuming achievement of the profit plan, the burden is not excessive. However, under a financial structure with high dependence on short-term liabilities, dividend sustainability will be affected by the achievement of the profit plan.

Risk Factors

1. Concentration of profit in the core business: The Mobility Business accounts for 69.3% (¥20.4B) of consolidated Operating Income of ¥29.4B, creating a structure in which automobile production trends, component prices, and foreign exchange movements directly affect consolidated performance.

2. Continued losses in the Gas Techno Business: Revenue of ¥37.7B (-14.6% YoY) and an Operating Loss of ¥3.2B continue. Although the loss narrowed from ¥4.4B in the previous year, delayed demand recovery could remain a factor weighing on consolidated profit.

3. Dependence on short-term liabilities and liquidity: Short-term borrowings of ¥231.1B increased by ¥44.9B YoY, and the short-term liability ratio reached approximately 60.4% of current liabilities of ¥484.1B. Cash and deposits of ¥39.2B were only approximately 0.17 times short-term liabilities, indicating relatively high sensitivity to changes in the refinancing environment.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin are below the industry median, placing profitability relatively low within the industry.

※Source: Compiled by the Company

Key Points from the Financial Results

1. Despite flat Revenue, the Operating Income margin improved to 3.9% from 2.5% in the previous year, confirming progress in the efficiency of the cost structure through gross margin improvement and SG&A expense reductions.

2. By segment, the Trading Business is the most profitable, with a profit margin of 14.1%, while the Gas Techno Business continues to report an Operating Loss, indicating a significant profitability gap within the business portfolio.

3. The transition from Ordinary Income to Net Income reflects a high effective tax burden of 46.9%; the level of the tax burden will continue to be monitored as a factor affecting fluctuations in final profit.

Theoretical Share Price (Reference Value)

Sensitivity: ¥952–¥1,006 at a ±1% change in the cost of equity, and ¥972–¥983 at a ±0.1 change in ω.

Notes:

• Net Income is substantially compressed relative to Operating Income due to the tax burden, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income 42%). This value reflects that compression at face value; if the factors are temporary, underlying earnings power may be higher.
• Because forecast ROE is below the cost of equity, the theoretical value is below Net Assets per Share.
• Net assets as of the end of the quarter are used; there is a timing difference from 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 financial results 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 financial results data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional advisor as necessary.

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