YAMATO Mobility & Mfg. (7886) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of the fiscal year ending March 2026, the Company shifted from a period of revenue growth to a significant decline in both revenue and earnings due to deteriorating profitability in its core synthetic resin molding-related business and expanding losses in its EV-related business, resulting in operating, ordinary, and net losses. Revenue was ¥78.3B (¥114.8B in the same period of the previous year, YoY -31.8%), Operating Income was ¥-2.8B (¥1.1B in the same period of the previous year, YoY -363.2%), Ordinary Income was ¥-4.8B (¥0.9B in the same period of the previous year, YoY -614.9%), and Net Income was ¥-4.2B (¥0.6B in the same period of the previous year, YoY -751.0%). SG&A expenses of ¥12.3B exceeded gross profit of ¥9.5B despite the decline in revenue, and the fixed-cost burden is putting pressure on earnings.

Factors Driving Changes in Performance

【Revenue】Revenue was ¥78.3B, down 31.8% year on year. The two core businesses both reported lower revenue: the synthetic resin molding-related business generated ¥63.0B (80.4% composition ratio, down -28.0% year on year), while the logistics equipment-related business generated ¥14.9B (19.0% composition ratio, down -45.6% year on year). The EV-related business increased year on year to ¥0.4B, although its scale remains small. The contraction in orders and operating activity across the Company was the primary cause of the revenue decline.

【Profit and Loss】The gross profit margin remained at 12.1%, and SG&A expenses of ¥12.3B exceeded gross profit of ¥9.5B, resulting in an Operating Loss of ¥2.8B. Ordinary Loss was ¥4.8B, with non-operating expenses including interest expenses of ¥0.6B and foreign exchange losses of ¥0.5B widening the loss. Net Loss of ¥4.2B was supported by extraordinary income of ¥0.9B, including gains on the sale of fixed assets, but this was insufficient to offset the deterioration at the ordinary income level. By segment, the synthetic resin molding-related business swung to an Operating Loss of ¥0.9B, while the EV-related business’s Operating Loss of ¥1.9B accounted for approximately 70% of the Company-wide loss; only the logistics equipment-related business maintained a modest profit. The Company reported lower revenue and earnings.

Segment Analysis

The synthetic resin molding-related business generated Revenue of ¥63.0B (¥87.4B in the same period of the previous year) and recorded an Operating Loss of ¥0.9B, swinging from Operating Income of ¥0.6B in the same period of the previous year. The logistics equipment-related business generated Revenue of ¥14.9B (¥27.3B in the same period of the previous year) and Operating Income of ¥0.0B, a substantial decline from ¥1.1B in the same period of the previous year, but remained profitable. The EV-related business generated Revenue of ¥0.4B (¥0.04B in the same period of the previous year) and recorded an Operating Loss of ¥1.9B, with the loss expanding from ¥0.6B in the same period of the previous year, making it a major factor behind the Company-wide Operating Loss of ¥2.8B. The recovery of profitability in the core synthetic resin molding-related business and the containment of losses in the EV-related business will be key inflection points determining the Company’s future earnings structure.

Key Financial Indicators

【Profitability】The Operating Income margin was -3.6% and the Net Income margin was -5.4%, reflecting a structure in which the SG&A expense ratio of 15.7% exceeds the gross profit margin of 12.1%.【Cash Quality】Extraordinary income of ¥0.9B was included in Net Income of ¥-4.2B, suggesting that recurring earnings power is weaker than Net Income indicates. Inventory of ¥10.9B (including ¥10.9B in finished goods) accounted for 19.4% of total assets, and the inventory burden amid declining demand is affecting capital efficiency.【Investment Efficiency】ROE was -49.6%, with the negative Net Income margin and high financial leverage serving as downward pressure factors.【Financial Soundness】The Equity Ratio declined to 15.2% (18.7% before the conversion of the previous year’s 15.2%), while interest-bearing debt, consisting of long-term borrowings of ¥17.9B and short-term borrowings of ¥8.0B, totaled approximately 46% of total assets. Cash and deposits of ¥6.0B were below short-term borrowings of ¥8.0B, requiring close monitoring of short-term liquidity.

