FY2025 Q3 Conference Presentation and Q&A Summary PDF （2,989KB） PDF （2,989KB）

Q3 Financial Results Briefing for the Fiscal Year Ending March 2026 February 12, 2026

(Total: 63 minutes, Presentation: 27 minutes, Q&A: 36 minutes)

Shinji Tanaka Representative Director, President

Joji Kumamoto Chief Executive, Corporate Strategy Division Director, Senior Managing Executive Officer

Kozo Okada Chief Executive, Finance and Accounting Division Director, Executive Officer

Keizo Hashimoto Chief Executive, Flat Rolled Products Division, Executive Vice President

Kaoru Ueda General Manager, IR, Finance Department

Harunobu Goroh UBS Securities

Yuji Matsumoto Nomura Securities

Yu Shirakawa Morgan Stanley MUFG Securities

Shinichiro Ozaki Daiwa Securities

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or whose questions were read by moderator/company representatives.

This briefing will be conducted using the explanatory materials available on the website of UACJ Corporation. If you do not have the materials at hand, please visit our website.

Although this presentation may provide information that includes forward-looking statements, such information is only our current forecast. Please note that actual results may differ significantly from these forward-looking statements due to a variety of factors.

I would now like to introduce today's attendees. Shinji Tanaka, Representative Director, President. Tanaka: This is Tanaka. Thank you.

Mr. Okada, General Manager of the Finance Division, will now explain the results for Q3 of FY2025, which were announced today. Please join us as we review the presentation materials.

Mr. Okada, please go ahead.

First, on page one, there is a summary of the financial results for Q3 of FY2025. I will explain the details on a later page, but let me give you an overview.

As a summary of Q3, both sales volume and revenue exceeded the previous year's levels in Q3 due to steady growth in global demand for can stock.

In terms of profit, cost reductions due to expanded scrap processing capacity in the US, as well as the effects of increased exports from Japan and price revisions, have also been realized.

On the other hand, due to a combination of factors such as exchange rate fluctuations and the current rapidly growing uncertainty in the North American automobile industry, business profit for H1 declined significantly by JPY13.1billion from YoY. In the cumulative total for Q3, it was a decrease of JPY7.8 billion, although it is improving.

As for the full-year forecast for FY2025, we expect the current business environment to continue, and we have revised our forecast upward. We have revised up the forecast for business profit by JPY2 billion from the one announced in November to JPY48 billion, and for net profit by JPY4 billion to JPY27 billion.

Accordingly, the annual dividend forecast has been revised upward to JPY45 per share, an increase of JPY3 from the previous forecast.

Let me explain the detail of financial results.

On page two, which is a table of contents for today, I will explain results for Q3, the full-year forecast, and enhancing corporate value.

First on page three is the financial results for Q3.

The details of the financial results are described on page four.

Revenue was JPY841.6 billion, up JPY103.2 billion from the previous year, business profit was JPY34 billion, down JPY7.8 billion from the previous year, and final profit, including inventory and operating income, was JPY24.9 billion, almost the same as the previous year.

Adjusted EBITDA was JPY63.7 billion, a decrease of JPY6.4 billion from the previous year.

See page five. This is the waterfall chart compared to the previous year for the business profit of JPY34 billion.

First, on the right side, we show the change in business profit for FY2025 by quarter. The first half of the fiscal year was extremely difficult, and there was a very small increase in business profit in Q1 and Q2. However, it increased in Q3 as we had expected at the beginning of the fiscal year.

Regarding the waterfall on the left side, I would like to explain some changes from the previous report for H1 of the fiscal year. In particular, the decline in TAA which was JPY900 million in the previous year was JPY5.6 billion in H1, which was a significant growth.

The sales-related difference was a decline of JPY700 million in H1 of the fiscal year, but has improved slightly to a decline of JPY1.1 billion in the current fiscal year.

The difference in cost and utilization ratio has worsened slightly, from a decline of JPY4.7 billion to a decline of JPY5.1 billion this time.

Regarding the very large growth of JPY17.1 billion in Q3, page six shows an analysis of business profit for Q3 alone for FY2024 and for Q3 alone for FY2025.

