Makita Q1 FY2027: Revenue, Profit Rise on Weak Yen; Full-Year Outlook Unchanged

Makita’s first-quarter revenue grew 10.7% year on year to ¥206.55 billion, driven by a 12.1% jump in overseas sales as the yen weakened against the dollar and euro. Operating profit climbed 17.2% to ¥30.57 billion, with the operating margin improving to 14.8%. Net income rose 18.6% to ¥22.87 billion. A one-time U.S. tariff refund lowered cost of sales, providing a temporary boost to the bottom line.

By region, Europe, which accounts for over half of revenue, saw an 11.2% increase, North America jumped 18.6%, and Central and South America surged 28.1%. The Middle East and Africa region, however, slumped 10.8% due to rising geopolitical risks.

Despite the solid start, Makita noted that high interest rates, labor shortages, and elevated building material costs continue to delay a recovery in construction markets. The company is pushing higher-value cordless tools, including its XGT series and cordless gardening equipment, to underpin demand.

Makita’s operations are divided by region: Japan, Europe, North America, Asia, and Other. In the first quarter, Japan reported external sales of ¥38.43 billion, up 1.8%, with operating profit of ¥6.71 billion, as cordless gardening equipment and the XGT series offset slowing housing starts.

Europe, the largest market with 50.4% of total sales, saw revenue rise 11.2% to ¥104.04 billion, mainly from the weaker euro. Operating profit was ¥8.03 billion, yielding a relatively low margin of 7.7%, reflecting high interest rates and a record heatwave.

North America posted an 18.6% revenue surge to ¥23.31 billion, helped by infrastructure spending and promotional activities tied to the upcoming World Cup. Operating profit jumped to ¥4.60 billion.

Asia recorded sales of ¥8.91 billion, up 11.4%, while operating profit reached ¥6.83 billion, boosted by internal segment transactions. China’s property slump continued to weigh on demand.

The Other segment, which includes Central and South America, Oceania, and the Middle East/Africa, generated ¥31.86 billion in sales with operating profit of ¥918 million. Central and South America sales surged 28.1%, while the Middle East/Africa fell 10.8% on geopolitical tensions.

Consolidated operating profit of ¥30.57 billion includes a ¥3.48 billion adjustment from inter-segment transactions.

Makita maintained its FY2027 (ending March 2027) forecasts, calling for revenue of ¥820.0 billion (up 5.5%), operating profit of ¥110.0 billion (up 5.1%), and net income of ¥81.0 billion (up 2.0%). The company assumes exchange rates of ¥155 per dollar and ¥180 per euro.

First-quarter progress reached 25.2% of the full-year revenue target and 27.8% of the operating profit target, putting the company slightly ahead of a straight-line pace. However, management cited geopolitical uncertainty, resource prices, logistics costs, and monetary policy as reasons for caution.

On dividends, Makita targets a payout ratio of at least 50%. It has already announced an interim dividend of ¥79 per share; the prior year total was ¥150 (¥20 interim, ¥130 year-end).

Total assets stood at ¥1,191.5 billion, up ¥10.3 billion from the end of the previous fiscal year, mainly due to a ¥10.1 billion increase in inventories as the company maintains ample stock to ensure rapid supply. The equity ratio remained extremely high at 84.5%, reflecting a virtually debt-free balance sheet.

Cash flow from operations was a robust ¥31.7 billion. Investing activities generated ¥1.4 billion, while financing activities used ¥37.9 billion, including ¥33.6 billion in dividends and ¥4.1 billion in share buybacks. Cash and equivalents were nearly flat at ¥256.3 billion.

Makita pays an annual dividend at year-end (no interim payment in Q1). The full-year dividend will be determined in line with the 50%-plus payout policy. The company holds treasury shares equivalent to about 8% of outstanding stock, and further buybacks are possible.

Key risk factors highlighted in Makita’s filing include:

• Geopolitics: Deterioration in the Middle East or a Strait of Hormuz blockade could disrupt logistics and hit sales in Middle East/Africa.
• Foreign exchange: The recent profit gains were heavily yen-dependent; a sudden strengthening of the yen would reverse the tailwind. The assumed full-year rates are ¥155/$ and ¥180/€, already stronger than current spot levels.
• Global slowdown: Prolonged high interest rates could further cool construction and housing investment, especially in Europe and North America.
• US trade policy: The Q1 tariff refund was one-off and future trade measures could become a headwind.
• Competition: Intensifying price competition in power tools makes continuous development of high-value products essential.

Makita aims to counter these risks with its global production network (over 92% overseas production) and its technological edge, particularly the XGT cordless platform.

Makita raised research and development spending 16.6% year on year to ¥4.57 billion in the first quarter. The full-year R&D plan is ¥18.5 billion, up about 11% from the previous year. Capital expenditure was ¥4.05 billion, slightly lower than a year earlier, while depreciation stood at ¥6.35 billion.

The full-year capex budget is set at ¥30.0 billion, a 39% increase, focused on automation and efficiency improvements at global production sites and development of new cordless tools. The evolution of the XGT series, aligned with the shift toward electrification and decarbonization, is seen as central to mid- to long-term growth.