| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥59.7B | ¥75.2B | -20.6% |
| Operating Income / Operating Profit | ¥0.9B | ¥12.1B | -92.9% |
| Ordinary Income | ¥1.9B | ¥11.8B | -84.1% |
| Net Income / Net Profit | ¥1.1B | ¥8.6B | -87.2% |
| ROE | 0.4% | 3.2% | - |
FY2026 Q1 results showed a significant decline: Revenue ¥59.7B (YoY -¥15.5B -20.6%), Operating Income ¥0.9B (YoY -¥11.2B -92.9%), Ordinary Income ¥1.9B (YoY -¥9.9B -84.1%), Net Income ¥1.1B (YoY -¥7.5B -87.2%). The main driver was a sharp drop in the Surface Treatment Equipment business (YoY -60.7%), which materially affected the companywide revenue mix. The Process Equipment business was largely flat with Revenue -1.0% YoY, but its Operating Income plunged -92.0%, revealing the heavy burden of fixed costs. Gross margin contracted to 27.2% (from 34.7% a year ago, -7.5pt) and operating margin to 1.4% (from 16.1% a year ago, -14.7pt), reflecting deteriorating project mix and lower utilization. Foreign exchange gains of ¥0.6B and interest income of ¥0.5B provided non-operating support, but were insufficient to offset the decline in operating profitability.
[Revenue] The decline to Revenue ¥59.7B (YoY -20.6%) was mainly due to the Surface Treatment Equipment business dropping to ¥9.5B (-60.7%). That business fell from ¥24.2B to ¥9.5B (~60% decline), reducing its share of company revenue to 15.9% (from 32.2% prior year). The Process Equipment business remained the core segment with Revenue ¥48.2B (YoY -1.0%), representing 80.8% of company revenue (from 64.0% prior year). Its breakdown is Semiconductor Equipment ¥25.9B, Conveyance Equipment ¥14.2B, and Cleaning Equipment ¥7.2B. The Mold & Resin Molding business was ¥2.8B (YoY -13.7%). Contract liabilities rose to ¥47.8B (YoY +¥11.3B +30.7%), indicating portions of backlog recorded as advances received.
[Profitability] Cost of sales was ¥43.4B (72.8% of sales), yielding Gross Profit ¥16.2B (Gross Margin 27.2%). Gross margin deteriorated -7.5pt from 34.7% a year ago, driven by fewer high-margin Surface Treatment Equipment projects and fixed-cost under-absorption due to lower utilization. SG&A was ¥15.4B (25.8% of sales), up ¥1.4B YoY. As SG&A increased in absolute terms despite lower sales, SG&A ratio rose +7.2pt from 18.6%, reversing operating leverage. Operating Income was ¥0.9B (Operating Margin 1.4%), down -92.9% from ¥12.1B a year ago. Non-operating income included interest income ¥0.5B and foreign exchange gains ¥0.6B (net of FX losses ¥0.3B → net +¥0.3B), totaling non-operating income ¥1.2B. After subtracting non-operating expenses ¥0.2B including interest expense ¥0.2B, Ordinary Income was ¥1.9B (YoY -84.1%). After income taxes ¥0.8B (effective tax rate 40.9%), Net Income was ¥1.1B (YoY -87.2%). By segment, Process Equipment reported Operating Income ¥0.6B (margin 1.3%, YoY -92.0%), Surface Treatment Equipment ¥0.1B (margin 1.5%, YoY -96.3%), and Mold & Resin Molding -¥0.0B (margin -0.4%, turned to loss). In conclusion, the sharp decline in Surface Treatment Equipment sales combined with lower utilization in Process Equipment led to increased fixed-cost burden and gross margin deterioration, producing a revenue- and profit-decline quarter.
The Process Equipment business reported Revenue ¥48.2B (YoY -1.0%) and Operating Income ¥0.6B (YoY -92.0%, margin 1.3%). While revenue was roughly stable, Operating Income fell significantly from ¥7.5B to ¥0.6B, with margin worsening from 15.7% to 1.3% (-14.4pt). The segment is composed of Semiconductor Equipment ¥25.9B, Conveyance Equipment ¥14.2B, and Cleaning Equipment ¥7.2B; slowdowns in Conveyance Equipment likely hindered fixed-cost absorption. The Surface Treatment Equipment business plunged to Revenue ¥9.5B (YoY -60.7%) and Operating Income ¥0.1B (YoY -96.3%, margin 1.5%), contracting sharply from prior-year Revenue ¥24.2B and Operating Income ¥3.9B (margin 16.3%), removing a high-margin driver of company profitability. The Mold & Resin Molding business was Revenue ¥2.8B (YoY -13.7%) with Operating Loss ¥0.0B (turned from Operating Income ¥0.4B prior year), indicating deterioration despite its small scale. All segments saw margins fall into the 1% range, with common issues of adverse project mix and increased fixed-cost burden.
