TOYODA GOSEI CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Q1 of the fiscal year ending March 2027 saw increases in both revenue and profit. Revenue was ¥3038.96B (+16.7% YoY), Operating Income was ¥232.24B (+26.4%), Profit Before Tax was ¥257.67B (+41.3%), and Net Income attributable to owners of the parent was ¥180.77B (+34.2%) (quarterly profit including non-controlling interests was ¥197.84B, +31.7%). The Operating Income margin improved to 7.6%, from 7.1% in the same period of the previous year, a 0.6pt improvement. A sharp recovery in profitability in the Japan segment, continued high margins in Asia, and improved financial income and expenses supported the increase in profit.

Factors Affecting Business Performance

【Revenue】Revenue increased in all regions except China, driven by the recovery in automobile production and the pass-through of prices. Revenue composition was as follows: the Americas 39.8% (¥1210.8B, +17.5%), Japan 38.4% (¥1165.6B, +19.8%), Asia 9.0% (¥273.6B, +24.2%), China 5.8% (¥174.9B, -11.6%), India 4.4% (¥133.9B, +23.7%), and Europe and Africa 2.6% (¥80.1B, +8.3%). China was the only region to post lower revenue, reflecting weakening local demand.

【Profit and Loss】Operating Income was ¥232.24B (+26.4%), and the Operating Income margin was 7.6% (+0.6pt). The principal factor behind the improvement in the company-wide margin was the sharp recovery in Japan, where Operating Income rose to ¥62.0B (+143.1%), and strong growth in China, where Operating Income increased to ¥15.0B (+135.0%). In contrast, the Americas reported lower profit at ¥104.1B (-2.9%), as did Europe and Africa at ¥4.4B (-19.2%), resulting in differing performance across regions. Financial income increased to ¥26.1B (¥15.8B in the same period of the previous year), while financial expenses decreased to ¥6.8B (¥24.2B in the same period of the previous year). Consequently, Profit Before Tax increased 41.3% to ¥257.67B, outpacing the growth in Operating Income. Net Income attributable to owners of the parent was ¥180.77B (+34.2%), resulting in higher revenue and profit.

Segment Analysis

While five of the six regions reported higher revenue, Japan and China stood out for the magnitude of their profit improvements. Japan recorded revenue of ¥1165.6B (+19.8%) and Operating Income of ¥62.0B (+143.1%, margin of 5.3%), reflecting improved absorption of fixed costs and a recovery from the low profitability of the previous year. The Americas was the largest region by scale, with revenue of ¥1210.8B (+17.5%), but Operating Income declined to ¥104.1B (-2.9%, margin of 8.6%) as higher costs somewhat pressured profit. Asia reported revenue of ¥273.6B (+24.2%) and Operating Income of ¥37.6B (+37.5%, margin of 13.7%), maintaining the highest margin among all segments. China was the only segment to report lower revenue, at ¥174.9B (-11.6%), but profitability improved substantially through improvements in its cost structure, with Operating Income rising to ¥15.0B (+135.0%, margin of 8.6%). India reported revenue of ¥133.9B (+23.7%), while Operating Income increased only 4.3% to ¥9.8B, lagging the growth in revenue; its margin declined to 7.3%. Europe and Africa reported revenue of ¥80.1B (+8.3%), but Operating Income declined to ¥4.4B (-19.2%, margin of 5.5%).

Key Financial Indicators

【Profitability】The Operating Income margin was 7.6%, improving 0.6pt from 7.1% in the same period of the previous year. The gross margin also increased to 16.4% from 15.8%, while the SG&A expense ratio edged up to 9.1% from 8.9%. Thus, the improvement in gross margin exceeded the increase in expenses associated with higher revenue, resulting in an improved margin. Net Income attributable to owners of the parent as a percentage of revenue improved to 5.9% from 5.2% in the same period of the previous year.【Cash Flow Quality】Cash flow from operating activities was ¥512.3B, equivalent to 2.8 times Net Income attributable to owners of the parent of ¥180.8B, indicating strong cash-generating capacity underpinning reported profit.【Investment Efficiency】ROE (quarterly basis) was 3.1%.【Financial Soundness】The Equity Ratio was 57.0%, broadly unchanged from 57.3% at the end of the same period of the previous year. Cash and cash equivalents of ¥1653.3B exceeded total interest-bearing debt of ¥1359.0B (current ¥830.3B and non-current ¥528.7B), indicating that the company maintained a net cash position.

Cash Flow Analysis

Cash flow from operating activities was ¥512.3B, up 22.7% YoY. In addition to the increase in Profit Before Tax, an increase in trade payables of ¥95.8B contributed to cash generation, while increases in trade receivables of ¥137.3B and inventories of ¥28.6B absorbed funds through working capital. Cash flow from investing activities was an outflow of ¥181.4B. In addition to capital expenditures of ¥170.6B, the company recorded the acquisition of shares in a subsidiary involving a change in the scope of consolidation of ¥84.4B, described in the notes as being related to the acquisition of Ashimori Industry Co., Ltd. as a wholly owned subsidiary. This represented an increase from the ¥20.97B outflow in the same period of the previous year. Cash flow from financing activities was limited to an outflow of ¥10.0B, comprising proceeds from short-term borrowings of ¥908.8B and repayments of ¥574.3B, repayments of long-term borrowings of ¥215.8B, and dividend payments of ¥102.9B (¥122.4B in total including payments to non-controlling shareholders). As a result, free cash flow, calculated as operating cash flow less investing cash flow, was ¥331.0B, a level sufficient to cover capital expenditures and dividend payments from internally generated funds. Cash and cash equivalents increased by ¥335.2B, from ¥1318.1B at the beginning of the period to ¥1653.3B at the end of the period, while foreign currency translation adjustments also contributed positively by ¥14.2B.

