5609.T

Company Overview & Core Strengths

• Founded in 1920, listed on the Tokyo Standard Market, with 294 employees, two factories in Kawasaki and Fukuyama, and three regional offices. It is an upstream specialty casting materials manufacturer serving multiple industrial sectors.
• Core competitive advantages are built on three pillars: technology development capability, proprietary R&D structure, and customer-focused solution proposal capability. Key technological achievements include the world's first zero thermal expansion alloy LEX-ZERO (patented, used in semiconductor and aerospace applications), award-winning seismic reinforcement technology for bridge bearings developed with the Metropolitan Expressway Company, and collaborative satellite component development with JAXA using 3D printing.
• R&D structure: separate development teams for cast materials, engineering/construction materials, and 3D printing, staffed by 5 PhD holders and 15 research associates.

Smart Factory Transformation Initiatives

• AI-powered worker flow analysis: improved the share of value-added direct work from 69% to 79% via process optimization.
• ACROS automatic riser cutting robot: over 70% adoption rate in production lines, targeting 90% adoption within the current fiscal year.
• Automatic welding repair robot: automated previously manual defect repair work, significantly expanded the range of applicable defects and producible unit volumes to cut costs.
• Dual 3D printing adoption: sand-type 3D printing for casting molds, metal 3D printing using low-cost steel (instead of expensive cobalt alloys) to deliver higher quality products, reduce lead times, cut production waste, and lower overall costs.
• DX optimization: unmanned forklifts cut warehouse management hours by 4,500 hours annually; the Owlnet energy visibility system cut power consumption by 10%.

Sustainability & Industry Collaboration

• Sustainability targets: on track to achieve carbon neutrality at the Kawasaki headquarters site by 2026, and is progressing faster than the Japanese government's 2030 50% emissions reduction target.
• Industry collaboration: recently announced a basic business partnership agreement with Seimoto Tekko Co., Ltd., and has started exploring collaboration with Kawakin Holdings Co., Ltd., both aimed at boosting revenue, cutting costs, and advancing R&D. The company will continue to explore industry restructuring and collaboration initiatives.

• The 2025 full-year fiscal guidance has been downwardly revised to 12.3 billion yen in revenue, 0.06 billion yen in operating profit, 0.22 billion yen in ordinary profit, 0.2 billion yen in net profit, and a 20 yen per share dividend.
• Management maintains a long-term strategy focused on improving profit margins via smart factory transformation, targeting cost reductions in expenses, outsourcing fees, labor costs, and material costs through automation and efficiency gains.
• The company will continue to deliver stable, sustained shareholder returns, targeting a payout ratio of approximately 30%.
• The company aims to achieve 90% adoption of the ACROS riser cutting robot within the current fiscal year.
• The company will continue to pursue external collaborations and industry restructuring to address ongoing industry challenges.

Nihon Chuzo operates two core business segments, but specific absolute financial results and revenue contribution percentages for each segment are not provided in the transcript. Historically, the company has delivered stable revenue and profit across both segments, with only one historical year recording an operating deficit due to a one-off loss. For the full year 2025, the revised consolidated forecast calls for total revenue of 12.3 billion yen, operating profit of 0.06 billion yen, ordinary profit of 0.22 billion yen, and net profit of 0.2 billion yen.

• Medium-to-long term structural risks: secular decline in domestic demand for castings, rising material and energy costs due to general price inflation, and persistent industry-wide labor shortages.
• 2025 performance downside: lower-than-forecast orders for semiconductor manufacturing equipment and mining machinery castings (driven in part by Trump tariff impacts) has reduced operating rates and eliminated high-margin order opportunities, leading to higher-than-expected cost ratios for the full year.

Q: What are the reasons for the 2025 full-year earnings forecast revision, and what is the company's go-forward strategy? / A: Management revised the 2025 forecast lower due to weaker-than-expected orders for semiconductor and mining machinery products, driven in part by Trump tariff impacts. Lower operating rates and lost high-margin order opportunities pushed expected cost ratios higher than initial projections. In the second half of the fiscal year, management will accelerate smart factory initiatives to cut outsourcing costs via in-sourcing and other cost rationalization measures to improve profit margins.

Q: What is the company's long-term shareholder return policy? / A: The company's core policy is to deliver stable shareholder returns while maintaining sufficient internal reserves to strengthen the management base and fund future business expansion. Despite the 2025 earnings revision, the company maintains its long-term target of a ~30% payout ratio, and will continue to deliver stable, sustained dividends from a long-term perspective.

Q: What is the current status of collaboration across the casting industry, and what are the future plans? / A: Nihon Chuzo is actively pursuing industry collaboration: it announced a basic partnership with Seimoto Tekko in July 2025, and started exploring collaboration with Kawakin Holdings later that month. To address the tough industry environment of labor shortages and falling domestic demand, the company will continue to actively pursue cross-company collaboration initiatives across the casting industry going forward.