GRAPHITE DESIGN INC.

Business Details

The company is a sporting goods specialty manufacturer whose core business is the manufacture and sale of carbon golf shafts, complemented by a golf club assembly processing business. Its main customers are golf club manufacturers and agents in Japan and the U.S., and it specializes in the high-price, high-value-added segment. It is characterized by a "design-in" approach in which it collaborates with customers from the development stage, and its main customer is the U.S. agent PRO'S CHOICE GOLF SHAFTS, INC. In the first quarter of FY2027 (ending February 2027), order volume from the U.S. agent exceeded expectations, resulting in significant increases in both revenue and profit, with net sales of ¥970 million (up 49.9% year on year) and operating profit of ¥193 million (up 478.0% year on year).

Recent Overview

Order volume surge from the U.S. agent drove a sharp Q1 net sales recovery, up 49.9% year on year

In the first quarter of FY2027 (ending February 2027) (March to May 2026), order volume for golf shafts from the U.S. agent exceeded expectations, resulting in net sales of ¥970 million (up 49.9% year on year) and operating profit of ¥193 million (up 478.0% year on year). Whereas the same quarter of the previous fiscal year had recorded a foreign exchange loss of ¥41 million leading to an ordinary loss, this quarter recorded a foreign exchange gain of ¥23 million, resulting in a swing to ordinary profit of ¥214 million. The golf shaft manufacturing and sales division drove results with sales of ¥914 million (up 57.4% year on year), while golf club assembly processing and others saw sales decline to ¥56 million (down 15.3% year on year). There has been no change to the full-year earnings forecast, which remains unchanged due to uncertainty regarding conditions from the second quarter onward.

Key Products

Growth Drivers

• Continued growth in orders from the U.S. agent and penetration of in-house brand shafts into the U.S. market (full-year net sales forecast for FY2027, ending February 2027, of ¥2,890 million, up 6.6% year on year)
• Improved cost ratio through increased production capacity following completion of new factory construction and leveling of operating rates
• Enhanced brand exposure and expanded aftermarket sales through strengthened tour support for PGA Tour players
• Expansion of market share in the iron shaft market under the "RAUNE" brand
• Revenue diversification through commercialization of CFRP products leveraging carbon fiber lamination technology

Risks

• Risk of rising cost ratio due to fluctuations in custom orders for in-house brand shafts (which materialized in FY2026, ending February 2026)
• Risk of sales concentration on a single U.S. customer (PRO'S CHOICE GOLF SHAFTS, INC.)
• Impact on earnings from sharp foreign exchange fluctuations (in the same quarter of the previous fiscal year, a foreign exchange loss of ¥41 million was recorded, resulting in an ordinary loss)
• Instability in order volume due to strengthened inventory management by club manufacturers
• Decline in gross profit margin due to rising raw material prices and other costs
• Adverse impact on overseas sales from ripple effects of U.S. trade policy (tariffs) (one factor behind keeping the earnings forecast unchanged, given uncertainty in conditions from the second quarter onward)
• Geopolitical risks such as conflict in the Middle East, which could worsen economic conditions and affect demand for golf equipment