Makita Earnings: Global Production Network Provides Chance to Improve Margin Over Midterm

Makita's companywide revenue marked 2.4% year-on-year growth to JPY 753 billion in fiscal 2024 (ended March 2025) which aligned with our estimate. Operating profit reached JPY 107 billion or a margin of 14.2%, surpassing our estimates of JPY 93 billion or a margin of 12.3%, as operating margin in Europe improved significantly to 9.5% from 4.8% in fiscal 2023. The companywide improvement in operating margin of 5.3 percentage points year over year suggests that the overstock issue across the regions has faded away, and the recovery of utilization rate is on track. While we cut our companywide revenue estimate by 3% in fiscal 2025, primarily due to a 15% downward revision of North American sales, we maintain our fair value estimate for narrow-moat Makita at JPY 5,000 as our midterm outlook that Makita will retain its leading position, with a competitive products lineup in key markets such as Europe, remains intact.