Shirai Electronics Swings to ¥16 Million Q1 Net Loss on Back Consumption Tax Charge; Operating Profit Down 32%

Shirai Electronics Industrial Co., Ltd. (TSE: 6658), a Shiga Prefecture-based manufacturer of printed wiring boards, reported consolidated results for the first quarter of the fiscal year ending March 31, 2027 (April 1 – June 30, 2026) under Japanese GAAP. Net sales rose 1.9% to ¥7,039 million, but operating profit fell 31.6% to ¥379 million, ordinary profit dropped 45.6% to ¥271 million, and the company swung to a loss attributable to owners of the parent of ¥16 million, against a ¥341 million profit a year earlier. Basic loss per share was ¥1.08, versus earnings of ¥22.87. There were no dilutive securities, and the quarterly statements were not reviewed by an auditor.

A ¥128 million back-tax charge did the damage

Operating profit was still comfortably positive, so the swing into the red opened up entirely below the operating line, in two places. First, non-operating expenses nearly doubled to ¥119 million from ¥63 million, driven by a foreign-exchange loss of ¥71 million (against ¥11 million a year earlier) and a ¥33 million equity-method investment loss (¥22 million); interest expense was ¥13 million, against ¥19 million. Non-operating income of ¥11 million, including a ¥3 million gain on debt forgiveness, only partly offset that, leaving ordinary profit down 45.6%. Second, extraordinary losses of ¥130 million — almost all of it a ¥128 million charge for prior-period consumption tax, which management explicitly describes as unplanned — cut pre-tax profit to ¥141 million from ¥495 million. Income taxes of ¥155 million then exceeded that pre-tax figure, producing a quarterly net loss of ¥13 million; after ¥2 million attributable to non-controlling interests, the loss attributable to owners of the parent came to ¥16 million.

Car electronics holds up, but raw materials bite

The core printed wiring board segment lifted sales 1.3% to ¥6,860 million but saw segment profit fall 34.4% to ¥365 million. Order intake in the main car-electronics field held firm, yet raw-material supply constraints limited output, and a sharp rise in raw-material prices and in purchase prices from OEM partners more than offset continuing productivity and cost-reduction work. The smaller inspection equipment and solutions segment grew sales 3.6% to ¥156 million as trade-show appearances brought in new orders, but higher procurement and development costs cut segment profit 37.8% to ¥10 million. An "other" category, made up of a transport business, added ¥71 million of sales and ¥1 million of profit. Management characterises the printed wiring board industry as operating in a tough environment shaped by cost-push inflation in raw materials and by supply constraints arising from tight supply-demand conditions, with a weaker yen pushing import prices higher.

Guidance untouched — and it already assumes a steep fall

Shirai left its full-year FY3/2027 forecasts unchanged from the numbers published with the FY3/2026 results on May 12, 2026: net sales of ¥29,000 million (−0.4%), operating profit of ¥850 million (−58.1%), ordinary profit of ¥800 million (−56.1%) and profit attributable to owners of the parent of ¥600 million (−54.2%), for EPS of ¥40.01. Q1 operating profit represents 44.7% of that full-year operating profit target — a fast start, but against a deliberately low bar, and management expects high raw-material prices and tight supply to keep pressure on margins for some time. The group also flags that FY3/2027 sales and profit are on course to fall short of the medium-term plan targets it published in May 2024, while pointing to an active push into growth markets in ASEAN and India, efficiency and labour-saving investment in production equipment and systems, and a search for new alliances. It says it will disclose any revision to guidance promptly if the outlook changes.

Dividend still set to be cut to ¥20

The dividend forecast was likewise left unchanged. Shirai plans an annual dividend of ¥20.00 per share for FY3/2027 — no interim payment and ¥20.00 at the year-end — down from the ¥35.00 paid for FY3/2026, which was itself all paid at the year-end. Against forecast EPS of ¥40.01, the reduced payout equates to a ratio of roughly 50%.

Borrowings fund the balance sheet; equity ratio slips

Total assets grew ¥821 million from the March year-end to ¥20,007 million. Current assets rose ¥814 million to ¥11,266 million, led by a ¥615 million build in cash and deposits to ¥1,442 million and a ¥106 million rise in inventories; non-current assets were broadly flat at ¥8,740 million. Total liabilities rose ¥976 million to ¥9,052 million, with current liabilities up ¥1,145 million to ¥8,023 million as short-term borrowings jumped ¥1,066 million to ¥2,079 million and electronically recorded obligations rose ¥148 million, partly offset by a ¥103 million fall in notes and accounts payable and a ¥284 million drawdown of the bonus provision. Non-current liabilities fell ¥169 million to ¥1,029 million. Net assets slipped ¥155 million to ¥10,954 million, as a ¥541 million fall in retained earnings outweighed a ¥298 million gain in the foreign-currency translation adjustment, and the equity ratio fell to 54.0% from 57.1%. No quarterly cash flow statement was prepared; depreciation was ¥228 million, up from ¥212 million. Comprehensive income was ¥369 million, against a negative ¥56 million a year earlier, helped by ¥383 million of other comprehensive income led by a ¥239 million translation gain.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.