The Same Tariff Shock: Why the Outlook Differs Between SUBARU and Mazda

Hello, this is the High Dividend Research Institute.

For the fiscal year ending March 2026, both SUBARU and Mazda faced the same headwind of additional U.S. tariffs, resulting in significant profit declines. Operating profit fell by 90.1% year-on-year for SUBARU and 72.3% for Mazda. Looking at the numbers alone, they appear similar in that both have 'collapsed significantly'.

However, as you read through the financial reports, you can feel a quiet difference in temperature between these two companies. This time, I would like to organize those differences using the financial figures as a guide.

■ First, starting with the commonalities

Both companies chose to 'maintain' their annual dividends under these circumstances. SUBARU is at 115.50 yen, and Mazda is at 55 yen. Both have capital and business alliances with Toyota Motor Corporation and are forecasting a significant earnings recovery for the next fiscal year (ending March 2027).

The environment they are in is quite similar. Perhaps that is why the differences in how they proceed from here stand out so clearly.

■ Operating cash flow as a 'thermometer'

Among financial statements, I personally consider operating cash flow to be the most honest figure. While profits are easily influenced by temporary expense accounting, cash flow is a mirror that reflects whether money has actually come in.

Although SUBARU recorded a 90% drop in operating profit, its operating cash flow was 358.2 billion yen. This is more than four times the total dividend amount (approximately 83.2 billion yen).

On the other hand, Mazda's operating cash flow dropped to 200 million yen, which is close to zero. The difference from the total dividend of 34.7 billion yen is effectively being covered by borrowing and other means.

Of course, Mazda has its own side of the story. It is a time when the temporary shock of tariff impacts hit directly, and the explanation that this is a one-time event in anticipation of a recovery next fiscal year is logical. However, if we isolate the single point of 'core cash-generating ability,' it is a fact that SUBARU had more durability this time.

■ The 'content' of the profit decline also differs

Both companies put the explanation of 'due to tariffs' at the forefront of their financial materials, but when broken down, there is a difference in the degree of dependence.

Of SUBARU's profit decline (down 289.3 billion yen year-on-year), U.S. tariffs alone account for about 80%. On the other hand, Mazda's tariff impact (down 154.9 billion yen) is about half of the total profit decline. The rest is thought to be the result of struggles in sales, increases in raw material and logistics costs, and the concentrated accounting of temporary losses.

In the background, there is also the fact that the full model change of Mazda's flagship SUV, the 'CX-5,' was the first in about eight years. It may be the result of trying to stretch limited development resources in all directions—electrification, internal combustion engines, and multiple regional expansions. I think it is closer to understand this as the difficulty of fighting in a way that matches the scale of the business, rather than whether the management decision was good or bad.

■ The way they protect capital is also contrasting

SUBARU is proceeding with a share buyback of up to 150 billion yen, and as of the end of June, it has utilized approximately 27 billion yen. This can be called aggressive shareholder returns.

Mazda newly procured 70 billion yen in subordinated loans and refinanced existing loans of the same amount. There is no conversion right to shares, so no dilution occurs. This is considered a defensive move to maintain and strengthen the financial base. Local regional banks are also listed as lenders, which shows that ties with regional financial institutions are continuing.

Furthermore, in the production and sales results for May 2026, Mazda's domestic sales of the new CX-5 grew by 63.3% year-on-year, and bright signs are beginning to appear. However, the year-to-date total is still in the negative range, so I would like to wait for a bit more data to accumulate.

■ Not as superiority or inferiority, but as 'current difference in physical strength'

The difference we see this time is not a simple matter of one management team being superior or inferior to the other, but rather a 'difference in current stamina' born from their respective business scales and capital structures. For both companies, the situation could change depending on their execution capabilities from the next fiscal year onward.

As an investor, the best approach may not be to decide which one is 'correct,' but rather to carefully track the recovery scenarios each company describes, following them through the next earnings report and the one after that.

More detailed figures and comparison charts are summarized in the main column of the High Dividend Research Institute. Please take a look if you are interested.

[Disclaimer]

This article is content created using AI (Claude/Anthropic). We do not guarantee the accuracy or completeness of the information, and there is a possibility that the content contains errors.

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Information reference date: July 16, 2026

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