IHI (7013) Q1 2027 earnings summary

Executive summary

• Achieved record Q1 earnings with revenue rising 10.9% year-over-year to ¥374.5 billion, driven by strong demand in civil aero engines, nuclear energy, and defense, despite a decline from divested operations and a drop in orders received.

• Operating profit surged to ¥73.2 billion (19.5% margin), up 250.5% year-over-year, aided by demand expansion, improved profitability, and a ¥40.0 billion gain on property sales.

• Profit attributable to owners increased 361.3% year-over-year to ¥53.5 billion.

• Orders received declined 15.0% year-over-year due to a rebound from large energy projects in the prior year and prior period divestitures.

Financial highlights

• Q1 FY2026 revenue: ¥374.5B, up ¥36.7B (+10.9%) year-over-year; gross profit: ¥89.4B, up from ¥75.0B.

• Operating profit: ¥73.2B (19.5% margin), up ¥52.3B (+13.3pt); excluding property sales, operating profit was ¥33.1B (8.8% margin).

• Profit attributable to owners: ¥53.5B, up ¥41.9B year-over-year; basic and diluted EPS were ¥50.48 after a 7-for-1 stock split.

• EBITDA: ¥93.8B (25.1% margin), up ¥54.8B year-over-year.

• Cash and cash equivalents at quarter-end were ¥117.0B, down ¥38.0B from the previous fiscal year-end; cash flows from operating activities: ¥(43.2)B, mainly due to working capital increases.

Outlook and guidance

• FY2026 full-year guidance raised: revenue forecast to ¥1,840.0B (+¥10.0B), operating profit to ¥250.0B (+¥10.0B), and profit attributable to owners to ¥172.0B (+¥7.0B).

• Record-high profits expected for the second consecutive year, with strong performance anticipated in Aero Engine, Space & Defense.

• Focus remains on growth in Civil Aero Engine, Defense, and Nuclear Energy, with strategic investments planned.

• Risk buffer of ¥20.0B maintained for potential overseas energy subsidiary restructuring costs.

• Dividend per share forecast for FY2026: ¥23.00 post-stock split.