ULVAC, Inc. FY2026 FY Earnings Report

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Executive Summary

Despite higher revenue, this earnings result was characterized by a pronounced decline in profit margins, with top-line expansion coexisting with deteriorating profitability. Revenue increased to ¥2691.3B (+7.1% YoY), while Operating Income declined significantly to ¥196.0B (-26.1%) and Ordinary Income to ¥199.1B (-30.4%). Net Income was ¥187.4B (consolidated, -31.6% YoY), whereas Net Income Attributable to Owners of the Parent increased to ¥170.9B (+2.4% YoY), with the recognition of ¥79.5B in extraordinary gains serving as the contributing factor. The decline in gross margin in the core Vacuum Equipment Business appears to have been the primary cause of the decrease in profit.

Factors Affecting Results

【Revenue】Revenue increased to ¥2691.3B (+7.1% YoY). By segment, the Vacuum Equipment Business generated ¥2115.5B (78.6% of total, +5.9% YoY), while the Vacuum Application Business generated ¥615.0B (22.9% of total, +11.2% YoY), with both segments recording higher revenue. By region, sales to China expanded from ¥868.2B to ¥1028.9B, driving a change in the regional sales mix, while sales to Japan declined from ¥780.5B to ¥692.2B.

【Profit and Loss】While revenue increased, Cost of Sales rose at a faster pace than revenue, increasing to ¥1914.0B (+11.7% YoY), and the gross margin declined to 28.9% from approximately 31.8% in the previous year. SG&A expenses also increased to ¥581.3B (+9.0% YoY), causing Operating Income to decline to ¥196.0B (-26.1% YoY) and the Operating Margin to contract to 7.3% from 10.6%. By segment, Operating Income in Vacuum Equipment declined substantially to ¥152.0B (-30.5% YoY), representing the primary cause of the deterioration in company-wide profits. Ordinary Income declined to ¥199.1B (-30.4% YoY), partly due to increased non-operating expenses, including ¥10.8B in foreign exchange losses. Meanwhile, the recognition of ¥79.5B in extraordinary gains resulted in Net Income Attributable to Owners of the Parent increasing to ¥170.9B (+2.4% YoY). In conclusion, the company recorded higher revenue but lower profit on an operating-business basis, while the increase in net income was attributable to temporary factors.

Segment Analysis

The Vacuum Equipment Business recorded revenue of ¥2115.5B (+5.9% YoY), Operating Income of ¥152.0B (-30.5% YoY), and a profit margin of 7.2% (approximately 10.3% in the previous year), indicating a substantial deterioration in profitability and having the largest impact on company-wide profit. The Vacuum Application Business recorded revenue of ¥615.0B (+11.2% YoY), Operating Income of ¥42.8B (-5.5% YoY), and a profit margin of 7.0% (approximately 8.6% in the previous year), also reflecting a decline in profitability. Both segments posted higher revenue but lower profit, suggesting that rising costs and lower process efficiency had a common impact on both businesses. By region, sales to China expanded to ¥1028.9B (38.2% of total), up from ¥868.2B (34.5% of total) in the previous year, indicating increased dependence on China in the regional sales mix.

Key Financial Metrics

【Profitability】The Operating Margin was 7.3%, down 3.3pt from 10.6% in the previous year, while the gross margin also declined to 28.9%. ROE was 7.5% and is composed of Net Profit Margin of 6.3%, Total Asset Turnover, and Financial Leverage.【Cash Quality】Operating Cash Flow (OCF) was ¥307.3B, exceeding consolidated Net Income of ¥187.4B, indicating solid cash-generation capacity.【Investment Efficiency】Basic EPS was ¥347.41 (+2.6% YoY), while BPS increased steadily to ¥4,900.33.【Financial Soundness】The Equity Ratio was high at 60.2%. Current Assets of ¥3020.1B compared with Current Liabilities of ¥1227.6B resulted in a Current Ratio of approximately 246%, indicating a strong financial base.

Cash Flow Analysis

Operating Cash Flow (OCF) declined 11.7% YoY to ¥307.3B but remained above Net Income, demonstrating that the company continued to generate cash to support its earnings. In terms of working capital, increases in inventories and trade receivables were negative factors of ¥33.4B and ¥33.9B, respectively, while an increase of ¥150.6B in contract liabilities offset these effects. OCF was determined after deducting ¥99.4B in income tax payments from subtotal Operating Cash Flow of ¥392.5B. Investing Cash Flow was -¥119.1B, primarily allocated to capital expenditures and other investments, while Financing Cash Flow was -¥83.2B, mainly due to dividend payments and share repurchases of ¥4.9B. As a result, Free Cash Flow remained positive at ¥188.2B, a level sufficient to cover dividends and share repurchases.

