Interim report
Page 1
MELIBA FASF Consolidated Financial Results for the Three Months Ended June 30 , 2026 ( Under IFRS ) Company name : IHI Corporation Listing : Tokyo Stock Exchange ( Prime Market ) Securities code : 7013 URL : Representative : Representative Director and President , Inquiries : https://www.ihi.co.jp Managing Executive Officer , Telephone : +81 ( 03 ) 6204 - 7065 Scheduled date to commence dividend payments : Hiroshi Ide Hiromi Oshima Preparation of supplementary material on financial results : Yes Holding of financial results briefing : August 5 , 2026 Yes ( for institutional investors , analysts and the media ) ( Yen amounts are rounded to the nearest millions . ) 1. Consolidated financial results for the three months ended June 30 , 2026 ( from April 1 , 2026 to June 30 , 2026 ) ( 1 ) Consolidated operating results ( Percentages indicate the year - on - year change for the same quarter . ) Revenue Operating profit Profit before tax Profit Three months ended Millions of yen % Millions of yen June 30 , 2026 June 30 , 2025 374,548 337,791 10.9 ( 3.0 ) 73,218 20,889 % 250.5 ( 12.3 ) Millions of yen % Millions of yen 81,962 20,225 305.3 ( 36.2 ) 54,442 12,488 % 336.0 ( 36.8 ) Three months ended Profit attributable to owners of parent Millions of yen Total comprehensive Basic earnings per share Diluted earnings per share June 30 , 2026 June 30 , 2025 53,518 11,601 % 361.3 ( 37.6 ) income Millions of yen 56,350 18,666 10.95 ( Note ) The Company conducted a 7 - for - 1 stock split for shares of its ordinary shares with an effective date of October 1 , 2025. Basic earnings per share and Diluted earnings per share have been calculated under the assumption that the stock split was conducted at the beginning of the fiscal year ended March 31 , 2026 . ( 2 ) Consolidated financial position % 201.9 ( 43.6 ) Yen 50.48 Yen 50.48 10.95 Total assets Total equity Equity attributable to owners of parent As of Millions of yen Millions of yen June 30 , 2026 March 31 , 2026 2,461,256 2,428,559 723,833 681,531 Millions of yen 696,605 652,243 Ratio of equity attributable to owners of parent to total assets % 28.3 26.9 2. Cash dividends Fiscal year ended March 31 , 2026 Fiscal year ending March 31 , 2027 Fiscal year ending March 31 , 2027 ( Forecast ) Annual dividends per share First quarter - end Second quarter - end Third quarter - end Fiscal year - end Total Yen Yen 70.00 Yen Yen Yen 10.00 11.50 11.50 23.00 ( Note ) Revisions to the dividend forecasts most recently announced : None The Company conducted a 7 - for - 1 stock split for shares of its ordinary shares with an effective date of October 1 , 2025. Reflecting the effect of the stock split , the dividend per share at the end of the second quarter for the fiscal year ended March 31 , 2026 was 10.00 yen , and the full - year dividend per share was 20.00 yen . -1-
Page 2
(Percentages indicate year-on-year changes.) Revenue Operating profit Profit before tax Profit attributable to owners of parent Basic earnings per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full-year 1,840,000 12.0 250,000 51.0 240,000 29.4 172,000 6.8 161.67 3. Consolidated financial forecast for the fiscal year ending March 31, 2027 (from April 1, 2026 to March 31, 2027) (Note) Revisions to the forecasts of results most recently announced: Yes As of June 30, 2026 1,082,759,678 shares As of March 31, 2026 1,082,759,678 shares As of June 30, 2026 22,598,004 shares As of March 31, 2026 22,597,750 shares Three months ended June 30, 2026 1,060,161,840 shares Three months ended June 30, 2025 1,059,548,473 shares * Notes (1) Significant changes in the scope of consolidation during the period：None (2) Changes in accounting policies and changes in accounting estimates (i) Changes in accounting policies required by IFRS：Yes (ii) Changes in accounting policies due to other reasons ：None (iii) Changes in accounting estimates ：None (3) Number of shares issued (ordinary shares) (i) Total number of issued shares at the end of the period (including treasury shares) (ii) Number of treasury shares at the end of the period (iii) Average number of shares outstanding during the period (Note) The Company conducted a 7-for-1 stock split for shares of its ordinary shares with an effective date of October 1, 2025. Average number of shares outstanding during the period has been calculated under the assumption that the stock split was conducted at the beginning of the fiscal year ended March 31, 2026. * This consolidated financial report is not subjected to quarterly reviews by certified public accountant