Lasertec (6920) FY2026 FY Earnings Report

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Executive Summary

The current period resulted in lower revenue and lower profit as a pause in demand for semiconductor manufacturing equipment coincided with increases in research and development expenses and SG&A expenses. Revenue was ¥230.48B (-8.3% year on year), Operating Income was ¥105.26B (-14.3%), Ordinary Income was ¥107.90B (-9.7%), and Net Income was ¥77.49B (-8.5%). The Operating Income margin was 45.7%, down 3.1pt from 48.8% in the previous year, but remained at an exceptionally high level. The primary reason for the decline in profit was the increase in total SG&A expenses to ¥31.22B (13.5% of Revenue, compared with 10.1% in the previous year), due to research and development expenses expanding to ¥16.29B (7.1% of Revenue, +39.5% year on year) in addition to the decline in Revenue. Ordinary Income and Net Income did not decline as much as Operating Income, supported by non-operating income (foreign exchange gains of ¥2.07B) and a lower effective tax rate.

Factors Affecting Performance

【Revenue】Revenue was ¥230.48B, representing an 8.3% year-on-year decline. As the Company operates as a single segment engaged in the design, manufacture, and sale of inspection and measurement equipment, segment-level details are not disclosed; however, the slowdown in demand for semiconductor manufacturing equipment across the Company is considered the primary factor. Meanwhile, the gross profit margin improved slightly to 59.2% from 59.0% in the previous year, indicating resilience in terms of product mix and cost management.

【Profit and Loss】Operating Income was ¥105.26B (-14.3% year on year), and the Operating Income margin declined to 45.7% from 48.8%, a decrease of 3.1pt. The primary factors were the increase in research and development expenses to ¥16.29B (+39.5% year on year) and the expansion of total SG&A expenses to ¥31.22B (+22.8% year on year), resulting in a double impact from lower Revenue and higher expenses. Ordinary Income was ¥107.90B (-9.7%), a smaller decline than the ¥17.58B decrease in Operating Income. This was because non-operating income and expenses improved by approximately ¥6.0B, from a net loss of ¥3.40B in the previous year, primarily due to foreign exchange losses, to a net gain of ¥2.64B in the current period, primarily due to foreign exchange gains. This can be considered a one-time boost. Net Income was ¥77.49B (-8.5%), also supported by the decline in the effective tax rate to 28.2% from 29.1%. In conclusion, the current period resulted in lower Revenue and lower profit.

Key Financial Indicators

【Profitability】The Operating Income margin was 45.7% (48.8% in the previous year, -3.1pt), while the Net Income margin was 33.6% (33.7% in the previous year, broadly flat). Although absolute profit margins remain high, compression at the operating level is progressing. ROE was 31.4%, down 8.9pt from 40.3% in the previous year (Net Income of ¥84.65B / Net Assets of ¥209.90B). Net Assets expanded by +17.6% through the increase in retained earnings at a pace exceeding share repurchases, while the decline in Net Income was the primary reason for the decrease in ROE. 【Cash Flow Quality】Operating Cash Flow (OCF) was limited to ¥48.54B (-37.7% year on year), and OCF/Net Income declined to 0.63x from 0.92x in the previous year, indicating a slowdown in the conversion of earnings into cash. 【Investment Efficiency】Capital expenditures were ¥1.49B and depreciation and amortization was ¥4.67B, resulting in CapEx/depreciation and amortization of 0.32x, indicating a conservative investment policy and securing Free Cash Flow of ¥46.66B. Total asset turnover was 0.685x (Revenue of ¥230.48B / Total Assets of ¥336.65B). 【Financial Soundness】The Equity Ratio rose substantially to 73.3% (63.7% in the previous year, +9.6pt), while total liabilities were reduced by 25.0% year on year. Current Assets of ¥295.08B substantially exceeded Current Liabilities of ¥86.37B, indicating a high level of short-term financial safety.

Cash Flow Analysis

Operating Cash Flow was ¥48.54B, down 37.7% year on year, and the ratio to Net Income of ¥77.49B (OCF/NI) declined to 0.63x from 0.92x in the previous year. The factors were a substantial decrease in contract liabilities (customer advances), with a cash impact of -¥21.12B, and an increase in income taxes paid (-¥43.45B, compared with -¥29.01B in the previous year), partially offset by support from a decrease in inventories (+¥1.76B contribution). Investing Cash Flow was -¥1.88B, representing a restrained level of investment centered on capital expenditures of ¥1.49B. Financing Cash Flow was -¥43.18B, with dividend payments of ¥31.13B and share repurchases of ¥12.00B as the primary sources of cash outflow. As a result, Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was ¥46.66B, securing a level sufficient to cover the combined outflow from dividends and share repurchases. Cash and cash equivalents at the end of the period were ¥91.50B, an increase of +¥5.42B from ¥86.09B in the previous year.

