SCREEN Holdings Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

The Company reported lower revenue and lower profit in Q1, primarily due to demand adjustments in its core Semiconductor Production Equipment (SPE) Business. Revenue was ¥121.78B (down -10.3% YoY), Operating Income was ¥14.37B (down -41.1%), Ordinary Income was ¥15.42B (down -37.2%), and Net Income attributable to owners of the parent was ¥10.49B (down -37.1%). While the decline in the SPE Business, which accounts for 76.5% of Revenue (Revenue -15.0%, segment profit -44.0%), weighed on overall results, the Graphic Arts (GA) and Flat Panel Display Manufacturing Equipment (FT) businesses secured higher revenue and higher profit, providing some support through portfolio diversification. The Operating Margin declined significantly to 11.8% from approximately 18.0% in the previous year, indicating reduced fixed-cost absorption amid declining revenue.

Factors Affecting Earnings

【Revenue】Revenue was ¥121.78B, representing a decline of -10.3% YoY. The core SPE (Semiconductor Production Equipment) Business, which accounts for 76.5% of the revenue mix, fell sharply to ¥93.13B (down -15.0%), driving the decline in overall Revenue. Meanwhile, GA (printing-related equipment, ¥13.83B, +7.1%), FT (display manufacturing equipment and film deposition equipment, ¥10.86B, +8.0%), and Other (¥5.78B, +20.4%) secured higher revenue, while PE (printed circuit board-related equipment, ¥3.13B, +2.0%) also remained marginally positive.

【Profit and Loss】Operating Income was ¥14.37B, a significant decline of -41.1% YoY. The gross margin was 35.5% (37.6% in the previous year, -2.1pt), while the SG&A expense ratio was 23.7% (19.7% in the previous year, +4.1pt), resulting in a negative reversal of Operating Leverage, with the fixed-cost burden becoming relatively heavier amid declining revenue. By segment, SPE profit was ¥14.39B (-44.0%), accounting for most of the overall decline in profit, while GA (+150.6%) and FT (+54.3%) posted higher profit due to improved profitability. PE fell into a loss of -¥0.30B. Ordinary Income was ¥15.42B (-37.2%), with a ¥1.05B surplus in non-operating income and expenses, mainly reflecting ¥0.69B in dividend income, providing an uplift from Operating Income. Extraordinary losses were limited to a ¥0.04B impairment loss on investment securities and had only a minor impact on Net Income. In conclusion, the Company reported lower revenue and lower profit.

Segment Analysis

Of the five segments, the core SPE Business accounts for 76.5% of the revenue mix but was the primary cause of the overall decline in profit, with Revenue down -15.0% and Operating Income down -44.0% (profit margin 15.4%). GA reported Revenue of ¥13.83B (11.4% of the mix, +7.1%) and Operating Income of ¥1.42B (+150.6%, profit margin 10.3%), showing a marked improvement in profitability. FT secured higher revenue and higher profit, with Revenue of ¥10.86B (8.9% of the mix, +8.0%) and Operating Income of ¥1.28B (+54.3%, profit margin 11.8%). PE reported Revenue of ¥3.13B (+2.0%) but fell into an Operating Loss of -¥0.30B (profit margin -9.5%), deteriorating from a small profit in the same period of the previous year. The three businesses other than SPE (GA, FT, and Other) collectively posted higher revenue and higher profit, providing partial support to earnings; however, their scale remains small relative to the Company as a whole, and they were unable to offset the decline in SPE profit.

Key Financial Indicators

【Profitability】The Operating Margin was 11.8%, down -6.2pt from approximately 18.0% in the previous year, while the Net Profit Margin also declined by -3.7pt to 8.6% from approximately 12.3% in the previous year. The gross margin was 35.5% (37.6% in the previous year), while the increase in the SG&A expense ratio to 23.7% (19.7% in the previous year) amplified the decline in profit margins.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥9.02B, only 0.86 times Net Income of ¥10.49B. Compared with EBITDA of ¥18.41B, including depreciation and amortization, OCF was 0.49 times, indicating somewhat weak cash conversion, primarily due to the increase in inventories (cash outflow of ¥33.41B).【Investment Efficiency】ROE was 2.1% (actual result for the quarter), reflecting the combined effects of a lower Net Profit Margin and slower asset turnover.【Financial Soundness】The Equity Ratio was 64.7%, down -2.7pt from 67.4% in the previous year but remaining at a high level. With cash and deposits of ¥212.24B and only a small amount of interest-bearing debt, the Company continues to maintain a net cash position.

Cash Flow Analysis

OCF increased to ¥9.02B, up +28.9% YoY, but the increase in inventories (-¥33.41B) was deducted substantially from the ¥20.28B subtotal before working capital adjustments, weighing on final OCF. The decrease in trade receivables (+¥10.84B) and increase in trade payables (+¥8.48B) contributed positively to cash generation, but did not offset the impact of inventory accumulation. Investing Cash Flow (ICF) was -¥10.00B, of which capital expenditures accounted for most at -¥9.63B. The Company continues to invest at a level 2.4 times depreciation and amortization of ¥4.04B. Financing Cash Flow was -¥16.26B, primarily reflecting cash outflows such as dividend payments. As a result, Free Cash Flow (OCF + ICF) was slightly negative at -¥0.98B; however, given the cash and deposits balance of ¥212.24B, the impact of the one-quarter deficit on liquidity is expected to be limited.

