JSW Q1 FY2027: Orders Up 19%, Revenue Falls 14%, Profit Rises 11%

JSW's consolidated revenue for the first quarter ended June 30, 2026, dropped 13.9% year on year to ¥58.17 billion, mainly due to a pullback in FPD equipment shipments after the previous year's concentration and a decline in plastics manufacturing and processing machinery. Despite the revenue fall, operating profit rose 11.2% to ¥5.86 billion, ordinary profit increased 8.8% to ¥6.11 billion, and net income attributable to parent shareholders jumped 35.4% to ¥5.93 billion. The profit gains were driven by a gross profit margin improvement to 27.4% (from 22.6% a year earlier) and a special gain of ¥2.07 billion from the sale of investment securities. Orders received surged 19.0% to ¥77.58 billion, lifting the order backlog 14.3% to ¥450.89 billion, signaling a robust pipeline for future revenue.

Industrial Machinery Business: Orders jumped 23.6% year on year to ¥65.08 billion, driven by strong demand for plastics machinery in China and India, as well as ELA equipment for FPD and presses for printed wiring boards. However, revenue fell 16.5% to ¥48.24 billion, partly due to the pullback in FPD equipment deliveries and lower plastics machinery sales, although defense-related equipment increased. Operating profit rose 5.4% to ¥4.54 billion, with an EBITDA margin of 12.3%.

Materials & Engineering Business: Orders grew 2.3% to ¥12.05 billion, supported by steady demand for power generation and nuclear applications. Revenue increased 2.7% to ¥9.48 billion, and operating profit climbed 11.0% to ¥1.86 billion, maintaining a high EBITDA margin of 27.9%.

The smaller Other segment posted revenue of ¥437 million (-21.0%) and an operating loss of ¥17 million.

Total assets at quarter-end stood at ¥423.83 billion, down ¥6.14 billion from the end of FY2026, primarily due to a reduction in trade receivables and the sale of investment securities. Liabilities decreased ¥7.57 billion to ¥208.57 billion, helped by a decline in contract liabilities. Net assets gained ¥1.43 billion to ¥215.26 billion, lifting the equity ratio to 50.4% (from 49.4%). JSW maintained its annual dividend forecast of ¥92 per share (¥46 interim, ¥46 year-end), unchanged from the previous year. To bolster liquidity and support growth investments, the company issued a total of ¥25 billion in straight bonds in July 2026: ¥17 billion in five-year notes at 2.35% and ¥8 billion in ten-year notes at 3.275%.

JSW left its full-year forecasts for FY2027 unchanged from the May 13, 2026 guidance. The company expects revenue of ¥310.0 billion (+12.8% YoY), operating profit of ¥27.0 billion (+6.7%), ordinary profit of ¥26.0 billion (-0.2%), and net income of ¥19.0 billion (-1.2%). The strong order trends provide a solid foundation, though the slight decline in ordinary and net profit reflects anticipated higher costs and normalization after last year's one-off gains.

Uncertainty persists around the impact of past quality misconduct at a subsidiary. Contingent liabilities for potential compensation costs have not been recognized in the financial statements because a reasonable estimate cannot yet be made at this stage. Future developments could negatively affect earnings. In addition, the Industrial Machinery Business faces large fluctuations in FPD equipment shipments, making quarterly revenue lumpy. The Materials & Engineering Business depends on demand from the power and nuclear sectors, which can be influenced by energy policy shifts and commodity price trends. Exchange rate risk remains a constant factor.

On April 1, 2026, JSW absorbed its wholly owned subsidiary Japan Steel Works M&E Co., Ltd., in a merger aimed at accelerating integrated operations of the Materials & Engineering business, generating group synergies, and strengthening corporate governance. M&E, established in a 2020 reorganization, had already achieved a stable profitable base; the merger is seen as a step toward sustainable growth and reinforces JSW's commitment to quality improvement and governance enhancement following past issues.