NIPPON GEAR CO.,LTD.'s share price fell in early September, with the recent pullback becoming increasingly pronounced. Meanwhile, the latest earnings report showed that operating profit and net income rose sharply despite net sales remaining broadly flat, while the order backlog also increased substantially from the end of the previous fiscal year.
From 4 September to 11 September, NIPPON GEAR CO.,LTD.'s share price fell 7.9% from ¥1,317 to ¥1,213. The closing price on 11 September was down ¥48 from the previous day. After reaching a high of ¥1,348 at the close on 7 September, the price moved lower from 8 September onward, falling to ¥1,301, ¥1,296, ¥1,261 and ¥1,213, respectively, with the loss of momentum after the increase in trading activity reflected in the share price trend.
According to a summary of the earnings report, first-quarter net sales for the fiscal year ending March 2027 were approximately ¥2.06 billion, down 0.4% year on year, while operating profit rose 30.9% year on year to approximately ¥496 million and net income rose 30.6% to approximately ¥351 million, representing substantial profit growth. The order backlog increased 31.5% from the end of the previous fiscal year, pointing to potential future sales growth.
Performance over the past 12 quarters has been improving. Net profit and operating profit margins have generally remained firm, while stability has increased as the equity ratio rose and interest-bearing debt declined. The increase in the order backlog and growing demand from power plants are seen as potential drivers of future growth. Risk factors include dependence on the domestic electricity sector, sales fluctuations caused by the timing of customer acceptance, rising raw material prices and inventory valuation burdens.