MORIROKU COMPANY, LTD.

Business Details

The Group's core segment, handling everything from development to production and sales of automotive resin parts (interior and exterior). It has a global production system across four regions—Japan, North America, China, and Asia—and its strengths lie in manufacturing know-how for large resin parts and decorative technologies. Major customers are Honda Development & Manufacturing of America, LLC (net sales of ¥49,887 million) and Honda Motor Co., Ltd. (¥23,502 million), which together account for approximately 55% of consolidated net sales.

Recent Overview

Despite lower sales, operating income rose 35.7% on price optimization, cost improvements, and the MTDM sale

Net sales for FY2026 (ending March 2026) were ¥108,413 million (down 9.7% year on year), primarily due to production cuts by major customers in China and Asia and the sale of MTDM. Excluding the one-time impact of the MTDM sale, the substantive decline was 5.9%. On the other hand, operating income increased significantly to ¥5,562 million (up 35.7% year on year), supported by progress in sales price optimization and cost improvements mainly in Japan and North America, improved model mix, the elimination of losses associated with the MTDM sale, and lower depreciation expenses resulting from the impairment loss recorded in China in the prior period. In North America, temporary production cuts due to semiconductor supply shortages were followed by smooth recovery production, limiting the impact.

Key Products

Growth Drivers

• Acquisition of Resonac's mobility business (Moriroku ReNova Co., Ltd., Moriroku Mobility Products Co., Ltd., and Moriroku Mobility Products (Thailand) Co., Ltd.) effective April 1, 2026, gaining exterior foam molding and modularization technologies and substantially expanding business scale (a main factor behind the forecast for FY2027 (ending March 2027) consolidated net sales of ¥194,400 million, up 45.2% year on year)
• Continued progress in sales price optimization negotiations mainly in Japan and North America, leading to cost pass-through and improved profitability
• Continuing profit-boosting effect from lower depreciation expenses following the impairment loss recorded in China in the prior period
• Sales expansion driven by expected increases in automobile production in the North American market and expected production increases in India
• Portfolio optimization across the three axes of region, customer, and parts, and promotion of profitability-focused business activities
• Advancement of core technologies (decorative, electrical, and lightweighting technologies) and new customer development through technology exhibitions

Risks

• Risk of continued sluggish sales by Japanese automakers in China and Asia (accelerating EV adoption and competition with local manufacturers)
• Risk of sales concentration in major customers (the Honda Group) (Honda Development & Manufacturing of America, LLC at ¥49,887 million and Honda Motor Co., Ltd. at ¥23,502 million, together accounting for approximately 55% of consolidated net sales)
• Risk of integration costs and goodwill arising from the acquisition of Resonac's business (acquisition cost of ¥17,200 million, syndicated loan of ¥15,000 million raised), and risk of unfinalized PPA (purchase price allocation)
• Risk of breaching financial covenants attached to the syndicated loan (maintenance of net assets, prohibition of operating losses for two consecutive periods, interest-bearing debt/EBITDA ratio of 7x or below)
• Risk of increased costs due to persistently high raw material and energy prices and rising labor costs
• Foreign exchange risk (erosion of North American and Asian sales when the yen appreciates)
• Risk of production stoppages at major customers in North America due to changes in US tariff policy and supply chain disruptions
• Risk of additional impairment of fixed assets if the downturn in China and Asia operations continues