DAIFUKU CO.,LTD. FY2026 Q2 Earnings Report

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Executive Summary

For Q2 of the fiscal year ending December 2026, Daifuku reported higher revenue and earnings, with a clear trend in which substantial growth in Clean Factory-related (CFI) operations offset the decline in external revenue from the core Material Handling Business. Revenue was ¥3555.1B (up +8.9% YoY), Operating Income was ¥566.8B (up +10.9%), Ordinary Income was ¥586.7B (up +11.7%), and Net Income attributable to owners of the parent was ¥431.4B (up +14.7%), all exceeding the same period of the previous year. The primary drivers of revenue growth were CFI’s external revenue growth of +112.7% and DNA’s +12.1%, which offset the -16.1% decline in external revenue from the core Daifuku Business. The Operating Income margin improved to 15.9% from the same period of the previous year, while higher gross profit margins and improved financial income and expenses contributed to the increase in final earnings.

Factors Affecting Financial Results

【Revenue】Consolidated Revenue was ¥3555.1B, up +8.9% YoY. By segment, based on sales to external customers, CFI surged to ¥400.8B (up +112.7% YoY), while Other Businesses at ¥793.4B (up +27.7%), DNA at ¥907.7B (up +12.1%), and CONTEC at ¥118.3B (up +23.5%) contributed to revenue growth. Meanwhile, the core Daifuku Business declined to ¥1126.6B (down -16.1%), and DSA decreased to ¥204.1B (down -3.0%). The revenue composition was Daifuku 31.7%, DNA 25.6%, Other Businesses 22.3%, CFI 11.3%, DSA 5.7%, and CONTEC 3.3%, indicating that growth in peripheral businesses offset the decline in the Daifuku Business.

【Profit and Loss】Cost of sales was limited to ¥2630.4B, or 74.0% of revenue, and the gross profit margin improved to 26.0% from 24.4% in the previous year. SG&A expenses increased to ¥357.9B, up +24.9% YoY, exceeding the revenue growth rate of +8.9%, and the SG&A ratio rose to 10.1% from 8.8%. However, the improvement in the gross profit margin more than offset this increase, and the Operating Income margin improved modestly to 15.9% from 15.7%. Although a foreign exchange loss of ¥9.3B was recorded in non-operating items, improved financial income and expenses, including interest income of ¥19.5B, offset this loss, resulting in an +11.7% increase in Ordinary Income. Special gains and losses amounted to a net gain of only +¥1.3B, comprising a gain on sales of investment securities of ¥3.6B and a loss on disposal and sale of fixed assets of ¥1.5B, among other items, indicating that the impact of temporary factors was limited. After deducting income taxes of ¥156.5B, representing an effective tax rate of 26.6%, Net Income increased to ¥431.4B (up +14.7% YoY), exceeding both the revenue growth rate and Operating Income growth rate. In conclusion, the Company achieved higher revenue and earnings.

Segment Analysis

Based on segment profit margins on sales to external customers, profitability was high in the Daifuku Business at 33.0%, DSA at 28.9%, and CFI at 18.4%, while DNA at 7.8% and CONTEC at 5.6% were relatively low. Although external revenue in the Daifuku Business declined by -16.1%, segment profit increased to ¥371.9B (up +9.3% YoY), indicating that project profitability was maintained. CFI posted substantial earnings growth, with revenue up +112.7% and profit rising to ¥73.9B (up +392.3%), making it the primary driver of Company-wide profit growth. Despite DNA’s revenue growth of +12.1%, profit declined to ¥71.2B (down -12.6%), indicating a divergence between revenue growth and profitability trends, potentially reflecting changes in the project mix or cost structure. DSA remained stable, with profit increasing modestly (+3.4%) despite lower revenue, while CONTEC showed an improving trend, with substantial increases in both revenue and profit, including a +98.2% increase in profit.

Key Financial Indicators

【Profitability】The Operating Income margin was 15.9%, improving from 15.7% in the same period of the previous year, while the Net Profit margin was 12.1%, exceeding 11.5% in the same period of the previous year. ROE was 8.6%, with the improvement in the Net Profit margin serving as the primary driver, while total asset turnover remained broadly flat at around 0.44x. 【Cash Flow Quality】Operating Cash Flow (OCF) of ¥520.6B was 1.21x Net Income of ¥431.4B, indicating strong cash backing for earnings. 【Investment Efficiency】Capital expenditures of ¥139.3B were approximately 2.0x depreciation and amortization of ¥69.0B, indicating continued growth investment. 【Financial Soundness】The Equity Ratio improved to 62.5% from 59.9% in the same period of the previous year. Current assets of ¥6173.3B versus current liabilities of ¥2346.6B resulted in a high current ratio of 263%. In addition, cash and deposits of ¥2693.8B compared with short-term borrowings of ¥3.98B indicate that the Company continues to maintain a financial structure close to debt-free.