[Profitability] Operating Margin 1.4% (prior year 16.1%), Net Margin 1.9% (prior year 11.5%) deteriorated substantially. Gross Margin 27.2% (from 34.7%, -7.5pt), SG&A Ratio 25.8% (from 18.6%, +7.2pt) indicate simultaneous gross margin compression and higher fixed-cost burden. ROE 0.4% (prior year 3.2%) and Return on Total Assets (Ordinary Income/Total Assets) 0.4% (prior year 2.5%) show weakened capital efficiency. [Cash Quality] Inventory Days 1,273 days, Accounts Receivable Days 194 days, CCC 1,325 days, showing material deterioration in working capital efficiency. Inventories ¥151.5B constitute 32.9% of total assets, indicating stalled project progress. Interest Coverage 4.96x (Operating Income ÷ Interest Expense) suggests near-term interest payment capacity is maintained. [Investment Efficiency] Total Asset Turnover 0.130x (prior year 0.161x) declined, and Fixed Asset Turnover 0.632x (prior year 0.828x) also worsened. [Financial Soundness] Equity Ratio 58.1% (prior year 57.7%), Current Ratio 282% (prior year 263%), Quick Ratio 166% (prior year 156%) indicate strong liquidity. Interest-bearing debt is ¥91.8B (Short-term Borrowings ¥37.1B + Long-term Borrowings ¥54.7B) while cash is ¥154.7B, resulting in Net Cash ¥62.9B. D/E Ratio 0.72x and Debt/Capital 25.5% reflect a conservative capital structure.
Cash flow statement data are not disclosed, so funding trends are analyzed from balance sheet movements. Cash and Deposits decreased to ¥154.7B (from ¥162.7B, -¥8.1B). Contract liabilities rose materially to ¥47.8B (from ¥36.6B, +¥11.3B), confirming accumulation of advances received. Inventory slightly decreased to ¥151.5B (from ¥154.1B, -¥2.6B) but remains elevated and stagnant. Accounts Receivable increased slightly to ¥31.7B (from ¥30.2B, +¥1.5B). Accounts Payable increased to ¥16.9B (from ¥15.7B, +¥1.2B), and Electronically Recorded Obligations ¥2.8B (from ¥20.1B, -¥17.3B), indicating a change in payment instrument composition. Accrued Income Taxes ¥2.1B (from ¥9.1B, -¥7.0B) fell significantly, suggesting tax payments were made in the prior period. Long-term borrowings increased to ¥54.7B (from ¥46.5B, +¥8.3B), bringing total interest-bearing debt to ¥91.8B (from ¥78.1B, +¥13.7B) including short-term borrowings ¥37.1B. Working capital lock-up and inventory stagnation may be affecting liquidity; accelerating cash recovery through digesting contract liabilities and inventory reduction is an important priority.
Ordinary Income ¥1.9B exceeded Operating Income ¥0.9B, indicating net non-operating contribution of ¥1.0B. This was composed of interest income ¥0.5B and net FX gains ¥0.3B (FX gains ¥0.6B - FX losses ¥0.3B), with financial income and FX benefits partially offsetting weak operating profitability. The net FX contribution ¥0.3B represents about 34% of Operating Income, implying earnings are sensitive to FX movements. Income taxes ¥0.8B (effective tax rate 40.9%) are high relative to pre-tax income ¥1.9B; even considering deferred tax assets ¥6.5B, current tax burden is heavy. Comprehensive Income ¥2.2B (Net Income ¥1.1B + Other Comprehensive Income ¥1.1B) was lifted by Foreign Currency Translation Adjustments ¥1.1B. The ¥1.1B gap between Net Income and Comprehensive Income is FX valuation gains that do not create cash. High dependence on non-operating income suggests FX and interest rate environments are key drivers of Ordinary Income volatility; sustainable recovery requires restoration of operating profitability. Product warranty reserves ¥5.6B (9.4% of sales) may be weighing on gross margin via quality and after-sales costs. No extraordinary items were indicated, so deterioration appears to be on a recurring basis.