or accounting auditor. * Proper use of forecast of results, and other special matters (Cautionary statements on forward-looking statements) Earnings estimates made in this report and other statements that are not historical facts are forward-looking statements about the future performance of the IHI Group. These statements are based on management’s assumptions and beliefs in light of the information currently available to it and therefore readers should not place undue reliance on them. IHI cautions that a number of important factors such as political and general economic conditions and the yen exchange rate including its rate against US dollar could cause actual results to differ materially from those discussed in the forward-looking statements, etc. (How to obtain supplementary material on financial results) The supplementary material on financial results shall be posted on IHI’s website. - 2 -
Page 3
1. SUMMARY OF BUSINESS RESULTS (1) SUMMARY OF BUSINESS RESULTS During the three months ended June 30, 2026, although geopolitical risks and uncertainties surrounding trade policies continued, the global economy remained generally resilient. The European economy was sluggish, reflecting persistently high energy prices and stagnation in manufacturing activities, while the Chinese economy also continued to lack momentum due to the prolonged stagnation in the real estate market and sluggish domestic demand. Meanwhile, although the U.S. economy was affected by uncertainty surrounding policy management, it was underpinned by AI‑related investment and a solid employment environment. In the Japanese economy, despite the impact of rising prices, a gradual recovery trend continued, supported by improvements in employment and income conditions. In the IHI Group’s Growth Businesses of Civil Aero Engine and Defense fields, while demand for aircraft is expected to increase over the medium‑ to long‑term, in the Civil Aero Engine Business, sales of spare parts have been steadily expanding. In the Defense Business, demand for domestic defense programs is also expected to expand in line with an increase in the defense budget. The IHI Group is steadily implementing investments with the aim of expanding capacity mainly in Growth Businesses such as Civil Aero Engines, Defense and Nuclear Energy. In the Stable revenue Businesses of Resources, Energy and Environment, Social Infrastructure, and Industrial Systems and General‑Purpose Machinery fields, the Lifecycle businesses are expected to achieve stable growth over the medium‑ to long‑term. Accordingly, the IHI Group will continue to work toward expanding these businesses, aiming to contribute to Group earnings and solidifying cash generation. In addition, with the objectives of improving asset efficiency, strengthening its financial foundations, responding to business portfolio reforms, and securing funds for upfront investments in Growth and Development-focus Businesses, the IHI Group has been pursuing planned property sales. During the three months ended June 30, 2026, the IHI Group completed the transfers of a part of our properties located in Koto‑ku, Tokyo. On June 2, 2026, IHI AEROSPACE Co., Ltd., a consolidated subsidiary of IHI, received a five‑month suspension of eligibility to participate in competitive tenders from the National Research and Development Agency, the Japan Aerospace Exploration Agency (hereinafter “JAXA”) , on the grounds that JAXA had identified expense claims based on reports inconsistent with the facts under contracts relating to maintenance services for equipment and facilities. To ensure that such incidents never occur again and, in order to regain the trust of all stakeholders at the earliest possible date, the IHI Group will work together to further instill compliance awareness, reform its corporate culture, and build mechanisms that prevent misconduct. Should this matter have any impact on the IHI Group’s business results, such impact will be promptly reflected in the Group’s earnings forecast. Under such a business environment, orders received by the IHI Group during the three months ended June 30, 2026 decreased 15.0% from the previous corresponding period to ¥360.7 billion. Revenue increased 10.9% from the previous corresponding period to ¥374.5 billion, mainly due to expansion of Growth Business such as Civil Aero Engine, Defense and Nuclear Energy Businesses, despite a revenue decline resulting from the divestiture of multiple businesses in the previous fiscal period. In terms of profit, operating profit increased ¥52.3 billion from the previous corresponding period to ¥73.2 billion, reflecting a demand expansion in Civil Aero Engine and Nuclear Energy Businesses, and expansion of Lifecycle business in the Carbon Solutions and Power System Business, as well as improvements in profitability of Vehicular Turbocharger Business, and ¥40.0 billion of gain on sale of properties. Profit before tax increased ¥61.7 billion to ¥81.9 billion, mainly due to an improvement in foreign exchange gains/losses and profit attributable to owners of parent increased ¥41.9 billion to ¥53.5 billion. - 3 -
