Fukoku profit falls on costs despite higher sales

Tokyo – Japanese parts supplier Fukoku has reported a sharp decline in operating profit for the first nine months of its fiscal year on broadly flat sales.

Consolidated sales for the nine months to end of December 2025 rose 0.2% year-on-year to Yen67 billion (€366 million), supported by “steady sales” in its functional parts, life science and hose businesses.

Operating profit declined 29.3% to Yen2.6 billion, said Fukoku in a 13 Feb announcement.

The group said that despite efforts to improve productivity, streamline operations and pass on higher costs through pricing, it was unable to fully offset rising raw material and labour expenses.

Results were also affected by a rebound from a one-off reversal of cost of sales amounting to Yen439 million linked to “fraudulent activities” at a consolidated subsidiary discovered in November 2024.

The company added that, despite the fall in operating profit, earnings were supported by gains on the partial sale of policy shareholdings aimed at improving capital efficiency, foreign exchange gains, and a rebound from one-off expenses related to the above-mentioned “fraudulent activities.”

In the functional parts business, which produces seals and wiper blades, net sales increased 5.7% year-on-year to Yen31.7 billion.

Growth was supported by “steady performance” in thermally conductive gap fillers, a focus area for sales expansion, as well as orders from Chinese local wiper manufacturers.

Segment income, however, declined 10.3% to Yen3.4 billion, as higher raw material and labour costs outweighed the benefits of sales growth, productivity improvements and price adjustments.

In the anti-vibration parts (AVS) business, sales fell 4.1% to Yen28 billion due to slower orders both in Japan and overseas.

Segment income decreased 23.9% to Yen1.8 billion amid sluggish sales.

Despite cost control measures, Fukoku said it could not absorb higher labour, metal parts and steel material costs.

Performance was also negatively impacted by a rebound from the earlier reversal of cost of sales related to the “fraudulent activities.”

The hose business recorded sales of Yen3.9 billion, up 9.2% year-on-year, supported by steady demand for commercial vehicle products.

Segment income more than doubled, rising 106.5% to Yen334 million, reflecting higher sales and progress in mitigating raw material and labour cost pressures through automation, operational streamlining and pricing measures.

During the reporting period, Fukoku said the Japanese economy maintained a moderate recovery trend, supported by improving employment and income conditions.

However, the group noted that uncertainties continue to remain due to US trade policies and inflationary pressures.

In the automotive sector, production volumes increased in China and remained steady in Japan, while parts of Southeast Asia saw weaker performance.

While demand for electric vehicles is expected to expand over the medium to long term, Fukoku said “signs of near-term weakening have emerged due to the effects of policy changes and other factors.”