The key point is that TAA increased by JPY4.7 billion, which is a significant growth, especially due to the increase in sales volume and the effect of recycled raw materials.

Next, sales-related difference added JPY1.8 billion. In addition to the increase in sales mix for sales volume, the effects of price revisions are beginning to emerge, resulting in a total increase of JPY1.8 billion.

As for costs and utilization ratio, the figure of a decline of JPY400 million is shown. Although the flat-rolled product business has been quite effective, the profit of businesses other than the flat-rolled product business and group companies has slightly declined.

The decline of JPY1 billion in Other was due to the impact of inflation in personnel costs, etc., compared to the previous year.

Continuing on page seven, I will explain the sales volume by product type for flat-rolled products. The cumulative total for Q3 was 993,000 tons, an increase of 48,000 tons over the previous year.

As you can see from the change on the right side, can stock increased by 51,000 tons. The IT and automotive materials sectors have turned positive with an increase of 3,000 tons and 1,000 tons, respectively, but thick plates are still down 5,000 tons from the previous year.

Continued on page eight is the consolidated statement of financial position.

The result is a total of JPY1.093 trillion in assets. The increase of JPY123 billion from the previous year to JPY1.093 trillion includes approximately JPY40 billion due mainly to foreign exchange effects. Other than that, the key point of changes is the impact on inventories, which increased by JPY44 billion due to an increase in working capital from a rise in aluminum bullion, etc.

Property, plant and equipment increased by JPY25.3 billion, up from JPY12.2 billion in H1 of the fiscal year, but as you can see on the right side, capital investment in the expansion of UBC treating/processing equipment in Fukui, the expansion of thick plate quenching furnaces in Fukaya, and the expansion of the scrap processing line at TAA have grown significantly. This has led to an increase in a property, plant and equipment by JPY25.3 billion.

For total liabilities and equity, borrowings increased by JPY41.4 billion, mainly due to an increase in working capital.

Cash flows are explained on the next page, page nine.

This is the status of consolidated cash flows.

As shown on the left, including income before income taxes, depreciation and amortization, and changes in receivables and payables, operating cash flow was JPY27.7 billion.

Capital expenditures totaled JPY44.5 billion is spent from that, resulting in a negative free cash flow of JPY16.8 billion.

In terms of financial strength, the total amount of interest-bearing debt increased by JPY41.4 billion as a result of financing schemes, dividends, changes in deposits, and the exchange conversion of foreign currency denominated borrowings.

The financial strength is listed on the far right. With an increase of JPY41.4 billion as I mentioned earlier, interest-bearing debt was JPY382.1 billion, but including the increase in equity, the consolidated debt-to-equity ratio was less than 1x in Q3.

The following page, page 10, shows the results for each individual company for Q3 of the fiscal year. First, Thailand, UATH.

This page is titled, "sales are growing, focus is on price revisions to improve profitability." As shown in the upper right-hand corner, this section shows changes in sales volume and business profit by quarter since FY2024.

Although sales volume is steadily increasing, business profits are still very tight. The situation here continues to be that the roll margin is being compressed very much due to the appreciation of the baht. Here, we would like to work toward securing firm roll margins, including price revisions.

Continued on page 11 is the status of TAA.

As for TAA, demand has been extremely strong. We maintain high production, operation, and sales. There is no change in the demand trend in the form of a CAGR of 3%, as assumed by the Company.

In terms of production and sales, the start of operations of investments to increase hot-rolling and shredder line capacity has begun. This has contributed to a reduction in total costs. Also, we expect sales to remain at a high level based on the strong relationship of trust with our customers.

As for profit and loss, we have a picture of the shredder line in full operation at the bottom right. In particular, by expanding the capacity of shredders and the scale of our use of recycled materials, we are now ready to create value through economies of scale, regardless of the impact of US tariffs and other factors. We will continue to focus our efforts in this area, including strategic procurement of raw materials for recycled materials.

Continued on page 12 is the status of UWH in North America.

The rapid changes in the North American automobile market have forced us to focus on securing earnings in a difficult environment.

The bar graph on the lower right shows the trend of BEV production in North America, and as you can see, there was a significant decline in Q3. In particular, with the termination of the IRA tax credit at the end of September, there was a rush demand until September, but the situation has become very difficult from Q3. We intend to focus on thorough cost improvement and reduction activities.

