Tsubaki Nakashima (6464): FY2025 Results Summary — Record Free Cash Flow Despite One-Time Losses

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Tsubaki Nakashima Co., Ltd. (Prime Market of TSE, 6464) released its FY2025 Results Presentation on February 13, 2026, covering the fiscal year from January to December 2025. Revenue decreased by 8.6% YoY (excluding foreign exchange impact) to ¥69.84 billion, and the company recorded a full-year operating loss of ¥22.34 billion after booking a ¥6.5 billion inventory valuation loss and a ¥16.7 billion impairment loss, both described as one-time, non-cash items. Excluding these one-time losses, operating profit was ¥0.88 billion, a similar level to the previous year. Free cash flow reached a record high of ¥11.64 billion, and for FY2026 the company forecasts operating profit of ¥2.50 billion with net profit turning positive at ¥0.50 billion.

Consolidated Results (Full Year)

The business environment remained challenging due to weakening European demand and the impact of U.S. tariffs, which the company says resulted in a direct impact of approximately ¥0.13 billion and an indirect impact of approximately ¥1.1 billion. Revenue fell short of the company’s plan by 2.3%. The presentation reports figures for continuing operations, excluding the manufacturing and sales of ball screws and ball ways (the Linear Business, transferred on October 3, 2025), which were classified as discontinued operations; net profit is presented as the combined results of continuing and discontinued operations.

Item (¥ billion)	FY2024 Actual	FY2025 Actual	YoY (amount)	FY2025 Full-Year Plan
Revenue	75.92	69.84	-6.53	71.50
Operating Profit	0.81	-22.34	-23.07	1.00
Operating Profit (excluding one-time losses)	—	0.88	—	—
EBITDA	4.06	-1.85	-5.83	—
PBT	1.75	-23.99	-25.67	-0.60
Net Profit	0.91	-27.21	-28.11	-0.80

Note: YoY amounts exclude foreign exchange effects. The FX impact on revenue was +0.45 billion yen.

One-Time Losses: Inventory Write-Down and Impairment

As part of internal reforms, a company-wide inventory review and management system overhaul revealed that the recoverable value of inventory held primarily at two U.S. plants and in ceramics fell below book value, resulting in a ¥6.5 billion write-down. Separately, changes in the business environment for European operations and intensified competition in the ceramic business led to a reassessment of the future recoverability of previously recorded goodwill, resulting in a ¥16.7 billion impairment charge, part of which was a ¥1.6 billion impairment on fixed assets in the European business. An impairment loss of ¥15.0 billion was recorded on goodwill in the Precision Components Business, primarily goodwill recorded during the integration of the former Tsubaki Nakashima business following the MEBO (2007) and the acquisition of NN Corporation (2017); the goodwill carrying amount declined from ¥36.2 billion (FY24) to ¥21.2 billion (FY25). The company states that both losses are non-cash and non-recurring.

By variation factor, operating profit moved from ¥0.81 billion in FY2024 to ¥0.88 billion in FY2025 excluding one-time losses: revenue impact of -3.14, market conditions and other of -0.75, FOREX of -0.08, structural reforms of +0.30, inventory valuation (recovered) of +2.00, and value creation (cost reductions) of +1.74 (¥ billion). The cost improvement of +1.74 consists of +0.41 from procurement optimization and +1.33 from productivity improvement.

Segment and Regional Revenue

Revenue in the Precision Components segment decreased 8.8% YoY. By region, Japan performed relatively well with revenue nearly flat, while Europe declined 15.3% and Asia (excluding China) declined 19.4%; within Asia, India (steel balls) performed well while Thailand (ceramic balls) underperformed. The Other segment, reclassified as the Blower & Real Estate Business from the fourth quarter of the fiscal year ending December 2024, grew 11.3%.

