USS Q1 FY2027: Operating profit up 9.8%, lifts full-year forecast

USS achieved record-high first-quarter results, with revenue of ¥312.56 billion (up 14.1% YoY), operating profit of ¥161.50 billion (up 9.8%), and net income of ¥109.46 billion (up 7.0%). Total auction listings rose 4.7% to 950,000 units, and sales volume increased 8.4% to 619,000 units, lifting the success rate to 65.1% from 62.9%. The CIS online bidding system’s monthly fee revision also contributed. All three business segments posted operating profit growth: the core auto auction business remained highly profitable at a ~65% margin, the recycling segment saw profit surge 4.3-fold, and the used vehicle purchase & sales business swung back into the black. Reflecting this momentum, management raised both second-quarter cumulative and full-year forecasts.

Auto Auction: External revenue rose 8.5% to ¥24,206 million, and operating profit grew 7.6% to ¥15,728 million. Higher listing and sales volumes, along with the CIS monthly fee increase, drove the gains. Operating margin held around 65%.

Used Vehicle Purchase & Sales: Revenue climbed 14.0% to ¥3,262 million, and the segment posted an operating profit of ¥65 million, reversing a ¥25 million loss a year earlier, thanks to stronger unit sales at ‘Rabbit’ purchase stores and improved per-vehicle margins amid favorable auction conditions.

Recycling: External revenue soared 80.9% to ¥3,421 million, and operating profit surged 433.8% to ¥284 million, fueled by higher scrap metal volumes, elevated metal prices, and an increase in large-scale demolition projects.

Total assets at quarter-end stood at ¥243,031 million, down ¥27,098 million from the previous fiscal year-end, largely due to a ¥28,744 million decrease in cash and deposits. Liabilities fell ¥6,405 million to ¥52,758 million, mainly reflecting lower income tax payables. Net assets contracted ¥20,693 million to ¥190,273 million, as ¥10,946 million in quarterly net profit was more than offset by ¥13,699 million in dividend payments and ¥17,999 million in share buybacks. The equity ratio remained high at 76.8%.

Operating cash flow was ¥4,309 million, compared with ¥3,966 million a year earlier. Investing cash flow showed an outflow of ¥845 million, primarily for intangible assets. Financing activities used ¥31,808 million, driven by the buyback and dividend payout.

In May 2026, USS executed a large-scale ToSTNeT-3 repurchase of 10.33 million shares for ¥17,999 million. The company plans an annual dividend of ¥56.40 per share, up ¥1.70 year-on-year. Additionally, it re-introduced a trust-type employee shareholding incentive plan in July 2026, disposing 502,500 treasury shares.

Following the strong first quarter, USS upgraded its consolidated forecasts for the fiscal year ending March 2027. Revenue is now forecast at ¥121,800 million (up 7.0% from the prior year), compared with the previous forecast of ¥119,800 million. Operating profit is expected to reach ¥62,600 million (up 4.6%), versus the earlier ¥61,000 million estimate, and net income attributable to owners of the parent is projected at ¥42,600 million (up 3.0%), from ¥41,600 million.

Auction listing volume was raised to 3.616 million units (from 3.56 million) and sales volume to 2.396 million units (from 2.362 million), while the success rate assumption was unchanged at 66.3%. The company also raised its second-quarter cumulative forecasts, signaling confidence in sustained used-car market momentum through the first half and beyond.

Several risks could affect performance. The used-car auction market is sensitive to new car sales trends and broader economic conditions: a domestic demand slowdown or weaker export markets could directly hit listing volumes and success rates. Geopolitical risks, such as disruptions in the Strait of Hormuz that reduced exports to the UAE, cannot be ignored. Metal prices and scrap market volatility may impact the recycling segment’s contribution. Intensifying competition from other auction platforms and pressure on fees as internet auctions expand also pose challenges. Furthermore, the large share buyback and dividend payments have reduced cash reserves, slightly diminishing financial flexibility, which must be balanced against future growth investments.

In May 2026, the board approved a ToSTNeT-3 purchase of 10.33 million shares, equivalent to roughly 2.2% of total outstanding shares, at a total cost of ¥17,999 million. This brought cumulative treasury stock to ¥27,001 million, expected to enhance per-share value.

The annual dividend was raised by ¥1.70 to ¥56.40 per share (interim ¥28.20, year-end ¥28.20), continuing a track record of stable increases.

Additionally, in July 2026, USS re-introduced a trust-type employee shareholding incentive plan, placing 502,500 treasury shares with Nomura Trust and Banking. The measure aims to strengthen employee incentives over the medium to long term, aligning their interests with shareholders and supporting corporate value improvement from both capital-return and human-capital perspectives.