J-MAX Co.,Ltd. Q2 FY2026 earnings call

• Overall Consolidated Performance

  • Total consolidated revenue hit 23.603 billion yen, up 5.9% year-over-year and 2.6% above prior guidance. All profit categories returned to positive: operating profit of 777 million yen (up 1.206 billion yen YoY, 159.2% above guidance), ordinary profit of 421 million yen (up 1.082 billion yen YoY), and net profit attributable to parent company shareholders of 691 million yen (up 1.706 billion yen YoY, 841 million yen above guidance).
  • Growth was driven by increased production of electrification components in China and continued benefits from 2023-2024 restructuring at Chinese facilities.

• Capital Expenditure & Cash Flow

  • Consolidated capital expenditure totaled 2.582 billion yen, and depreciation expense was 1.877 billion yen, both down year-over-year. Investment focused on medium- to long-term growth: Okayama new factory, Guangzhou coating line, Fujian new factory, and new production lines to meet growing electrification component orders in China.
  • Operating cash flow was +2.928 billion yen, investing cash flow was -1.455 billion yen, financing cash flow was -1.767 billion yen, resulting in positive free cash flow of 1.473 billion yen, driven by completed major growth investments, increased production in China, and improved profitability from restructuring.

• Operational Updates: Domestic Japan

  • Okayama Factory held an open house in August 2025, and mass production of the new Nissan Roox and Mitsubishi Delica Mini started in September 2025. These models, built on a shared platform, are the core of Okayama Factory, with a record number of component orders secured. Both models rank top 10 in annual kei car sales in Japan, so further production growth is expected.

• Operational Updates: China

  • J-MAX has expanded business with Chinese OEMs including CATL, Geely LOTUS, and Xpeng Motors to adapt to rapid EV adoption and shifting market share in China. Chinese OEMs are projected to account for ~40% of China segment stamping part sales this term.
  • The company secured a new order for components for a next-generation "flying car" co-developed with a global Chinese manufacturer. Development is complete, and preparations for mass production are ongoing.

1. Japan Segment: Revenue of 8.845 billion yen, 7.7% decrease year-over-year, accounting for 37.5% of total consolidated revenue. Operating profit of 115 million yen, 7.7% decrease year-over-year; ordinary profit of 399 million yen, 16.9% decrease year-over-year. Revenue fell due to reduced production of automotive parts for major customers, offset partially by increased mold and equipment sales from the Okayama Factory new model launch.
2. Thailand Segment: Revenue of 3.238 billion yen, 10.3% increase year-over-year, accounting for 13.7% of total consolidated revenue. Operating profit of 145 million yen, 173 million yen increase year-over-year; ordinary profit of 96 million yen, 198 million yen increase year-over-year. Growth came from increased production of automotive and general engine parts for major customers, with continued benefits from prior restructuring.
3. China Segment: Revenue of 11.7 billion yen, 17.1% increase year-over-year, accounting for 49.6% of total consolidated revenue. Operating profit of 529 million yen, 1.088 billion yen increase year-over-year; ordinary profit of 266 million yen, 978 million yen increase year-over-year. Growth was driven by expanded orders and ramped-up production of electrification components for Chinese OEMs, offsetting production cuts from Japanese automakers, with continued benefits from prior restructuring.

• Full-year 2026 March fiscal year guidance maintains prior projections for revenue (49 billion yen), operating profit (1.5 billion yen), and ordinary profit (800 million yen). Only net profit attributable to parent company shareholders was upward revised to 850 million yen, following a special gain from the completion of liquidation of North American subsidiary Indiana Marujun.
• Interim dividend is maintained at 2 yen per share, in line with the original plan, despite better-than-expected interim performance.
• Management plans to prioritize restoring profitability from growth strategies including Okayama new factory ramp-up, CATL business expansion, and electrification R&D before considering dividend increases.

• Japanese automaker production volumes in China continue to decline, with ongoing uncertainty about future production trends, creating pressure on segment performance.
• Large-scale growth investments in Okayama and Fujian factories have left interest-bearing debt at a high level, and pushed the equity ratio down to 30% (down from prior periods due partially to foreign exchange impacts), creating a need to strengthen financial stability.
• Parent company standalone earnings remain in decline, limiting capacity to increase dividends in the near term.

Q: Why is there no dividend increase despite the upward earnings revision and the company's 20% payout ratio target?

A: While consolidated performance has returned to profitability thanks to prior restructuring and Fujian factory ramp-up, parent company standalone earnings are still declining. Japanese automaker production in China continues to fall with an uncertain outlook. Management has opted to keep the dividend unchanged to prioritize strengthening the balance sheet, retaining capital for growth investments, and restoring stable profitability before increasing distributions in the medium to long term.

Q: Has the relationship with top customer Honda changed after Honda reported a reduced shareholding ratio in June?

A: Honda's actual number of J-MAX shares held has not changed since 2014, with the ratio change driven by other factors. J-MAX maintains a good, stable relationship with Honda, and there is no change to the business partnership.

Q: What is the order situation at the newly operational Fujian Factory?

A: Fujian Factory is a dedicated facility for components for CATL, located close to CATL's headquarters in Fujian to strengthen the partnership. The factory is operating smoothly, and has received consistent strong inquiries and orders from CATL. Management is strategically focusing on higher-value, optimal orders to improve profitability, and will continue working to expand orders and deepen the partnership with CATL.

Q: What depreciation method is used for the new Okayama and Fujian factories?

A: The new Okayama and Fujian factories use the straight-line depreciation method, which is consistent with all of J-MAX's other facilities across Thailand and China.