AISAN INDUSTRY CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In Q1 FY2027, Operating Income, Ordinary Income, and Net Income all increased significantly, driven by improved profitability in the Americas business and gains on foreign exchange and interest income recorded below operating income. Revenue was ¥8.393B (¥7.992B in the same period of the previous year, YoY +5.0%), Operating Income was ¥0.560B (¥0.352B, YoY +59.0%), and Ordinary Income was ¥0.625B (¥0.338B, YoY +84.6%). Consolidated Net Income was ¥0.454B (¥0.372B, YoY +22.0%), of which Net Income Attributable to Owners of the Parent was ¥0.435B (¥0.356B, YoY +22.5%). The Operating Margin was 6.7%, improving by 2.3pt from 4.4% in the previous year, indicating that profitability improved at a faster pace than revenue growth.

Factors Affecting Performance

【Revenue】Revenue was ¥8.393B, up +5.0% year on year. By segment, Japan grew to ¥3.668B (+11.6%) and the Americas to ¥2.138B (+12.5%), while Asia was broadly flat at ¥3.309B (-0.1%) and Europe declined to ¥0.366B (-8.2%). Japan’s revenue growth includes the consolidation contribution from Tris Inc., which became a subsidiary during the current quarter. In terms of revenue scale, Japan was the largest, followed by Asia and the Americas.

【Profit and Loss】Operating Income was ¥0.560B (+59.0%), and the Operating Margin improved to 6.7% from 4.4% in the previous year, a 2.3pt improvement. The Gross Margin improved by 2.5pt to 14.6% from 12.1%, primarily due to improved profitability in the Americas (Operating Margin of 15.7% and Operating Income of ¥0.336B, accounting for more than 60% of company-wide profit). SG&A expenses increased by 8.4% to ¥0.664B, exceeding the revenue growth rate, but the increase was absorbed by the improvement in gross profit, securing higher earnings. Ordinary Income was ¥0.625B (+84.6%), with foreign exchange gains of ¥0.040B and interest income of ¥0.026B recorded in non-operating income, creating the ¥0.064B difference from Operating Income. No extraordinary gains or losses were recorded, and temporary factors such as gains on the sale of investment securities seen in the previous period did not occur in the current period. Consolidated Net Income was ¥0.454B (+22.0%; Net Income Attributable to Owners of the Parent: ¥0.435B, +22.5%), with an effective tax rate of approximately 27.3%, broadly a standard level. Overall, the period can be characterized as one of revenue and profit growth.

Segment Analysis

The Americas recorded revenue of ¥2.138B (+12.5%), Operating Income of ¥0.336B (+139.1%), and an Operating Margin of 15.7%, demonstrating the highest profitability among all segments and becoming the core business driving more than 60% of company-wide Operating Income (¥0.560B). Asia was broadly flat in revenue at ¥3.309B (-0.1%), while Operating Income declined slightly to ¥0.206B (-8.8%), with a margin of 6.2%. Japan had the largest revenue scale at ¥3.668B (+11.6%), but operating results remained at a loss of ¥-0.018B; the loss narrowed from ¥-0.066B in the previous year (improvement of +73.3%). Europe experienced both lower revenue and lower earnings, with revenue of ¥0.366B (-8.2%) and Operating Income of ¥0.0096B (-62.9%), while its margin declined to 2.6%. Company-wide profit growth is highly dependent on the Americas, making a return to profitability in Japan and renewed growth in Asia key areas for future portfolio diversification.

Key Financial Indicators

【Profitability】The Operating Margin improved to 6.7% from 4.4% in the previous year, the Gross Margin improved to 14.6% from 12.1%, and the Net Profit Margin based on Net Income Attributable to Owners of the Parent improved to 5.2% from 4.4%. ROE was 3.0%, calculated as Net Income Attributable to Owners of the Parent of ¥0.435B divided by average equity during the period. 【Cash Quality】Accounts receivable and notes receivable were ¥4.423B, up +9.5% from ¥4.041B in the previous year, while inventories were ¥1.127B, up +15.1% from ¥0.980B. Both increased faster than the +5.0% revenue growth rate, indicating an accumulation of working capital. 【Investment Efficiency】Total asset turnover for the current quarter was 0.26x (Revenue of ¥8.393B / Total Assets of ¥31.863B), indicating that asset efficiency was pressured by increases in inventories and receivables. 【Financial Soundness】The Equity Ratio remained high at 46.8% (approximately 47.0% in the previous year). Cash and deposits of ¥7.897B exceeded interest-bearing debt, which totaled ¥5.793B (short-term borrowings of ¥0.270B, current portion of long-term borrowings of ¥0.205B, and long-term borrowings of ¥5.318B), indicating substantial effective financial capacity.

