TPR CO.,LTD. Q4 FY2025 earnings call

Overall 2025 March Full-Year Results

• Despite support from yen depreciation benefits and strong performance in the Asian market, lower sales in Japan dragged down overall results, leading to a year-over-year decrease in both total net sales and operating income. Net sales hit 192.4 billion yen (down 1.4 billion yen YoY), operating income hit 11.2 billion yen (down 1.3 billion yen YoY), ordinary income hit 15.7 billion yen (down 0.3 billion yen YoY), and net profit increased 0.7 billion yen YoY to 8.8 billion yen driven by gains from the sale of investment securities.

Capital Efficiency and Shareholder Returns

• Continues to sell cross-held policy shares to reduce low-profitability capital; implemented a 1.5 billion yen share repurchase program for 640,000 shares, funded by proceeds from policy share sales. Maintains a target payout ratio above 40% from the perspective of stable dividends.
• Introduced a cash management system to improve internal group capital utilization, targeting 4.0 billion yen in capital efficiency gains.
• Strengthened IR activities and expanded information disclosure through enhanced dialogue with shareholders and investors.

Mid-Term Management Plan: Human Capital Management

• Launched the "Human Capital Management Project" based on the belief that human talent is the most critical management foundation. Initiated activities across four core priority areas: personnel system reform, talent development promotion, talent recruitment promotion, and workplace environment improvement.

Mid-Term Management Plan: Powertrain Business Strategy

• Strengthened expansion into markets with internal combustion engine demand: Projections show Indian automotive production will grow from 6 million units in 2024 to 9.01 million units in 2030. Leveraging existing track records with major Japanese and Korean automakers (which hold over half the Indian market), TPR committed approximately 2.0 billion yen in investment to add a new high-efficiency production line to expand capacity, and has begun evaluating a new factory construction to match market growth.
• Adapted to structural changes in the Chinese market: Chinese domestic OEM market share grew from 38% in 2017 to 63% in 2024. TPR's Chinese operations have aligned with this shift, growing Chinese OEM revenue share from 43% in 2017 to 65% in 2024, keeping business on track.
• Accelerated technological innovation for next-generation engines: Made an additional 0.5 billion yen investment in i Labo, a firm developing hydrogen conversion technology to retrofit existing engines to hydrogen power. i Labo will open a new R&D center in Aichi Prefecture in fall 2025, with a personnel secondment agreement already finalized with TPR.

Mid-Term Management Plan: Frontier Business Strategy

• EV-related products have achieved strong growth in China: Revenue from Chinese EV-related products grew 2.1x between 2023 and 2024, with component adoption by top Chinese NEV manufacturers expanding rapidly. TPR has added new production lines to meet strong demand, covering battery components, power unit components, and other product lines.
• Established the new Frontier Innovation Center (FIC) in Harumi, Tokyo: The center consolidates dispersed knowledge and talent to accelerate commercialization via a co-creation structure that integrates marketing, R&D, and business planning. It will focus on recruiting specialized long-term talent and driving new business development through partnerships with universities, startups, and industry players, covering five priority areas: EV-related products, nanomaterials, new businesses, automotive exteriors and related equipment, and rubber/resin products.

Recognition

• Received 7 domestic and 18 overseas awards from customers for quality and delivery performance in FY2024, and was certified as a 2025 Excellent Health Management Corporation (Large Enterprise Division).

1. Japan Segment (TPR Group): Net sales decreased 3.5 billion yen year-over-year; operating income decreased 1.6 billion yen year-over-year. 2. Asia Segment (TPR Group): Net sales increased 5.4 billion yen year-over-year; operating income increased 0.7 billion yen year-over-year. 3. North America Segment (TPR Group): Net sales decreased 0.1 billion yen year-over-year; operating income decreased 0.1 billion yen year-over-year. 4. Fartech Group: Net sales decreased 2.8 billion yen year-over-year; operating income increased 30 million yen year-over-year. Revenue contribution percentages for each segment were not provided in the transcript.

• For FY2026 (ending March 2026), TPR expects continued strong performance in the Asian market, but forecasts a year-over-year decrease in both revenue and profit driven by adverse yen appreciation foreign exchange impacts and falling demand at the Fartech Group. The full-year forecast is: 183.4 billion yen in net sales (down 9.0 billion yen YoY), 9.4 billion yen in operating income (down 1.8 billion yen YoY), 12.9 billion yen in ordinary income (down 2.8 billion yen YoY), and 7.3 billion yen in net profit (down 1.5 billion yen YoY).
• Assumed foreign exchange rates for the forecast are 140 JPY per USD and 19.5 JPY per CNY.
• TPR maintains a stable annual dividend forecast of 100 JPY per share (50 JPY interim, 50 JPY final), matching the FY2025 dividend level and its prior guidance.
• This represents a downward revision from prior guidance, driven by the inclusion of projected impacts from U.S. tariff policy risks.

• U.S. tariff policy risks are a key headwind for FY2026, with TPR projecting 1.0 billion yen in negative impacts from tariffs already included in its full-year earnings forecast, contributing to the 1.1 billion yen negative "other" factor in ordinary income projections.
• Sustained customer price reduction requests create ongoing downward pressure on profitability, with an expected 0.8 billion yen negative impact on FY2026 ordinary income.
• Wage increases globally are projected to create an 0.8 billion yen negative impact on FY2026 ordinary income, partially offset by 0.3 billion yen in labor cost recovery.
• Adverse yen appreciation is projected to create a 0.6 billion yen negative impact on FY2026 ordinary income.
• Falling demand at the Fartech Group will contribute to an overall decline in consolidated profitability in FY2026.

No question and answer section was included in the provided transcript.