Kawasaki Heavy Industries (7012) Q1 2026 earnings summary

Executive summary

• Q1 FY2025 revenue reached a record ¥488.4B, up 10% year-on-year, and business profit rose to ¥20.5B, a 21.1% increase, meeting performance forecasts.

• Profit before tax declined 35% year-on-year to ¥16.8B, and net profit attributable to owners dropped 72.4% to ¥4.2B, mainly due to reduced FX gains from yen appreciation.

• Full-year FY2025 forecast remains unchanged, factoring in U.S. tariffs, weaker yen, and revised FX assumptions (JPY 145/USD, JPY 165/EUR).

• U.S. tariff policy had minimal Q1 impact but is included in full-year guidance; cost increases expected to be offset by pricing and cost controls.

• Ongoing compliance investigations and reforms in the submarine repair and marine engine businesses may impact future results.

Financial highlights

• Q1 FY2025: Orders received ¥446.3B, revenue ¥488.4B, business profit ¥20.5B, profit before tax ¥16.8B, net profit ¥4.2B.

• Gross profit increased to ¥91.8B (+¥6.3B YoY), but gross margin slightly decreased to 18.8%.

• Cash and cash equivalents at quarter-end were ¥73.9B, down from ¥132.8B at the start of the period.

• Cash flows from operating activities recorded a loss of ¥7.7B; free cash flow loss of ¥45.8B, deteriorating ¥43.3B year-on-year.

• Basic earnings per share decreased to ¥25.39 from ¥91.79 year-over-year.

Outlook and guidance

• FY2025 business profit forecast remains at ¥145.0B, with revenue expected at ¥2,290.0B.

• Full-year profit before tax forecast at ¥115.0B; net profit forecast at ¥82.0B; basic EPS forecast at ¥490.61.

• Annual dividend per share set at ¥150, with a payout ratio planned at 30.7%.

• After-tax ROIC projected at 6.9% for FY2025.

• U.S. tariffs and cost increases expected to be offset by price strategies, cost control, and FX benefits.