Page 4
(Billions of yen) Reportable segment Orders received Three months ended June 30, 2025 Three months ended June 30, 2026 Changes from the previous corresponding period (%) Three months ended June 30, 2025 Three months ended June 30, 2026 Changes from the corre- sponding period (%) Revenue Operating profit (loss) Revenue Operating profit (loss) Revenue Operating profit (loss) Resources, Energy and Environment 143.1 79.9 (44.2) 70.9 (3.3) 88.8 2.8 25.2 － Social Infrastructure 22.4 16.1 (28.1) 29.1 (1.7) 20.4 (1.8) (30.0) － Industrial Systems and General-Purpose Machinery 112.7 118.1 4.8 104.6 0.3 102.3 5.5 (2.2) － Aero Engine, Space and Defense 137.0 138.0 0.8 127.9 27.9 154.7 29.1 21.0 4.4 Reportable segment total 415.3 352.2 (15.2) 332.7 23.1 366.3 35.8 10.1 54.9 Other 21.3 21.2 (0.1) 15.1 0.5 17.3 42.1 14.3 － Adjustment (12.3) (12.8) － (10.0) (2.7) (9.1) (4.7) － － Total 424.3 360.7 (15.0) 337.7 20.8 374.5 73.2 10.9 250.5 Results by reportable segment for the three months ended June 30, 2026 are as follows: Note: Monetary amounts less than first decimal are rounded down, and ratios less than one unit are rounded off. - 4 -
Page 5
(2) SUMMARY OF FINANCIAL POSITION Assets, liabilities and equity Total assets at the end of the first quarter were ¥2,461.2 billion, up ¥32.6 billion compared with the end of the previous fiscal year. The major item of increase was inventories, up ¥50.2 billion. The major item of decrease was cash and cash equivalents, down ¥38.0 billion. Total liabilities were ¥1,737.4 billion, down ¥9.6 billion compared with the end of the previous fiscal year. The major item of increase was retirement benefit liabilities, up ¥9.2 billion. The major item of decrease was trade and other payables, down ¥29.2 billion. Interest-bearing liabilities, including lease liabilities, were ¥487.1 billion, down ¥2.7 billion compared with the end of the previous fiscal year. The IHI Group ensures an adequate level of liquidity of funds. Equity was ¥723.8 billion, up ¥42.3 billion compared with the end of the previous fiscal year, which included profit attributable to owners of parent of ¥53.5 billion. As a result of the above, the ratio of equity attributable to owners of parent increased from 26.9% at the end of the previous fiscal year to 28.3%. Cash flows At the end of the first quarter, the outstanding balance of cash and cash equivalents was ¥117.0 billion, down ¥38.0 billion from the end of the previous fiscal year. Net cash flows from operating activities were ¥43.2 billion excess of expenditure. This was due to increases in inventories, as well as the payment of corporate income taxes. Net cash flows from investing activities were ¥23.6 billion excess of income. This was due to proceeds from property sales. Net cash flows from financing activities were ¥20.5 billion excess of expenditure. This was due to the payment of dividends and lease liabilities. (3) EXPLANATION REGARDING FUTURE PREDICTION INFORMATION SUCH AS CONSOLIDATED FORECASTS OF RESULTS The global economy faces heightened geopolitical risks surrounding Ukraine and the Middle East. In addition, the Chinese economy continues to face a stagnant real estate market and sluggish domestic demand, while in the United States it is necessary to remain vigilant regarding uncertainties over trade policies and other factors. It is necessary to continue to pay close attention to the impact of fluctuations in energy prices and in financial and capital markets may have on the global economy. The Japanese economy is expected to recover gradually against the backdrop of improvements in the employment and income environment, but it is necessary to closely monitor the impact of these global economic developments. The IHI Group defined its desired state toward 2040 in its Medium-to-Longer-Term Direction announced on May 8, 2026. From fiscal year 2026, with a view toward 2040, the IHI Group will move into a stage of accelerated growth aimed at realizing its medium- to long-term vision. The IHI Group positions the