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Introduction & Market Context
Tsubakimoto Chain Co (TYO:6371) released its first quarter fiscal year 2025 results on July 30, 2025, revealing a challenging start to the year with overall profit declines despite growth in select business segments. The company, known for its power transmission and materials handling equipment, faced headwinds from a stronger yen and increased company-wide expenses that weighed on its financial performance.
The presentation comes as Tsubakimoto Chain’s stock trades at 2,202 yen (as of September 9, 2025), down 0.5% or 11 yen from its previous close, within a 52-week range of 1,546 to 2,310 yen.
Quarterly Performance Highlights
For Q1 FY2025, Tsubakimoto Chain reported a 1.7% year-over-year decline in net sales to 65,317 million yen, while operating income fell more sharply by 19.8% to 3,280 million yen. The operating income margin contracted from 6.2% to 5.0% compared to the same period last year.
As shown in the following financial highlights table, ordinary income and net income saw even steeper declines of 28.1% and 29.6% respectively:
The company attributed these results primarily to unfavorable exchange rate movements, with the Japanese yen strengthening against major currencies. The USD/JPY rate averaged 144.60 in Q1 FY2025, compared to 155.85 in the same period last year, representing a significant headwind for the export-oriented manufacturer.
Detailed Financial Analysis
Tsubakimoto Chain’s segment performance revealed a mixed picture, with some business units achieving growth while others struggled. The Motion Control and Mobility segments were bright spots, while Chain and Materials Handling faced challenges.
The segment breakdown shows the following performance:
The Motion Control segment delivered the strongest performance with an 8.4% increase in sales and a remarkable 3,698.1% surge in operating income, albeit from a very low base in the previous year. The Mobility segment also performed well with a 2.2% sales increase and 38.0% growth in operating income.
In contrast, the Chain segment, traditionally a core business for Tsubakimoto, saw sales decline by 1.2% and operating income fall by 16.2%. The company specifically cited foreign exchange impacts and "Trump’s tariffs" as factors affecting this segment.
The Materials Handling segment faced the steepest decline with a 12.0% drop in sales and continued operating losses, which the company attributed to weaker sales in the Americas.
Forward-Looking Statements
Despite the challenging start to the fiscal year, Tsubakimoto Chain maintained its full-year forecast unchanged from its May 14 outlook. The company continues to expect sales to increase by 3.9% year-over-year to 290,000 million yen for the fiscal year ending March 31, 2026.
However, the forecast acknowledges continued pressure on profitability, with operating income projected to decline by 5.9% to 21,500 million yen, as shown in the following forecast table:
The company expects a stronger second half of the fiscal year, with both sales and operating income projected to improve compared to the first half. The forecast assumes exchange rates of 141.15 yen to the USD, 160.96 yen to the EUR, and 19.87 yen to the RMB for the full fiscal year.
Shareholder Returns & Strategic Initiatives
Despite the profit pressures, Tsubakimoto Chain remains committed to shareholder returns. The company plans an annual dividend of 80 yen per share for FY2025, which represents a payout ratio of 39.2%. This follows the implementation of a three-for-one stock split on October 1, 2024.
The following chart illustrates the company’s dividend history and payout ratios:
It’s worth noting that the FY2024 dividend of 240 yen shown in the chart doesn’t account for the stock split. On a split-adjusted basis, the comparable FY2024 dividend would be 146 yen per share (consisting of an interim dividend of 99 yen and a year-end dividend of 47 yen).
In addition to dividends, the company has a 10 billion yen share buyback program currently in progress, further demonstrating its commitment to returning capital to shareholders despite the challenging business environment.
On the strategic front, Tsubakimoto Chain highlighted the completion of its Fukui Mihama Plant, the company’s sixth domestic facility for automated cultivation of commercial-use lettuce. The plant is scheduled to begin operations on August 1, representing the company’s continued diversification into agricultural technology.
The company also emphasized its multi-stakeholder approach, noting that it aims to "promote cooperation and co-prosperity with business partners and other businesses that aim to create value" while appropriately distributing profits and results to various stakeholders.
As Tsubakimoto Chain navigates through currency challenges and varying segment performance, investors will be watching closely to see if the company can achieve its projected second-half improvement and maintain its commitments to both growth initiatives and shareholder returns.
Full presentation:
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