Above was the result for Q3.

I will continue to explain our forecast for FY2025 starting on page 13.

On page 14, bottom right, we start with the business profit forecast.

Based on the current sales situation, we have revised our full-year business profit forecast upward to JPY48 billion.

In terms of the business environment, we expect the impact of the North American tariff policy to continue in Q4. In addition, there are some signs of a slight recovery in thick plates for semiconductor equipment. Also,

we are seeing a slight decline in demand for extruded and processed products, etc., other than the flat-rolled product business. With regard to exchange rate fluctuations, the impact of the baht dollar continues to require close monitoring.

As for measures to be taken from Q4 onward, we will continue price revision measures in response to rising costs and, in order to alleviate the supply chain disruption occurring in North America, the UACJ Group intends to respond by shipping from Japan and Thailand. With regard to the aerospace and defense materials business, we will continue to work in the area of strengthening our activities.

The left-hand side shows the progress by quarter, and for Q4, we expect a slight decrease from the JPY17.1 billion in Q3. The business environment has not changed, but I would like to introduce a few transient processes that are manifesting themselves.

We expect business profits to fall by about JPY3 billion, and one of the factors of this is that the timing of property taxes has been adjusted to Q4 in accordance with IFRS accounting standards. Also, all groups conduct year-end and New Year's repairs, and these repair costs will emerge in Q4, so there will be a slight decrease in profit related to manufacturing. In addition, each group company has been struggling a bit in business profits other than for the flat-rolled product business, and we expect to see some decline and that the business profits for Q4 will not be as high as those for Q3.

Continued on page 15 is the full-year earnings forecast.

First of all, revenue is projected to be JPY1.140 trillion for FY2025, an upward revision of JPY40 billion from the November announcement. Business profit is expected to be JPY48 billion, revised up by JPY2 billion from the November announcement. The forecast for the impact of metal price lag, etc. was increased by JPY9 billion to JPY18 billion. Operating profit is projected to be JPY66 billion, an upward revision of JPY11 billion from the November forecast, and net income attributable to owners of the parent is projected to be JPY27 billion, an upward revision of JPY4 billion from the November forecast.

As a result, we plan to pay an annual dividend of JPY45 per share, which will be mentioned later, an upward revision of JPY3 per share from the November announcement.

Moving on, our analysis of the JPY48 billion business profit forecast compared to the forecast announced in November is shown on page 16.

From the forecast of business profit of JPY46 billion, UATH is expected to decline by JPY800 million due to the fact that the baht has been appreciating a little since the November announcement.

The TAA is expected to increase by JPY2 billion, because the effect of recycled raw materials was more pronounced than expected, and the exchange rate conversion, the conversion into yen, is expected to be slightly positive.

The sales-related difference is projected to increase by JPY1.3 billion, taking into account of the extremely strong sales volume of flat-rolled product and the effect of the price revision, as well as the negative effects of slight slowdown in sales outside of the flat-rolled product business.

The cost and utilization ratio difference is projected to add JPY1 billion. We expect costs and utilization ratio to improve, given that production is slightly higher than expected.

The decline of JPY1.4 billion in Other is due to a slight impact of inflation on overhead costs, etc. As a result, business profit is forecast to be JPY48 billion, revised up by JPY2 billion.

Page 17 is the comparison with previous year.

The full-year forecast is JPY48 billion, an increase of JPY2.1 billion from JPY45.9 billion in the previous year.

The details of the increase and decrease are basically the same as in the previous section, but UATH is expected to be down JPY2.2 billion from the previous year due to the impact of foreign exchange and UBC costs, while TAA is expected to be up by JPY4.5 billion due to an increase in volume and the effect of recycled raw materials.

For UWH, the forecast is a decline of JPY600 million compared to the previous year due to the very difficult phase after this fourth quarter.

As for the sales-related difference, that for the flat-rolled product business is expected to be very positive. The effect of price revision has emerged in all businesses, but there was a slight negative impact from the decrease in sales in businesses other than the flat-rolled product business, resulting in an increase of JPY3.6 billion in the forecast for sales-related difference.

