J-MAX Co.,Ltd. Q4 FY2025 earnings call

Customer Base

• Honda accounts for 61.9% of total revenue, Toyota 11.5%, Nissan 9.9%, and other customers 16.7%, with Honda representing ~60% of total business
• Production volume increased 2.0% YoY at Japanese Honda facilities due to new EV model launches, but fell over 30% YoY in Chinese facilities and 21.3% YoY in Thailand automotive production / 7.1% YoY in Thailand general engine production, leading to an overall group production decline

New Mass Production Launches

• Japan: Started mass production for Honda N-VAN e:, Toyota 4RUNNER, and Mitsubishi OUTLANDER PHEV
• China: Started mass production for multiple Honda models, and has begun mass production of EV-related components for XPeng and CATL alongside traditional Japanese automaker clients, with EV order volume growing steadily
• The company actively pursues new body and battery component orders across all locations, beyond traditional Japanese automaker customers

Quarterly Performance Trend

• Following the typical automotive industry trend of growing sales through the fourth quarter, J-MAX saw fourth quarter sales increase, and structural reform results gradually emerged, pushing operating margin up to 4%
• After three consecutive quarters of operating losses, the company returned to operating profit in Q4, demonstrating that fixed cost cutting and production system review efforts are delivering results

Capital Expenditure & Financial Position

• Full year capital expenditure totaled 8.664 billion yen, increased YoY, primarily for the Okayama factory in Japan and Fujian new factory in China
• Depreciation expense totaled 4.393 billion yen, down YoY, as a result of production capacity optimization as part of structural reform
• Interest-bearing debt totaled 25.078 billion yen, increased for growth capital expenditure but remains within planned ranges; cash and deposits remain stable at 6.565 billion yen, and capital adequacy ratio remains at a healthy level despite a YoY decline
• Operating cash flow was +1.257 billion yen, investing cash flow was -6.457 billion yen, financing cash flow was +5.386 billion yen, and free cash flow was -5.199 billion yen, negative due to special structural reform losses and large capital expenditure for future growth

Mid-Term Management Plan Progress

• The 5-year "J-VISION30" plan launched in FY2024 has two core pillars: strengthening existing business and creating new business; after the 2024 revision, priority themes shifted to transforming into an electrification-focused supplier focused on EV lightweighting, and building a sustainable corporate structure through structural reform, with FY2025 marked as the structural reform phase
• Completed (rated pass): New product development for new businesses, digital-driven process/core technology evolution, next-generation factory construction and manufacturing innovation, DX acceleration for management structure reform, business portfolio transformation for sustainable growth
• Partially completed (rated in progress): Sales expansion through new customer development, sustainability-focused capital policy ESG work is on track but capital policy prioritizes near-term profit security so resources are not yet fully allocated
• New factory progress: Okayama factory completed construction in February 2025, is strategically located for supply across Western Japan, has flexible high-efficiency compatible equipment, and is on track for full mass production starting July 2025; Fujian new factory in Guangzhou started operation in March 2025, has integrated in-house production lines for EV components, and is positioned to strengthen relations and expand orders with CATL, which is headquartered in Fujian
• Technology development: Awarded a new patent for press forming technology for battery module constraint frames that reduces bending radius without cracking, enabling tighter battery cell layout and contributing to vehicle lightweighting, strengthening R&D competitiveness for the company's electrification transformation

Dividend Policy

• The company maintains a target 20% payout ratio, but the current tough business environment means full achievement will take time; FY2025 annual dividend is set at 4 yen per share (2 yen interim, 2 yen year-end), and the same level is planned for FY2026, with dividend increases considered once profit recovery from structural reform is confirmed