three-year period from fiscal year 2026 to fiscal year 2028 as a phase intensively focusing on upfront investments and strengthening the financial foundation, with a view to a significant expansion of operating profit and operating cash flow from fiscal year 2029 onward, as well as free cash flow from fiscal year 2032 onward. In fiscal year 2026, the first year of this phase, the Group plans to systematically implement investments aimed at expanding capacity, with a focus on Growth Businesses that will drive future growth, including Civil Aero Engines, Defense, and Nuclear Energy. In addition, the Group will work to strengthen Development-focus Businesses such as ammonia and the space fields, which are expected to become future business pillars, and will further reinforce its growth foundation for next generation by continuing a strategic shift of management resources to capital efficient businesses with anticipated market growth. In the Civil Aero Engine and Defense fields as Growth Businesses, where global demand for aircrafts is - 5 -
Page 6
expected to expand, the IHI Group participates in the development and mass production of best selling engines spanning small, large, and ultra large engine classes for civil aero engines. The IHI Group aims to expand its business in the aftermarket, where further demand growth is expected. Regarding the maintenance business, the IHI Group is striving promptly to establish a capable structure which will provide high quality services. In defense-related businesses where demand is expected to increase against the backdrop of higher defense budgets, the IHI Group will further accelerate efforts to strengthen its production capacity and develop necessary technologies. In addition, in the Nuclear Energy field, the IHI Group will steadily generate cash by reliably capturing demand for domestic Lifecycle business related to reactor restarts and nuclear fuel reprocessing and enhance production capacity to achieve top-line growth through the acquisition of overseas new-build projects supported by the expansion of global demand for new construction. In the ammonia field, which is a Development-focus Business, the IHI Group will contribute to realize carbon- free society by promoting to establish a value chain spanning from fuel production to storage, transportation, and utilization, while leveraging our technical capabilities. In addition, in the space field, the IHI Group will seek to expand its space related businesses through initiatives such as the development of satellite constellations for the provision of satellite data for security, public, and commercial use. In our Stable revenue Businesses of Resources, Energy and Environment, Social Infrastructure, and Industrial Systems and General-Purpose Machinery where anticipated market growth and IHI Group can leverage our strengths, we will focus on Lifecycle businesses that make maximum use of existing assets and installed bases, thereby aiming to generate cash efficiently and stably. At the same time, the IHI Group will continue to implement business portfolio reforms to improve capital efficiency and profitability, thereby achieving sustainable enhancement of corporate value. With regard to the consolidated forecasts of results for the fiscal year ending March 31, 2027, based on factors including the results for this quarter in the Civil Aero Engine Business, we have revised orders received to ¥1,770.0 billion, revenue to ¥1,840.0 billion, operating profit to ¥250.0 billion, profit before tax to ¥240.0 billion, and profit attributable to owners of parent to ¥172.0 billion. Note that a foreign exchange rate of ¥145/US$1 has been assumed in the above forecasts in and after the second quarter ending September 30, 2026. Concerning dividends, no changes have been made to the previous forecasts. - 6 -
Page 7
2. CONDENSED QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO (1) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Millions of yen) As of March 31, 2026 As of June 30, 2026 Assets Current assets: Cash and cash equivalents 155,084 117,012 Trade and other receivables 575,965 589,456 Contract assets 104,903 98,124 Other financial assets 4,100 3,121 Inventories 504,223 554,468 Other current assets 107,119 105,761 Subtotal 1,451,394 1,467,942 Assets related to disposal groups classified as held for sale － 18,005 Total current assets 1,451,394 1,485,947 Non-current assets: Property, plant and equipment 240,010 237,158 Right-of-use assets 112,038 110,747 Goodwill 4,931 4,976 Intangible assets 135,680 139,155 Investment property 144,817 135,669 Investments accounted for using equity method 79,758 86,946 Other financial assets 37,848 39,867 Deferred tax assets 127,618 127,758 Other non-current assets 94,465 93,033 Total non-current assets 977,165 975,309 Total assets 2,428,559 2,461,256 - 7 -
