SANDEN CORPORATION

Business Details

A business that manufactures and sells automotive air conditioning systems, electric compressors, heat exchangers, and other products, accounting for nearly all of the Sanden Group's net sales. Major customers include the Volkswagen Group and Chinese OEMs, including EV manufacturers. The overseas sales ratio reaches 93%, with Europe and China accounting for approximately 60% of sales. The company is promoting the provision of Integrated Thermal Management System (ITMS) solutions centered on electric compressors for the NEV (New Energy Vehicle) market.

Recent Overview

Net sales up 13.9%, operating loss narrowed significantly, and quarterly net income turned profitable

Net sales for Q1 FY2026 (ending December 2026) (January to March 2026) were ¥51,819 million (up 13.9% year on year), driven by increased production volume in the Indian market and the effect of the weaker yen on foreign exchange translation. Gross margin improved due to expanded sales volume and cost reduction measures, and the operating loss narrowed to ¥464 million (compared to △¥1,016 million in the same period of the prior year). With the recognition of equity in earnings of affiliates of ¥1,191 million, gain on sale of fixed assets of ¥973 million, and reversal of provision for structural reform of ¥282 million, quarterly net income attributable to owners of the parent turned profitable at ¥763 million. The full-year earnings forecast remains unchanged from the figures announced on February 13, 2026, maintaining net sales of ¥200,000 million, an operating loss of △¥1,000 million, ordinary income of ¥2,700 million, and net income of ¥500 million.

Key Products

Growth Drivers

• Expansion of sales to local OEMs driven by increased automobile production volume in the Indian market
• Continued strong sales of electric compressors to Chinese NEV and EV manufacturers
• Improvement in gross profit margin (from ¥6,697 million to ¥8,128 million) through expanded sales scale and cost reduction measures
• Contribution to ordinary income from equity in earnings of affiliates accounted for by the equity method (¥1,191 million)
• Recognition of extraordinary income (gain on sale of fixed assets of ¥973 million) through the promotion of fixed asset liquidation
• Temporary profit contribution from reversal of provision for structural reform (¥282 million)
• Increase in yen-converted overseas sales due to the weaker yen exchange rate trend
• Promotion of transformation into a full-solution system supplier based on the medium-term management plan SHIFT2028

Risks

• Risk of declining automobile production volumes due to concerns over economic slowdown in Europe and China (year-on-year declines continuing across global regions)
• Risk of rising raw material prices and logistics costs due to the impact of US tariff policy (full-year forecast left unchanged as the extent of impact is difficult to estimate)
• Foreign exchange risk (93% overseas sales ratio; impact on sales and profit in the event of a shift toward yen appreciation)
• High level of interest-bearing debt centered on short-term borrowings of ¥73,254 million, and financial liquidity risk
• Fragile financial base, with an equity ratio of 15.3% and retained earnings of △¥19,866 million
• Risk of profit pressure from annual review of selling prices
• Geopolitical risk from escalating tensions in the Middle East (direct impact currently limited)
• Quality cost risk, as indicated by the increase in provision for product warranties (from ¥4,562 million to ¥5,283 million)