UACJ (5741) Q1 FY2026 Earnings Deep Dive Report

1. Comprehensive Analysis of Earnings and Key Topics

UACJ Corporation’s Q1 FY2026 earnings report reflects a robust performance, driven by steady global aluminum demand and the successful realization of cost structure reforms through the full-scale operation of recycling facilities across the group. This resulted in the highest quarterly business profit in the company's history .

The key highlights and critical topics from this earnings release are summarized in the following 10 points:

1. Record-High Q1 Business Profit : Revenue increased by 44.0% year-on-year to ¥377.4 billion , while business profit surged 2.25 times (+¥17.8 billion) to ¥25.7 billion .
2. Significant Upward Revision of Full-Year Guidance : Based on strong Q1 results and the current supply-demand environment, the full-year business profit forecast has been raised from ¥65 billion to ¥86 billion (+¥37.8 billion YoY).
3. Enhanced Shareholder Returns (Annual Dividend of ¥70/share) : In line with the dividend policy, the annual dividend forecast has been raised from ¥58/share to ¥70/share (+¥15/share YoY, +¥12/share from previous guidance).
4. Dramatic Profit Gains from Recycling Operations : The full-scale contribution of recycling processing capacity introduced and expanded across Japan, the U.S., and Thailand has led to a dramatic improvement in marginal profit .
5. Sharp Recovery in Thick Plate Demand for Semiconductor Equipment : In Japan, demand for thick plates for semiconductor manufacturing equipment and IT/data center-related applications is recovering and expanding at a pace exceeding expectations.
6. Strong Performance and Market Tailwinds at North American Base (TAA) : With U.S. can stock demand projected to grow at a CAGR of approximately 3% through 2030, TAA maintains high profitability through hot-rolling expansion investments and effective recycling utilization.
7. Thailand Base (UATH) as a Global Supply Hub : Progress continues in expanding exports to growth markets like Europe and India, alongside cost optimization through the expansion of UBC (Used Beverage Can) procurement routes.
8. Scrutiny of External Risks (Middle East Situation & Raw Material Costs) : The projected full-year impact of logistics and raw material costs due to the Middle East situation has been revised downward from ¥15 billion to ¥12 billion , with appropriate pass-through to sales prices being implemented.
9. Financial Soundness and Working Capital Management : Despite an increase in interest-bearing debt (¥410.3 billion) due to rising aluminum ingot prices, the consolidated D/E ratio remains at 0.9x , firmly within the target range of the medium-term plan.
10. Management Focused on Cost of Capital and Share Price : Clarification of capital strategy aimed at consistently achieving an ROE target of 9% or higher (12.2% in FY2025), reducing the cost of shareholder equity through improved beta, and establishing a PBR of 1.0x or higher.

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2. Q1 FY2026 Performance Analysis: A Duet of Recycling Efficiency and Improved Product Mix

In Q1 FY2026, consolidated sales volume increased by 8,000 tons to 342,000 tons . Combined with rising ingot prices and the effects of price revisions, revenue reached ¥377.4 billion (+¥115.4 billion YoY).

Regarding profitability, the company recorded business profit of ¥25.7 billion (+¥17.8 billion YoY) and net profit attributable to owners of the parent of ¥35.9 billion (+¥34.6 billion YoY), significantly outperforming the same period last year. Adjusted EBITDA also more than doubled, rising from ¥17.4 billion in the previous year to ¥36.4 billion .

Crucial to understanding the structure of this significant growth is the slide analyzing the factors behind the Q1 business profit variance.

[Slide Commentary: Why the Q1 Business Profit Analysis Slide is Critical]

The slide above details the ¥17.8 billion increase in business profit from Q1 FY2025 (¥7.9 billion) to Q1 FY2026 (¥25.7 billion):

• Manufacturing Cost Variance (+¥17.2 billion) : This accounts for the vast majority of the profit growth. In addition to domestic sheet (+¥2.1 billion) and North American TAA (+¥1.6 billion), the utilization of recycled materials and improved processing capacity at UATH (Thailand) and across the group dramatically reduced manufacturing costs.
• Sales Variance (+¥4.9 billion) : Increased sales volume of high-value-added products, such as thick plates for semiconductor equipment, and the successful implementation of price revisions boosted profits.
• Control of Negative Factors : Negative impacts such as rising energy and additive metal costs (-¥0.4 billion), increased depreciation (-¥1.2 billion), and higher costs for auxiliary materials and detour routes due to the Middle East situation (-¥2.4 billion) were completely offset by overwhelming improvements in manufacturing costs.

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3. Upward Revision of Full-Year Forecast and Business Environment Outlook

Based on Q1 progress, UACJ has significantly raised its full-year forecast for FY2026. The new targets are sales volume of 1,375,000 tons (+10,000 tons vs. May plan), revenue of ¥1.4 trillion (+¥100 billion), business profit of ¥86 billion (+¥21 billion), and net profit of ¥42 billion (+¥14 billion).

