ENVALITH
株式会社SUBARU logo

SUBARU CORPORATION

7270・Prime Market・Transportation Equipment

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株式会社SUBARU logo
SUBARU CORPORATION7270

Business

SUBARU CORPORATION is a Japanese comprehensive transportation equipment manufacturer established in 1953, with its predecessor being the former Nakajima Aircraft Company. The business consists of three segments: Automotive, Aerospace, and Other (Real Estate Leasing Business, etc.), with the Automotive business accounting for approximately 97% of revenue. In the Automotive business, the company conducts global sales centered on SUVs such as the Forester, Crosstrek, and Outback, with North America as its primary market. In the Aerospace business, the company handles civil aircraft parts (Civil Aircraft Structural Parts (Center Wing, etc.)), defense equipment, and Helicopters, forming a stable second pillar of earnings with an order backlog of ¥707,464 million. Under a business and capital alliance with Toyota Motor Corporation, the company is also promoting joint development and production of BEVs.

Business Model

In the Automotive business, the company sells an SUV lineup built around proprietary technologies such as Symmetrical AWD and horizontally-opposed engines, achieving global sales of approximately 896,000 units. Through optimization of pricing composition (grade mix improvement), it maintains a structure capable of achieving revenue growth even amid unit sales declines. The Aerospace business operates on a build-to-order basis, with an order backlog of ¥707,464 million securing medium- to long-term revenue visibility. Other businesses, including Real Estate Leasing, complement stable earnings within the group with a high profit margin of approximately 73%.

Company Strengths

The unique combination of Symmetrical AWD, horizontally-opposed engines, and EyeSight (Driver Assist System) forms the core value proposition of "peace of mind and enjoyment," earning deep customer loyalty expressed in the U.S. as "I love SUBARU." The Forester's receipt of the "Five Star Award" in the 2025 JNCAP further demonstrates the company's high safety performance as validated by a third-party organization.

The Aerospace segment achieved a turnaround to profitability in FY2026 (ending March 2026), with revenue of ¥141,667 million (up 27.0% year on year) and segment profit of ¥3,500 million, while building up an order backlog of ¥707,464 million (up 9.9% year on year) and orders received of ¥203,569 million (up 8.8% year on year). Combined with growing demand for defense-related business amid the government's policy of expanding defense spending, this secures medium- to long-term revenue visibility.

As of the end of March 2026, cash and cash equivalents, including time deposits with maturities exceeding three months, exceeded ¥1,453,400 million, and the company held approximately ¥300,000 million in unused commitment lines. Having obtained an "A- (Stable)" rating from the Rating and Investment Information, Inc. (R&I), the company possesses the financial flexibility to continue growth investments and shareholder returns even under an uncertain business environment.

ENVALITH's Perspective

Operating profit for FY2026 (ending March 2026) fell sharply to ¥40,120 million (down 90.1% year on year), mainly due to the impact of additional tariffs in the United States and the recording of environmental regulation-related expenses, including losses related to environmental regulation credits. The forecast for FY2027 (ending March 2027) anticipates a substantial recovery to operating profit of ¥150,000 million (up 273.9% year on year), but the assumed exchange rate is set at ¥155 to the US dollar (versus the actual rate of ¥150 in the previous fiscal year), reflecting a yen depreciation assumption, leaving significant upside and downside risk to the forecast depending on the direction of tariff policy. Uncertainty over US trade policy remains externally the largest factor affecting performance volatility.

The Aerospace segment achieved revenue of ¥141,667 million (up 27.0% year on year) and segment profit of ¥3,500 million in FY2026 (ending March 2026), turning profitable. This was driven by an increase in deliveries of center wings in the civil aircraft business, but the segment profit's contribution to the company-wide operating profit of ¥40,120 million remains limited. With Automotive segment profit falling sharply to ¥32,086 million (down from ¥420,410 million in the previous fiscal year), expansion in scale is needed for the Aerospace business to function as a buffer for revenue diversification, remaining a mid-term challenge.

As a subsequent event, on May 15, 2026, the company resolved to conduct a share buyback of up to 80 million shares and ¥150,000 million (from May 18, 2026 to March 16, 2027) and to retire all repurchased shares. Dividends were also maintained at an annual ¥115.50 per share (FY2026, ending March 2026), an increase of ¥0.50 year on year, bringing the dividend payout ratio to 92.0%. Against profit attributable to owners of the parent of ¥90,842 million, total dividends of ¥83,257 million account for nearly the entirety of profit, and combined with the share buyback, the total return amount substantially exceeds profit. While the aggressive capital return utilizing financial capacity is commendable, a recovery in performance in FY2027 (ending March 2027) is essential from the standpoint of sustainability.

Growth Strategy

Aiming for earnings recovery through expanding ICE and BEV product lineup and maintaining U.S. sales under the SUBARU 2025 policy

In addition to ICE vehicles such as the Forester and Crosstrek, the company is expanding its Alliance BEV product lineup. For FY2027 (ending March 2027), the company targets revenue of ¥5,200,000 million (up 8.7% year on year), aiming for steady accumulation of global unit sales.

The company continues its strategy of offsetting declines in unit sales through improved pricing structure (grade mix optimization). It is flexibly maintaining solid sales in the increasingly competitive U.S. market while building up unit sales across global markets, including Japan and Canada.

Domestic production lines were temporarily halted in FY2026 (ending March 2026) due to construction work for in-house battery EV production. Domestic production volume declined to 525 thousand units, down 77 thousand units (12.8%) year on year, but the completion of the mixed-model production system is promoting supply stabilization and electrification readiness.

Driven by an increase in deliveries of Civil Aircraft Structural Parts (Center Wing, etc.) in the civil aircraft business, the company achieved revenue of ¥141,667 million (up 27.0% year on year) and turned profitable with segment profit of ¥3,500 million in FY2026 (ending March 2026). The company continues to cultivate this as a second pillar of earnings, capturing medium- to long-term demand growth in the defense business amid the government's policy of expanding defense spending.

On May 15, 2026, the company resolved to acquire up to 80 million shares / ¥150,000 million in treasury stock and to cancel all such shares (acquisition period: May 18, 2026 to March 16, 2027). Annual dividends are maintained at ¥115.50, continuing a high level of returns with a dividend payout ratio of 92.0%. The company aims to improve its PBR through enhanced capital efficiency.

Last updated: July 19, 2026