MIRAI INDUSTRY CO.,LTD. FY2026 FY Earnings Report

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Executive Summary

For the fiscal year ending March 2026, the Company posted higher revenue but lower earnings, as declining profit margins in its core Electrical Materials and Piping Materials Business put pressure on overall profitability. Revenue increased slightly to ¥45.67B (+1.2% YoY), while Operating Income declined to ¥6.72B (△2.5%), Ordinary Income to ¥6.90B (△2.4%), and Net Income attributable to owners of the parent to ¥4.70B (△2.8%). The primary factor behind the decline in earnings was a decrease in the gross profit margin to 38.7%, as cost increases outpaced revenue growth.

Factors Affecting Performance

【Revenue】Total company revenue was ¥45.67B, up +1.2% YoY. The core Electrical Materials and Piping Materials Business, accounting for 76.0% of the revenue mix, generated ¥34.73B, essentially flat at △0.1% YoY. The Wiring Devices Business performed strongly, generating ¥8.04B, up +9.7% YoY. Other Businesses generated ¥2.90B, down △3.2% YoY. As domestic sales account for more than 90% of total revenue, the Company has a revenue structure highly sensitive to domestic construction and capital investment demand.

【Profit and Loss】Operating Income was ¥6.72B (△2.5% YoY), mainly due to the decline in the gross profit margin to 38.7% from the previous year. Segment profit in the Electrical Materials and Piping Materials Business was ¥5.99B, down △6.4% YoY, driving the overall earnings decline, while the Wiring Devices Business generated ¥0.87B, up +24.9% YoY, contributing to earnings growth. SG&A expenses were ¥10.94B (+0.7% YoY), reflecting disciplined cost control, and the SG&A ratio actually improved to 23.9%. Ordinary Income was ¥6.90B (△2.4% YoY), and Net Income was ¥4.70B (△2.8% YoY). Extraordinary gains and losses—profit of ¥0.05B and loss of ¥0.05B—were nearly offset, with the difference between Ordinary Income and Net Income primarily attributable to the tax burden. Overall, the Company recorded higher revenue but lower earnings, with the increase in the cost ratio being the primary cause of the earnings decline.

Segment Analysis

The Electrical Materials and Piping Materials Business generated revenue of ¥34.73B (76.0% of the revenue mix, △0.1% YoY) and Operating Income of ¥5.99B (△6.4% YoY, operating margin of 17.3%), making it the primary cause of the overall earnings decline. The Wiring Devices Business generated revenue of ¥8.04B (17.6% of the revenue mix, +9.7% YoY) and Operating Income of ¥0.87B (+24.9% YoY, operating margin of 10.8%), supporting the Company through higher revenue and earnings. Other Businesses, including labor-saving machinery, telecommunications, and cable television, generated external revenue of ¥2.90B (△3.2% YoY), while segment profit increased to ¥0.71B (+24.5% YoY). From a business portfolio perspective, the stagnation of the high-margin Electrical Materials and Piping Materials Business coexisted with growth in the lower-margin Wiring Devices Business. Accordingly, it is important to note that changes in the business mix may affect the Company-wide profit margin.

Key Financial Metrics

【Profitability】The Operating Income margin was 14.7%, down from 15.3% in the previous year, while the Net Income margin was 10.3%, slightly down from 10.9% in the previous year. ROE was 8.5%, down from 9.2% in the previous year, with the 5.3% increase in net assets to ¥56.26B also acting as a dilution factor.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥7.08B, approximately 1.5 times Net Income of ¥4.78B, indicating strong cash backing for earnings.【Investment Efficiency】Capital expenditures were ¥3.53B, equivalent to 1.35 times depreciation and amortization of ¥2.61B. While this indicates an active approach to expanding production capacity, it is also compressing Free Cash Flow in the short term.【Financial Soundness】The Equity Ratio was extremely high at 81.9%, while interest-bearing debt was negligible, indicating a conservative and stable financial foundation.