We intend to suppress the decline in the cost and utilization ratio difference to JPY3.7billion making efforts on cost reduction, so that it can be covered by sales-related difference, despite the impact of inflation and other factors.

The forecast for energy prices, etc., is JPY1.8 billion, and the current forecast shows that electricity, fuels, and added metals are improving compared to the previous year.

Page 18 is a sales volume forecast by product type.

The full-year forecast for FY2025 is 1,334,000 tons, which is a decline of 13,000 tons from the November announcement.

We expect the sales volume of can stock to decrease slightly by 12,000 tons but also expect a slight positive contribution from the automobile and thick plate sectors. That is the current situation and the forecast for the full year.

Compared to the actual results for FY2024, total sales volume is expected to increase by 68,000 tons, which is a significant increase compared to the previous year. This is mainly because beverage cans of can stock have grown very significantly to 64,000 tons.

Continued on, page 19 shows a shareholder return policy.

We are revising the annual dividend upward to JPY45 per share, an increase of JPY3 per share from the November announcement.

For the full year, the dividend payout ratio will be 30.2% at JPYP45 per share. We will work hard to maintain a dividend payout ratio of 30% or more of net income.

On the last page, I would like to make a few comments about our efforts to improve corporate value.

Regarding page 21, the current very strong performance of the stock price has led to a PBR in excess of 1x, but the Company will focus on reducing the cost of capital and improving ROE in order to create an equity spread.

On page 22, the topic is about strengthening activities in the growing field of aerospace and defense materials. In aerospace and defense, we have decided to make capital investments totaling JPY23 billion this fiscal year.

We released the largest ring material manufacturing facilities in Japan on February 10. We have made a capital investment of approximately JPY12 billion in Foundry & Forging Works, and we will invest particularly in the important area of space-related ring materials for the H3 rocket. We have been selected for the technology development theme of the Japan Aerospace Exploration Agency, and we intend to take firm action with the support of the Space Strategy Fund for implementation.

The thick plate quenching facilities on the right side was released on May 13 last year. In particular, we are expanding our quenching facilities for aerospace and defense related materials and semiconductor production equipment materials. We are installing the largest scale of highly efficient equipment in Japan at our Fukaya Works. We are focusing on our efforts to ensure that these two major investments will lead to profits.

Finally, as shown on page 23, we received an "A-" rating for the second consecutive year in the CDP2025 score for "Climate Change" and "Water Security". Here, too, we will strive to sustainably enhance corporate value.

Page 24 shows the changes in business profit and EBITDA.

We expect to grow EBITDA from JPY88 billion in the forecast for FY2025 to JPY100 billion in FY2027 and business profit from JPY48 billion to JPY60 billion. We will strive to generate a solid profit in FY2026 in order to reach our goals.

Lastly, on page 25, we are planning to disclose the financial result for FY2025 on May 14, 2026 at 14:00, and the IR-Day is scheduled for the morning of May 29. It was the introduction of the events.

That is all from Okada.

However, we ask for your understanding that we may refrain from answering your question if there is a possibility that the content of your question may affect our business activities.

I would now like to introduce first questioner. Mr. Yamaguchi of SMBC Nikko Securities, please go ahead.

I am now looking at the quarterly changes in the business profit of each unit, and I see that TAA's profit lifted from over JPY5 billion just before Q3 to about JPY10 billion in Q3, and the domestic profit rose from over JPY2 billion to over JPY6 billion. I would like to ask you to explain about the profit increase in each of the two bases in terms of quarters. Perhaps metal benefits in the US is emerging, but please explain whether profit margin is expanding or not.

Also, in the domestic market, aluminum cans are not selling well due to the Asahi Breweries' problem, and statistics from the Japan Aluminum Association show that the numbers are a bit tough. However, I see your company is raising business profit domestically this fiscal year. I would like to know the reason.

You mentioned that the goal is to achieve JPY60 billion in business profit. Only the Q3 result is due to your capability and Q4 is seasonal, so it is hard to say, but if we multiply it by 4, it will be JPY68 billion, and if we double H2, it will be JPY61 billion. Therefore, you have already achieved the mid-term goal for H2 profit. But I am not sure if you should let our guard down or not. In other words, I would like to know if there will still be various negative factors next year and whether or not profits will go down once we continue to drive with our hands in the air.