The slide analyzing the factors behind this upward revision is as follows:

[Slide Commentary: Background and Significance of the Full-Year Business Profit Revision]

This slide visualizes the ¥21 billion revision process from the initial full-year business profit forecast (¥65 billion) to the latest forecast (¥86 billion):

• Expansion of Manufacturing Cost Variance (+¥13.2 billion) : The cost reduction effect from recycling facility operations , proven in Q1, will contribute throughout the fiscal year. Specifically, the recycling effect at North American TAA (+¥11.8 billion) is expected to be a major contributor.
• Revision of Middle East Impact (+¥3.0 billion improvement) : Previously, the company factored in a ¥15 billion profit reduction due to rising raw material/auxiliary costs and logistics disruptions. Through careful assessment and procurement adjustments with customers, the impact has been reduced to ¥12 billion (a positive turnaround of ¥3 billion).
• Improvement in Sales Variance (+¥4.6 billion) : Continued recovery in domestic demand for semiconductor thick plates and steady shipments of capacitor foil and housing materials for data centers are contributing factors.

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4. Business Highlights by Segment and Key Base

① Domestic Sheet Business

• Demand Trends : While can stock demand is expected to remain flat or slightly decline, demand for thick plates for semiconductor manufacturing equipment is recovering strongly . Shipments of aluminum materials for batteries and capacitors for IT/data centers, driven by generative AI and cloud expansion, are extremely robust.
• Recycling Initiatives : The UACJ recycling rate has exceeded 74% (FY2030 target: 80%). With the operation of UYAR (UACJ Yamaichi Aluminum Can Recycling), the company is accelerating the shift toward circular raw materials, reducing the use of primary aluminum.

② North American Base (Tri-Arrows Aluminum / TAA)

• Demand Trends : U.S. can stock demand is projected to grow at a CAGR of approximately 3% through 2030 , driven by the shift away from plastic, substitution for glass bottles, and increased aluminum adoption in new product launches.
• Strengths and Achievements : Investments in hot-rolling capacity have borne fruit, increasing production volume. Recycling facility operations have dramatically improved the flexibility of raw material procurement , allowing for strong financial performance in a high-market-price environment.

③ Thailand Base (UACJ Thailand / UATH)

• Demand Trends : In addition to increased beverage consumption due to population growth and economic expansion in Southeast Asia, can stock exports are growing steadily, supported by demand for glass bottle substitution in the European market .
• Optimization Initiatives : The global expansion of UBC (Used Beverage Can) procurement routes has established an optimal balance of manufacturing costs. Group synergies are being realized, such as the supply of support coils to North American TAA.

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5. Management Focused on Cost of Capital, Share Price, and Shareholder Returns

In its "4th Medium-Term Management Plan (FY2024–2027)," UACJ has committed to consistently achieving an ROE of 9% or higher and strengthening dialogue and disclosure to reduce the cost of capital. Shareholder returns have been significantly enhanced in line with the upward revision of earnings.

[Slide Commentary: Shareholder Return Policy and the Importance of Dividend Increases]

This slide shows the company's dividend policy and the trend of dividend payments and forecasts:

• Basic Policy : The company aims for a dividend payout ratio of 30% or higher during the 4th medium-term plan period.
• Upward Revision of Dividends : The annual dividend for FY2026 has been significantly raised to ¥70/share (¥35 interim, ¥35 year-end), an increase of ¥15 from FY2025 results and ¥12 from the May forecast.
• Shareholder Return Stance : Against a full-year net profit forecast of ¥42 billion, the payout ratio is 30.2% , demonstrating a clear commitment to returning generated profits to shareholders while continuing growth investments.

Financially, total assets expanded to ¥1.2175 trillion due to an increase in inventories (+¥41.6 billion) caused by rising aluminum ingot prices, and interest-bearing debt increased to ¥410.3 billion. However, the D/E ratio is contained at 0.9x , maintaining a capital structure that ensures safety.

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6. Conclusion: Realization of Structural Reform and Outlook for Mid-to-Long-Term Growth

UACJ's Q1 FY2026 earnings report clearly demonstrates that the company's performance is not merely a result of market tailwinds, but that its investment in building a global recycling system has successfully translated into tangible cost competitiveness.

• Short-term Perspective : Achieved record-high Q1 business profit and raised full-year guidance through the recovery of semiconductor thick plates, mitigation of Middle East risks, and cost suppression via recycling.
• Mid-to-Long-term Perspective : Coverage of global can stock demand (2.5%–3% annual growth) through the three-pole system (North America, Thailand, Japan) and expansion of aluminum supply to growth sectors such as data centers, aerospace, and defense.
• Capital Efficiency Perspective : Maintaining high ROE, increasing dividends (¥70/share) to target a PBR of 1.0x, and balancing the financial base.

In summary, this earnings report reflects a high degree of harmony between current earnings expansion, structural profitability improvement, and sustainable enhancement of shareholder returns. The progress of the company's business development and growth story will continue to be a focal point.