Cash Flow Analysis

As no disclosure of a cash flow statement has been confirmed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits decreased to ¥6.0B from ¥20.0B in the same period of the previous year, and, taking into account the operating loss and the levels of inventory and borrowings, the Company’s cash generation capacity may have deteriorated. While working capital remains at a certain level, with accounts receivable and notes receivable of ¥10.4B and inventory of ¥10.9B, accounts payable and notes payable of ¥12.9B provide a certain level of funding through trade payables. The combined total of long-term borrowings of ¥17.9B and short-term borrowings of ¥8.0B substantially exceeds cash and deposits of ¥6.0B, resulting in a capital structure with a high degree of dependence on external funding.

Quality of Earnings

The current-period loss consists of a three-layer structure: operating results (Operating Loss of ¥-2.8B), non-operating results (factors worsening earnings by approximately ¥-2.1B, including interest expenses of ¥0.6B and foreign exchange losses of ¥0.5B), and extraordinary income of ¥0.9B. Extraordinary income of ¥0.9B resulted from temporary factors such as gains on the sale of fixed assets; excluding this item, recurring earnings power can be interpreted as even weaker than Net Loss of ¥4.2B. Interest expenses and foreign exchange losses were the major components of non-operating expenses of ¥2.3B, and financial costs and foreign exchange fluctuations have deteriorated the quality of earnings. Accordingly, the current-period Net Loss includes a certain mitigating effect from non-recurring items, and the earnings power of the core business can be assessed as being in a more challenging situation.

Earnings Forecast and Guidance

The cumulative Q3 progress rate against the full-year earnings forecast was 78.9% for Revenue (forecast: ¥99.2B). The progress rate for the Operating Loss was 82.3% against a forecast loss of ¥3.4B, while the progress rate for the Ordinary Loss reached 93.1% against a forecast loss of ¥5.2B. Although Revenue progress is generally on track, the high progress rate for Ordinary Loss suggests that the scope for a substantial earnings improvement in the final quarter is limited. The full-year EPS forecast is -¥369.71, implying an expansion of the loss from -¥283.91 for the cumulative Q3.

Shareholder Returns

The Q2 dividend was ¥0 per share, with no dividend paid. The current period recorded a Net Loss attributable to owners of the parent of ¥4.2B, and there is no earnings base on which to assess a Payout Ratio. No information regarding share buybacks was confirmed, and no assessment of the Total Return Ratio has been made.

Risk Factors

1. High leverage and interest payment capacity: Interest-bearing debt totaled ¥25.9B, comprising long-term borrowings of ¥17.9B and short-term borrowings of ¥8.0B, a high level relative to net assets of ¥8.5B. Interest expenses of ¥0.6B were incurred despite the Operating Loss, and interest coverage through Operating Income has not been established.

2. Deteriorating profitability by business: The synthetic resin molding-related business (Revenue of ¥63.0B) swung to an Operating Loss of ¥0.9B, while the EV-related business recorded an Operating Loss of ¥1.9B against Revenue of ¥0.4B, making it a major contributor to the Company-wide loss. Only the logistics equipment-related business maintained a modest profit.

3. Inventory and liquidity risk: Finished goods inventory of ¥10.9B accounted for 19.4% of total assets, creating a risk of valuation losses amid declining demand. In addition, cash and deposits of ¥6.0B were below short-term borrowings of ¥8.0B, requiring monitoring of the Company’s liquidity position.

Industry Benchmark (Reference, Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability is substantially below the industry median and remains at a level deviating from the average for the manufacturing industry.

Growth and Capital Efficiency

The Revenue growth rate is substantially below the industry median, positioning the Company in a contraction phase within the industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The primary cause of the deterioration in Company-wide performance was the core synthetic resin molding-related business swinging to an Operating Loss, making the recovery of profitability in this business a key inflection point for the future earnings structure.

