F-TECH INC.

Business Details

In Japan, four companies including the Company are responsible for manufacturing and selling automotive parts (Subframe, Suspension Parts, Pedal, etc.). The main customer is the Honda Motor group. Recorded sales including intersegment internal sales (¥12,402 million) totaled ¥41,855 million. As the source of the Group's overall production engineering capabilities and on-site management expertise, the Japan base also serves a technology transfer and consulting function for overseas bases, and the increase in technical income contributed to the improvement in earnings.

Recent Overview

Achieved a turnaround to profitability from an operating loss in the prior period, driven by increased technical income and cost reductions

In FY2026 (ending March 2026), the Japan segment saw external customer sales decrease to ¥29,453 million (down 2.2% year on year) due to a decline in product sales; however, earnings improved significantly due to increased technical income and cost reductions, resulting in operating income of ¥618 million (compared to an operating loss of ¥1,093 million in the prior period). Intersegment internal sales increased to ¥12,402 million (up 14.9% year on year), reflecting the expansion of technical and equipment support to overseas bases.

Key Products

Growth Drivers

• Increased technical income (expanding demand for technical guidance and consulting to overseas bases)
• Winning new orders through optimization design leveraging CAE analysis technology
• Continued improvement in earnings structure through cost reductions and structural reform
• Capturing demand for HEV/PHEV parts for the main customer (Honda Motor group)
• Expansion of intersegment internal sales driven by production engineering support needs at overseas bases (North America, Asia)

Risks

• Risk of fluctuations in domestic production volumes at the main customer (Honda Motor group)
• Risk of fluctuations in technical income (dependent on performance and support needs of overseas bases)
• Risk of changes in customers' production strategies due to U.S. tariff policy and EV policy changes
• Shrinkage of the domestic automobile market due to Japan's declining birthrate, aging population, and population decline
• Risk of deteriorating competitive environment for customers due to the rise of Chinese EV makers, with spillover effects on domestic production
• Risk of rising energy costs and supply chain disruption due to escalating tensions in the Middle East

Business Details

The North America segment comprises six local subsidiaries in the United States, Canada, and Mexico, manufacturing and selling undercarriage automotive parts such as Subframe, Suspension Parts, and Pedal. The main customer is the Honda group, and this is the largest segment, accounting for approximately 76% of consolidated net sales. Its strength lies in weight reduction and cost reduction proposals through optimization design leveraging CAE analysis technology. In FY2026 (ending March 2026), sales and profit declined due to a decrease in the main customer's production volume caused by semiconductor supply shortages and the impact of yen appreciation.

Recent Overview

Sales and profit declined due to semiconductor shortages and yen appreciation, with operating income down 26.0% year on year

In FY2026 (ending March 2026), the North America segment's main customer's production volume declined due to semiconductor supply shortages, compounded by the impact of yen appreciation, resulting in sales of ¥222,616 million (down 1.6% year on year) and operating income of ¥5,938 million (down 26.0% year on year). Segment assets expanded to ¥117,539 million (up 5.5% year on year) due to increases in construction in progress and other items. While consolidated overall profit improved due to the absence of the large-scale impairment loss (mainly in the Asia segment) recorded in the prior period, profitability declined on a standalone basis for North America.

Key Products

Growth Drivers

• Expectations of a recovery in production volume at the main customer (Honda group) driven by a return of HEV/PHEV demand
• Strengthened sales activities toward EV automakers and acquisition of new orders through the establishment of a new subsidiary in North America
• Improved production efficiency at U.S. and Mexico bases (through the dispatch of experts from Japan, Mexico, Canada, and China)
• Continued price pass-through through selling price revision negotiations with major customers
• Expansion of production capacity through capital expenditure, as reflected in the increase in construction in progress (¥8,862 million)

Risks

• Risk of decreased production volume at the main customer due to U.S. protectionist tariff policy
• Risk of decreased production volume at the main customer due to a resurgence of semiconductor procurement issues (already materialized in FY2026, ending March 2026)
• Negative translation impact on sales and profit from continued yen appreciation (assumed rate: ¥150 to the US dollar)
• Rising labor costs at U.S. bases (persistently high raw material and labor costs due to inflation)
• Risk of changes in the order structure due to the main customer's cancellation of EV production plans
• Risk of supply chain disruption due to escalating tensions in the Middle East

Business Details

The Asia segment comprises nine local subsidiaries in China, Southeast Asia, and other regions, manufacturing and selling automotive parts such as Subframe, Suspension Parts, and Pedal. The main customer is the Honda Motor group. In the China region, the main customer's production volume continued to decline due to sluggish sales by Japanese and Western makers and the rise of Chinese EV makers, resulting in a significant decline in sales; however, earnings improved due to the effects of structural reform in the China region, and the segment achieved a turnaround to operating profit in FY2026 (ending March 2026).

Recent Overview

Sales declined 10.5% due to reduced production in China, but the segment achieved a turnaround to operating profit through structural reform effects

In FY2026 (ending March 2026), the Asia segment continued to see a decline in the main customer's production volume in the China region, resulting in a significant sales decline to ¥39,797 million (down 10.5% year on year). On the other hand, in terms of earnings, the effects of structural reform in the China region (such as workforce optimization and fixed asset impairment) materialized, and operating income turned to a profit of ¥1,665 million (compared to an operating loss of ¥1,609 million in the prior period). The impairment loss of ¥7,781 million (attributable to the Asia segment) recorded in the prior period did not occur in the current period.

Key Products

Growth Drivers

• Market growth and steady demand trends in Southeast Asian countries (such as India)
• Fixed cost reduction effects from the completion of structural reform in the China region (workforce optimization, fixed asset impairment)
• Winning new orders through optimization design leveraging CAE analysis technology
• Pursuit of medium- to long-term growth opportunities through strengthened allocation of management resources to the India business

Risks

• Risk of continued decline in production volume at the main customer (Honda Motor group) in the China region
• Prolonged sluggish sales by Japanese and Western makers due to the expanding global market presence of Chinese EV makers
• Risk of spillover effects on the automotive industry as a whole from U.S. protectionist tariff policy
• Risk of decreased production volume at the main customer due to a resurgence of semiconductor procurement issues
• Translation impact on sales and profit from foreign exchange fluctuations (yen appreciation)
• Risk of supply chain disruption due to escalating tensions in the Middle East