Cash Flow Analysis

As a cash flow statement was not disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥7.897B, down -9.9% from ¥8.766B in the previous year. The primary factors are considered to be the increased working capital burden associated with the accumulation of receivables (+9.5%) and inventories (+15.1%), as well as investment expenditures related to the acquisition of Tris Inc. Intangible assets were ¥0.367B, up +34.5% from ¥0.273B in the previous year, mainly due to the recognition of goodwill of ¥0.092B on a provisional basis in connection with the acquisition. Property, plant and equipment was ¥9.768B, up +6.9% from ¥9.135B in the previous year, suggesting that capital investment has continued. Long-term borrowings were ¥5.318B, up +2.1% from ¥5.211B in the previous year and broadly flat, indicating no significant change in the funding structure.

Earnings Quality

No extraordinary gains or losses were recorded in the current period. Earnings consisted of higher operating profit and accumulated non-operating income, and the absence of temporary factors such as gains on the sale of investment securities seen in the previous period means that earnings have become more recurring in nature. Non-operating income of ¥0.093B represented approximately 1.1% of revenue, with foreign exchange gains of ¥0.040B and interest income of ¥0.026B as the major components. Of Ordinary Income of ¥0.625B, ¥0.064B was attributable to the boost from non-operating items, namely foreign exchange and interest income. The effective tax rate was approximately 27.3%, remaining at a standard level. Comprehensive Income was ¥0.533B, of which ¥0.518B was attributable to owners of the parent, exceeding Net Income Attributable to Owners of the Parent of ¥0.435B by ¥0.083B. The primary factor was foreign currency translation adjustments of +¥0.108B. This divergence resulted from differences arising on the yen translation of the foreign-currency-denominated net assets of overseas subsidiaries and does not materially affect the quality of the Company’s underlying business earnings for the period.

Earnings Forecast and Guidance

Progress against the full-year forecast was 25.1% for Revenue (¥8.393B / ¥33.500B), 28.7% for Operating Income (¥0.560B / ¥1.950B), 30.5% for Ordinary Income (¥0.625B / ¥2.050B), and 32.2% for Net Income Attributable to Owners of the Parent (¥0.435B / ¥1.350B). Operating Income, Ordinary Income, and Net Income all exceeded the 25% benchmark for simple quarterly progress, with improved profitability in the Americas and contributions from non-operating income lifting first-half progress. As of the current quarter, the Company revised its earnings and dividend forecasts, setting full-year forecast EPS at ¥235.55 and the dividend forecast at ¥41.00.

Shareholder Returns

The full-year dividend forecast is ¥41.00, compared with ¥37.00 in the previous fiscal year, implying an increase in dividends. The Payout Ratio against forecast EPS of ¥235.55 is approximately 17.4% (¥41.00 / ¥235.55), representing a conservative return policy relative to earnings. Given cash and deposits of ¥7.897B and a favorable net position relative to effective interest-bearing debt, the Company has a financial base capable of supporting the current dividend level.

Risk Factors

1. Accumulation of working capital: Accounts receivable and notes receivable were ¥4.423B (+9.5% year on year), while inventories were ¥1.127B (+15.1%), with both increasing faster than the +5.0% revenue growth rate. There is a risk that cash generation may lag revenue expansion.

2. Level of product warranty costs: The provision for product warranties was ¥0.693B, equivalent to 8.3% of current-quarter revenue of ¥8.393B. Quality-related costs may continue to weigh on profit and cash flow.

3. Concentration of regional earnings: The Americas accounted for ¥0.336B, or more than 60%, of company-wide Operating Income of ¥0.560B, while Japan remained loss-making at ¥-0.018B and Europe also experienced lower earnings (¥0.0096B, -62.9%), indicating a high dependence on specific regions for profit generation.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Return

Both the Operating Margin and Net Profit Margin are below the industry median, placing profitability in the lower-middle range within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate is also slightly below the industry median, indicating that the pace of revenue growth is around or somewhat below the industry average.

Source: Compiled by the Company

Key Points from the Financial Results

1. The Operating Margin improved by +2.3pt year on year to 6.7%, while the Gross Margin also increased by +2.5pt to 14.6%. Improved profitability in the Americas and the increased penetration of price pass-through were observed as structural drivers of profitability improvement.

2. Full-year progress was 28.7% for Operating Income, 30.5% for Ordinary Income, and 32.2% for Net Income Attributable to Owners of the Parent, all exceeding the 25% benchmark for evenly distributed quarterly progress, confirming an upward trend in first-half earnings.

3. Increases in receivables (+9.5%) and inventories (+15.1%) exceeded the revenue growth rate (+5.0%), indicating room for improvement in working capital efficiency despite higher profitability. The provision for product warranties, equivalent to 8.3% of revenue, also requires continued monitoring in assessing earnings quality.

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). It is not a forecast of the market share price or a recommendation to undertake any specific investment action.

Sensitivity: ¥2,562–¥2,716 at ±1% for the cost of equity, and ¥2,637–¥2,638 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(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 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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