Page 8
(1) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Millions of yen) As of March 31, 2026 As of June 30, 2026 Liabilities Current liabilities: Trade and other payables 401,427 372,227 Bonds and borrowings 103,552 119,598 Lease liabilities 19,544 19,524 Other financial liabilities 10,878 10,335 Income taxes payable 23,923 32,039 Contract liabilities 311,447 308,884 Provisions 24,130 23,844 Refund liabilities 110,613 116,756 Other current liabilities 170,767 156,290 Subtotal 1,176,281 1,159,497 Liabilities related to disposal groups classified as held for sale － 16,476 Total current liabilities 1,176,281 1,175,973 Non-current liabilities: Bonds and borrowings 255,981 238,212 Lease liabilities 110,816 109,832 Other financial liabilities 55,514 55,504 Deferred tax liabilities 2,996 3,394 Retirement benefit liability 121,401 130,607 Provisions 6,259 6,123 Other non-current liabilities 17,780 17,778 Total non-current liabilities 570,747 561,450 Total liabilities 1,747,028 1,737,423 Equity Share capital 107,165 107,165 Capital surplus 48,401 48,420 Retained earnings 441,645 484,904 Treasury shares (9,454) (9,447) Other components of equity 64,486 65,347 Other components of equity related to disposal groups classified as held for sale － 216 Total equity attributable to owners of parent 652,243 696,605 Non-controlling interests 29,288 27,228 Total equity 681,531 723,833 Total liabilities and equity 2,428,559 2,461,256 - 8 -
Page 9
(2) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF PROFIT OR LOSS (Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Revenue 337,791 374,548 Cost of sales 262,816 285,158 Gross profit (loss) 74,975 89,390 Selling, general and administrative expenses 55,371 57,693 Other income 2,563 42,958 Other expenses 1,278 1,437 Operating profit (loss) 20,889 73,218 Finance income 1,193 4,167 Finance costs 8,406 2,074 Share of profit (loss) of investments accounted for using equity method 6,549 6,651 Profit (loss) before tax 20,225 81,962 Income tax expense 7,737 27,520 Profit (loss) 12,488 54,442 Profit (loss) attributable to: Owners of parent 11,601 53,518 Non-controlling interests 887 924 Profit (loss) 12,488 54,442 Earnings per share Basic earnings (loss) per share (yen) 10.95 50.48 Diluted earnings (loss) per share (yen) 10.95 50.48 (Note) The Company conducted a 7-for-1 stock split for shares of its ordinary shares with an effective date of October 1, 2025. Basic earnings per share and Diluted earnings per share have been calculated under the assumption that the stock split was conducted at the beginning of the fiscal year ended March 31, 2026. - 9 -
Page 10
CONDESNSED QUARTERLY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Profit (loss) 12,488 54,442 Other comprehensive income Items that will not be reclassified to profit or loss Financial assets measured at fair value through other comprehensive income 7,126 (367) Share of other comprehensive income of investments accounted for using equity method 130 (366) Total of items that will not be reclassified to profit or loss 7,256 (733) Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations (1,041) 2,662 Cash flow hedges (66) (42) Share of other comprehensive income of investments accounted for using equity method 29 21 Total of items that may be reclassified to profit or loss (1,078) 2,641 Other comprehensive income, net of tax 6,178 1,908 Comprehensive income 18,666 56,350 Comprehensive income attributable to: Owners of parent 18,199 54,975 Non-controlling interests 467 1,375 Comprehensive income 18,666 56,350 - 10 -
Page 11
(3) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Millions of yen) Equity attributable to owners of parent Share capital Capital surplus Retained earnings Treasury shares Other components of equity Exchange differences on translation of foreign operations Cash flow hedges Financial assets measured at fair value through other comprehensive income Balance as of April 1, 2025 107,165 46,384 280,100 (8,576) 36,162 777 19,765 Profit (loss) 11,601 Other comprehensive income (619) (39) 7,256 Total comprehensive income － － 11,601 － (619) (39) 7,256 Purchase of treasury shares (5) Disposal of treasury shares Dividends (10,634) Share-based remuneration transactions 20 Transfer from other components of equity to retained earnings 