Segment / Region (¥ billion)	FY2024 Actual	FY2025 Actual	YoY (amount)	YoY (%)
Group Consolidated	75.92	69.84	-6.53	-8.6%
Precision Components	75.10	68.92	-6.63	-8.8%
Japan	11.66	11.58	-0.08	-0.7%
North America	14.86	13.76	-0.92	-6.2%
Europe	25.16	22.07	-3.85	-15.3%
China	17.18	16.44	-0.57	-3.3%
Asia (excluding China)	6.25	5.08	-1.21	-19.4%
Other	0.82	0.91	+0.09	+11.3%

Note: YoY amounts and percentages exclude FX impacts. Regional figures are after eliminating inter-regional consolidation.

Cash Flow and Balance Sheet

Free cash flow reached an all-time high of ¥11.64 billion (FY2024: ¥1.07 billion), driven by inventory reduction, a shorter cash conversion cycle, and CAPEX restraint. Operating cash flow was ¥10.52 billion and investing cash flow was ¥1.12 billion. Inventories fell from ¥36.08 billion to ¥25.73 billion, a ¥10.4 billion reduction (a 3.8 billion yen reduction excluding the 6.5 billion yen inventory valuation loss). The cash conversion cycle improved by 62 days from 260 days to 198 days (an 11-day improvement excluding the impact of the inventory valuation loss), and capital expenditures were reduced from ¥3.83 billion to ¥1.94 billion. The company also cites shortening the CCC, curbing CAPEX, selling idle assets, completing the transfer of the Linear Business, and selling cross-held shares as drivers of the financial improvement.

FY2026 Forecast

The company states that the inventory write-down and impairment losses are one-time, non-cash items and will not impact FY2026 performance. Operating profit of ¥2.5 billion is expected as per the Mid-Term Business Plan 2025-2029, with net income also turning profitable at ¥0.5 billion. Exchange rate assumptions are ¥145 per USD, ¥170 per EUR, and ¥20.30 per CNY.

Item (¥ billion)	FY2026 Full-Year Forecast	FY2025 Full-Year Actual	Change amount
Revenue	70.00	69.84	0.16
Operating Profit	2.50	-22.34	24.84
PBT	1.10	-23.99	25.09
Net Profit	0.50	-27.21	27.71
Basic Earnings per Share (yen)	12.91	-702.80	715.71
Dividend per Share (yen)	0.0	0.0	—

In the growth segments designated in the Mid-Term Business Plan, the FY2026 sales plan calls for the Indian market to grow to ¥3.6 billion (+32.1% vs. FY2025), Aerospace & Defense to ¥1.2 billion (+65.5%), Ceramic Balls to ¥7.1 billion (+5.5%), and Engineered Plastic Components (EPC) to ¥3.9 billion (+11.5%). The company expects Ceramic Balls to bottom out, with the other growth areas projecting double-digit increases YoY.

Shareholder Returns

The dividend per share was ¥0.0 for FY2025, and Tsubaki Nakashima plans to suspend its dividend payment for FY2026 as it prioritizes strengthening its financial base by enhancing internal reserves. In the company’s long-term improvement roadmap under the Mid-Term Business Plan 2025-2029, “Aim to restart dividend payment” is listed among the actions for the steady-state, full-scale improvement phase.

Mid-Term Business Plan Progress

FY2025 was the first year of the Mid-Term Business Plan 2025-2029, and the company reports that procurement and production cost reductions exceeded plan. In the growth segments, sales in the Indian market grew 18.5% YoY to ¥2.7 billion (88.1% of plan), Aerospace & Defense was ¥0.7 billion (80.6% of plan), Ceramic Balls were ¥6.7 billion (89.2% of plan), and EPC was ¥3.5 billion (98.3% of plan). The company also reports positive signs in the ceramic business, including significantly increased sales of ceramic balls for data center cooling fans, a third Nadcap certification obtained by its U.S. subsidiary in Aerospace & Defense, and newly established microfluidic plate manufacturing capabilities in EPC. Separately, in response to the quality compliance incident in the linear business discovered in October 2024, the company states that implementation of all planned improvement items was completed company-wide by the end of December 2025.

The engagement score reached 7.03, exceeding the industry average of 7.0. On sustainability, the FY2025 carbon footprint result of 0.69 was better than the annual target of 0.80, CO2 emissions were reduced by 10% YoY, and the company obtained a Level B rating from CDP for Climate Change in FY2025.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.