Why IHI (TSE:7013) Boosted Its Dividend and Earnings Outlook Despite Recent Share Price Pressure

• IHI Corporation recently announced that it will pay a cash dividend of ¥70 per share for the second quarter ended September 30, 2025, an increase from ¥50 per share a year earlier, with payment scheduled for December 5, 2025.
• The company also revised its consolidated earnings guidance upward for the fiscal year ending March 31, 2026, signaling increased revenue and profit expectations which suggest a stronger outlook and enhanced potential returns for shareholders.
• With a higher interim dividend now confirmed, we will explore how these developments could influence IHI's wider investment narrative and future prospects.

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IHI Investment Narrative Recap

To be a shareholder in IHI, you need to believe in the company’s ability to sustain strong sales in civil aero engines and maintain its financial health, particularly as profitability and returns on equity improve. While the recent upward revision in earnings guidance and higher dividend may provide confidence in the short-term outlook, the biggest near-term catalyst remains the continued robust performance in its engines business, while the key risk is the volatility in spare parts demand and exchange rates, which this news does not materially change.

The latest announcement of a higher cash dividend for the second quarter, set at ¥70 per share, stands out as especially relevant. This move underscores management’s willingness to reward shareholders, coinciding with stronger earnings guidance and reinforcing confidence around near-term shareholder returns amid otherwise uneven recent earnings results.

However, investors should also be mindful that, unlike the upbeat guidance and dividend bump, unforeseen downturns in aero engine spare parts sales remain a fundamental challenge that …

Read the full narrative on IHI (it's free!)

IHI's outlook anticipates ¥1,734.8 billion in revenue and ¥103.1 billion in earnings by 2028. This is based on a projected annual revenue growth rate of 2.6%, but reflects a decrease in earnings of ¥15.1 billion from the current ¥118.2 billion.

Uncover how IHI's forecasts yield a ¥3023 fair value, a 12% upside to its current price.

Exploring Other Perspectives

Two fair value estimates from the Simply Wall St Community range from ¥2,458 to ¥3,022 per share. While outlooks differ widely, staying aware of the biggest risk, potential future declines in civil aero engine spare parts sales, could be critical for understanding long-term performance.

Explore 2 other fair value estimates on IHI - why the stock might be worth as much as 12% more than the current price!

Build Your Own IHI Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your IHI research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free IHI research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate IHI's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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