Automotive drives earnings growth, while Industrial Machinery & Bearings and Machine Tools continue to post lower profits

FY2027-Q1 consolidated revenue was ¥491,973 million, up 8.2% year on year, while operating profit was ¥22,811 million, up 68.6%. The earnings breakdown, however, was uneven. Automotive generated revenue of ¥355,287 million and segment profit of ¥15,762 million, with segment profit up 158.1% year on year. Industrial Machinery & Bearings generated revenue of ¥88,169 million and segment profit of ¥3,678 million. Revenue rose 2.4%, but profit declined 11.1%. Machine Tools generated revenue of ¥48,516 million and segment profit of ¥3,299 million, with profit down 15.0% despite an 8.3% increase in revenue.

In the comparable FY2026-H1 period, Automotive generated revenue of ¥658,746 million and segment profit of ¥16,433 million. Industrial Machinery & Bearings generated revenue of ¥172,134 million and segment profit of ¥7,640 million, while Machine Tools generated revenue of ¥99,294 million and segment profit of ¥8,938 million. Accordingly, the key points for FY2027-H1 are not only whether Automotive’s Q1 segment profit of ¥15,762 million will exceed ¥16,433 million for the full first half, but also how far Industrial Machinery & Bearings and Machine Tools can recover toward their year-earlier profit levels. Looking only at simple Q1 progress could obscure the fact that Automotive’s outperformance is offsetting lower profits in the other segments.

For Automotive, higher sales in Japan and North America, yen depreciation and cost improvements lifted profit. For Industrial Machinery & Bearings, the impact of U.S. tariffs, and for Machine Tools, higher expenses, were cited as factors weighing on profit. Earlier disclosures also identified higher raw-material and energy costs and lower sales in Europe and Japan as constraints on Industrial Machinery & Bearings, while material prices and higher expenses constrained Machine Tools. This suggests that differences in pricing and cost structures, rather than simply temporary sales fluctuations, may be driving the profit gap between segments.

At the next earnings announcement, regional revenue had not been disclosed as of Q1, and no monetary profit bridge was provided for the effects of yen depreciation, U.S. tariffs, sales volumes or cost improvements. In H1, we will look for evidence of whether Automotive’s segment profit continues to increase year on year, whether the rate of decline at Industrial Machinery & Bearings and Machine Tools narrows, and whether the effects of tariffs and higher expenses are quantified. If only Automotive continues to post higher profit while the other two segments remain below the year-earlier level, the likelihood of achieving the full-year forecast and the sustainability of earnings will need to be assessed separately.