HKS CO., LTD.

Business Details

The company's main products are mufflers, electronic control products, turbochargers, suspensions, thermal management products, engine parts, and other items, sold to the domestic and overseas aftermarket, and it also operates a Contract Manufacturing & Development Business. Manufacturing is handled by the domestic head office plant and HKS (THAILAND) CO., LTD., while sales are conducted globally through domestic subsidiaries and overseas subsidiaries (UK, Thailand, China, and the US). Turn 14 Distribution, Inc., the largest distributor in the US, is a key customer.

Recent Overview

In the cumulative third quarter, net sales reached ¥7,092 million and operating profit ¥407 million, with all profit line items increasing significantly; the full-year forecast has been revised upward

In the cumulative third quarter of FY2026 (ending August 2026) (September 2025 to May 2026), net sales increased 7.5% year on year to ¥7,092 million, driven by robust domestic and overseas demand in the aftermarket business, the weaker yen, and strong performance of new products. Gross profit margin improved 1.0 percentage point year on year to 42.1%. Although selling, general and administrative expenses increased ¥196 million year on year due to payment of US import tariffs, operating profit increased 23.7% year on year to ¥407 million. With the recording of ¥107 million in foreign exchange gains, ordinary profit increased 51.5% year on year to ¥549 million. Reflecting items such as ¥52 million in gains on sale of investment securities and ¥15 million in insurance income, quarterly net profit increased 44.7% year on year to ¥413 million. The full-year earnings forecast was revised upward from the figures announced on April 10, 2026, to net sales of ¥9,750 million, operating profit of ¥500 million, ordinary profit of ¥600 million, and net profit for the period of ¥500 million.

Key Products

Growth Drivers

• Robust domestic and overseas demand in the aftermarket business (cumulative third-quarter net sales up 7.5% year on year)
• Strong market performance of newly launched products, including suspensions
• Continued year-on-year growth in inquiries through the US sales channel
• Increase in yen-denominated value of foreign-currency sales and foreign exchange gains (¥107 million in the cumulative third quarter) due to the weaker yen
• Improved head office plant utilization rate and gross profit margin (42.1%) driven by rising demand in the aftermarket business
• Increase in local subsidiary sell-out in Asia (China, Thailand, etc.)
• Expansion of overseas sales channels, strengthening of product development capabilities for local vehicles, and promotion of new market development based on the medium-term management plan

Risks

• Uncertainty over US import tariff policy: changes in tariff rates directly affect selling and shipping costs and profit margins (selling, general and administrative expenses increased ¥196 million year on year in the cumulative third quarter)
• Continued weakness in the contract manufacturing business: inventory adjustments and reduced orders by client companies, along with sluggish growth in new contract projects, continue
• Risk of declining plant utilization rate due to reduced shipment volume of in-house products: a decline in utilization rate directly leads to a rise in cost of sales ratio and a decline in profit margin
• Geopolitical risk: sustained high crude oil prices and supply chain disruption due to worsening conditions in the Middle East
• Risk of a slowdown in the Chinese economy: adjustment pressure in the real estate and labor markets and lack of robust personal consumption
• US economic risk: impact on employment and income formation through deterioration in corporate earnings due to tariffs, and impact on personal consumption
• Acceleration of electrification in the automotive industry: long-term risk of shrinking demand for aftermarket parts for engine-powered vehicles amid tightening carbon neutrality regulations