2. While the EV-related business’s Revenue remained limited to ¥0.4B, its Operating Loss of ¥1.9B confirms that upfront investment and start-up costs are significantly weighing on Company-wide earnings.

3. The full-year progress rate for Ordinary Loss has reached 93.1%, and the gap between this figure and the Revenue progress rate of 78.9% indicates that a structural deterioration in profitability can be identified from the financial results data.

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This report is a financial results 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 available financial results data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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AI Financial Analysis

Executive Summary

FY2026 Q3 was a severe earnings deterioration, driven by sharp volume/revenue contraction, loss-making core operations, and an already-stretched balance sheet. Revenue declined 31.8% year on year to ¥7.83bn for the nine-month cumulative period. Operating income swung from a ¥0.11bn profit to a ¥2.79bn loss. The operating margin deteriorated by approximately 4.0 percentage points, from 0.9% in the prior-year period to -3.6%. Gross profit fell 23.5% to ¥0.95bn, while the gross margin declined 80bp from 10.8% to 12.1%; despite this modest gross-margin improvement, the substantially smaller revenue base was insufficient to absorb SG&A. SG&A increased 8.4% to ¥1.23bn despite the revenue decline, materially worsening operating leverage. Ordinary loss was ¥4.84bn, reflecting a ¥2.25bn non-operating expense burden that included ¥0.60bn of interest expense, ¥0.50bn of foreign-exchange losses, and equity-method losses of ¥0.34bn. Net loss was ¥4.21bn, compared with net income of ¥0.64bn a year earlier. A ¥0.86bn gain on sales of subsidiary stock partly mitigated the pre-tax loss, indicating that reported earnings were supported by a non-recurring disposal gain rather than operating recovery. Total comprehensive loss of ¥8.32bn was almost double the net loss, principally reflecting a ¥4.24bn adverse foreign-currency translation adjustment. The synthetic-resin molding business, the largest segment by revenue, moved to a ¥0.88bn segment loss from a ¥0.58bn profit. Logistics equipment remained marginally profitable at ¥0.04bn, but its revenue fell 45.6% year on year to ¥1.49bn. The newly disclosed EV-related business generated only ¥0.04bn of revenue while posting a ¥1.95bn segment loss, making it the largest source of consolidated operating losses. Balance-sheet risk intensified as equity declined 39.8% year on year to ¥0.85bn and interest-bearing debt remained high at ¥2.59bn. Management’s full-year forecast implies a further ¥0.60bn operating loss in Q4 and full-year revenue of ¥9.92bn, so a near-term operational turnaround is not embedded in guidance. The key forward implication is that restoration of sales volume, containment of EV-business losses, inventory normalization, and preservation of lender support are more important than margin expansion alone.

Profitability Analysis

The reported annualized DuPont ROE is -66.0%, decomposed into a -5.4% net profit margin, 1.865x asset turnover, and 6.58x financial leverage. The negative net margin is the principal driver of the negative ROE, while high leverage magnifies losses attributable to the small equity base. The annualized asset-turnover level is relatively high, but it does not create shareholder value because the company is generating losses on revenue. EBIT margin was -3.6%, versus an operating margin of 0.9% in the prior-year nine-month period, showing that the deterioration is fundamentally operational rather than merely tax-related. Gross margin improved to 12.1% from 10.8%, but gross profit still decreased because revenue contracted much more sharply than unit profitability improved. SG&A rose to ¥1.23bn from ¥1.13bn while revenue fell to ¥7.83bn from ¥11.48bn; SG&A represented 15.7% of revenue, up from 9.9%. This adverse fixed-cost absorption is the clearest operating-leverage issue. The core synthetic-resin molding segment recorded revenue of ¥6.30bn, down 27.9%, and a ¥0.88bn loss versus a ¥0.58bn profit, implying a margin swing from 0.7% to -1.4%. Logistics equipment revenue declined 45.6% to ¥1.49bn, while segment profit declined 96.5% to ¥0.04bn; its segment margin compressed from 4.1% to 0.3%. EV-related revenue rose from a negligible base to ¥0.04bn, but the segment loss expanded to ¥1.95bn from ¥0.63bn, equating to an exceptionally negative margin because the revenue base remains very small. The EV segment’s loss profile indicates development, launch, or ramp-up costs that are not yet supported by commercial scale. The interest burden ratio of 1.431 is mechanically above one because EBIT and pre-tax income are both negative; economically, it confirms that financing costs exacerbate losses. Interest coverage was -4.67x, and annualized ROIC was -13.1%, both underscoring that invested capital is currently earning below its funding cost. The ¥0.86bn subsidiary-share sale gain reduced the pre-tax loss but should not be treated as recurring profitability. A sustainable recovery requires a substantial reduction in EV losses, a revenue rebound in the molding and logistics businesses, and SG&A resizing to the lower sales base.