Earnings Quality

The widening difference between Ordinary Income and Operating Income was attributable to the improvement in non-operating income and expenses from a net loss of ¥3.40B in the previous year, primarily due to foreign exchange losses, to a net gain of ¥2.64B in the current period, primarily due to foreign exchange gains of ¥2.07B. This largely reflects a one-time fluctuation in foreign exchange rates rather than a change in recurring business earnings power. Comprehensive Income was ¥80.06B, exceeding Net Income of ¥77.49B by ¥2.57B. The difference consisted of foreign currency translation adjustments of ¥2.12B and valuation differences on securities of ¥0.40B, with the divergence limited to +3.3% of Net Income. From a cash flow perspective, however, OCF remained at 0.63x Net Income, as working capital and accrual factors—including the decrease in contract liabilities (customer advances) and the increase in income tax payments—constrained the conversion of earnings into cash. The quality of current-period earnings therefore requires monitoring together with changes in the expense structure at the Operating Income level.

Earnings Forecast and Guidance

The Company has announced its forecast for the next period of Revenue of ¥290.00B (+25.8% compared with current-period results), Operating Income of ¥125.00B (+18.8%), and Ordinary Income of ¥125.00B (+15.9%), projecting a recovery from lower Revenue and lower profit in the current period to higher Revenue and higher profit. Forecast EPS is ¥1,004.12, an increase of +16.4% from current-period actual EPS of ¥862.99, while forecast DPS is ¥351, an increase of +6.7% from current-period actual DPS of ¥329. The Company explicitly states that the forecast is “not intended as a promise of achievement.” Key prerequisites for achieving the forecast are considered to include the shipment and acceptance progress of work in process (WIP, ¥122.45B) and the recovery of contract liabilities (customer advances), which declined during the current period.

Shareholder Returns

Annual dividends were ¥329 (interim dividend of ¥132 and year-end dividend of ¥197), resulting in a Payout Ratio of 38.1% (DPS of ¥329 / EPS of ¥862.99). The Company conducted share repurchases of ¥12.00B (none in the previous year), and the Total Return Ratio, including total dividends of ¥29.49B, was approximately 53.5%. Coverage of the combined dividend and share repurchase outflow (approximately ¥41.5B) by Free Cash Flow of ¥46.66B exceeded 1.1x, indicating that sufficient funds for shareholder returns were secured. For the next period, the Company plans DPS of ¥351 (forecast Payout Ratio of approximately 35.0%). Although the ratio will decline from 38.1% in the current period, the Company plans to continue increasing dividends.

Risk Factors

1. Risk of fluctuations in the semiconductor investment cycle: Revenue declined by 8.3% and Operating Income declined by 14.3% in the current period. As the Company operates a single business—inspection and measurement equipment—it has a structure in which fluctuations in demand directly affect overall performance.

2. Risk of inventory and working capital accumulation: The balance of work in process (WIP) was high at ¥122.45B, with inventory days of approximately 651 days and a cash conversion cycle of approximately 646 days. This is one of the primary factors behind the decline in OCF/Net Income to 0.63x from 0.92x in the previous year.

3. Declining visibility of orders due to the decrease in contract liabilities (customer advances): Customer advances were ¥44.28B, down 31.2% from ¥64.39B in the previous year. The weakening of short-term automatic funding stability and the support provided by advance orders requires monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The Company’s Operating Income margin and Net Income margin both substantially exceed the industry median, placing it among the top tier of profitability within the manufacturing sector.

Growth and Capital Efficiency

The Revenue growth rate was below the industry median, and the current period represents a phase of a larger-than-average decline in Revenue relative to the industry.

Source: Compiled by the Company

Key Points from the Financial Results

1. Although the Operating Income margin of 45.7% and ROE of 31.4% substantially exceed the industry median, they declined by -3.1pt and -8.9pt, respectively, from the previous year, indicating that profitability appears to have peaked.

2. The OCF/Net Income multiple declined to 0.63x from 0.92x in the previous year, while the persistently high level of WIP at ¥122.45B and the 31.2% decrease in contract liabilities (customer advances) slowed cash conversion.

3. The forecast for the next period anticipates a return to higher Revenue and higher profit, with Revenue of +25.8% and Operating Income of +18.8%. Achievement will depend on the shipment and acceptance progress of WIP and the recovery of orders, as indicated by customer advances.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥5,629–¥5,984 at a cost of equity capital of ±1%, and ¥5,710–¥5,945 at ω of ±0.1.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not predict 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 release data. It does not recommend investment in any specific security. 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 professionals as necessary.

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