Full Year guidance is maintained at Revenue ¥355.0B (YoY +0.2%), Operating Income ¥36.0B (YoY -24.5%), Ordinary Income ¥35.0B (YoY -30.1%), Net Income ¥25.0B, EPS 170.65円. Progress against Q1 results is: Revenue 16.8% (¥59.7B ÷ ¥355.0B), Operating Income 2.4% (¥0.9B ÷ ¥36.0B), Ordinary Income 5.3% (¥1.9B ÷ ¥35.0B), Net Income 4.4% (¥1.1B ÷ ¥25.0B), all materially behind. Especially Operating Income progress at 2.4% implies that 97.6% of annual operating profit is expected in H2, reflecting an extremely back-loaded plan. The buildup of Contract Liabilities ¥47.8B (YoY +30.7%) and backlog is inferred as the basis for H2 recovery, but delivery/acceptance progress and inventory reduction are critical to meeting the plan. FX assumptions, improvement in project mix, and suppression of warranty costs are essential for margin recovery in H2; monitoring Q2 onward progress and any revisions to the full-year plan is important.
No interim dividend was paid and the full-year dividend forecast remains ¥0. No dividends were paid in the prior year either, so a dividend pause is expected to continue. With EPS forecast ¥170.65円 and dividend ¥0, Payout Ratio is 0%. Retained earnings remain substantial at ¥187.5B (from ¥191.4B). Given cash on hand ¥154.7B, there is sufficient financial capacity for dividends, but the large gap between Q1 Operating Margin 1.4% and FY Operating Margin forecast 10.1% (¥36.0B ÷ ¥355.0B) suggests that sustained operating improvement and working capital normalization are prerequisites for resuming dividend policy or clarifying shareholder return plans.
Inventory stagnation risk: Inventories ¥151.5B (32.9% of total assets) and Inventory Days 1,273 days are extremely high. Prolonged project delays or customer specification changes could lead to obsolescence, discounting, or impairment, further compressing gross margins and reducing cash generation. Given Contract Liabilities ¥47.8B, managing production and installation progress for projects with advances received is critical.
Product warranty cost escalation risk: Product warranty reserves ¥5.6B (9.4% of sales) remain high despite declining from ¥6.4B prior year. Continued quality issues or prolonged after-sales service obligations could require additional reserves or actual expenditures, pressuring gross margins and delaying operating margin recovery.
FX and order volatility risk: Net FX contribution ¥0.3B accounted for roughly 34% of Operating Income ¥0.9B, indicating high sensitivity to currency movements. Yen appreciation would reduce non-operating gains and compress Ordinary Income. Additionally, as seen with Surface Treatment Equipment down -60.7% YoY, investment cyclicality in semiconductor/electronic components industries can cause large swings in orders and sales. The full-year plan is heavily back-loaded (Operating Income progress 2.4%), so order delays or delivery timing shifts could directly cause plan misses.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.4% | 6.8% (2.9%–9.0%) | -5.4pt |
| Net Margin | 1.9% | 5.9% (3.3%–7.7%) | -4.1pt |
Profitability is well below the industry median; both operating and net margins rank low.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -20.6% | 13.2% (2.5%–28.5%) | -33.8pt |
Revenue growth lags the industry median by -33.8pt, with adverse project mix and the steep decline in Surface Treatment Equipment as key factors.
※Source: Company aggregation of public financial data
Progress on inventory reduction and digestion of contract liabilities is key to H2 recovery. While Contract Liabilities ¥47.8B (YoY +30.7%) suggests revenue pipeline, Inventory Days 1,273 days is excessively long; production-order-level progress management and accelerated deliveries are prerequisites for operating margin recovery. If warranty reserves ¥5.6B (9.4% of sales) can be restrained while improving gross margin, Operating Margin could revert toward normal levels.
The strong H2 bias in the full-year plan (Operating Income progress 2.4%) is extreme; secure delivery and acceptance from Q2 onward is the watershed for plan achievement. Given net FX contribution ¥0.3B represents ~34% of Operating Income, changes in FX assumptions or order timing could trigger plan revisions. Liquidity is ample (Cash ¥154.7B, Current Ratio 282%), limiting financial risk, but normalization of working capital efficiency is necessary for sustained profitability restoration and resumption of shareholder returns.
This report is an AI-generated financial analysis document based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial disclosures. Investment decisions are your own responsibility; consult professionals as needed before acting.