1. J-MAX (Japan segment): Revenue decreased due to reduced production at major customers and lower sales of mold equipment. Profit also declined from higher fixed cost burden from lower revenue, changes in production vehicle mix, and increased preparation costs for the Okayama new factory. This segment drives overall group growth through expanding new customers, developing Okayama factory, and leading R&D for future competitiveness. 2. Thailand segment: Revenue decreased due to lower production of automotive and general-purpose engine components for major customers. However, structural reform focused on workforce optimization and mold business contraction drove significant reduction in ordinary loss, as cost reduction efforts offset revenue declines. The segment is strengthening its profit structure through fixed cost cutting amid mature local and regional export markets. 3. Guangzhou (China) segment: Both revenue and profit declined driven by major customer production cuts, despite structural reform efforts including workforce optimization, production capacity adjustment, and sale of unneeded assets from plant restructuring. The segment is expanding its electrification business, including construction of the new Fujian factory focused on EV components to capture growing Chinese EV demand. 4. Wuhan (China) segment: Both revenue and profit declined driven by major customer production cuts, despite structural reform efforts starting this period focused on workforce optimization to cut labor costs and production capacity adjustment to reduce overall costs. The segment is working to build a new revenue base through improving production efficiency, establishing differentiated differentiated material processing technology, and expanding orders from growing EV market. Aggregate group revenue: 47.12 billion yen, 13.3% down year-over-year, 2.4% above internal forecast. The full group reported operating profit of 19 million yen, ordinary loss of 535 million yen, and net loss attributable to parent company shareholders of 3.282 billion yen, impacted by special losses from structural reform.

• For the 2026 March fiscal year, management forecasts total group revenue of 49.0 billion yen, a 4% YoY increase, with operating profit of 1.5 billion yen, ordinary profit of 0.8 billion yen, and net profit attributable to parent shareholders of 0.35 billion yen, expecting a return to full profit across all metrics
• The 2026 fiscal year is positioned as the first year on a steady recovery trajectory after completion of the 2025 structural reform phase, with revenue growth driven by new factory operation despite continued tough external conditions including potential demand slowdown and Chinese EV-driven customer production cuts
• Management expects an ordinary profit improvement of 1.335 billion yen from the FY2025 loss, and 1.48 billion yen operating profit improvement, driven by customer production increases and sustained structural reform cost benefits. Higher depreciation from new factory operation is a partial offset, but sales growth and cost improvement are expected to outpace these headwinds to deliver net profit growth
• Long-term targets for the 2031 March fiscal year remain 70.0 billion yen revenue, 4.0 billion yen operating profit, and 6% ROA. While FY2025 results came in below FY2024 levels due to production cuts and structural reform, management expects a return to growth starting in FY2026, and plans to increase target achievability through new revenue from new businesses/new locations, deeper existing customer relationships, new factory operation, and new EV-focused customer expansion

• Large customer concentration risk: Over 60% of revenue comes from Honda, so production cuts and model mix changes at Honda have an outsize impact on overall group performance. In FY2025, large production cuts at Honda's Chinese and Thailand facilities drove the overall group revenue decline
• External market risk: China is facing accelerating EV shift and economic slowdown, Thailand's domestic auto market is in a sustained downturn, and potential external demand slowdown from trade policy changes create ongoing pressure on overseas production and revenue
• Profit impact risk: Structural reform required recognition of large special losses including deferred tax asset write-downs, fixed asset disposal/impairment losses, and special severance payments, leading to a large full-year net loss in FY2025
• Growth capital risk: Large capital expenditure for new factories increased interest-bearing debt, though debt remains within planned levels, creating near-term balance sheet leverage and depreciation pressure that partially offsets future profit gains
• Revenue expansion progress risk: While EV customer expansion has progressed in Japan and China, large production decline in China has prevented overall top-line growth, leaving the sales expansion strategic pillar partially incomplete

The full detailed Q&A content of the exchange is not included in the provided transcript, only the topics of two planned questions are listed: 1) Impact of potential trade shocks linked to the Trump administration; 2) Operating margin improvement progress and outlook. No further Q&A exchange content is available.