1,845 (1,845) Transfer to other components of equity related to disposal groups classified as held for sale 58 (153) Other 671 546 (5) Total transactions with owners － 691 (8,243) (5) 58 (153) (1,850) Balance as of June 30, 2025 107,165 47,075 283,458 (8,581) 35,601 585 25,171 Equity attributable to owners of parent Non- controlling interests Total Other components of equity Total Other components of equity related to disposal groups classified as held for sale Total Remeasure ments of defined benefit plans Share acquisition rights Total Balance as of April 1, 2025 － 57 56,761 481,834 (108) 481,726 26,934 508,660 Profit (loss) － 11,601 11,601 887 12,488 Other comprehensive income 6,598 6,598 6,598 (420) 6,178 Total comprehensive income － － 6,598 18,199 － 18,199 467 18,666 Purchase of treasury shares － (5) (5) (5) Disposal of treasury shares － － － － Dividends － (10,634) (10,634) (2,638) (13,272) Share-based remuneration transactions － 20 20 20 Transfer from other components of equity to retained earnings (1,845) － － － Transfer to other components of equity related to disposal groups classified as held for sale (95) (95) 95 － － Other (5) 1,212 1,212 1,212 Total transactions with owners － － (1,945) (9,502) 95 (9,407) (2,638) (12,045) Balance as of June 30, 2025 － 57 61,414 490,531 (13) 490,518 24,763 515,281 Three months ended June 30, 2025 - 11 -
Page 12
(3) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Millions of yen) Equity attributable to owners of parent Share capital Capital surplus Retained earnings Treasury shares Other components of equity Exchange differences on translation of foreign operations Cash flow hedges Financial assets measured at fair value through other comprehensive income Balance as of April 1, 2026 107,165 48,401 441,645 (9,454) 47,940 1,091 15,403 Profit (loss) 53,518 Other comprehensive income 2,213 (23) (733) Total comprehensive income － － 53,518 － 2,213 (23) (733) Purchase of treasury shares (1) Disposal of treasury shares Dividends (10,639) Share-based remuneration transactions 19 8 Transfer from other components of equity to retained earnings 380 (380) Transfer to other components of equity related to disposal groups classified as held for sale (165) (51) Other Total transactions with owners － 19 (10,259) 7 (165) (51) (380) Balance as of June 30, 2026 107,165 48,420 484,904 (9,447) 49,988 1,017 14,290 Equity attributable to owners of parent Non- controlling interests Total Other components of equity Total Other components of equity related to disposal groups classified as held for sale Total Remeasure ments of defined benefit plans Share acquisition rights Total Balance as of April 1, 2026 － 52 64,486 652,243 － 652,243 29,288 681,531 Profit (loss) － 53,518 53,518 924 54,442 Other comprehensive income 1,457 1,457 1,457 451 1,908 Total comprehensive income － － 1,457 54,975 － 54,975 1,375 56,350 Purchase of treasury shares － (1) (1) (1) Disposal of treasury shares － － － － Dividends － (10,639) (10,639) (3,433) (14,072) Share-based remuneration transactions － 27 27 27 Transfer from other components of equity to retained earnings (380) － － － Transfer to other components of equity related to disposal groups classified as held for sale (216) (216) 216 － － Other － － － (2) (2) Total transactions with owners － － (596) (10,829) 216 (10,613) (3,435) (14,048) Balance as of June 30, 2026 － 52 65,347 696,389 216 696,605 27,228 723,833 Three months ended June 30, 2026 - 12 -
Page 13
(4) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF CASH FLOWS (Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Cash flows from operating activities Profit (loss) before tax 20,225 81,962 Depreciation, amortization and impairment losses 18,228 20,899 Finance income and finance costs 1,370 600 Share of loss (profit) of investments accounted for using equity method (6,549) (6,651) Loss (gain) on sale of property, plant and equipment, intangible assets and investment property (1,404) (40,102) Decrease (increase) in trade receivables 37,338 (16,768) Decrease (increase) in contract assets (7,079) 5,097 Decrease (increase) in inventories and prepayments (60,457) (62,189) Increase (decrease) in trade payables 27,081 (16,970) Increase (decrease) in contract liabilities 57,324 3,971 Increase (decrease) in refund liabilities (23,373) 6,143 Other (29,665) 1,632 Subtotal 33,039 (22,376) Interest received 675 483 Dividends received 521 478 Interest paid (1,446) (1,678) Income taxes paid (38,137) (20,155) Net cash provided by (used in) operating activities (5,348) (43,248) Cash flows from investing activities Purchase of property, plant and equipment, intangible assets and investment property (25,413) (18,051) Proceeds from sale of property, plant and equipment, intangible assets and investment property 3,058 48,470 Purchase of investments (including investments accounted for using equity method) (10) (2,407) Proceeds from sale and redemption of investments (including investments accounted for using equity method) 318 580 Proceeds from sale of equity interest in subsidiaries 2,590 520 Other 3,837 (5,469) Net cash provided by (used in) investing activities (15,620) 23,643 - 13 -
