Construction equipment maker Takeuchi revised its full-year earnings forecast upward for the fiscal year ending February 2027. The company also announced a dividend increase and plans to buy back shares.
The company significantly raised its consolidated full-year performance forecast for the fiscal year ending February 28, 2027. Sales are now projected at 261 billion yen, an increase of 17 billion yen from the previous forecast of 244 billion yen, representing a 7.0% rise year on year. In terms of profitability, operating income is expected to reach 44.5 billion yen, up 7.2 billion yen from the prior estimate of 37.3 billion yen, marking a 19.3% increase. Ordinary income is forecast at 44.2 billion yen (21.1% increase), and net income at 31.5 billion yen (21.6% increase).
Regional sales volume forecasts show steady performance in North America, with growth of 5.0% in the first half and 1.2% in the second half, resulting in a full-year forecast of 3.1%. This strength is largely attributed to robust sales to rental companies. The European market is also expected to grow by 6.0% for the full year as recovery trends emerge in the second half. In contrast, the Asia-Oceania region will see continued slowdowns into the second half due to the business closure of an Australian distributor, though this remains within initial expectations.
A key driver of profit growth is benefits from US tariff refunds, which are expected to boost operating income by 6.8 billion yen for the full year. Additionally, the strengthening yen against the dollar has further supported earnings. While headwinds such as higher fuel surcharges due to crude oil prices, increased ocean freight rates from Panama Canal restrictions, and expanded discounts in the US market were factored in, the company secured revenue strength that far exceeds these costs.
Strengthening profitability has led Takeuchi to clarify its shareholder return policy and revise its current dividend forecast. The total annual dividend will be increased from 220 yen to 245 yen. Specifically, the final dividend is set at 135 yen, up from 110 yen, formally implementing a shift to a semi-annual dividend system with interim and final payments. Consequently, the company aims to gradually raise the consolidated payout ratio to 40%.
The company prioritizes allocating cash flow to growth investment while maintaining working capital equivalent to two to two and a half months of sales. Under this policy, it determined to strengthen shareholder returns for the current period based on profit levels and financial condition.
Additionally, the acquisition of treasury shares on a scale of 15 billion yen has been decided. The upper limit for the number of shares acquired is 2.2 million (representing 4.8% of issued shares), with the period running from October 14, 2026, to the end of the current term, February 19, 2027. This acquisition is based on current shareholder return policies, considering stock price levels and capital efficiency.
Furthermore, the grant of restricted stock to the employee stock ownership association was also decided. The distribution date is February 19, 2027, with the number determined by market trends (maximum 49,900 shares). This aims to improve employee welfare and corporate value, with dilution effects limited to approximately 0.10% of total issued shares.
The exchange rate assumptions in this forecast are set significantly towards a weaker yen compared to the previous year's actual rates. Based on first-half actuals, the US dollar is 159.60 yen, the British pound 213.14 yen, and the euro 184.84 yen. Second-half assumptions are set at the US dollar 150.00 yen, British pound 204.00 yen, euro 175.00 yen, and yuan 22.30 yen. Compared to the previous year's full-year assumptions (e.g., 147 yen per dollar), the figures reflect improved profitability under a significant weaker yen premise.
Future risks include further increases in fuel surcharges due to sustained high crude oil prices and logistics cost hikes from Panama Canal restrictions. In North America, while dealer sales faced a period of weakness due to housing market downturns and high interest rates, demand expansion from data center construction and energy infrastructure projects is supporting business.
For the Asia-Oceania region, the impact of the Australian distributor's closure is expected to last into the second half. While Australian sales were significantly downgraded in the first half, they are projected to recover to previous forecast levels in the second half. Consolidated sales volumes are forecast to increase by 4.0% for the full year, achieving growth in both volume and revenue.
Analyst take
Takeuchi's approach is characterized by focusing on structural enhancement of shareholder returns rather than overvaluing temporary profit factors like tariff refunds. The shift to semi-annual dividends and the 40% payout ratio target suggest an intent to lower long-term capital costs and enhance corporate value. Investors should note the high proportion of one-off non-operating income (6.8 billion yen tariff refund) but also recognize that operating margin improvement outpaces sales growth, indicating leverage effects.
Uncertainty remains regarding whether expanded discounts in US sales promotions will persist into the second half and the pace of recovery in the Australian market. However, the treasury stock buyback size, reaching about 5% of issued shares, is substantial and may provide short-term stock price support. Attention should be paid to the sustainability of US-related demand, with potential market expectation fluctuations depending on how well second-half results exceed initial forecasts.
