Power Tool & Compact Equipment Majors FY2026 Full Year: Takeuchi beats Makita on margins

During the fiscal year, four key themes shaped the machinery sector:

• Weak yen boosts sales: Foreign exchange tailwinds supported revenue growth for both companies.
• Resilient overseas demand: Despite high interest rates delaying a full recovery in housing markets, infrastructure demand remained solid.
• Rising raw material and operational costs: Impact from additional US tariffs and escalating labor expenses weighed on earnings.
• Focus on capital efficiency: Both firms shifted toward enhancing shareholder returns, either by increasing payout ratios or introducing interim dividends.

In the face of headwinds from a slowing construction market, the key challenge was how effectively each company could deliver value.

In this period's comparison, Takeuchi demonstrated extraordinary earning power.

Its revenue reached 225.3 billion yen (up 5.7% year on year), while operating profit rose to a record 37.7 billion yen (up 1.5%). This yielded an industry-leading operating margin of 16.7%. The company successfully offset a 5.13 billion yen tariff cost increase in the US through effective pricing strategies.

Conversely, Makita, despite its larger scale, struggled on the profitability front.

While maintaining its market-leading revenue of 777.6 billion yen (up 3.2%), its operating profit fell 2.2% to 104.7 billion yen. Rising advertising and labor costs squeezed its operating margin down to 13.5%.

Both companies implemented distinctive strategies aimed at future growth and shareholder returns.

Makita made a dramatic shift in its capital allocation policy, raising its consolidated dividend payout ratio to 50% or higher in a bid to improve its lagging price-to-book ratio (PBR). Operationally, the company is accelerating its transition from gas-powered engines to its ' 40Vmax ' rechargeable cordless product line.

Meanwhile, Takeuchi decided to introduce interim dividends to establish twice-a-year payouts, strengthening shareholder returns. Backed by its strong market share in Europe and North America, the company continues to maintain robust pricing power.

Both companies face several common risks moving forward:

• Currency fluctuations: The risk of a significant earnings decline if the yen's weakness reverses.
• US tariff policies: Concerns that further protectionist tariffs could damage export profitability.
• Rising labor and marketing costs: Increasing expenses associated with global talent acquisition and stiffening competition.
• Delayed global housing investment: Prolonged high interest rates dampening overall construction demand.

For those planning their careers, both companies offer highly attractive paths.

Makita's strengths lie in its overwhelming product lineup and extensive global footprint. As a pioneer in cordless power tools, employees can work at the forefront of environmental sustainability. Its upgraded capital policy also raises expectations for future corporate value growth.

Takeuchi is an excellent company boasting a high operating margin run by a lean, highly efficient workforce. With a dominant presence in North America and Europe's global niche markets for compact construction machinery, it is an ideal fit for young professionals eager to build a career on the global stage.