Earnings Quality

Attention should be paid to the high degree of dependence on temporary factors in the current period’s earnings structure. Against Operating Income of ¥196.0B, extraordinary gains of ¥79.5B, including gains on the sale of fixed assets, and extraordinary losses of ¥15.1B were recognized, producing a net positive impact of ¥64.4B. This amount is equivalent to approximately 38% of Net Income Attributable to Owners of the Parent of ¥170.9B. The increase in Net Income (+2.4% YoY) was primarily attributable to this temporary factor, while Operating Income from the core business declined 26.1%, indicating a divergence between recurring earnings power and reported Net Income. Comprehensive Income was ¥300.0B, exceeding Net Income of ¥187.4B, with foreign currency translation adjustments of ¥73.6B making a substantial contribution. Non-operating expenses of ¥34.9B, including foreign exchange losses of ¥10.8B, were incurred against non-operating income of ¥38.0B, leaving non-operating income at only a modest positive level.

Earnings Forecast and Guidance

The forecast for the next period calls for Revenue of ¥2550.0B (-5.3% YoY), Operating Income of ¥280.0B (+42.9% YoY), and Ordinary Income of ¥280.0B (+40.6% YoY), representing a plan for substantially higher profit despite lower revenue. This assumes a recovery from the current-period Operating Margin of 7.3%, with the planned Operating Margin expected to improve to approximately 11.0%. Contract liabilities, or advance payments received, amounted to ¥399.3B, equivalent to approximately 14.8% of revenue, indicating a certain level of order backlog as a source of next-period revenue. Forecast EPS of ¥386.20 implies an increase of +11.2% from current-period actual EPS of ¥347.41.

Shareholder Returns

The year-end dividend was ¥152 per share, reduced from ¥164 in the previous year, resulting in a Payout Ratio of 43.8%. A dividend of ¥152 per share is also planned for the next period, with the dividend level expected to remain unchanged. Share repurchases of ¥4.9B were conducted, and shareholder returns including dividends are considered sustainable in light of OCF of ¥307.3B and Free Cash Flow of ¥188.2B.

Risk Factors

1. Risk of continued deterioration in profitability: The Operating Margin declined to 7.3% from 10.6% in the previous year, a decrease of 3.3pt, while deteriorating profitability in the core Vacuum Equipment Business—7.2%, down approximately -3pt YoY—has affected the company as a whole. The key issue is whether the recovery in profitability assumed in the next-period plan, to approximately 11.0%, will be achieved.

2. Regional concentration risk: Sales to China expanded to ¥1028.9B (38.2% of total), up from 34.5% in the previous year. Greater dependence on a particular region creates a structure that is more susceptible to demand trends and policy changes in that region.

3. Dependence on temporary gains: Net extraordinary gains of +¥64.4B accounted for approximately 38% of Net Income Attributable to Owners of the Parent of ¥170.9B. From the next period onward, autonomous profit growth driven by Operating Income from the core business will be required.

Industry Benchmark (For Reference; Company Analysis)

Profitability and Returns

The Operating Margin is slightly below the industry median, while the Net Profit Margin exceeds the median partly due to the contribution from extraordinary gains.

Growth and Capital Efficiency

The Revenue Growth Rate is substantially above the industry median, placing the company’s top-line growth in a relatively favorable position within the industry.

※Source: Company compilation

Key Takeaways from the Earnings Results

1. Top-line growth continues to exceed the industry average, but the Operating Margin has declined to below the industry median, putting the company at a relative disadvantage within the industry in terms of profitability.

2. The increase in Net Income was substantially boosted by extraordinary gains, while Operating Income, which indicates recurring earnings power, declined 26.1%. The earnings data indicate a divergence in the direction of Operating Income and Net Income.

3. Contract liabilities, or advance payments received, increased to ¥399.3B, confirming the accumulation of an order backlog as a backdrop to the projected increase in profit for the next period, including a +42.9% increase in Operating Income.

Implied Share Price (Reference Value)

Sensitivity: ¥4,662–¥4,934 at ±1% in the Cost of Equity, and ¥4,791–¥4,797 at ±0.1 in ω.

Note:

• As forecast ROE is below the Cost of Equity, the implied value is below Book Value per Share.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

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

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