Growth Assessment

Revenue contraction was broad-based rather than isolated to one business. Synthetic-resin molding, the core business by revenue contribution, declined ¥2.44bn year on year, accounting for most of the consolidated sales decline. Logistics equipment declined ¥1.25bn year on year, indicating additional weakness in demand for handling and logistics-related equipment. The EV-related business added only ¥0.04bn of sales and therefore does not yet offset the decline in established businesses. The company’s full-year revenue forecast of ¥9.92bn implies Q4 revenue of approximately ¥2.09bn, below the nine-month quarterly run rate of approximately ¥2.61bn. Nine-month revenue progress is 79.0% of the full-year forecast, modestly ahead of the standard 75% Q3 progress level by 4.0 percentage points. The full-year operating-loss forecast of ¥3.39bn implies a Q4 operating loss of approximately ¥0.60bn. Accordingly, the forecast assumes continued losses but a smaller quarterly loss than the cumulative Q1–Q3 average. Full-year ordinary loss guidance of ¥5.20bn implies an additional Q4 ordinary loss of roughly ¥0.36bn. Full-year loss attributable to owners of ¥5.26bn implies an additional Q4 loss of around ¥1.05bn, suggesting continued below-the-line volatility. The gross-margin improvement provides some evidence that unit economics in legacy operations may not have deteriorated as sharply as consolidated revenue, but the fixed-cost structure remains incompatible with the current scale. Revenue sustainability depends primarily on stabilizing demand in molding and logistics equipment, while the EV business must demonstrate a credible path from investment-stage losses to commercial revenue. The sale of subsidiary stock contributed ¥0.86bn of extraordinary income and does not improve recurring growth capacity.

Financial Health

Financial health is highly stressed. The current ratio is 136.1%, above 1.0x, and working capital is ¥0.96bn, so current assets exceed current liabilities on a book-value basis. However, the quick ratio is 95.3%, below 1.0x, indicating that liquidity depends partly on inventory realization. Cash and deposits declined 69.9% year on year to ¥0.60bn, while inventories increased 84.1% to ¥1.09bn. This shift from cash to inventory materially reduces liquidity flexibility. Accounts receivable fell 49.2% to ¥1.04bn and accounts payable fell 38.5% to ¥1.29bn, broadly consistent with lower business activity but also leaving less supplier financing in absolute terms. Current liabilities total ¥2.66bn, including ¥0.80bn of short-term loans, against ¥3.62bn of current assets. Short-term debt represents 30.9% of interest-bearing debt, and cash covers only 0.75x of short-term loans. The company therefore faces refinancing and operating-liquidity sensitivity even though the current ratio remains above one. Long-term loans are ¥1.79bn and total interest-bearing debt is ¥2.59bn, equal to 5.58x equity. This exceeds the 2.0x level typically associated with aggressive leverage and is a material concern given negative EBIT. Debt-to-capital is 75.3%, well above the 60% covenant-risk benchmark. Interest coverage of -4.67x means operating earnings do not service interest expense. Total equity fell from ¥1.41bn to ¥0.85bn, while retained earnings worsened to negative ¥1.47bn from negative ¥1.05bn. Capital stock and capital surplus together remain above the book deficit in retained earnings, but the equity cushion is narrow relative to debt and operating losses. Total comprehensive loss of ¥0.83bn also reduced equity through adverse foreign-currency translation effects. The defined-benefit liability of ¥0.16bn is an additional long-term obligation, though smaller than financial debt. The high-leverage quality alert is warranted: debt-funded capital structure risk has become more consequential as earnings, cash reserves, and equity have weakened.