Cash Flow Analysis

Operating Cash Flow was ¥7.08B, down 6.0% from ¥7.53B in the previous year. An increase in inventories (¥0.38B) and a decrease in trade payables (¥0.36B) placed a cash burden on working capital, while a decrease in trade receivables (¥0.45B) contributed to cash generation. Investing Cash Flow was an outflow of ¥4.15B, primarily consisting of ¥3.53B in capital expenditures, indicating that investment is progressing at a level exceeding depreciation and amortization. Financing Cash Flow was an outflow of ¥2.70B, mainly attributable to dividend payments of ¥2.58B. As a result, Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was ¥2.93B, compressed from the previous year due to the expansion of capital expenditures. OCF provides ample coverage for dividends, and no concerns are apparent regarding liquidity management.

Earnings Quality

Non-operating income and expenses resulted in a surplus of ¥0.18B, primarily consisting of recurring income such as dividend income of ¥0.07B, with limited one-time characteristics. Extraordinary income of ¥0.05B and extraordinary losses of ¥0.05B, including losses on disposal of fixed assets, were nearly offset and had only a limited impact on the change from Ordinary Income to Net Income. Operating Cash Flow of ¥7.08B exceeded Net Income of ¥4.78B, indicating strong cash backing for earnings and no excessive dependence on accruals (non-cash income recognized under the accrual basis). Comprehensive Income was ¥5.39B, exceeding Net Income, supported by positive changes in valuation differences on securities and adjustments related to retirement benefits. Based on the above, current-period earnings can be assessed as reflecting the Company’s recurring earning power from its core operations.

Earnings Forecast and Guidance

The forecast for the next fiscal year calls for revenue of ¥11.82B (+1.2% YoY), Operating Income of ¥1.29B (△12.8%), Ordinary Income of ¥1.32B (△13.0%), and EPS of ¥54.30. While revenue is expected to increase within a broadly flat range, earnings are projected to decline by double digits, suggesting that the trend toward lower profit margins due to rising costs and changes in the business mix is expected to continue into the next fiscal year. The annual dividend forecast is ¥100.

Shareholder Returns

The annual dividend consists of an interim dividend of ¥50 and a year-end dividend of ¥95, for a total of ¥145, resulting in a Payout Ratio of 49.9%. Share repurchases remained negligible (¥0.01B), meaning that shareholder returns are effectively centered on dividends. Dividend payments of ¥2.58B represented 36.5% of OCF of ¥7.08B, providing ample cash flow coverage for dividends. The Company’s net cash financial foundation, including cash and deposits of ¥21.73B and negligible interest-bearing debt, also supports dividend sustainability. For the next fiscal year, the Company has indicated a dividend forecast of ¥100, a decrease from the current-period actual dividend of ¥145.

Risk Factors

1. Declining profitability in the core business: The Electrical Materials and Piping Materials Business accounts for 76.0% of the revenue mix, but revenue declined △0.1% YoY and segment profit declined △6.4% YoY. This creates a structure in which demand and cost trends in this business have a significant impact on consolidated performance.

2. Higher inventory levels: Inventories increased 4.8% YoY to ¥5.08B, becoming a working capital burden on OCF. Inventory accumulation while revenue remains broadly flat requires monitoring of inventory efficiency and valuation risk.

3. Margin pressure from changes in the business mix: While the high-margin Electrical Materials and Piping Materials Business, with a profit margin of 17.3%, has stagnated, the relatively lower-margin Wiring Devices Business, with a profit margin of 10.8%, has expanded. Changes in the business mix may therefore affect the Company-wide profit margin.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Company’s Operating Income margin and Net Income margin significantly exceed the industry median, indicating that its profitability is at a superior level within the industry.

Growth and Capital Efficiency

The Company’s revenue growth rate is slightly below the industry median, indicating that top-line growth is below the average level within the industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The Operating Income margin of 14.7% and Net Income margin of 10.3% exceed the industry median. Maintaining relatively high profitability despite rising costs is a key takeaway from the financial results.

2. ROE declined to 8.5% from the previous year. While the Company’s substantial equity and cash-and-deposits base enhances financial safety, capital efficiency remains relatively constrained.

3. Although OCF exceeds Net Income, it declined YoY. The impact of higher inventories and expanded capital expenditures on cash flow efficiency should be monitored continuously in future financial results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,642–¥2,787 at a ±1% change in the cost of equity, and ¥2,692–¥2,727 at a ±0.1 change in ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value will be below book value per share.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly available 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 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 available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional where necessary.

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