Cash Flow Analysis

OCF was ¥520.6B, up +17.4% YoY, increasing at a faster pace than Net Income growth of +14.7%. Cash flow from operating activities before changes in working capital was ¥664.5B; however, a decrease in trade payables of -¥73.5B and an increase in inventories of -¥10.3B weighed on working capital, while income taxes paid of ¥168.2B were deducted, resulting in OCF of ¥520.6B. Investing Cash Flow was -¥236.2B, reflecting continued investment activity centered on capital expenditures of ¥139.3B. Financing Cash Flow was -¥184.4B, consisting primarily of dividend payments of ¥156.1B, while share repurchases remained minimal. As a result, Free Cash Flow was ¥284.4B, providing a sufficient level to cover dividends and capital expenditures.

Earnings Quality

Current-period earnings were primarily generated by recurring business activities, and the impact of temporary factors was limited. Special gains of ¥3.6B, mainly gains on sales of investment securities of ¥3.6B, and special losses of ¥2.4B, including losses on disposal and sale of fixed assets of ¥1.5B, amounted to a net gain of only +¥1.3B. Their contribution to Net Income of ¥431.4B was limited to approximately 0.3%. Non-operating income of ¥31.5B, or 0.9% of revenue, consisted primarily of interest income of ¥19.5B, while foreign exchange losses of ¥9.3B accounted for the majority of non-operating expenses of ¥11.7B; the two were broadly offsetting. Comprehensive Income was ¥506.1B, ¥74.7B higher than Net Income of ¥431.4B, primarily due to foreign currency translation adjustments of +¥68.8B. This divergence mainly reflects accounting fluctuations arising from the translation of overseas subsidiaries into yen and should be viewed separately from recurring earnings power.

Earnings Forecast and Guidance

Progress against the full-year forecast was 48.3% for Revenue (¥355.1B/¥735.0B), 50.2% for Operating Income (¥566.8B/¥1130.0B), 50.4% for Ordinary Income (¥586.7B/¥1165.0B), and 49.9% for Net Income (¥431.4B/¥865.0B), broadly in line with the halfway point of the first half, or the standard progress rate of 50%. Although revenue progress was somewhat low, progress on the earnings front remained in line with the plan. In the second half, the execution of projects supported by contract liabilities of ¥787.4B may support revenue progress. During the quarter, the earnings forecast and dividend forecast were revised.

Shareholder Returns

The interim dividend was ¥40 per share, and the full-year dividend forecast was ¥90, compared with the previous year’s annual dividend of ¥34, which is expected to increase. Based on average shares outstanding of 368,533 thousand shares, total interim dividends were approximately ¥147.4B, resulting in a Payout Ratio of approximately 34.2% relative to first-half Net Income of ¥431.4B. Under the full-year forecast, total dividends—calculated as 372,214 thousand shares, representing shares outstanding excluding treasury shares, multiplied by ¥90—will be approximately ¥335.0B, resulting in a Payout Ratio of approximately 38.7% relative to forecast Net Income of ¥865.0B. First-half Free Cash Flow of ¥284.4B exceeded first-half dividend payments of ¥156.1B. In light of cash and deposits of ¥2693.8B, the dividends have sufficient cash flow support.

Risk Factors

1. Profitability disparities among segments: Despite external revenue growth of +12.1% in the DNA segment, segment profit declined by -12.6%, indicating a divergence between revenue growth and profitability. If this situation continues, a key issue will be whether CFI’s high growth can continue to absorb the downward pressure on DNA’s profit.

2. Increase in inventories: Inventories increased to ¥143.5B (up +32.8% YoY), while trade payables decreased by ¥73.5B. Although this is consistent with the accumulation of work in progress associated with project progress, inventory turnover and working capital conversion require monitoring.

3. Impact of foreign exchange fluctuations: The Company recorded a foreign exchange loss of ¥9.3B during the period. Given its business structure with a high overseas sales ratio, fluctuations in foreign exchange rates affect non-operating income and expenses. Foreign currency translation adjustments of +¥68.8B in Comprehensive Income also underscore the extent of this foreign exchange sensitivity.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Profit margin significantly exceeded the industry median, placing profitability among the higher levels within the industry.

Growth and Capital Efficiency

The Revenue growth rate was slightly below the industry median but remained within the IQR range and did not represent a pronounced underperformance.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The Operating Income margin of 15.9% and Net Profit margin of 12.1% both significantly exceeded the industry median. High growth in CFI and the maintenance of project profitability in the Daifuku Business contributed to improved profitability. Financial soundness was also high, with an Equity Ratio of 62.5% and a current ratio of 263%.

2. Progress against the full-year forecast for both revenue and earnings was broadly in line with the standard progress rate of 50%. In the second half, the pace of order execution supported by contract liabilities of ¥787.4B will be a key point for monitoring earnings progress.

3. The DNA segment’s higher revenue but lower earnings, the increase in inventories (+32.8%), and the working capital outflow relative to cash flow from operating activities before changes in working capital will remain key points to monitor when evaluating the earnings structure and capital efficiency in subsequent periods.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,679–¥1,779 at ±1% for the cost of equity, and ¥1,718–¥1,742 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end were used; there is a timing difference relative to the full-year forecast.
• Because net assets include non-controlling interests, the theoretical values may be calculated somewhat higher.

(Model used: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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