Notable B/S Changes

Inventories: +¥0.50bn (+84.1%) to ¥1.09bn - substantial build in finished goods amid a 31.8% revenue decline; raises cash-conversion, markdown, and obsolescence risk. Cash and deposits: -¥1.40bn (-69.9%) to ¥0.60bn - materially weaker liquidity reserve and only 0.75x coverage of short-term loans. Accounts receivable: -¥1.00bn (-49.2%) to ¥1.04bn - consistent with lower sales activity and partly offsets the inventory-related working-capital burden. Accounts payable: -¥0.81bn (-38.5%) to ¥1.29bn - reduced supplier financing lowers spontaneous funding available to support operations. Retained earnings: -¥0.42bn (-40.3%) to negative ¥1.47bn - continuing losses deepen the accumulated deficit and narrow the equity cushion. Total equity: -¥0.56bn (-39.8%) to ¥0.85bn - loss absorption capacity has weakened materially relative to ¥2.59bn of interest-bearing debt. Investments and other assets: +¥0.29bn (+145.2%) to ¥0.48bn - increase is notable relative to the small equity base and should be assessed alongside the group’s need to preserve liquidity.

Cash Flow Quality

Inventory is concentrated in finished goods, which amount to ¥1.09bn, while raw materials are ¥0.17bn and work in process is ¥0.05bn. Finished goods therefore account for the overwhelming majority of disclosed inventory and have increased sharply from the prior-year level. In the context of a 31.8% revenue decline, this inventory build is a material working-capital and obsolescence risk for a manufacturer. The reduction in receivables partly offsets the inventory increase, but cash and deposits fell by ¥1.40bn year on year, indicating materially lower liquidity reserves. Payables declined by ¥0.81bn, which reduces spontaneous supplier funding and increases the burden on cash and borrowings. The combination of lower sales, higher finished-goods inventory, and lower cash requires close monitoring for inventory markdowns or further working-capital absorption. Earnings quality is also weak because the pre-tax loss was reduced by a ¥0.86bn gain on sale of subsidiary stock. The non-recurring gain equals approximately 20.5% of the reported net loss and should not be regarded as operating cash-generative performance. Foreign-exchange losses of ¥0.50bn further demonstrate sensitivity of reported earnings to non-core items. With negative EBIT and a large inventory increase, the operational priority is conversion of finished goods into cash rather than further inventory accumulation.

Dividend Sustainability

The Q2 dividend per share was ¥0. The absence of a dividend is consistent with the ¥283.91 nine-month loss per share, the forecast full-year loss per share of ¥369.71, negative retained earnings of ¥1.47bn, and high leverage. Dividend payout ratio is not meaningful while earnings are negative. Capital preservation is the appropriate financial priority given the ¥0.85bn equity base, ¥2.59bn of interest-bearing debt, and negative interest coverage. Any future shareholder distribution capacity would depend on sustained restoration of operating profitability, liquidity recovery, and a reduction in leverage.

