NTN Q1 FY2027: Operating profit up 19%, full-year forecast unchanged

Revenue rose 6.7% year-on-year to ¥212.2 billion, operating profit climbed 19.2% to ¥8.3 billion, recurring profit surged 57.5% to ¥6.3 billion, and net profit attributable to owners of the parent jumped 61.9% to ¥1.9 billion. The gains were driven by yen depreciation effects, a recovery in aftermarket sales, and progress on cost reduction and price pass-through measures. On the other hand, OEM demand in the Americas weakened, and the company booked a ¥1.05 billion business restructuring loss (¥0.95 billion in Americas, ¥0.1 billion in Europe). Despite the net profit jump, the quarterly net margin remained low at 0.9%. Recurring profit growth outpaced operating profit thanks to lower interest expenses and equity-method investment gains. Comprehensive income improved sharply to ¥6.88 billion from ¥0.79 billion a year earlier, largely due to a favorable swing in foreign currency translation adjustments.

NTN reports results by region (Japan, Americas, Europe, Asia and other) and by business (bearings and other, CVJ axles). All regions posted year-on-year revenue growth, helped by the weaker yen, but operating profit performance was mixed. Japan saw revenue rise 3.1% to ¥52,441 million, with segment profit surging 772% to ¥4,168 million, boosted by aftermarket bearings and CVJ axle recovery. The Americas reported a 7.2% revenue increase to ¥70,222 million, but segment profit slumped 68.1% to ¥519 million as OEM demand weakened. Europe revenue grew 8.7% to ¥45,796 million, but segment loss widened to ¥352 million from a loss of ¥327 million a year ago, as strong aftermarket was offset by sluggish automotive OEM axles. Asia and other revenue rose 7.2% to ¥43,819 million, segment profit increased 13.2% to ¥4,343 million, maintaining a high margin of 10.2%. By business, the bearings and other segment posted revenue of ¥89,984 million, up 8.4%, and operating profit of ¥2,979 million, up 31.6%. The CVJ axle segment saw revenue of ¥122,294 million, up 5.4%, and operating profit of ¥5,339 million, up 13.3%.

Total assets at quarter-end stood at ¥866,990 million, down 1.3% from the previous fiscal year-end, mainly due to declines in trade receivables and cash. Liabilities fell 2.7% to ¥552,022 million as debt repayments progressed; interest-bearing debt decreased by ¥16,777 million to ¥302,396 million. Net assets rose 1.1% to ¥314,968 million, lifting the equity ratio to 34.6% from 33.8%. Operating cash flow came in at ¥26,457 million, up 42.2%, aided by an increase in trade payables and higher pretax profit. Investing cash flow was an outflow of ¥11,775 million, mainly for capex, while financing cash flow saw a ¥22,096 million outflow due to debt repayment and dividends. Cash and equivalents ended at ¥125,160 million, down 4.6% from end of FY2026, but liquidity remains healthy. The company plans to raise the annual dividend to ¥13.00 per share (from ¥11.00), with interim and year-end payments of ¥6.50 each.

Key risks include uncertain demand, especially from OEM customers in the Americas and potential sluggishness in industrial machinery; Europe’s persistent operating losses (five consecutive quarters) despite restructuring efforts; an ongoing competition law lawsuit with Renault in France, with claims of €62.49 million (about ¥9.9 billion) that could result in a significant loss; foreign exchange volatility, as a sharp yen appreciation would erode revenue and profit; and execution risk around the structural reforms under the new medium-term plan, which may involve additional costs.