Mimaki Engineering: Q1 FY2027 Earnings Deep Dive Report

This report provides a comprehensive analysis of the Q1 FY2027 earnings for Mimaki Engineering Co., Ltd. (Securities Code: 6638), covering performance highlights, segment trends, profit structure analysis, and the progress of the mid-to-long-term growth strategy, "MI30."

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1. Q1 FY2027 Consolidated Earnings Highlights

Mimaki Engineering delivered a solid performance in the first quarter (1Q) of the fiscal year ending March 2027, reporting net sales of 20,052 million yen (+3.3% YoY) , operating profit of 2,351 million yen (+21.6% YoY) , ordinary profit of 2,282 million yen (+24.4% YoY) , and quarterly net profit of 1,621 million yen (+22.7% YoY) , marking a period of increased revenue and profit.

Revenue growth was driven by a significant surge in ink sales across all markets, alongside strong sales of new products, particularly hybrid models for the SG (Sign Graphics) market. A positive foreign exchange impact (+1,572 million yen) also contributed to the year-on-year revenue increase.

In terms of profitability, the operating profit margin reached 11.7% (an improvement of 1.7 percentage points YoY) , reflecting a notable enhancement in efficiency. This was driven by an improved product mix of inks and printer units, as well as the effects of ongoing cost-reduction initiatives.

Analysis of Operating Profit Variance

The breakdown of the 416 million yen increase in operating profit (from 1,934 million yen to 2,351 million yen) in 1Q is as follows:

As shown in the slide above, the positive impact of foreign exchange (+643 million yen) was a major contributor. By currency, the US dollar accounted for +312 million yen and the Euro for +284 million yen in profit growth. While there was a negative impact from sales volume and other factors (-463 million yen), the cost of sales ratio improved by 2.0 percentage points, from 50.3% to 48.3% , generating a positive push of +368 million yen. Regarding SG&A expenses, the ratio rose from 39.7% to 42.5% (-131 million yen negative impact) due to planned aggressive investments for future growth, such as increased R&D spending (+324 million yen). However, this was more than offset by improvements in the cost of sales ratio and foreign exchange effects.

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2. Performance Trends by Market (Segment) and Region

Sales Trends by Market

• SG (Sign Graphics) Market : Net sales of 9,140 million yen (+11.4% YoY) Strong initial sales of new hybrid models and steady performance of both new and existing UV ink-equipped models drove growth. Furthermore, ink sales—a key recurring revenue stream—increased dramatically, leading to double-digit growth for the segment.
• IP (Industrial Products) Market : Net sales of 4,629 million yen (-3.8% YoY) While ink sales remained strong, the segment saw a decline in revenue due to the transition period for certain small flatbed (FB) printer models.
• TA (Textile & Apparel) Market : Net sales of 2,301 million yen (+7.6% YoY) Strong sales of certain sublimation transfer models and a significant increase in ink sales contributed to overall revenue growth.
• FA (Factory Automation) Business : Net sales of 755 million yen (-26.5% YoY) The segment experienced a significant decline, primarily due to weakness in the board inspection and mounting equipment businesses.

Sales Trends by Region

• Japan : Net sales of 5,214 million yen (-2.7% YoY). While impacted by the decline in the FA business, sales increased when excluding the FA segment.
• North America : Net sales of 4,949 million yen (+20.0% YoY; +8.7% in local currency). The region showed remarkable growth, with double-digit increases in SG hybrid new products, high-productivity TA models, and ink sales across all markets.
• Europe : Net sales of 4,500 million yen (+4.8% YoY; -7.2% in local currency). Revenue increased due to the positive impact of the weaker yen.
• Asia/Oceania : Net sales of 3,322 million yen (-3.6% YoY). Revenue declined due to sluggishness in the eco-solvent market.

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3. "Ink Sales": The Key to Revenue Stability

In Mimaki Engineering's business model, the most critical element of its recurring revenue is "ink sales."

As the data in the slide above indicates, the 5-year growth rate for ink is 157% , demonstrating rapid expansion. A structure has been established where the sales of consumable ink continue to grow in tandem with the increasing cumulative number of printers in operation.

In particular, the rise in TA printer installations has led to a significant increase in demand for white ink used in T-shirt applications. Because the ink business boasts high profit margins, the increase in sales volume contributes significantly to the stabilization of group-wide earnings and the improvement of the gross profit margin.

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4. Full-Year FY2027 Forecast, Investments, and Shareholder Returns

Maintenance of Full-Year Consolidated Earnings Forecast

Although 1Q results exceeded plans and current sales trends remain solid, Mimaki Engineering has decided to maintain its initial full-year earnings forecast due to geopolitical risks, such as the escalating situation in the Middle East, and uncertainties regarding foreign exchange fluctuations.

• Net Sales : 91,000 million yen (+8.7% YoY)
• Operating Profit : 9,500 million yen (+0.7% YoY)
• Ordinary Profit : 8,600 million yen (-3.5% YoY)
• Net Profit Attributable to Owners of Parent : 6,100 million yen (-9.5% YoY)

Exchange rate assumptions for 2Q and beyond are set at 146 yen per US dollar and 170 yen per Euro. Regarding the situation in the Middle East, the company maintains a stable supply chain for raw materials, and there has been no adverse impact on production at this time.

Investment Plan and Shareholder Return Policy

• Capital and R&D Investment : The company plans 5,800 million yen in capital investment and 7,600 million yen in R&D investment (8.4% of net sales) , actively promoting R&D and strengthening production systems to secure long-term technological superiority.
• Shareholder Returns : Based on the basic policy of providing stable returns in line with growth, the forecasted annual dividend for FY2027 is 55.0 yen (27.5 yen interim, 27.5 yen year-end) , maintaining a high level of shareholder returns.

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5. Outlook for the Mid-to-Long-Term Growth Strategy "MI30"

The company has set a goal to achieve 150 billion yen in net sales by the fiscal year ending March 2030, based on its mid-to-long-term growth strategy, "MI30 (Mimaki Innovation 30)."

To achieve this goal, the company is not only strengthening its existing business foundation but also promoting the following "4 Challenges" :

1. Challenge 1: High-Viscosity Domain - Applying technology from low-viscosity inks to the high-viscosity coating field and developing new markets.
2. Challenge 2: Flexible OLED Sheets - Establishing low-cost manufacturing technology for OLEDs using inkjet production technology.
3. Challenge 3: Segment Brand (Second Brand) - Providing pre-processing and post-processing equipment to create customer peace of mind and expand solution offerings.
4. Challenge 4: Evolution of 3D Business - Realizing full-color 3D printing on diverse materials and expanding markets into industrial, medical, and apparel sectors.

By actively allocating resources to these new areas, the company aims to grow as a comprehensive technology innovator that transcends the boundaries of industrial inkjet printers.

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6. Conclusion

Mimaki Engineering's Q1 FY2027 earnings achieved a very healthy increase in revenue and profit, driven by new product effects, strong ink sales, and improved cost of sales ratios . The accumulation of recurring ink revenue, which grows in line with the number of active printer units, serves as a solid foundation for the company's performance.

While short-term attention must be paid to foreign exchange and geopolitical risks, the company has demonstrated a structure aimed at sustainable corporate value enhancement through the challenges in new areas set out in "MI30" and the continued expansion of digital on-demand printing.