Tanaka Seimitsu Kogyo Q1 Net Profit Nearly Triples to ¥1.44 Billion on ¥763 Million Securities Sale Gain

Tanaka Seimitsu Kogyo Co., Ltd. (TSE: 7218), a Toyama-based maker of precision engine and transmission components for the automotive industry, reported consolidated results for the first quarter of the fiscal year ending March 2027 — the three months to June 30, 2026 — under Japanese GAAP. Net sales rose 18.5% to ¥11,668 million, operating profit gained 14.6% to ¥783 million and ordinary profit rose 20.8% to ¥916 million, while net profit attributable to owners of the parent almost tripled, up 197.9% to ¥1,443 million. Basic earnings per share were ¥147.97, against ¥50.02 a year earlier; there were no dilutive securities.

A ¥763 million securities sale, not the operating line, drove the profit surge

The unusual gap between ordinary profit of ¥916 million and net profit of ¥1,443 million is explained entirely by an extraordinary item. The company booked ¥778 million of extraordinary income in the quarter, of which ¥763 million was a gain on the sale of investment securities; the balance was ¥14 million of compensation received and under ¥1 million from the disposal of fixed assets. Extraordinary losses were negligible at ¥3 million, so pre-tax profit reached ¥1,691 million, up 127.9%. The balance sheet corroborates the disposal: investment securities fell from ¥3,386 million at the March year-end to ¥2,229 million at June 30, a ¥1,157 million reduction consistent with an unwinding of cross-shareholdings. After a light ¥72 million tax charge and ¥176 million attributable to non-controlling interests, ¥1,443 million was left for parent shareholders. Comprehensive income multiplied more than eight-fold to ¥1,494 million from ¥181 million.

HEV parts power an 18.5% revenue gain

Underlying growth came from two of the group's three segments. Parts manufacturing, the core precision-machining business, grew sales 22.9% to ¥9,027 million as newly launched hybrid-vehicle components ramped up, and segment profit jumped 49.0% to ¥776 million. Mobility, the group's vehicle sales and service arm, grew sales 20.2% to ¥2,465 million on stronger new-car volumes, but higher depreciation and selling expenses cut segment profit 42.1% to ¥27 million. Solutions, which supplies factory-automation equipment and automated guided vehicles, fell back hard against a year-earlier quarter that carried large one-off orders: sales dropped 60.6% to ¥175 million and the unit swung to a ¥45 million segment loss from a ¥137 million profit. Management noted that automobile sales fell year on year in China but ran ahead of the prior year elsewhere, against a backdrop of continued uncertainty over U.S. tariff policy and currency swings.

Two new subsidiaries join the mobility business

Two companies entered the consolidation scope during the quarter, both assigned to the mobility segment, and none left it. T-Start Co., Ltd. was created by Tanaka Seimitsu Kogyo itself through an incorporation-type company split, and T-Arc Co., Ltd. was acquired through a share purchase and placed under T-Start. The additions are small relative to the group: goodwill on the balance sheet actually slipped from ¥50 million to ¥43 million as ¥9 million of amortisation outweighed anything newly recognised. Quarterly depreciation, by contrast, rose to ¥743 million from ¥583 million as the enlarged asset base and recent capacity investment fed through.

Guidance cut on operating profit, lifted on the bottom line

The company revised its full-year forecasts on the same day in a separate disclosure, replacing the guidance issued on May 14, 2026. For the year to March 2027 it now expects net sales of ¥45,300 million (+3.4%), operating profit of ¥1,800 million (−24.1%), ordinary profit of ¥1,900 million (−25.6%) and net profit attributable to owners of the parent of ¥2,100 million (+75.8%), with EPS of ¥216.27. The shape of the revision mirrors the quarter itself — the operating and ordinary lines guided lower, the bottom line guided sharply higher on the one-off gain. Measured against those targets, the first quarter delivered 25.8% of forecast sales, 43.5% of operating profit and 68.7% of the full-year net profit goal.

Dividend held at ¥34 as the balance sheet strengthens

The dividend forecast is unchanged from the previous guidance at ¥34.00 per share for FY3/2027 — ¥17.00 at the half-year and ¥17.00 at the year-end — up from the ¥32.00 paid for FY3/2026. Total assets edged up ¥183 million to ¥47,906 million, with cash and deposits climbing to ¥11,494 million from ¥9,619 million. Liabilities fell ¥856 million to ¥13,716 million as interest-bearing borrowings were reduced: short-term borrowings dropped to ¥3,540 million from ¥3,860 million and the current portion of long-term debt to ¥619 million from ¥829 million. Net assets rose ¥1,039 million to ¥34,190 million, lifting the equity ratio to 56.5% from 54.4% and book value per share to ¥2,776.04 from ¥2,661.42.

Honda's stake falls to 15% after the self-tender

A material subsequent event sits outside the quarter's numbers. A tender offer for the company's own shares, resolved by the board on May 14, 2026, closed on June 11 and settled on July 3, 2026. Honda Motor Co., Ltd. — previously Tanaka Seimitsu Kogyo's largest shareholder and an "other affiliated company" — tendered 1,070,000 shares, all of which were purchased. Honda's voting rights fell from 23,760 units, or 24.36%, to 13,060 units, or 15.04%, and it ceased to qualify as an other affiliated company from the July 3 settlement date. Because settlement fell after the June 30 balance-sheet date, the buyback is not yet reflected in treasury stock, which stood at just 9,776 shares at quarter-end.

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.