Also, perhaps, at the beginning of the fiscal year, TAA formulates forecast often without including metal benefits, so the figures often come out as a disappointment to everyone. Including such situation, I would like to know whether the actual profit figures for H2 are sustainable. Can you please explain whether you are reaching these JPY60 billion or not?

That is all.

The first point is that, looking at the quarterly financial results, both TAA and domestic sales have shown respective growth, but we were asked to explain the details of this area, especially domestic sales.

In addition, statistics from the Japan Aluminum Association (JAA) are available for the domestic market. Your first question is how the flat-rolled product business is going, including in particular that there was a bit of trouble with a beverage manufacturer in Japan.

Secondly, looking at the business profit for H2, if we multiply it by four, it would be a certain figure, and you would like to know the forecast for H2. You asked whether we should be on our guard or not.

Hashimoto will reply to the first point and Okada to the second point.

In your first question, you mentioned that the profit of TAA has improved in Q3. As I explained in H1, there was a time lag in H1 and it took some time for the benefits of using recycled raw materials to become apparent. In H2, it became apparent at certain level. That is the major reason we have been explaining.

In addition, as mentioned in the explanatory materials, we have also been enhancing our recycling facilities, and we are beginning to see the benefits of these facilities in terms of volume.

As for the domestic beverage maker you mentioned, they have been working very hard and shipping almost as much beer as planned, so I hope you understand that we have not been affected too much.

Regarding the improvement in domestic profitability, one point is that exports to Europe are progressing relatively well in terms of volume, and are on a trend to increase further. Also, there was a mill in the US that had some trouble, and can stock and automobile materials were sent out from Japan in support of the mill, resulting in an increase. Also, regarding thick plates, Q2 was a bottom, and a gradual recovery has been seen since Q3. We project an increase for Q4. One of the reasons for the improvement is that the numbers which were at a low level are showing some improvement finally.

The question is if we proceed with at the current level, we may reach JPY60 billion goal. As I wrote on page 14, as shown in the bar chart, profit has not been running at the high level and the trend is inevitably affected by various external environments. As you commented, I think there are some seasonal factors.

However, if the effect of the tariffs in North America continue as they are in 2026, since TAA is already in a full production situation, we can expect a good base.

As for UATH, full production is expected to continue in the next fiscal year, so if, for example, the baht depreciates against the dollar in foreign exchange, I think there will be more profit.

As I mentioned earlier in my explanation, in the domestic business, there are increase and decrease depending on the business. However, as Hashimoto just explained, there are signs of recovery in the semiconductor production equipment related product, and we are currently discussing the budget for FY2026, and well aware of the market's expectation for us to reach the 60 billion yen in the coming fiscal year.

On the first point, you all were concerned about the impact of the beverage manufacturer. As Hashimoto answered, we were not completely unaffected, but the impact was very minor, partly because the beverage manufacturer shipped their main products well.

Regarding the second point, whether profits in H2 will continue for the full next fiscal year, the biggest impact will be from the North American tariffs. We cannot predict what will happen in the next fiscal year, so we need to keep a close eye on the situation and consider the impact of the project.

I would now like to introduce next questioner. Mr. Shirakawa of Morgan Stanley MUFG Securities, please go ahead.

The first point is about page 16 of the document. It says that the sales-related difference is an increase of JPY1.3 billion. I think this includes price increases, etc., so please tell us about this. Also, regarding the price increase, I am still not sure if it has penetrated well in a not-so-favorable environment. On the flip side, I would appreciate your comments on whether there is still upside for the next fiscal year and beyond. Also, the decrease of JPY1.4 billion in Other is a bit large. I would like to know the breakdown. This is the first point.

The second point is about Thailand. I think you still have a reasonable volume for the US market this year, including support for the US market, of course, but what kind of outlook should we have for the next fiscal year? I don't think tariffs had that much of an impact on this year's contract, but I wonder if they will have an impact next year. Also, since this is a calendar year, I think the agreement has already been reached, but please let us know what the price increase is going to be in the US and other regions as well.

Those are the two questions. Thank you.

The first point is the business profit analysis, and you asked about sales-related differences, detail of Other category, as well as price increases.