Risk Assessment

Business risks include High impact / high likelihood: Continued demand weakness in synthetic-resin molding, where revenue fell 27.9% and segment profit turned from a ¥0.58bn profit to a ¥0.88bn loss., High impact / high likelihood: EV-related business execution risk. The segment produced only ¥0.04bn of revenue but a ¥1.95bn loss, exposing the group to prolonged development, commercialization, and scale-up losses., High impact / medium likelihood: Logistics equipment cyclicality. Revenue declined 45.6% and segment margin fell to 0.3%, leaving limited resilience against further order weakness., Medium impact / high likelihood: Finished-goods inventory risk. Inventory rose 84.1% while consolidated revenue declined, raising the prospect of markdowns, slower turnover, or production adjustments., Medium impact / medium likelihood: Foreign-exchange risk. A ¥0.50bn FX loss and a ¥4.24bn adverse foreign-currency translation adjustment demonstrate sensitivity to currency movements., Medium impact / medium likelihood: Manufacturing-sector input-cost, supply-chain disruption, customer concentration, product-quality, and technological-transition risks may further pressure margins during a low-utilization period..

Financial risks include High impact / high likelihood: Leverage is excessive, with D/E of 5.58x and debt/capital of 75.3%. This is the root cause of heightened refinancing and equity-erosion risk; it is materially above conservative manufacturing balance-sheet norms., High impact / high likelihood: Debt-service capacity is inadequate. Interest coverage of -4.67x reflects negative EBIT against ¥0.60bn of interest expense, meaning operations do not cover financing costs., High impact / medium likelihood: Liquidity flexibility has weakened. Cash fell 69.9% to ¥0.60bn, quick ratio is 95.3%, and cash covers only 0.75x of short-term loans., High impact / medium likelihood: Further losses or adverse OCI movements could reduce the ¥0.85bn equity base, increasing the risk of covenant pressure, refinancing difficulty, or the need for external capital., Medium impact / medium likelihood: The ¥0.86bn gain on subsidiary-share sales is non-recurring and cannot be relied upon to offset future operating and financing losses..

Key concerns include The low operating-efficiency alert is justified: EBIT margin was -3.6%, versus a 5% threshold generally associated with minimum acceptable profitability., The low gross-margin alert is justified: gross margin was only 12.1%, leaving limited capacity to absorb SG&A and financing costs when revenue declines., The capital-efficiency alert is justified: annualized ROIC was -13.1%, indicating destruction of capital rather than a temporary shortfall in reported net income., The high-leverage alert is amplified by the 39.8% year-on-year decline in equity and 69.9% decline in cash., The debt-service alert is particularly significant because the company’s forecast remains loss-making through FY2026 rather than indicating a near-term return to interest coverage..

Investment Implications

Key takeaways include The principal investment issue is operational recovery: revenue fell 31.8%, and the company moved from operating profit to a ¥2.79bn operating loss., The synthetic-resin molding segment remains the core business by revenue but has become loss-making, while EV losses dominate the group’s operating deficit., The modest gross-margin improvement does not offset severe negative operating leverage, as SG&A increased despite a sharply lower revenue base., A non-recurring ¥0.86bn subsidiary-share sale gain reduced the reported loss but does not change the weak recurring earnings profile., Balance-sheet resilience is limited by D/E of 5.58x, debt/capital of 75.3%, negative interest coverage, and a ¥0.85bn equity base., Finished-goods inventory and cash preservation are central near-term indicators of whether the operating downturn is being contained..

Metrics to watch include Monthly or quarterly revenue recovery in synthetic-resin molding and logistics equipment, EV-related segment revenue growth, segment loss reduction, and evidence of commercial-scale orders, Operating margin and SG&A-to-revenue ratio, Finished-goods inventory relative to sales and any inventory valuation charges, Cash and deposits, short-term loan balances, and refinancing terms, Interest expense and interest coverage, Equity level, foreign-currency translation effects, and capital adequacy ratio, Progress against full-year revenue of ¥9.92bn and operating loss of ¥3.39bn.

Regarding relative positioning, Relative to financially sound manufacturing peers, the company is currently disadvantaged by subscale profitability, a negative annualized ROIC of -13.1%, high balance-sheet leverage, weak debt-service capacity, and a large loss-making EV investment burden. Its 12.1% gross margin and 26.0% PPE-to-assets ratio suggest a manufacturing model with limited margin buffer during revenue volatility.