Page 14
(4) CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF CASH FLOWS (Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Cash flows from financing activities Net increase (decrease) in short-term borrowings (41,819) 5,757 Net increase (decrease) in commercial papers 45,000 － Proceeds from long-term borrowings － 20,000 Repayments of long-term borrowings (7,207) (26,798) Repayments of lease liabilities (5,697) (5,322) Dividends paid (10,434) (10,354) Dividends paid to non-controlling interests (2,638) (3,435) Increase in other financial liabilities 232 538 Decrease in other financial liabilities (1,263) (942) Other (5) 1 Net cash provided by (used in) financing activities (23,831) (20,555) Effect of exchange rate change on cash and cash equivalents (750) 2,114 Net increase (decrease) in cash and cash equivalents (45,549) (38,046) Cash and cash equivalents at beginning of period 136,809 155,084 Cash and cash equivalents included in assets related to disposal groups classified as held for sale (237) (26) Cash and cash equivalents at end of period 91,023 117,012 - 14 -
Page 15
(5) NOTES TO THE CONDENSED QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS MATERIAL ACCOUNTING POLICIES Material accounting policies applied by the IHI Group in the condensed quarterly consolidated financial statements are the same as those in the consolidated financial statements for the previous fiscal year. Income taxes for the condensed quarterly consolidated financial statements are calculated based on the estimated annual effective tax rate. From the current consolidated fiscal year, the IHI Group has adopted the amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity,” which were published on December 18, 2024. The adoption of these amendments had no material impact on the condensed quarterly consolidated financial statements. SEGMENT INFORMATION Reportable segment Main businesses, products and services Resources, Energy and Environment Power systems (power systems plants for land use and power systems for ships), Carbon solutions, Nuclear energy (components for nuclear power plants) Social Infrastructure Bridges and water gates, Shield systems Industrial Systems and General-Purpose Machinery Vehicular turbochargers, Parking, Rotating machineries (compressors, separation systems, turbochargers for ships), Heat treatment and surface engineering, Logistics and industrial systems (logistics systems, industrial machineries) Aero Engine, Space and Defense Aero engines, Rocket systems and space utilization systems, Defense systems 1. Overview of reportable segment The business segments are constituent units of the IHI Group for which separate financial information is available. The Board of Directors periodically examines these segments for the purpose of deciding the allocation of management resources and evaluating operating performance. The IHI Group organizes SBUs by products and services and allocates Business Areas to control these SBUs. Each Business Area manages and supervises the SBUs’ execution of business strategies and allocates management resources necessary for execution of the SBUs’ business strategies. SBUs shall be the units possessing complete business processes including sales, developments, designs, productions, constructions, services, etc. based on the visions and strategies drawn up by Business Areas. Each SBU is an organization executing business and responsible for ensuring a profit in the SBU. Based on the above, the IHI Group consists of segments by these Business Areas and sets the Business Areas of “Resources, Energy and Environment,” “Social Infrastructure,” “Industrial Systems and General-Purpose Machinery,” and “Aero Engine, Space and Defense” as its reportable segment. There are no aggregated business segments when deciding the reportable segment. Main businesses, products and services belonging to each segment are as follows: - 15 -
Page 16