I think your second question was what the outlook for Thailand for the next fiscal year is.

Okada will explain the first point regarding sales-related differences, and Hashimoto will explain the price increase and the outlook for Thailand for the next fiscal year.

I explained earlier that while the volume structure and price revisions for flat-rolled product will have an effect, demand for businesses other than flat-rolled product, such as extrusion and metal components, has been a little sluggish. As a result, it is JPY1.3 billion, as I explained. To give you a rough idea, the flat-rolled product business-related added approximately JPY2 billion. However, although we are raising prices in all extrusion-related businesses, the sales volume has decreased more than the effect of the price increase. That is the reason for the reduction of JPY700 million.

In addition, regarding the breakdown of a decrease of JPY1.4 billion in Other, it is due to the impact of inflation and other factors. We expect to see a slight impact of inflation on overhead and other costs in the future, which was projected to be JPY1.4 billion.

As for Thailand, as I mentioned earlier, we are increasing the volume of materials for the US market in response to requests for increased volume due to the mill trouble in the US, and this increase will continue for some time. In addition, since the supply and demand situation in the US has continued, it is necessary to ship the material from Thailand in next year as well. Therefore, we are discussing that this will continue to the middle of the next year. That is the situation for the product for the US. In terms of price increase, the price of aluminum bullion is rising in Shanghai bullion in China and price of Chinese materials of competitors is also rising in Asia. Therefore, we have asked for price increase and achieved a certain level of price revision this year.

Regarding the first point, the domestic price increase, can I understand that it is already completed?

I would now like to introduce next questioner. Mr. Matsumoto of Nomura Securities, please go ahead.

First point is about page 14. I understand from Mr. Okada earlier that Q4 will be a bit transient and will decrease, but looking at these red and blue letters, there are some stories that Q4 will be much better, and from what Mr. Hashimoto said earlier, it seems that price increases are also being made in Thailand and other countries. I also feel that the metal benefits in the US are not getting much worse, so how should we think about this? I have a feeling that some of the stories will get better over Q4, so what are your thoughts on that?

Secondly, while margins look good in the US, I have heard that in Asia, UBCs and premiums are decreasing and margins are suffering. Please advise how we should look at the assumption of the market, increase in scrap, deterioration of premium, etc., in the future.

Also, sorry, thirdly, I saw a newspaper article that said magnesium exports are no longer coming out of China. Please let me know if I should be worried about this. Thank you.

I understood your first question to be about the progress and how to proceed in Q4 and then next year, with a particular focus on page 14.

Second, you asked what the margins for Asia are going to be, or are likely to be, and third, what is the recent status of magnesium.

Okada will answer the first point, Hashimoto will answer the second point regarding margins for Asia, and Kumamoto will answer the third point.

I think Mr. Matsumoto asked which of positive impact and negative impact are being focused. First of all, as you are already aware, the business environment is certain to continue in the current situation in Q4, so we believe that we will be able to secure a solid profit, especially for TAA's profit and loss. We are very concerned about the extrusion-related area, where, as you have explained, demand is declining. We are now working hard to expand sales of highly profitable extruded materials, and we are making efforts to improve these areas, so we expect to see solid results in the coming year.

As for exchange rate fluctuations, we expect it to continue, so we will make firm efforts to improve profit and loss for UATH, and as Hashimoto explained earlier, including price increase. We would like to firmly put the structure in place before the exchange rate of baht improves. Also, I would like to omit the part in blue in Q4 regarding price revisions, as Hashimoto explained earlier.

Regarding the shipment from Japan and Thailand in relation to the supply chain in the US, we are currently experiencing supply chain problems in North America, and we are receiving requests for support from Japanese and other customers. We will work to make sure that we are able to do so while coordinating deliveries from Japan and Thailand. I can't see how far the impact on the supply chain will extend, but we want to make sure we are prepared to deal with the situation.

As for your earlier question about the cost increase due to higher recycled raw materials, it is true that the premium was very low in Q3, so the price difference between recycled material and virgin aluminum was small, but this has also improved in Q4. The price increase for recycled raw materials has also calmed down somewhat, so I hope that you recognize that we are now in the direction of improvement in that sense as well.