Quality of Earnings

The increase in profit for the period was supported not only by improved operating performance but also by improvements in non-operating items, namely higher financial income (¥26.1B versus ¥15.8B in the same period of the previous year) and lower financial expenses (¥6.8B versus ¥24.2B in the same period of the previous year). The magnitude of these non-operating improvements was the principal reason that the increase in Profit Before Tax (+41.3%) exceeded the increase in Operating Income (+26.4%). Comprehensive income for the quarter was ¥246.9B (¥225.8B attributable to owners of the parent), creating a difference from quarterly profit of ¥197.8B (¥180.8B attributable to owners of the parent). This was primarily because foreign currency translation adjustments for foreign operations shifted from a negative ¥48.9B in the same period of the previous year to a positive ¥51.8B in the current period, indicating a significant impact from foreign exchange movements, an extraordinary factor. Operating cash flow reached 2.8 times Net Income, indicating a small gap between accounting profit and cash generation and demonstrating good earnings quality.

Earnings Forecast and Guidance

Against the full-year earnings forecasts of revenue of ¥1200.0B, Operating Income of ¥80.0B, and Net Income attributable to owners of the parent of ¥57.0B, progress as of Q1 was 25.3% for revenue, 29.0% for Operating Income, and 31.7% for Net Income attributable to owners of the parent. All were tracking ahead of the simple quarterly allocation of 25%. The company plans a 5-for-1 stock split of its common shares, with September 30, 2026 as the record date. The full-year EPS forecast of ¥97.30 has been calculated on a post-split basis and therefore cannot be directly compared with the Q1 actual EPS of ¥154.33, which is presented on a pre-split basis. No revisions were made to the earnings or dividend forecasts during the quarter.

Shareholder Returns

Dividend payments reported in the cash flow statement for Q1 were ¥102.9B, resulting in a Payout Ratio of 56.9% relative to Net Income attributable to owners of the parent of ¥180.8B. No share repurchases were conducted, and shareholder returns consisted solely of dividends. A 5-for-1 stock split of common shares is scheduled, with September 30, 2026 as the record date. The fiscal year ending March 2027 year-end dividend forecast is presented on a post-split basis, and the total annual dividend is shown as “-” due to the impact of the split. Without considering the impact of the split, the year-end dividend is ¥90.00 per share and the annual dividend is ¥175.00 per share.

Risk Factors

1. Demand trends in China: Revenue in the China segment was ¥174.9B, down 11.6% YoY, making it the only segment to report lower revenue. Although Operating Income improved to ¥15.0B (+135.0%, margin of 8.6%) through cost efficiencies, whether the declining revenue trend will continue requires monitoring.

2. Increase in working capital: According to the cash flow statement, increases in trade receivables of ¥137.3B and inventories of ¥28.6B absorbed funds. Although this was partially offset by an increase in trade payables of ¥95.8B, the levels of trade receivables and inventories (¥1859.0B and ¥1120.0B, respectively) warrant monitoring from a capital efficiency perspective.

3. Changes in borrowing composition: Current bonds and borrowings increased to ¥830.3B (+77.4% from ¥468.1B at the end of the previous fiscal year), while non-current bonds and borrowings decreased to ¥528.7B (-30.9% from ¥765.3B), indicating a shift toward short-term interest-bearing debt. Although the company maintains a net cash position compared with cash and cash equivalents of ¥1653.3B, the change in borrowing composition warrants observation from a funding management perspective.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin are slightly below the industry median.

Growth and Capital Efficiency

The revenue growth rate was substantially above the industry median and exceeded the upper bound of the IQR.

Source: Compiled by the company

Key Points from the Earnings Results

1. Progress against the full-year earnings forecasts was 25.3% for revenue, 29.0% for Operating Income, and 31.7% for Net Income attributable to owners of the parent, tracking ahead of a simple quarterly allocation.

2. The profit margin in the Japan segment improved to 5.3% (equivalent to 2.4% in the previous year), while the profit margin in the China segment improved to 8.6% (equivalent to 3.2% in the previous year). Changes in the earnings structure in both regions contributed to raising the company-wide Operating Income margin.

3. A 1-for-5 stock split is scheduled, with September 30, 2026 as the record date. The impact of the split must be taken into account when comparing EPS and dividend results across periods from the next fiscal period onward.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥3,905–¥4,133 for cost of equity ±1%, and ¥3,985–¥4,037 for ω ±0.1.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing mismatch with the full-year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on 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 discretion and responsibility, after consulting with professionals as necessary.

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