Nifco Q1 FY2027: Revenue rises 6.3%, operating profit slips 1.6%

Nifco reported first-quarter revenue of ¥90.9 billion, up 6.3% year-on-year, driven by a recovery in domestic vehicle production and favorable currency effects in its main plastic molded products business. However, operating profit slipped 1.6% to ¥12.8 billion and net profit attributable to owners of the parent fell 9.6% to ¥8.9 billion, pressured by higher raw material and personnel costs. Ordinary profit rose 7.2% to ¥13.5 billion, boosted by foreign exchange gains.

The company maintained its full-year forecast, projecting revenue of ¥367 billion (up 4.1%) and operating profit of ¥50.8 billion (up 5.7%). Management views the first-quarter profit decline as largely within expectations. Nifco also announced a 2-for-1 stock split effective October 1 and an effective dividend increase, underscoring its commitment to shareholder returns.

Nifco operates two segments: Plastic Molded Products and Bed & Furniture.

Plastic Molded Products, accounting for about 90% of total revenue, saw sales rise 6.3% to ¥81.6 billion. Domestic growth was supported by higher vehicle production and sales, while overseas revenue benefited from yen depreciation. However, segment profit declined 1.5% to ¥12.8 billion as inflation and rising labor costs outpaced cost-reduction efforts.

Bed & Furniture achieved both revenue and profit growth, with sales up 5.8% to ¥9.3 billion and segment profit up 5.7% to ¥1.4 billion. Domestic sales to retailers were steady, though hotel demand softened. Overseas, strong hotel demand in mainland China and robust performance in Hong Kong and Taiwan lifted results, more than offsetting higher material costs.

Total assets at end-June 2026 stood at ¥390.1 billion, down ¥3.5 billion from the prior fiscal year-end, mainly due to a decline in cash and deposits and sale of securities. Liabilities decreased by ¥5.1 billion to ¥88.9 billion, reflecting lower income tax payable and bonus provisions. Net assets rose ¥1.7 billion to ¥301.2 billion, pushing the equity ratio to 76.6% (from 75.3%).

On a post-split basis, Nifco plans an interim dividend of ¥56 and a year-end dividend of ¥28, equivalent to ¥112 per share on a pre-split basis, representing an effective ¥2 increase from the prior year’s ¥110. The company appears committed to maintaining its consecutive dividend growth record. No new share buyback or other capital policy measures were announced.

Key risks facing Nifco include:

• Elevated geopolitical tensions, such as in the Middle East, and commodity price volatility
• Sluggish auto markets in China and the potential for a slowdown in the United States
• Continued pressure from rising raw material and labor costs, making progress on cost pass-through critical
• Exchange rate fluctuations, with yen appreciation posing a downside risk to ordinary profit

Nifco aims to address these headwinds through cost reduction and productivity improvements, but the external environment remains highly uncertain.

Nifco left its FY2027 guidance unchanged, forecasting revenue of ¥367 billion (up 4.1% YoY), operating profit of ¥50.8 billion (up 5.7%), ordinary profit of ¥50 billion (down 2.5%), and net profit of ¥34 billion (down 0.2%). Despite a first-quarter operating profit dip, the company expects a return to growth as auto production recovers and cost-saving measures take hold. Its foreign exchange assumptions are conservative, leaving room for an upward surprise in ordinary profit.