Three months ended June 30, 2025 (Millions of yen) Reportable segment Other (Note 1) Total Adjustment (Note 2) ConsolidatedResources, Energy and Environment Social Infrastructure Industrial Systems and General- Purpose Machinery Aero Engine, Space and Defense Total Revenue Revenue from external customers 70,202 28,375 101,732 127,137 327,446 10,345 337,791 － 337,791 Intersegment revenue and transfers 782 819 2,873 781 5,255 4,842 10,097 (10,097) － Total 70,984 29,194 104,605 127,918 332,701 15,187 347,888 (10,097) 337,791 Segment profit (loss) (Note 3) (3,368) (1,797) 305 27,972 23,112 514 23,626 (2,737) 20,889 Notes: 1. The “Other” classification consists of business that is not included in reportable segment. It includes inspection and measurement business, the manufacture and sale of equipment and the like related to such business, urban development (real estate sales and rental), and other service operations. 2. Adjustment of segment profit (loss) represents intersegment transactions of ¥ (419) million and unallocated corporate expenses of ¥ (2,318) million. Unallocated corporate expenses mainly consist of general and administrative expenses that are not attributable to reportable segment. 3. Segment profit (loss) is adjusted with operating profit (loss) in the condensed quarterly consolidated financial statement of profit or loss. Three months ended June 30, 2026 (Millions of yen) Reportable segment Other (Note 1) Total Adjustment (Note 2) ConsolidatedResources, Energy and Environment Social Infrastructure Industrial Systems and General- Purpose Machinery Aero Engine, Space and Defense Total Revenue Revenue from external customers 88,208 20,377 99,687 154,157 362,429 12,119 374,548 － 374,548 Intersegment revenue and transfers 629 52 2,636 603 3,920 5,237 9,157 (9,157) － Total 88,837 20,429 102,323 154,760 366,349 17,356 383,705 (9,157) 374,548 Segment profit (loss) (Note 3) 2,834 (1,807) 5,577 29,199 35,803 42,174 77,977 (4,759) 73,218 Notes: 1. The “Other” classification consists of business that is not included in reportable segment. It includes inspection and measurement business, the manufacture and sale of equipment and the like related to such business, urban development (real estate sales and rental), and other service operations. 2. Adjustment of segment profit (loss) represents intersegment transactions of ¥ 335 million and unallocated corporate expenses of ¥ (5,094) million. Unallocated corporate expenses mainly consist of general and administrative expenses that are not attributable to reportable segment. 3. Segment profit (loss) is adjusted with operating profit (loss) in the condensed quarterly consolidated financial statement of profit or loss. 2. Information about reportable segment The IHI Group’s information about reportable segment is as follows: Intersegment revenue and transfers are based on actual market pricing. - 16 -
Page 17
DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE (Millions of yen) As of March 31, 2026 As of June 30, 2026 Assets related to disposal groups classified as held for sale Trade and other receivables － 5,811 Contract assets － 1,184 Inventories － 2,941 Property, plant and equipment － 3,114 Other － 4,955 Total assets － 18,005 Liabilities related to disposal groups classified as held for sale Trade and other payables － 2,433 Contract liabilities － 6,946 Retirement benefit liabilities － 1,870 Other － 5,227 Total liabilities － 16,476 On May 8, 2026, IHI concluded an agreement to transfer the issued share of IHI Logistics & Machinery Corporation, a consolidated subsidiary of IHI (hereinafter “ILM”), to Toyota Industries Corporation (hereinafter “Toyota Industries”) in order to strengthen ILM’s competitiveness through the creation of mutual synergies and continuous investment in growth, and to achieve sustainable growth of ILM’s business. Accordingly, the IHI Group has classified ILM as a disposal group classified as a held for sale in the first quarter of the current fiscal year. The assets of this disposal group are measured at their carrying amount because the fair value less costs to sell (estimated sales price) is expected to exceed the carrying amount. IHI will transfer 80% of the issued shares of ILM held by IHI to Toyota Industries in April 2027. With respect to the remaining 20% equity interest, IHI plans to continue to hold such shares for a period of approximately five years and thereafter them to Toyota Industries. The breakdown of assets and liabilities related to disposal groups classified as held for sale are as follows: SIGNIFICANT SUBSEQUENT EVENTS Not applicable NOTES ON PREMISE OF GOING CONCERN Not applicable - 17 -