Quality of Earnings

The primary reason for the difference between Ordinary Income of ¥15.42B and Net Income of ¥10.49B was income taxes of ¥4.90B (an effective tax rate of approximately 31.9%). Extraordinary gains and losses were limited to a ¥0.04B impairment loss on investment securities, so the impact of temporary factors on earnings was limited. Non-operating income of ¥1.47B was primarily recurring in nature, led by dividend income of ¥0.69B. Although a foreign exchange loss of ¥0.16B was recorded in non-operating expenses, the overall composition remained stable. Meanwhile, Comprehensive Income was ¥26.61B, substantially exceeding Net Income of ¥10.48B, with most of the difference attributable to an increase of +¥14.92B in the valuation difference on securities. This divergence reflects changes in the market value of the investment securities held and should be considered separately from the Company’s recurring earning power from its core operations.

Earnings Forecast and Guidance

Progress in Q1 against the full-year Company forecast (Revenue of ¥743.00B, Operating Income and Ordinary Income each of ¥156.50B, and Net Income of ¥115.00B) was 16.4% for Revenue, 9.2% for Operating Income, 9.9% for Ordinary Income, and 9.1% for Net Income. All were below the 25% benchmark based on simple quarterly allocation. Semiconductor Production Equipment tends to have deliveries and shipments weighted toward the second half, and contract liabilities (advance payments) have accumulated to ¥124.93B, equivalent to 1.03 times Revenue, providing one indication of potential Revenue recognition toward the second half. The earnings forecast and dividend forecast were revised during the quarter.

Shareholder Returns

The annual dividend forecast for the current fiscal year (the fiscal year ending March 2027) is ¥60 (on a post-stock-split basis following the stock split implemented in April 2026), resulting in a Payout Ratio of approximately 9.9% against forecast EPS of ¥608.06. The actual dividend for the previous fiscal year (the fiscal year ended March 2026) was ¥123 annually on a pre-split basis; however, according to the disclosure, it was equivalent to an interim dividend of ¥61.50 and a year-end dividend of ¥85, or ¥146.50 in total, on a post-split basis. On a simple comparison, the current-year forecast is below this level. Free Cash Flow as of Q1 was -¥0.98B, meaning that dividends and capital expenditures were not fully covered on a quarterly basis; however, given the substantial cash and deposits balance of ¥212.24B, concerns regarding the Company’s ability to continue paying dividends in the near term are limited. No disclosure regarding share repurchases was identified; accordingly, the assessment here is based solely on the Payout Ratio.

Risk Factors

1. Concentration of the business portfolio: The core SPE (Semiconductor Production Equipment) Business accounts for 76.5% of Revenue, and its Revenue declined -15.0% while Operating Income declined -44.0%, resulting in a substantial impact on overall results. The business structure is such that fluctuations in the semiconductor capital investment cycle can readily affect overall performance.

2. Accumulation of working capital: The increase in inventories reduced OCF by ¥33.41B, while contract liabilities increased by +¥40.69B. The coexistence of these two factors indicates that the management of the timing from order receipt through acceptance and Revenue recognition affects capital efficiency.

3. Low progress against the full-year plan: Revenue progress was 16.4% and Operating Income progress was 9.2%, substantially below the 25% benchmark based on simple allocation. Even considering the business characteristics that result in second-half weighting, this is a phase in which the recovery in the second half must be monitored to assess the achievement of the full-year plan.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Margin and Net Profit Margin exceed the industry median, placing the Company in the upper tier of its peer group in terms of profitability.

Growth and Capital Efficiency

Revenue Growth was substantially below the industry median, distinguishing the Company as one experiencing declining revenue within its peer group.

※Source: Compiled by the Company

Key Points in the Financial Results

1. Contract liabilities (advance payments) increased +50.2% YoY to ¥124.93B, reaching 1.03 times Revenue. This is a factor supporting future Revenue recognition and is notable as evidence underpinning the second-half-weighted earnings progress.

2. The Operating Margin declined to 11.8% (approximately 18.0% in the previous year), confirming a negative reversal of Operating Leverage accompanied by an increase of +4.1pt in the SG&A expense ratio. Although the margin remains above the median in industry comparisons, it is on a declining trend compared with the Company’s historical levels.

3. The Company maintains a net cash position, with an Equity Ratio of 64.7%, cash and deposits of ¥212.24B, and only a small amount of interest-bearing debt. Its financial resilience during periods of earnings volatility therefore remains high.

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 five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥3,921–¥4,172 at ±1% for the Cost of Equity, and ¥4,002–¥4,107 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end were used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest rate reference month: 2026-06 / 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 release data. It is not a recommendation to invest 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, after consulting with professionals as necessary.

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